Bank Bill of 1791

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Bank Bill of 1791
Pub. L.Tooltip Public Law (United States) 1–10, Session III
Statutes at Large1 Stat. 191, Chap. 10
Legislative history
  • Introduced in the Senate as S. 17
  • Passed the House on February 8, 1791 (39-20)
  • Signed into law by President George Washington
on February 25, 1791

The Bank Bill of 1791 is a common term for two bills passed by the

United States of America on February 25 and March 2 of 1791.[1][2][3]

Background

After Alexander Hamilton became Secretary of the Treasury in 1790, he promoted the expansion of the federal government through a variety of controversial bills. Hamilton argued that a federal bank would be beneficial to the national economy. The opening paragraph of the bill sums up his arguments:

Whereas it is conceived that the establishment of a bank for the United States, upon a foundation sufficiently extensive to answer the purposes intended thereby, and at the same time upon the principles which afford adequate security for an upright and prudent administration thereof, will be very conducive to the successful conducting of the national finance; will tend to give facility to the obtaining of loans, for the use of the government, in sudden emergencies; and will be productive of considerable advantages to trade and industry in general:

[citation needed]

Rights and restrictions

This bill grants that a "bank of the United States" shall be granted limited

legal rights in order to manage the national finance, to obtain loans for the federal government in case of sudden emergencies, and to promote trade and industry. The bank was granted the following legal rights
and restrictions:

Bank stock

The corporation was granted the right to issue paper stock under the following restrictions:

  • The corporation was granted the legal right to sell a maximum of 25,000 shares of stocks at $400 each for a total of $10,000,000, beginning April 1, 1791. Any individual, partnership or body politic could purchase up to 1,000 shares.
  • The corporation was granted the legal right to accept payment for these shares at the fixed ratio of two currencies: $1 in gold or silver for every $3 in federal debt bonds, which were issued under the Funding Act of 1790 and bore interest at an annual rate of 6%.
  • The corporation was required to pay
    nominal equivalent of 6% annual interest on the $300 in debt bonds that shareholders initially used to purchase the bank stock. These dividends would be paid at a fixed ratio of two currencies
    : $1 in gold or silver for every $3 in debt bonds.

Corporate personhood

The

shareholders of the bank were granted the legal right of corporate personhood
and the corporation was granted several rights:

  • Shareholders were granted the legal right to form a corporation, "The President, Directors and Company, of the Bank of the United States", with its own legal seal, continuing until March 4, 1811.
  • The corporation was granted the legal rights of
    corporate person
    : "to sue and be sued, plead and be impleaded, answer and be answered, defend and be defended, in courts of record, and any other place whatsoever."
  • The corporation was granted the right to buy "lands, rents, tenements, hereditaments, goods, chattels, and effects of what kind, nature or quality soever" and to "sell, grant, demise, aliene, or dispose of" the commodities above.
  • The corporation may only hold lands, tenements and hereditaments "requisite for its immediate accommodation in relation to the convenient transacting of" the corporation's business.
  • The corporation was granted the right of monopoly in that no other bank would be established by the federal government during its continuance.

Self-governance

The corporation would be

self-governed
according to the following organizational structure:

  • Shares would initially be sold under the supervision of "not less than three" superintendents, appointed by the president of the United States.
  • Whenever the corporation would obtained $400,000 in gold and silver from shareholders, the corporation would be required to elect 25
    shareholders
    as directors of the bank and then reelect 25 directors each January 1.
  • Shareholders cast votes in proportion to the number of shares that they hold. Only shareholders, citizens of the United States, are eligible as directors. The directors choose one of themselves as president after each election.
  • 7 directors constitute a quorum.
  • Any group of at least 60 people in possession of at least 200 shares can call a general meeting.
  • The directors are personally responsible for any debts beyond the allowed limit without exempting the corporation's holdings from legal confiscation. However, absentee or dissenting directors may excuse themselves from liability.

Accounting

See also

References

  1. ^ "Bank Bill of 1791 ~ P.L. 1-11" [Supplementary to Bank Bill of 1791] (PDF). 1 Stat. 196 ~ Chapter XI. USLaw.Link. March 2, 1791.
  2. ^ "1st Congress Chapter X, February 25, 1791" (PDF). Archived from the original (PDF) on April 25, 2012. Retrieved November 17, 2011.
  3. ^ "1st Congress XI, March 2, 1791" (PDF). Archived from the original (PDF) on April 25, 2012. Retrieved November 17, 2011.

Concerning the First National Bank in Colonial America

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