First Bank of the United States The major political controversy following ratification of the Constitution was the debate about the First Bank of the United States. In 1791, Congress chartered the First Bank of the United States for 20 years. It was supported for a variety of reasons: • a symbol of federal power • the federal government needed a fiscal agent to collect taxes, hold the government's funds, transfer funds among regions and offices, and make authorized payments • any bank tended to foster commerce and industry • debtors supported the bank on the grounds that any fractional reserve banking system expands the money supply and is inflationary • needed a unit committed to extending credit to the federal government The federal government owned 20% of the bank's stock; private individuals owned the rest. Within 3 months of its issue the bank's stock rose from $25 to $300 a share. In most respects the First Bank acted like a private bank: it made loans, accepted deposits, and
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