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Robert Morris's portrait is next to a note that reads: Promise to pay to or bearer on demand, Twenty Dollars, Philadelphia, the day of 179_. For the President, Director, and Company of the Bank of North America.
Robert Morris and a Bank of North America bank note. Unlike Continental Dollars, people who received a Bank of North America bank note for payment knew that they could exchange it at any time for its face value in gold and silver.

Funding the Revolution: America’s first commercial bank

America’s Founding Fathers established the Bank of North America on Jan. 7, 1782, helping to fund a war and save a fledgling economy.

January 11, 2019
Alyssa Bentz

Alyssa Bentz is a Wells Fargo historian.

During the Revolutionary War, representatives from each of the newly formed 13 states gathered in Philadelphia to form the Continental Congress. One of the duties of the nation’s first governing body, which met from 1774 to 1789, was finding a way to finance the Revolution. They also printed the Declaration of Independence and appointed Gen. George Washington commander in chief of the Continental Army.

The Continental Congress had no taxation powers and no clear source of funding the war. For years, it resorted to printing paper money, bonds, and loans. In a world economy based on gold and silver coins, these paper promises meant nothing to soldiers expecting pay in precious metals. The Continental dollar bills quickly depreciated. By 1781, people needed 167 paper dollars or more to exchange for $1 in coins.

America had written one too many IOUs and was starting to get questions from its foreign lenders. Troops and suppliers started to demand payment in coin, not paper.

Finding a solution

Papers read: Fifty Shillings, According to an Act of the General Assembly of Pennsylvania, paffed in the 15th Year of the Reign of His Majesty George the Third. Dated the Tenth Day of April, Anno Domini 1775. The other: Two Pounds Ten Shillings.
Colonial Americans had to get creative with their finances. When gold and coin were in short supply, colonies printed their own money, like this paper money issued by the Colony of Pennsylvania in 1775. Photo credit: Wells Fargo Corporate Archives

To fix the crashing economy and pay for the war, the Continental Congress appointed well-known Philadelphia merchant Robert Morris as the nation’s superintendent of finance in February 1781. When he accepted the position in May, he also submitted a proposal for establishing a bank, the nation’s first, to stabilize the economy.

Morris had to find a way to structure borrowing. He needed to turn short-term debt into a financial tool to meet immediate needs. With the firm financial foundation of a bank, he argued, the national credit would be more respected. Loans from foreign governments and domestic investors would be easier. As King of England’s George III said a year before, “this war … will prove one of credit.”

The Continental Congress considered Morris’s proposal. Some members feared that authorizing a bank exceeded their limited powers. To balance concerns, the governing body recommended each state submit their own authorization. As state approvals slowly arrived one letter at a time, Morris began seeking the money needed to fund the bank.

An illustration shows five brick buildings connected. They have signs with: Russell's Hat Store, John Peterson Tanner & Currier, Timy Abbott & Co., and American Fire Insurance. The bottom of the illustration reads: Bank of North America, 1828.
An illustration of the Bank of North America on Chestnut near Third Street in 1828. Photo credit: Wells Fargo Corporate Archives
An aged white paper reads: Philad: 18 May 1782. Cashier of the Bank. Pay to Clement Biddle or bearer Eight hundred & fifty Dollars and 82/90. Owen Biddle.
When Owen Biddle needed to send money to his brother Clement in 1782, he didn’t want to send heavy coins or cows. He sent a check instead. Clement Biddle ran one of the nation’s first stock brokerage houses, which is today also part of Wells Fargo. Photo credit: Wells Fargo Corporate Archives

Business associates and other investors stepped forward to buy stock, but it wasn’t enough. Then, word arrived in Philadelphia of a French ship due to arrive with silver and gold to loan to the new nation. After a trip of nearly two months, Morris received the French coins in November and used $250,000 of the money to buy stock in the new bank. With the funding complete, the Continental Congress gave its official authorization for the bank on Dec. 31, 1781.

By investing that money in the bank instead of paying the government’s bills immediately, Robert Morris was able to make that money multiply. The Bank of North America, now Wells Fargo, opened its doors in Philadelphia on Jan. 7, 1782. Over the course of the next six months, it loaned the American government $400,000, more than the original amount of gold deposited in the bank’s vaults. Within its first 13 months, the bank loaned about $2.4 million.

The first commercial bank and the first commercial loans

As business prospered, the bank loaned money to merchants and other small businesses. These loans were the first commercial loans in the nation. Before the war, most businesses acquired needed capital through friends, family, and private investors. Now, the bank became a source of credit to the growing nation. Loans went to pay for soldiers and supplies to the Continental Congress and state governments. The bank loaned money to businesses in Philadelphia, but also in other states. About half of the bank’s business loans went to stockholders and their enterprises. The other half went to smaller merchants with no connection to the bank.

Four white papers are on top of each other. One reads: New York Currency. Three Dollars. Another reads: No. 292697 Fifty Dollars. Another reads: Ten Shillings. According to the Resolves of the Assembly of Pennsylvania, of the 6th Day of April.
The Continental Congress claimed money it printed was exchangeable for Spanish dollars, but everyone knew it wasn’t worth more than the paper it was printed on. Photo credit: Library of Congress

The impact the bank had on the early American economy was dramatic. Thomas Paine, author of the influential pamphlet Common Sense, credited it in 1786 with advancing the Revolutionary cause. “The sudden restoration of public and private credit, which took place on the establishment of the bank,” he said, “is an event as extraordinary in itself as any domestic occurrence during the progress of the Revolution.”

More banks for the new nation

In 1783, the Treaty of Paris ended the eight-year war with England, but the political revolution continued. The nation’s leaders admitted to the weaknesses of the Continental Congress and gathered to create a new governing system. They wrote and ratified the U.S. Constitution in June 1788, creating the governing system we use today. The Bank of North America could no longer legally operate under its charter given by the Continental Congress. However, it had received an additional charter by the Commonwealth of Pennsylvania. It used that authorization to continue providing loans, savings, and other financial tools to people throughout the U.S.

Over time, the new government sold its stock in the bank and opened a new central bank, called the Bank of the United States. While the Bank of North America jealously guarded its role as the nation’s only bank for a time, its success inspired others to replicate it. Within the first few years of peace, more banks opened, spreading access to stable currency and access to credit.

Two golden coins are shown side by side. One has the side profile of a man in the middle and reads: Carol IIII D G, 1791. The other has a crest in the middle and reads: In Utroq Fellix Auspice Deo.
An art piece shows three men, Robert Morris, George Washington, and George Ross. Two are sitting in chairs and one stands between them inside a house. Betsy Ross, sits across from them, holding a flag.
Spanish coins were highly valued in early America as the most desired medium of exchange. Photo credit: Wells Fargo Corporate Archives
Robert Morris, seated right, is portrayed in this 1893 work at the “Birth of our Nations’ Flag” with Betsy Ross, Gen. George Washington, and George Ross. Photo credit: Library of Congress
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