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Early Paper Money of America / Pennsylvania / 1791, etc. Bank of the United States, Branch Offices of Discount and Deposit

Alexander Hamilton in 1779 urged Robert Morris to sponsor the organization of a national bank of issue, using land as security for its notes. Further promulgation of the plan in 1780, 1781 and 1790 culminated in the passage on February 25, 1791 of an Act of Congress incorporating the Bank of the United States with a capital of $10,000,000 divided into 25,000 shares of $400 each. The bank is referred to as the “first bank” to distinguish it from the federally chartered “second bank” of the same name (1816-36, and thereafter as a Pennsylvania corporation). Although the first bank was a private corporation with a 20-year life, the Federal government bought 5,000 shares and became a major depositor and borrower. The United States had not been granted the right to issue its own paper money under the U.S. Constitution, which had become effective in 1789. Circulating notes of the Bank of the United States were given legal tender status for all debts due to the United States, including import duties. The principal office was established in Philadelphia in 1791. The Bank of the United States and its branch offices operated successfully and without a legal test of its constitutionality, liquidating on the expiration of its charter in 1811. Between 1796 and 1802 the Federal government sold its shares in the Bank at a substantial profit. Most bank records were apparently destroyed and the principal sources of information are the reports to Congress made in 1809 and 1811.

The total amount of bank notes issued by the Bank of the United States up to 1811 was $6,152,533 of which $5,037,125 was then outstanding. Of this total the Philadelphia office or parent bank emitted $1,687,893 of which $1,561,833 were then outstanding. The parent bank issued engraved bank notes with the denomination spelled out in a panel on the left end. The counterfeiting of notes of the Bank of the United States was made a Federal crime by Act of June 27, 1798.

Virtually all of the circulating notes of the bank were fully redeemed in specie on liquidation in 1811 and unredeemed examples of genuinely issued bank notes have not been located. A few proof notes and some genuine notes with raised denominations have survived. The principal source of bank note information, however, is from counterfeits made for circulation and a secret circular of the Bank dated Dec. 31, 1791. Most counterfeits have one or more inked x marks on their faces indicating that they were presented to some bank and rejected.

Branch Offices of Discount and Deposit:

Offices of Discount and Deposit of the Bank of the United States were established in New York, Boston, Baltimore and Charleston in 1792, in Savannah in 1793, in Norfolk in 1795, in Washington in 1800, and in New Orleans in 1804. Each branch office had its own president and cashier. Nevertheless the notes issued by the branch offices were signed by the president and cashier of the parent bank, and contained the handwritten name of the issuing office in a blank space in the engraved text. The notes of the branch offices had the word DEPARTMENT in a panel engraved on the left end and the engraved note form for each denomination was interchangeable for use by all branch offices. Some branch office notes for protection prior to original emission were payable to the order of the president of the branch office and required his endorsement on the back before issuance, but others were payable to him or the bearer and did not require endorsement. To make branch offices more self-reliant the note issues of any branch were to be redeemed in specie only at the branch office of issue and not at the parent bank or other branches. The basic varieties of branch office issues are as follows:

I. An eagle in flying position bearing the Arms of the United States as used on the post notes of the parent and with the word DEPARTMENT in capital letters on the panel at the left end. The plate was engraved by John Draper whose name, J. Draper, is on the left end.

II. A heraldic eagle with 13 stars above it as used on the first type of parent bank note issues and with the word DEPARTMENT in script on the panel at the left end.

III. A heraldic eagle in an oval frame of 15 stars as used on the third type of parent bank note issues and with the word DEPARTMENT in capital letters on the panel at the left end. This emission continued into the nineteenth century.

Illustrations of and further data on branch office note issues are given under the State in which the branch office was located.

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