By Rob Nichols
On July 4, cities and towns across the nation will celebrate 250 years of American independence.
By and large, Americans all know our founding story: how a group of thirteen original colonies broke free from Great Britain, formed a union and grew over two and a half centuries into a global superpower.
But perhaps a lesser-known part of that story is the critical role that banks played in securing American independence, and transforming this nation into what it is today.
Great Britain forbade its American colonies from operating their own banks — just one of the many restrictions that pushed the colonies to rebel. With no established banking system, the colonists found themselves at a disadvantage, and the Revolutionary War effort faltered, until the Bank of North America was chartered by the Second Continental Congress in 1781.
Based in Philadelphia, the bank began operations in 1782, and was an immediate success, paying strong dividends to investors and providing a critical line of credit to the fledgling Congress.
The Bank of North America was the first commercial bank in the U.S., and while it refashioned itself in the 1780s, it lived on as a model for the First Bank of the United States, which was founded in 1791 by Alexander Hamilton to help stabilize a nascent U.S. financial system beleaguered by heavy war debts.
Hamilton believed in the power of the private banking model for maintaining discipline; when the Bank of the United States was opened, it marked the first IPO in American history. Private investors owned 80% of the Bank of the United States, with the government owning the remaining 20%.
While the Bank of the United States charter lapsed, briefly at first and then permanently in 1836, it demonstrated to young leaders like Abraham Lincoln what a diverse, well-capitalized banking system could do to grow our economy.
Throughout moments that followed — the Civil War, the growth of the United States as an industrial superpower, our victory in two world wars — banking was what helped propel America forward and into new stages of growth and development. Throughout our history, Americans have relied on banks of all sizes to provide the credit needed for individuals and businesses to thrive.
Our financial ecosystem is unique in terms of the diversity of institutions that operate today — from small community banks, mutuals, and minority depository institutions that serve niche markets, to midsize and regional banks, to the largest global financial institutions operating on multiple continents.
Our country has thrived thanks to that interconnected network of financial institutions, and it’s helped create the opportunity for Americans from sea to shining sea to participate in the economy and pursue their dreams.
And that’s an American tradition worth protecting and worth celebrating.
Happy Independence Day!
