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The Revolutionary War

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In 1781 the first attempt in central banking was undertaken by an act of the Congress of the Confederation, thereby creating the Bank of North America. This bank was given exclusivity in the domain of issuing of national bills and credit. The idea was that this bank run by Robert Morris would act as the monetary agent of the US government which was needed to help deal with the funding of the Revolutionary War. Prior to the ratification of the Articles of Confederation & Perpetual Union in 1781, only the thirteen states had the sovereign power to issue their own bills of credit. Therefore before the ratification it was State Chartered banks that were providing the credit for the war, through the use of continental currency or “continentals.” These continentals were depreciating in value to the point of becoming distressed assets so it was Morris’s assertion that this private “for profit” monopolized commercial bank would be the only viable solution. With the ratification of the Articles of Confederation, congress also gained the power over the issue of bills of credit, so Morris went to work establishing America’s first central bank. It is also important to note that this function was not essential to continuing the war effort as with the defeat of the British in Yorktown in October of 1781 excluding several small skirmishes, the war had already ended. The Bank of North America essentially provided the greatest monetary benefit to the holders of large amounts of

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