Bank Bill of 1791
Encyclopedia
The Bank Bill of 1791 is a common term for two bills passed by the First Congress
of the United States of America on March 25 and February 2 of 1791.
of the United States
" shall be granted limited legal rights in order to manage the national finance, to obtain loans for the federal government in case of sudden emergencies, and to promote trade and industry. The bank
was granted the following legal rights
and restrictions:
Bank
Stock
:
The bank
was granted the right to issue paper
stock
under the following restrictions:
Corporate Personhood
:
The shareholders of the bank
were granted the legal right
of corporate personhood
:
1st United States Congress
-House of Representatives:During this congress, five House seats were added for North Carolina and one House seat was added for Rhode Island when they ratified the Constitution.-Senate:* President: John Adams * President pro tempore: John Langdon...
of the United States of America on March 25 and February 2 of 1791.
Rights and Restrictions
This bill grants that a "bankBank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
of the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
" shall be granted limited legal rights in order to manage the national finance, to obtain loans for the federal government in case of sudden emergencies, and to promote trade and industry. The bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
was granted the following legal rights
Rights
Rights are legal, social, or ethical principles of freedom or entitlement; that is, rights are the fundamental normative rules about what is allowed of people or owed to people, according to some legal system, social convention, or ethical theory...
and restrictions:
Bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
Stock
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
:
The bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
was granted the right to issue paper
Banknote
A banknote is a kind of negotiable instrument, a promissory note made by a bank payable to the bearer on demand, used as money, and in many jurisdictions is legal tender. In addition to coins, banknotes make up the cash or bearer forms of all modern fiat money...
stock
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
under the following restrictions:
- The bankBankA bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
was granted the legal rightRightsRights are legal, social, or ethical principles of freedom or entitlement; that is, rights are the fundamental normative rules about what is allowed of people or owed to people, according to some legal system, social convention, or ethical theory...
to sell a maximum of 25,000 shares of stocksStocksStocks are devices used in the medieval and colonial American times as a form of physical punishment involving public humiliation. The stocks partially immobilized its victims and they were often exposed in a public place such as the site of a market to the scorn of those who passed by...
at $400 each for a total of $10,000,000. - The bankBankA bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
was granted the legal rightRightsRights are legal, social, or ethical principles of freedom or entitlement; that is, rights are the fundamental normative rules about what is allowed of people or owed to people, according to some legal system, social convention, or ethical theory...
to accept payment for these shares at the fixedPrice fixingPrice fixing is an agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand...
ratio of two currenciesCurrencyIn economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...
: $1 in gold or silver for every $3 in federal debtDebtA debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
bondsBondsBonds can refer to any of several things:*Certificates that represent money a government or corporation has borrowed from other entities: see Bond *Bonds an Australian clothing company-People:* Alfred Bryan Bonds* Barry Bonds Bonds can refer to any of several things:*Certificates that represent...
, which were issued under the Funding Act of 1790Funding Act of 1790The United States Funding Act of 1790 was passed on the 4th of August, as part of the Compromise of 1790, to address the issue of funding domestic debt...
and bore interest at an annual rate of 6%. - However, the bankBankA bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
was required to pay dividends to shareholders at $9 per share every six months, the nominal equivalent of 6% annual interest on the $300 in debtDebtA debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
bondsBondsBonds can refer to any of several things:*Certificates that represent money a government or corporation has borrowed from other entities: see Bond *Bonds an Australian clothing company-People:* Alfred Bryan Bonds* Barry Bonds Bonds can refer to any of several things:*Certificates that represent...
that shareholders initially used to purchase the bankBankA bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
stockStockThe capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
. - The bankBankA bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
was granted the legal rightRightsRights are legal, social, or ethical principles of freedom or entitlement; that is, rights are the fundamental normative rules about what is allowed of people or owed to people, according to some legal system, social convention, or ethical theory...
to pay these dividends at the fixedPrice fixingPrice fixing is an agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand...
ratio of two currenciesCurrencyIn economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...
: $1 in gold or silver for every $3 in debtsbondsBondsBonds can refer to any of several things:*Certificates that represent money a government or corporation has borrowed from other entities: see Bond *Bonds an Australian clothing company-People:* Alfred Bryan Bonds* Barry Bonds Bonds can refer to any of several things:*Certificates that represent...
.
Corporate Personhood
Corporate personhood
Corporate personhood is the status conferred upon corporations under the law, which allows corporations to have rights and responsibilities similar to those of a natural person. There is a question about which subset of rights that are afforded to natural persons should also be afforded to...
:
The shareholders of the bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
were granted the legal right
Rights
Rights are legal, social, or ethical principles of freedom or entitlement; that is, rights are the fundamental normative rules about what is allowed of people or owed to people, according to some legal system, social convention, or ethical theory...
of corporate personhood
Corporate personhood
Corporate personhood is the status conferred upon corporations under the law, which allows corporations to have rights and responsibilities similar to those of a natural person. There is a question about which subset of rights that are afforded to natural persons should also be afforded to...
:
- Shareholders were granted the legal rightRightsRights are legal, social, or ethical principles of freedom or entitlement; that is, rights are the fundamental normative rules about what is allowed of people or owed to people, according to some legal system, social convention, or ethical theory...
to form a corporationCorporationA corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
. - The corporation was granted the right to buy "lands, rents, tenements, hereditamentHereditamentIn law, a hereditament is any kind of property that can be inherited.Hereditaments are divided into corporeal and incorporeal...
s, goods, chattelsPersonal propertyPersonal property, roughly speaking, is private property that is moveable, as opposed to real property or real estate. In the common law systems personal property may also be called chattels or personalty. In the civil law systems personal property is often called movable property or movables - any...
, and effects of what kind, nature or quality soever". - The corporation was also granted the right to "sell, grant, demise, aliene, or dispose of" the commoditiesCommodityIn economics, a commodity is the generic term for any marketable item produced to satisfy wants or needs. Economic commodities comprise goods and services....
above. - However, the nominal value of these commodities was capped at $15,000,000 including the $2,500,000 of goldGoldGold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
and silverSilverSilver is a metallic chemical element with the chemical symbol Ag and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal...
, and the $7,500,000 in debtDebtA debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
bondsBondsBonds can refer to any of several things:*Certificates that represent money a government or corporation has borrowed from other entities: see Bond *Bonds an Australian clothing company-People:* Alfred Bryan Bonds* Barry Bonds Bonds can refer to any of several things:*Certificates that represent...
potentially obtained through the sale of stocks (see above). - The corporation was also granted the legal rightsRightsRights are legal, social, or ethical principles of freedom or entitlement; that is, rights are the fundamental normative rules about what is allowed of people or owed to people, according to some legal system, social convention, or ethical theory...
of corporate person: "to sue and be sued, pleadPleadingIn law as practiced in countries that follow the English models, a pleading is a formal written statement filed with a court by parties in a civil action, other than a motion...
and be impleadedImpleaderImpleader is a procedural device before trial in which one party joins a third party into a lawsuit because that third party is liable to an original defendant...
, answer and be answered, defend and be defended, in courts of record, and any other place whatsoever." - The corporation was granted a legal seal.
- The corporation was granted the right of self governance.
- However, if the corporation obtained $400,000 in gold and silver from shareholders, the corporation would then be required to choose 25 shareholders as directors of the bank.