On July 4, cities and towns across the nation celebrated 250 years of American independence. By and large, Americans all know our founding story: how a group of 13 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. 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 WASHINGTON UPDATE The Legacy of American Banking Rob Nichols, President and CEO American Bankers Association 10 NEBRASKA BANKER
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