From these statements we may infer what the plan of this bank was. Continental or State paper was brought into it as a subscription, for which the subscriber obtained the interest-bearing notes of the bank, payable in six months. The supplies were bought with the currency which the subscriber had brought in. The bills drawn on the Envoys were held as collateral security until Congress should pay for the supplies. Those bills might be negotiated, but it was the understanding that they should not be; for it was well understood that they were not drawn for value, legitimately at the disposal of the drawer, but would impose an obligation on the Envoy on whom they were drawn to borrow or beg funds to meet them, so that they would be honored or not according as he succeeded.
This institution was called the Bank of Pennsylvania, and began operations July 17, 1780, in Front street, two doors above Walnut. The last installment of the subscription was called in November 15th. The last payment in discharge of the debt of the Confederation to it was made in 1784. Some attempt seems to have been made to repeat its operations, for, November 29th, the Pennsylvania Assembly appointed a committee to confer with the directors on the practicability of an immediate supply of corn and forage for the army, on three or six months' credit, to be paid for in current money of the State, equal in value to gold and silver.[1] In May, 1781, Reed, who was of the anti-bank party, wrote to Washington that the notes of the bank would no longer circulate; that they soon lost credit, but that the bank ruined the paper money of the State.[2]
In May, 1781, before he had assumed the office of Financier, Robert Morris submitted to Congress a plan of a bank, which had been prepared by Gouverneur Morris.[3] "Anticipation of taxes and funds," he wrote, "is all that ought to be expected from any system of paper credit."[4] By this he meant that paper could only be used to anticipate the return from taxes by which the paper would be canceled. He proposed that Congress should apply to the States for power to incorporate the bank, and he hoped that the States would make its notes receivable for taxes.
May 26, 1781, Congress approved of the plan of the Bank of North America as follows: There were to be one hundred shares of $400 each, with liberty to increase the capital. The state of the cash account and circulation was to be made known to the Superintendent of Finance every evening except Sunday. The States were to make the notes, if payable on demand, receivable for duties and taxes. The Superintendent of Finance was to have access to all books and papers. The States were to make laws to punish embezzlement in the bank as felony. No director was to be paid for his services. On the question of incorporating the bank, Massachusetts voted no; Pennsylvania was divided; Madison voted no. Congress asked the States not to charter any other bank during the war, and to pass the other votes called for by the plan.
