What is the Bank of North America?
The Bank of North America was the United State's first attempt at a national bank. In fact, it was the first commercial bank in the country.
Some consider it the original idea of a central bank. It did not, however, They did not set monetary policy, regulate private banks, hold their excess reserves, or act as a lender of last resort.
It was chartered under the Articles of Confederation by the Continental Congress. This was done on May 26, 1781.
Robert Morris was the one behind the design of the bank. Modeled after the Bank of England, the thought was to have the bank privately owned but work closely with the government. For the couple years of operation, it did work for and with the government.
Stock Offering
There bank was authorized to sell stock, 1,000 shares at $400 apiece. The challenge was the initial offering do rather poorly, raising $70,000. It is reported that Benjamin Franklin bought a single share for the mentioned $400 as a show of support by the Federalists.
William Bingham was reported to have picked up 9.5% in the newly formed bank.
The largest investor, and the one who was able to get the bank to meet the requirements for charter, was the US Government. It just so happened that Alexander Hamilton had recommended Morris for the position of Superintendent of Finance of the United States. This proved to be advantageous.
When a gift loan came in from France, Morris took $250,000 and bought stock in the bank on behalf of the US Government. This brought the bank to the level it needed yet deprived the government of the money it required to fund the Revolutionary War.
US Loan
Here is where Morris got creative. He not only loaned the US Government the $250,000, he added another $150,000, bringing the total loan to $400,000. This allowed it to fund the war effort.
The challenge was the government was in no position to pay back the loan. It did not have the $400,000. Once again, Morris got creative.
He allowed the US to forfeit its share of the the stock as payment of the loan. The government liked this because it received $400,000 worth of supplies for the war in exchange for $250,000.
The remaining $150,000 was still owed and this is where Morris set up a scheme that fueled his critics to speculate that he was using the arrangement to personally profit.
Morris ended up dying broke.
National Charter Revoked
Hamilton would cite the Bank of North America's contribution to the war effort. This did not stop the State of Pennsylvania from objecting to its privileges and reincorporating it under state law. This made it ineligible for national charter under the Federal Constitution.
In 1791, the US Congress chartered a new bank. The First Bank of the United States would be established with the Bank of North America continuing as a private entity.
Post Government
By the time this all took place, the bank had depositors and was making loans. Thus, the US Government effectively provided a temporary cash infusion into the bank.
The bank stopped doing business with the government but did succeed as a private bank. It kept going until the 20th century.
In 1914 it became part of the Federal Reserve System. From there, it went through a series of mergers throughout the century, eventually losing its name.
Here are the transactions that describe the eventual outcome:
It joined with Commercial Trust Company in 1923 to become The Bank of North America and Trust Company.
In 1929, it merged into The Pennsylvania Company for Insurances on Lives and Granting Annuities, eventually renamed the Pennsylvania Company for Banking and Trust.
BNA’s legacy became the First Pennsylvania Banking and Trust Company in 1955 after another merger, this time with the First National Bank of Philadelphia.
In 1990, Core States acquired “First Pennsy,” which then First Union in turn acquired in 1998.
In 2001, First Union merged with Wachovia.
Wells Fargo purchased Wachovia in 2008, being the present "owner" of the lineage of the Bank of North America.