The Link Between Two National Banks

By Atom Bergstrom

Atom’s Blog

Naturalized American Stephen Girard (according to Wikipedia) “personally saved the U.S. government from financial collapse during the War of 1812, and became one of the wealthiest people in America, estimated to have been the fourth richest American of all time, based on the ratio of his fortune to contemporary GDP.”

He was the John D. Rockefeller of his era, quite an accomplishment for a man who had no formal schooling whatsoever.

Girard was the fourth richest American of all time, according to Forbes business magazine.

French by birth, he became an American citizen on October 27, 1778, at the age of 28.

George R. Fisher, M.D. (“Stephen Girard, Compulsive Gambler,” Philadelphia Reflections, 2004-2016) wrote …

“As a major stockholder in the bank [First National Bank of the United States], Steven Girard was well aware of the strong populist sentiment that the Government had no business running a bank. Although he did his best to preserve the bank, he could see its closure was politically inevitable with Thomas Jefferson as President of the United States, soon to be followed by his Virginia crony, James Madison. When the charter was revoked, Girard took his immense cash horde — and bought the doomed bank with it. From the Virginians’ perspective, they were going to need that money if they went to war with England; while in Girard’s view they could not possibly fight a war without a bank to finance it. As matters turned out, the War of 1812 was largely financed by Girard’s personal wealth, which ultimately meant that Girard bought the Government’s bank with the Government’s own money.”

According to William H. Rhawn (Proceedings of the Second Annual Convention of the Philadelphia Bankers’ Association Held at Pittsburgh, December 16 and 17, 1896) …

“His career as a banker seems to have begun in 1811-12, when, the charter of the first United States Bank having expired, Girard purchased the bank building and entire outfit of the bank and established ‘The Bank of Stephen Girard,’ with a capital of $1,200,000, when the business of the old bank was largely transferred to him. During the whole of the War of 1812 this bank was the very right hand of national credit, having at the crisis of that struggle taken the entire national loan of five millions, which was upon the point of failure, as the Secretary of the Treasury [Albert Gallatin] had been unable to negotiate more than $20,000 of it. The services rendered by Girard at this juncture were of inestimable value to the country. His bank continued until his death, by which time it had accumulated a capital of $4,000,000, and it is said that the bank never refused to pay the specie [money in the form of coins] for a note of his.

“The first United States Bank began business in Carpenters’ Hall in 1791, and continued there until 1797, when it was removed into its new marble-front building on Third Street, between Chestnut and Walnut, where it remained until its charter expired in 1811. The private bank of Girard was continued in this building until after his death, when, in 1832, it was succeeded by the Girard Bank, charted by the State, with $5,000,000 capital, which was subsequently reduced. This bank was reorganized as a national bank in 1864, and has since continued its occupancy of the building, which ever since Girard bought it has been known as the Girard Bank, and still belongs to his estate, and is claimed to be the oldest bank building in the United States. The inscription, ‘Founded A.D. MDCCXCV,’ upon the frieze of the porch of the building, shows that its erection was begun in 1795, and it has been occupied and known as a bank for the full century, from 1797 to 1897.

“Girard had an active agency in procuring the charter of the second United States Bank, of which he became a Director, and when it was started in 1816, with its enormous capital of $35,000,000, of which $7,000,000 was subscribed by the United States,* it is related of him that he waited until the last moment before the subscription books closed, and then, inquiring if all that wished had subscribed, he coolly took the balance of the stock, amounting to $3,038,300.”

According to the footnote (*) indicated above …

“For its subscription the Government made a stock note at five per cent interest, on which it paid $3,000,000 in 1830 and the remaining $4,000,000 in 1831. It sold its stock to the bank in 1837, after it had become a State institution, which paid for it in annual installments from 1837 to 1840. — Prof. William G. Sumner in ‘A History of Banking in All Nations.’

“The Government thus realized a net profit of $6,093,167 upon its stock in the bank. — Report of Comptroller of the Currency Knox for 1876.”

According to William H. Rhawn (continued from above) …

“In 1829 the State of Pennsylvania found itself upon the verge of bankruptcy, from which it was saved by Girard advancing the money needed upon the sole credit of the Governor before a special session of the Legislature could be convened. This was the last pubic act of his life. In April, 1830, however, he purchased the large tracts of coal land in Schuylkill County which now form a large part of his estate.

“Girard died of influenza at his Water Street mansion, Philadelphia, December 26, 1831, in his eighty-second year, leaving a fortune of $7,500,000, probably the largest of his day in the country, but no direct heir. His funeral was the largest ever before known in Philadelphia.”
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