The
Second Report on the Public Credit also referred to as
The Report on a National Bank was the second of three influential reports on fiscal and economic policy delivered to Congress by Secretary of the Treasury
Alexander Hamilton. The
Report, submitted on December 14, 1790, called for the establishment of a central bank, its primary purpose to expand the flow of legal tender by monetizing the national debt through the issuance of federal bank notes. Modeled on the
Bank of England, this privately held, but publicly funded institution would also serve to process revenue fees and perform fiscal duties for the federal government. Secretary Hamilton regarded the bank as indispensable to producing a stable and flexible financial system. The ease with which
Federalists advanced legislation to incorporate the bank impelled agrarian opposition hostile to Hamilton's emerging
economic nationalism. Resorting to constitutional arguments, Representative
James Madison challenged Congress’s broad authority to grant charters of incorporation under the
“necessary and proper” clause of the US Constitution, and charging Hamilton with violating a literal or
strict constructionist interpretation of the founding document. Despite Madison’s objections, the legislation to form the
First Bank of the United States passed, without amendment, in the House by a vote of 37-20 on February 2, 1791, endowed with a twenty-year charter.