Second Report on Public Credit

In United States history, the Second Report on the Public Credit,^[1] also referred to as The Report on a National Bank,^[2] was the second of four influential reports on fiscal and economic policy delivered to Congress by the first U.S. Secretary of the Treasury, Alexander Hamilton.^[2][3] Submitted on December 14, 1790,^[2][3] the report called for the establishment of a central bank with the primary purpose to expand the flow of legal tender, monetizing the national debt^[4][5] by issuing of federal bank notes.^[6]

Modeled on the Bank of England,^[6] the privately held but publicly funded institution would also serve to process revenue fees and to perform fiscal duties for the federal government.^[5][7] Hamilton regarded the bank as indispensable to produce a stable and flexible financial system.^[6][8]

The ease with which Federalists advanced legislation to incorporate the bank impelled agrarian opposition that was hostile to Hamilton's emerging economic nationalism. Resorting to constitutional arguments,^[5][8][9] Representative James Madison challenged Congress's broad authority to grant charters of incorporation under the "necessary and proper" clause of the US Constitution^[10] and charged Hamilton with violating a literal, strict constructionist interpretation of the founding document.^[11][12]

Despite Madison’s objections, the Bank Bill of 1791 penned to form the First Bank of the United States passed without amendment in the US House of Representatives^[12] by a vote of 39-20^[13] on February 8, 1791. The bank was endowed with a 20-year charter.^[7]