It could issue bank notes, was not required to pay state taxes, and it was understood that Congress was not to charter any comparable institution (D"Urso 4). From the day it was created it faced serious problems -- private business could not be clearly or easily separated from its public functions. According to Weisberger, "as the holder of the fast-growing nation's swelling revenues it had the biggest reserves and readily became the most powerful lending institution in the land -- a central bank, in effect, with a determining influence on the amount of available credit in the economy. From a fiscal-stability point of view, this was not a bad situation at all, but in the United States of the 1820s it was politically explosive" (1). .
At the time, America had no other currency than gold or silver coins, otherwise known as specie. In the early years of the 19th century it was becoming increasingly difficult to obtain, and the resultant shortages were partially compensated for by the notes issued by various states. However, the inconsistency that was the norm in the state banking regulations of the day resulted in a wide fluctuation of the worth of the bank notes. They were, however, far more plentiful than gold or silver. Weisberger explains, as collection agent for the Treasury, the Bank accumulated millions in these notes, and it could either hold on to them, thereby encouraging credit expansion, or promptly present them for redemption, driving weaker institutions out of business and starting a contraction and panic (2). In addition, the notes issued by the Bank were, not surprisingly, generally preferred to the other notes. It can be argued that The Bank was providing Americans with a stable currency, which is how it looked to the investing communities concentrated in the Northeast's major cities. It can, however, also be argued that it was evolving into a virtual monopoly enjoying government protection, which is how potential borrowers in the South and developing West viewed it.
