In the new nation emerged two kinds of bank——the commercial banks chartered by state legislatures and the Bank of the United States deriving its authority by act of the U.S. Congress.
After the commercial boom beginning in 1793， a large number of banks were established by special state charters. Almost all of these state-chartered banks were private， with the power to issue their own paper money. A group of investors would set aside a reserve of specie from their own assets as starting capital， and then take deposits and make loans. The loans were often self-liquidating in that they bridged the gap between production and sale， underwriting trade credit and supporting increasingly commercialized farmers between planting and harvest. By 1860 more than 1，500 state banks were issuing， on an average， six different denominations of notes. Most notes were acceptable at a distance from the issuing bank only at a discount， and anyone ignorant of the actual worth of a note was open to loss. Notes of "broken" or liquidated banks sometimes remained in circulation for long periods， and counterfeiting was a continuing problem. Some counterfeiters specialized in the manufacturing end of the business； others， called utters， were adept at passing the bogus money.
The other kind of bank-the Bank of the United States was simultaneously a commercial bank and a quasi-public central bank. The First Bank of the United States， chartered by the Congress in 1791， owed its existence to Alexander Hamilton who， shortly after becoming Secretary of the Treasury， showed remarkable insight into the financial problems of the young country and the economic implications of banking. The First Bank of the United States operated much like a private bank， printing notes and exchanging them for borrowers' interest-bearing promises to pay. But unlike a regular commercial bank， it had the federal government as a partner and number one customer. The Bank served as the fiscal agent for the government， holding government tax receipts， paying government bills， performing various financial housekeeping tasks. In return， the government kept its cash as deposits with the First Bank of the United States， giving it a huge financial base. The First Bank's federal charter， moreover， allowed it to operate branches in all states， giving it a big competitive edge over regular state-chartered banks， which could operate only in the states that chartered them. Gradually the First Bank of the United States evolved into a sort of banker's bank， gaining the power to police lesser commercial banks.