process which
actually resulted in the loan of the amount by the bank to the treasury.
Other loans were made by the bank to the government, which gradually
carried the obligation by the end of 1795 to $6,200,000. In order to meet
these obligations, the government gradually disposed of its bank stock,
until by 1802 its entire holdings had been disposed of at a profit of
$671,860. The bank did not publish regular reports, but a statement
submitted by Gallatin to congress for January 24, 1811, showed resources of
$24,183,046, of which $14,578,294 was in loans and discounts, $2,750,000 in
United States stock and $5,009,567 in specie.

The expiration of the charter of the bank in 1811 was the occasion of a
party contest, which prevented renewal and added greatly to the financial
difficulties of the government in the war with Great Britain which began in
the next year. Although foreign shareholders were not permitted to vote by
proxy, and the twenty-five directors were required to be citizens of the
United States, the bank was attacked on the ground of foreign ownership as
well as on the constitutional ground that congress had no power to create
such an institution.

The government was compelled in the war of 1812 to rely on the state banks.
Their suspension of specie payments, in 1814, made it very difficult for
the treasury to transfer funds from one part of the Union to the other,
because the notes of one section did not circulate readily in another.
Gallatin left on record the opinion that the suspension of specie payments
"might have been prevented at the time when it took place, had the former
Bank of the United States been still in existence."

The financial condition of the government became so bad during the war that
the second Bank of the United States was authorized in April 1816. The
general project was that of Alexander J. Dallas, who in October 1814 had
become secretary of the treasury. The capital of the new bank was
$35,000,000, and the government again appeared as owner of one-fifth of the
stock, which was paid in a stock note. The president of the United States
was authorized to appoint five of the twenty-five directors and public
funds were to be deposited in the bank, "unless the secretary of the
treasury shall at any time otherwise order and direct." The right of
congress to charter the bank came before the Supreme Court in 1819 in the
famous case of _McCulloch_ v. _Maryland_. Chief Justice Marshall ren