After the dissolution of the first Bank of the United States and during the war against Great Britain, the money market became badly disorganized, specie payments were suspended except in New England, and the public credit sank to a low ebb. A demand for the re-establishment of the bank arose spontaneously, the main reason being to restore to the country an orderly currency through the resumption of specie payments. Accordingly a bill was passed in 1816 creating a new bank, with a charter to run for twenty years.

The new bank was capitalized at $35,000,000, in $100 shares, one-fifth to be subscribed by the government and four-fifths by private subscribers. No one subscription was to exceed $390,000. Subscriptions were payable within a year, one-fourth in specie, and the remainder in either specie or government bonds. The board of directors consisted of 25 members, 5 of whom were appointed annually by the President of the United States from several states, and the other 20 by the stockholders under a system of restricted voting. Not all the directors were eligible for re-election and no director could be a director of any other bank.

The bank was authorized to deal in bills of exchange and bullion and to sell goods pledged for loans, but was not to deal in any public stock. Loans to the United States were limited to $500,000, and to any state to $50,000. Debts, excluding deposits, were not to exceed the capital. The smallest denomination of bank note issued was $5. All bank notes below $100 denomination were payable upon demand, and were legal tender in payments to the government. The larger notes could run for terms up to 60 days. The organization of branches of the bank was required under certain conditions, and control of the branch was lodged with the parent institution by the appointment of the branch directors.

The bank was required to transmit public moneys at par and free of charge. The Treasurer was directed to deposit the government funds in the bank or its branches; and if for any reason he did not do so, he was to report the reasons to Congress. In case of the suspension of specie payments, the obligations of the bank were subject to 12 per cent interest until resumption of such payments. The bank was to make periodical statements, not more often than once a week, to the Secretary of the Treasury, and he was empowered to inspect its books. A bonus of $1,500,000 was levied upon the bank for its franchise.