In viewing the life of Stephen Girard, one can see a natural progression in his personal development: 1) He desires to be; 2) He becomes; 3) He excels; 4) He moves forward.
As a boy he wanted so much to be like his father. He begged and pestered until he went aboard to help in all the duties of a pilotin. At sea he was everywhere and did all that was expected of him. Soon he exceeded expectations and learned all there was to know about sailing a ship, managing cargo, and studying prices and markets. Then he wanted to be captain of his own ship and at a very young age he realized his dream. Then perhaps he thought that better than being a captain was to be a captain of many captains. From his house at port side in Philadelphia he created a network of ships taking his trade as far as China, India and Africa. His captains were assaulted by privateers and pirates. His ships were taken or destroyed but he persisted until the seas became relatively safe and he was ready for his next step forward. Dissatisfied with how banks handled his ever-growing fortune, Girard was sure he could do better.
The single event that gave Girard his first step into the banking world came with the occasion of difficulties at the First Bank of the United States. It was uncertain that its charter would be renewed. Having funds in the First Bank, Girard’s first impulse was to help the bank manage its problems. He worked the entire year of 1811 to help the bank survive. In November of that year, he realized that his efforts had been in vain. The US Bank was to close its doors. Faced with the problem of liquidating its assets, the bank turned to Girard for help. Girard agreed to buy the bank’s entire holdings.
Then, Girard purchased most of the stock as well. With the buildings, he purchased all the furnishings. His staff was small. He began his operation with eight employees— a cashier, two tellers, two bookkeepers, a clerk, a messenger and a janitor. Girard hired George Simpson, the cashier of the First Bank, as cashier of the new bank, and opened for business on May 18, 1812. He allowed the Trustees of the First Bank of the United States to use some offices and space in the vaults to continue the process of winding down their affairs at a very nominal rent.
His own bank was variously known as "Girard's Bank," or as "Girard Bank" or also as "Stephen Girard's Bank" or even the "Bank of Stephen Girard." Girard was the sole proprietor of his bank, and thus avoided the Pennsylvania state law which prohibited an unincorporated association of persons from establishing a bank, and requiring a charter from the legislature for a banking corporation. When it was a question of legality to own an unincorporated bank, Girard wanted to be sure, because it had never been done before in Pennsylvania, so he hired two Philadelphia lawyers—Jared Ingersoll and Alexander Dallas to research the matter. But being the risk taker that he was, Girard opened his bank before his lawyers had their answer. As he anticipated, the lawyers told him it was legal. This bank was located in the same building as the First US bank, on South Third Street.
When the charter renewal for the First US Bank was refused, Girard was determined to use the funds he had drawn from London to capitalize his bank. Girard deposited funds from checks he had drawn from other bank accounts. This amounted to $71,000. To that sum, he added $556,115 in securities he owned. On May 23rd, he notified Governor Simon Snyder of Pennsylvania of his actions. Girard was a firm believer that fortune smiles on the audacious. He had the capital, he had the property and he had the valuable services of George Simpson. Girard was curious as to how the public would react to the change in bank management. Most people never saw or knew of any change. The changeover was mostly seamless. Some professionals were against the establishment of an unchartered bank but few knew the details of the succession. The impression spread unchecked that Girard was closely affiliated with the US Treasury. This misconception gave Girard prestige and helped his business. After the first year of operation, Girard, by his own estimate, earned a reasonable profit. He was sure as his reputation grew, he would do better than 3% in subsequent years.
The banking community began to show its attitude towards a new private bank. Two weeks after Girard’s opening, only the Farmers’ Bank of Lancaster and the Bank of Wilmington recognized Girard’s bank. The Mechanics Bank of Baltimore began relations with him a bit later. By September of 1812, two New York bank institutions recognized Girard as their Philadelphia agent. As for Philadelphia banks, it was completely different. They were far from welcoming. The four state-chartered institutions conspired to put Girard out of business. They resorted to unfair criticism telling Girard’s clients that they were risking their money in a dangerous venture. Some said that upon Girard’s death the money in the bank would become part of his estate. Girard reacted quickly to these lies. He immediately declared that upon his death, five trustees would immediately assume control of the bank’s management and continue its operations as before. All investments and accounts would be secured.
Girard's Bank was a principal source of government credit during the War of 1812. Towards the end of the war, when the financial credit of the U.S. government was at its lowest, Girard placed nearly all of his resources at the disposal of the government and underwrote up to 95 % of the war loan issue, which enabled the United States to carry on the war. After the war, he became a large stockholder and one of the directors of the Second Bank of the United States. Girard's bank became the Girard Trust Company, and later Girard Bank. It merged with Mellon Bank in 1983, and was largely sold to Citizens Bank two decades later. Its monumental headquarters building still stands at Broad and Chestnut Streets in Philadelphia.
In 1816, Girard influenced the Government to establish the Second United States Bank. Girard was appointed a board member of the bank and bought nearly a million and a half dollars of its stock. His involvement influenced others to purchase stock. He believed his involvement was necessary for the bank to succeed, but he disliked this appointment because he thought some of the other members were corrupt or incompetent. He accepted the appointment for only two years.
(Acknowledgement: I owe my thanks to the research of Harry Emerson Wildes for the details of Girard’s entry into the realm of banking.)