HISTORY OF BANKS IN THE US
1791 Bank of the US
The Bank of the US received a charter in Carpenters' Hall on February 25, 1791 from 1791 to 1795.
from Congress; signed by President George Washington.
This bank collected fees and made payments on behalf of the federal government.
Bank went away because state banks opposed it; thought it gave too much power to national government.
In 1811, the bank failed because people thought it gave to much power to the central government.
1816 Second Bank of the US
Second Bank of the US was chartered in 1816 in Carpenter's Hall, Philadelphia.
Due to the War of 1812, the states were suffering from inflation and couldn't pay for the military procedures.
The banks failed because it didn’t regulate state banks or charter any other banks.
State banks were issuing their own currency.
Federal government didn’t print paper currency until the Civil War.
1861-1865 Civil War (printing currency)
During the Civil War, banking houses were syndicated to meet the federal government's need for money to fund its war efforts.
- In 1862, the U.S. created the Lender Tender Act, issuing $150 million in national notes called greenbacks.
- The paper money was able to have value because it was changed by the gold in the treasury.
- Paper currency issued by the north during the Civil War.
- Once the war began, debt grew quickly. The financial cost of the war was significant, totaling an estimated $5.2 billion.
1863 National Banking Act
The National Bank Act of 1863 was built to create a national banking system.
Banks could have a state or federal charter (duel banking).
A nationwide banking system that loaned money to the Government to pay for the war
A national system of paper money and coins
By the end of the war in 1865, Government debt had exploded, reaching $2.6 billion. That was more than 40 times what it was only five years earlier at $65 million.
1982 (regarding banking)
1982: Congress allows S&L(saving and loan) banks to make high risk loans and investments.
Investments went bad.
Federal government had to give investors their money back.
Federal government debt: $200 billion
The FDIC(federal deposit insurance corporation) took over the S&L.
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