History of the Banking Industry

Michael Wright

1791, Bank of the U.S

This was the first national bank. It was created to take on the debt that America had after the Revolutionary War. it was created in Philadelphia which also was our nations capital at the time. The bank was also responsible for creating a national currency. Many states feared this bank because they felt it gave to much power to the national government.

1816 Second Bank in the U.S

The second bank in the U.S was chartered with the same responsibilities as the first one. This time the bank's charter was for 20 years. The second bank's goal was to fix the nations debt after the War of 1812 and to fix the rapid inflation rates at the time. It ultimately failed because it did not try to regulate any of the state banks or try to charter another bank.

Civil War Currency

The United States did not print currency until the Civil War came about. Until then the state banks issued their own currency in exchange for gold and silver.

1863 National Banking Act

The National Banking Act was established with the hope that a national banking system could be created and that a formal national currency wold be developed. At this time our government was still trying to pay for the cost of the Civil War. Many people hoped that this new system would also help ix our nations debt at the time.

1913 Federal Reserve Act

This bill laid the ground work for the Federal Reserve. The Federal Reserve was intended to bring economic stability to the nation with the introduction of the Central bank.

Great Depression

The stock market crash in 1932 caused most of the banks in America to collapse. Their collapse caused most citizens to lose all of their money. FDR declared a "bank holiday" which only allowed banks that could prove they were financially stable to re open.
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Glass-Steagall Banking Act

Passed by Congress in 1933. This act prevented commercial banks from participating in the investment banking business. The act was passed to counter the collapse of nearly 5,000 banks during the Great depression. It was Eventually repealed in 1999.

Banking in the 70's

The banking industry was not very stable during the 70's. During 1970 we saw the passing of the Emergency Home Finance Act. A couple years later our nations banks were hit hard at the the collapse of the Real Estate Investment Trust. All of this coming because of Congress's loser restrictions on the industry.
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Banking in 1982

In 1982 Congress allowed the S&L banks to make numerous high risk loans and investments. These investments and loans went south quickly leaving the government out $200 billion dollars. Later that year the FDIC took control of the S&L banks.

Gramm-Leach-Bliley Act

Made to repeal the Glass-Steagall Banking Act. This new legislation gave banks the power to provide their customers with many new services. these new services included insurance on their money, financial aid and loans.