Module Thirteen Lesson Two


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Bank of the US The First Bank's charter was drafted in 1791 by the Congress and signed by George

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Second Bank of the US The Second Bank of the US was charted in 1816 in Carpenter's Hall, Philadelphia. The main reason the bank came to be was because the states were suffering from inflation due to the War of 1812 and couldn't pay for the military procedures. After 20 years, this bank also failed because it hadn't regulated the state banks or chartered any others. Before the Civil War, the US was already in debt by $64 million and would continue to sink. The government needed newer, sufficient ways to pay the debts so they created the Lender Tender Act.

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National Banking Act The 1863 National Banking Act was created during the Civil War and established a system of nationally chartered banks. The banks could have a state or federal charter, but the money in the banks needed to be backed by government securities. This was known as dual banking, where state and national banks were supervised at different levels. The act was amended so that state currency would be taxed, but not national currency. As the desired effect, banks switched over to national currency to have a uniformed monetary system.

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Federal Reserve Act On December 23, 1913, Woodrow Wilson signed the Federal Reserve Act into law. It created 12 national banks located throughout majorities. The act required national banks to be a part of the Federal Reserve and put a percentage of their customer savings in the Federal Reserve Bank.

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Great Depression (regarding banking) During the Great Depression 5102 banks went out of business leaving people without money and out of work all over the US. Two days after taking office, President Roosevelt declared a bank holiday. This meant that all the banks had to close and were only allowed to reopen again if they could prove they were financially stable

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Glass-Steagall Banking Act In the 1970's, the Glass-Steagall Act grew controversial when the banks complained that they would lose customers to other companies unless they provided more services. The government then allowed more freedoms to banks to offer more financial services. Many people were able to get S&L financing for buying their homes and the interest rates paid on deposits at S&Ls were kept low. However, plenty of Americans put their money in them because insurance on deposits made it a safe place to invest.