Changes to the Banking Industry

A Timeline for the Changes of the U.S banking industry


*1791-1811; the First Bank of the United States: The first bank of the U.S was proposed by Alexander Hamilton. It was granted a twenty-year charter by congress in spite of Jeffersonians who opposed it because to the it represented dominance of mercantile over agrarian interests. The bank was based in Philadelphia and had eight branches. It was well managed and profitable but critics charged that the bank's fiscal caution was constraining economic development and its charter was not renewed in 1811.

*1816-1836; the Second Bank of the United States: The second bank of the U.S was formed five years after the first bank's charter was not renewed in 1811. It brought new controversy despite the supreme courts support of its power. President Andrew Jackson removed all its funds after his reelection in 1832 and it ceases operations as a national institution after its charter expired in 1836.

*1861-1862;Civil war (printing currency):Prior to the civil war, banks printed paper money. For America's first 70 years, private entities, and not the federal government, issued paper money. Notes printed by state-chartered for gold and silver, were the most common form of paper currency in circulation.

*1863;the National Bank Act: On February 25 in 1863 the National bank Act was signed by President Lincoln and was designed to create a national banking system, float federal war loans, and establish a national currency. Congress passed the act to help resolve the financial crisis that emerged during the American Civil War. The act improved but did not solve the nation's financial problems because some of the 1500 state bank were converted to national banks by additional legislation. Other state banks were driven out of business or ceased to issue bank notes.

*1913; Federal Reserve Act: In 1913 the Federal Reserve System created the Federal Reserve Act and it began to operate in 1914. It was an act to provide for the establishment of Federal Reserve banks to furnish an elastic currency, to afford means of rediscounting commercial paper etc.

*1930; The great depression regarding banking: Weakness became apparent for the United States banks when they began to erode in 1930. Banks had to close their doors because of failure there was less money in circulation and the purchasing power of consumers sharply reduced. Citizens withdrew their deposits from banks and hoarded cash and gold.

*1933; The Glass-Steagall Act: Two members of congress put their names on what is currently known as the Glass-Steagall act. It was in the wake of the 1929 stock market crash. This act separated investment and commercial banking activities. Senator Carter Glass, a former Treasury secretary, was the primary force behind the act. Henry Steagall was a member of the house of Representatives and chairman of the housing banking and currency committee. They agreed to the act after an amendment was added permitting bank deposit insurance (this was the first time it was allowed).

*1970's; The 1973-75 regarding banking: In 1973 there was a dramatic crash in property prices in Great Britain. This caused dozens of small lending banks to be threatened with bankruptcy. The cause of the crisis is up for debate. Somme blame the regulation of lenders and policy driven inflammation pressures that failed to even correct its initial target and others blame the Heath government's fixing of rent price rises in 1971. On December 19 in 1974, a rent freeze by the heath government was rescinded and the bank of England, which had severely restricted the supply of credit for housing in 1971, released greater funds.