When the bank’s 20-year charter expired in 1811 Congress refused to renew it by one vote. Many Americans uncomfortable with the idea of a large and powerful bank had opposed it.
Second Bank of the United States established
The Panic of 1837
After the closing of the Second Bank, state-chartered banks and unchartered “free banks” took hold, issuing their own notes, redeemable in gold or specie. In 1837, New York banks suspended specie payments. This began the second worst depression (1837 to 1843) in United States history.
Panic of 1907
A financial crisis that occurred in the United States when the New York Stock Exchange fell almost 50% from its peak the previous year.
The Aldrich-Vreeland Currency Act
Under the impact of the financial panic of 1907, the Aldrich-Vreeland Currency Act is passed by Congress, it establishes the National Monetary Commission to study banking. It published 40 banking treatises and led to the establishment of the Federal Reserve System
Federal Reserve System established
The Panic of 1907 provided the motivation for renewed demands for banking and currency reform.
U.S. Aids to Finance War
But the greater impact in the United States came from the Reserve Banks’ ability to discount bankers acceptances. Through this mechanism, the United States aided the flow of trade goods to Europe, indirectly helping to finance the war.
Formation of the War Finance Corporation
During WWI, the War Finance Corporation is formed, capitalized at five hundred million dollars to support war industries through loans and bond sales.
1914-1918 War Debt from WWI
War debt incurred by United States
Stronger Credit throughout the 1920's
The 1920s was a decade of expansion. Accounts of the twenties in the United States ... emphasize the ready availability of credit. Credit fueled a real estate boom in 1925, a Wall Street boom in 1928-9, and a consumer durables spending spree spanning the second half of the 1920s.
1920-1980 Credit made available to most Americans
Buying of Big-Ticket Items
Beacuse of credit, shoppers were able to buy big ticket consumer items like cars, fridges, washing machines, pianos, vacuum cleaners, furniture, and radios on time payment. Previously, these expensive items were only affordable by the wealthy.
Stock Market Crash
1929 Wall Street Stock Market Crash People buying stocks on margin, meaning they would borrow up to 80-90% of the cost of stock, people increasingly getting into the stock market, and banks placing customers' money in the stock market without their knowledge all led to the crash of 1929. Nearly $10 billion dollars was simply wiped out in less than two hours.
Great Depression 1930s
Decade of consumer distrust of credit and investment. After the Stock Market Crash, the bankruptcy and closing of numerous banks across the country and the rise in unemployment led to the greatest economis crisis in all of history.
1930-33 Closing of Banks Across the Country
From 1930 to 1933, nearly 10,000 banks failed, and by March 1933, newly inaugurated President Franklin Delano Roosevelt declared a bank holiday, while government officials grappled with ways to remedy the nation’s economic woes.
The Banking Act of 1933
In reaction to the Great Depression, Congress passed the Banking Act of 1933, better known as the Glass-Steagall Act, calling for the separation of commercial and investment banking and requiring use of government securities as collateral for Federal Reserve notes.
The Federal Reserve System formally committed to maintaining a low interest rate peg on government bonds in 1942 after the United States entered World War II. Following the war, the President felt that it was his duty to protect patriotic citizens by not lowering the value of the bonds that they had purchased during the war.
First Credit Card
Because credit was more readily available, businesses wanted to make create more customer loyalty so they invented the credit card. The first bank card, named "Charg-It," was introduced in 1946 by John Biggins, a banker in Brooklyn, according to MasterCard.
1950s Number of College Students Doubles
During the 1950s, the number of college students doubled. Getting a college education was no longer for the rich or elite. The increase in the standard of living for Americans at the time made the cost of a college education more reasonable and easier to afford.
1970s Rapid Economic Growth
Overuse of credit, high inflation rate, consumer credit protection legislation and the birth of credit counseling.
Record High in Savings Bonds
Because of the rapid economic growth throughout the 1970s and 1980s, the value of United States Savings Bonds increased and topped a record-breaking $100 billion.
1990s Use of Credit as a Major Marketing Tool across Industries
Industries' made use of credit in marketing resulting in major stock market gains. The longest economic expansion and longest peace time expansion.
Creation of Subprime Mortgages
Because of the use of credit as a major marketing tool in industries, real-estate companies invented subprime mortgages.
9/11 Terrorist Attacks leads to Economic Recession
Terrorist attacks on the World Trade Center, the Pentagon, and Pennsylvania led to major stock market losses. Threats of further terrorism continue to influence the financial markets. The latter part of the first decade was marked by a significant economic recession that resulted in failed banks, foreclosures, and high unemployment.
The Federal Reserve Meets Liquidy Needs
In the days that followed 9/11, the Fed lowered interest rates and loaned more that $45 billion to financial institutions in order to provide stability to the U.S. economy.