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The earliest banks were used exclusively by rulers to fund the more important and larger festivals and for building expenses.
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Barter system
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(1066-1485) Many of the banking firms loaned money to royalty, at great risk, as some were bankrupted when kings defaulted on their loans.
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There were no commercial banks in 1775 in American colonies. There were only colonial institutions, both public and private.
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8,000 different state banks were circulating their own paper money. Currencies were different in each state.
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The National Bank Act of 1863 was designed to create a national banking system and national currency. Banks only made loans that were to be repaid in 30 to 60 days and were mostly issues to business owners and manufactures to pay employees and and suppliers.
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More than 600 banks failed each year between 1921 and 1929. Those failures led to the end of many state deposit insurance programs. The failed banks were primarily small, rural banks, and people in metropolitan areas were generally unconcerned.
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A series of crises among commercial banks turned what had been a typical recession into the beginning of the Great Depression.
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This act revises and consolidates earlier FDIC legislation into one act, increases the insurance limit from $5,000 to $10,000
and gives the FDIC the authority to lend to any insured bank in danger of closing. -
Bank failures eventually reached a post-Depression record of 279 in 1988.
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