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Adam Smith defends paper money
Adam Smith defends paper money.
In his Wealth of Nations he draws attention to the benefits of paper money in stimulating business both in Scotland and in the American colonies. -
Bank of Pennsylvania founded
First American bank to be established since the Declaration of Independance. It's a temporary mean of raising funds for American army that is in a desperate financial situation. -
The Bank Indemnity Act
Gives the directors of the Bank of England legal immunity for loans to the government. Also enables the British government to borrow much larger sums for the war against France -
Second bank of the US founded
The bank begins the task of restoring the convertibility of paper notes. It also restrains other banks from making excessive issues of notes. -
US Coinage Act
This makes a slight reduction in the value of silver relative to gold in order to encourage more gold to be brought to the mint. However, it hastens the disappearance of much of the remaining silver in circulation. -
US Banking Crisis
The uncontrolled, chaotic expansion of banking in the US is slowed, then partly reversed by a financial crisis in which every bank is forced to suspend specie payment of notes. The crisis leads to a depression in the economy which lasts until 1843. -
The Second Bank of the United States crashes
By this time it is simply a private bank and no longer a national institution. When it ran into difficulties during the 1837 crisis it was still the largest bank in the world, but it finally crashes in 1841. -
US Subsidiary Coinage Act
The silver content of half-dollars, quarters and dimes are reduced by 7% making it no longer worthwhile to sell them to silver metal dealers. Therefore the new coins remain in circulation. -
World-wide banking crisis starts in the US
In the month of October 1,415 US banks are forced to suspend specie payments. Because of huge European, especially British, investment in the US the effects are felt on the other side of the Atlantic. In Germany many of the new idustrial banks founded in the early 1850s fail. However recovery from the crisis is rapid. -
US National Bank Act
This amends and expands the provisions of the Currency Act of the previous year. Any group of five or more persons are allowed to set up a bank, subject to certain minimum capital requirements. These banks are authorized by the Federal, not the State governments, they are known as national banks. -
US Contraction Act
By the end of the Civil War the Greenbacks are only worth half as much in gold as their nominal value. Under the terms of this act the government begins to withdraw them from circulation. -
US Resumption Act
This act is intended to restore the convertiblity of bank notes into gold. by january 1st 1879 full redemption is promised. -
US Bland-Allison Act
The silver lobby pushes through this act forcing the US Treasury to buy between $2 million and $4 million of silver each month for coinage and fixes the relative prices the mint pays for gold and silver. -
US Sherman Act
This act obliges the Treasuary to buy 4.5 million ounces of silver eah month. -
Bank panic in the US
A bank panic breaks out. Bank clearing houses use clearing house certificates for settling inter-indebtedness, leaving the notes and gold available for their fearful personal customers. -
US Gold Standard for Currency Act
The great increase in America's stock of gold leads to abandonment of bimetallism. The act also halves the minimum capital requirement for the smallest national banks, stimulating an increase in their numbers, and raises the limitations on the issue of notes. -
US Aldrich-Vreeland Act
As a response to the panic of the previous year this allows groups of a minimum of 10 national banks to form National Currency Associations to issue temporary currency. The act also sets up a National Monetary Commission which authorizes 42 separate reports, most of which contain studies of foreign banking systems. -
US Federal Reserve System established
12 Federal Reserve districts are established each with its own reserve bank. All national banks have to become members of the system and the state banks are given conditional permission to join. Banks are also allowed to establish branches abroad -
US Banking Act
The changes this makes in the Federal Reserve System have the effect of shifting power away from New York and the Federal Reserve Districts towards Washington. -
US Bank Holding Company Act
Holding companies doing some limited banking are allowed to set up shopsomewhere else. This act is used as a way of avoiding legal restrictions on branch banking. -
Third World debt crisis
1970s a lot of developing countries borrow large sums, many of the loans being at variable rates from commercial banks which are very eager to lend money after their coffers are swollen by money from OPEC countries following the oil price hike in 1974. when interest rates rise in the industrial world, the debts of many developing countries start to rise beyond their capacity to repay them.
