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MAKING MONEY
The U.S. begins making money -
First Try at a Bank
We begin to get our toes wet with banking, with of course, the first bank -
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Try Try Again
the political body was once again deciding toward the idea of a central bank; by a sliver a hope, Congress agreed to charter the Second Bank of the United States. But when Andrew Jackson, a central bank hater, was elected president in 1828, he pledged to never let it happen. -
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The Free Banking Era
Banks started issuing their own currencies as opposed to the norm, which is a single recognized curency -
The National Banking Act
During the Civil War, the National Banking Act of 1863 was passed, providing for nationally chartered banks, whose circulating notes had to be backed by U.S. government securities. there was a required tax put on the state notes but not the national bank notes -
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Panics
Although the National Banking Act of 1863 established some measure of currency stability for the growing nation, bank runs and financial panics continued to plague the economy. In 1893, a banking panic triggered the worst depression the United States had ever seen, and the economy became normalized only after the intervention of financial expert J.P. Morgan. -
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Decentralizing a central bank
The Aldrich-Vreeland Act of 1908, passed as an immediate response to the panic of 1907, provided for emergency currency issue during crises. It also established the national Monetary Commission to search for a long-term solution to the nation’s banking and financial problems -
New Federal Reserves
by November 16, 1914, the 12 cities chosen as sites for regional Reserve Banks were open for business, just as hostilities in Europe erupted into World War I. -
Open Market??
During the 1920s, the Fed began using open market operations as a monetary policy tool. -
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The Depression
From 1930 to 1933, nearly 10,000 banks failed.Many people blamed the Fed for failing to stem speculative lending that led to the crash. -
Changes
The Banking Act of 1935 called for further changes in the Fed’s structure, including the creation of the Federal Open Market Committee as a separate legal entity, removal of the Treasury Secretary and the Comptroller of the Currency from the Fed’s governing board and establishment of the members’ terms at 14 years. -
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Inflation and Deflation
The 1970s saw inflation skyrocket as producer and consumer prices rose, oil prices soared and the federal deficit more than doubled. -
Expansion
wo months after Alan Greenspan took office as the Fed chairman, the stock market crashed on October 19, 1987 In response, he ordered the Fed to issue a one-sentence statement before the start of trading on October 20: “The Federal Reserve, consistent with its responsibilities as the nation’s central bank, affirmed today its readiness to serve as a source of liquidity to support the economic and financial system.” -
What about now?
During the early 2000s, low mortgage rates and expanded access to credit made homeownership possible for more people, increasing the demand for housing and driving up house prices. The housing boom got a boost from increased securitization of mortgages—a process in which mortgages were bundled together into securities that were traded in financial markets. Securitization of riskier mortgages expanded rapidly, including subprime mortgages made to borrowers with poor credit records.