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Federalists wanted a centralized banking system
Alexander Hamilton as Secretary of the Treasury proposed a national bank -
Congress set up the Bank of United States
Granting it a 20 year charter to operate -
The Bank lost its main backer
Alexander Hamilton died in a famous duel with Price President Aaron Burr -
The Bank's charter ran out
From 1804. the Bank functioned until 1811 -
Congress chartered the Second Bank of United States
Like the first bank, the second bank was limited to a 20-year charter. The Second Bank slowly managed to rebuild the public's confidence in a national banking system. -
President Andrew Jackson agreed with the bank's opponents
Supreme Court had ruled a national bank constitutional -
Nicholas Biddle became president of the Second Bank
He was responsible for restoring stability. If Biddle thought that a particular state bank was issuing bank notes without enough gold and silver reserves, he would surprise the bank with a great number of its notes all at once, asking for gold or silver in return. -
1830 and 1837: The number of state-charterd banks nearly triple
The sheer number of banks gave rise to a variety of problem: Bank runs and panics, Wildcat banks, fraud, and many different currencies. -
Jackson vetoed its renewal
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1837 to 1863: Free Banking, or "Wildcat," Era
The fall of the Second Bank once again allowed state-charterd banks to flourish -
An estimated 8,000 different banks were circulating currency.
The federal government played no role in providing paper currenvy or regulating reservea of gold or silver -
The Civil War made existing problems worst
The United States Treasury issued its first paper currency since the Continental. The official name of the currency was "demand notes," but people called them greenbacks because they were printed with green ink. -
The nation adopted a gold standard
The gold standard set a definite value for the dollar so that one ounce of gold equaled about $20. Since the value was set, people knew that they could redeem the full value of their paper money at any time -
The Federal Reserve Act establish the Federal Reserve System
The Federal Reserve System, or Fed, served as the nation's first true central bank, or bank that can lend to other banks in time of need. It reorganized the federal banking system: Federal Reserve Banks, Federal Reserve Board, Short-term Loans, Federal Reserve Notes -
The Great Depression
Lasted more than a decade. It is the severe economic decline. During the 1920s, banks loaned large sums of money to many high-risk businesses. Many businesses were unable to pay back their loans. Because of the hard times on the nation's farms, many farmers also failed to repay bank loans. Then, the 1929 stock market crash led to widespread bank runs as depositors in all parts of the country rushed to withdraw their money. -
Congress passed the act that established the Federeal Deposit Insuarance Corporation (FDIC)
The FDIC insures customer deposits if the bank fails -
Franklin D. Roosevelt became president
Franklin D. Roosevelt acted to restore public confidence in the nation's banking system. Only days after his inauguration, Franklin D. Roosevelt closed the nation's bank. The "bank holiday" was a desperate last resort to restore trust in the nation's financial system, -
Continuing problems in the nation's banking system resulted in the Panic of 1970
Lacking adequate reserves, many banks had to stop exchanging gold for paper money. Several long-established New York banks failed, and many people lost their jobs because bussinesses could not borrow money to invest in future projects -
Each deposit basic accounts in one bank ere insured up to $250,000