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Congress accepts dollar as currency.
Declaring a national currency is of the uttermost importance when establishing a new country. It was accepted because we had to have money to pay for the Revolutionary war. This paper money, the "continental" was good at first, but quickly inflated. -
1st Bank of the U.S. chartered for 20 years.
This was our country's first step toward a national banking system. -
2nd National Bank chartered by Congress for 20 years.
This was a big deal, considering the "Bank War" that occurred because of the first National Bank. This bank was established to help pay debts after the War of 1812 -
Andrew Jackson vows to kill the National Bank.
Upon his election in 1828, Andrew Jackson vowed to "kill" the national bank, and he did just that. This meant that unchartered or state-run banks were the only option. The notes they took were redeemed in gold or specie. There was little to no government regulation of these banks. It was a setback for the national banking system. -
Bank Panic of 1837
This panic was caused largely by Andrew Jackson's Specie Circular he enacted before leaving office. This said that when buying land, people had to pay with hard money (gold, specie, etc.) instead of paper bank notes. This alarmed many people and they began withdrawing funds from the banks and banks began to demand that loans be paid. This was one of those scenarios where "we created what we feared". Mass unemployment ensued. -
National Banking Act of 1863
It's main goals were to establish a system of national banks, create a national currency, and help finance the Civil War (on the Union's side). Considering it took nearly 30 years for this to happen after Andrew Jackson "killed" the National Bank, this was a massive step in the right direction for our country. Even though it took a national crisis to make it necessary. -
Panic of 1893
This panic began with the collapse of the Reading Railroad. Many banks relied heavily on it and other railroads, and without them, the banks could not function. The stock market plunged as well when foreign investors began to pull out of the U.S. market. This panic led to a rise in business consolidations and a decline in trust in the government. -
Panic of 1907
This panic was spurred by a failure on Wall Street and J.P. Morgan (a financial giant) was called on to help fix the problem. By this time, the banking issue had greatly divided the country into conservatives who supported "money trusts" and "progressives" who opposed them. Despite the differences in opinion, they all knew that the banking system needed reform. This panic was somewhat of a "last straw" for the U.S. -
Aldrich-Vreeland Act of 1908
This act established a national Monetary Commission that was put in place to look for a solution to the problem. Senator Nelson Aldrich was head of the commission and decided on a plan where the banks were controlled mostly by bankers. This plan did not go over well with progressives who wanted a publicly controlled bank. But this set the stage for a decentralized banking system. -
Federal Reserve Act
This act gave 12 Federal Banks the right to print money, adjust interest rates, and sell U.S. treasuries. All of these powers were given to them to ensure national economic security. -
Liberty bonds sold.
These Liberty bonds were used to finance World War I. This was a useful tactic that would be used for decades to come. -
McFadden Act
The first thing this act did was keep the first chartered banks in place and secure them a place forever. The second issue was about branch banking and whether or not it was wrong. The third issue -
Stock Market Crash
Much like other panics, the lack of confidence in the market system from American people played a huge role in creating this crisis. When people began to pull out of the stock market, it created a spiral effect that ended in the Great Depression. This event was caused largely in part to deficit spending in the stock market, but also in the economy in general (cars, houses, etc.) -
National Bank Holiday
FDR enacted this bank holiday to try to ease some of the panic during the Great Depression. While banks were closed for these 4 days (and it actually extended to the 13th), they were not allowed to give or receive any money. This gave the president time to think about what his next step would be. The holiday worked, and has reoccured throughout history during time of crisis. -
Recalling of all gold and silver certificates.
When FDR did this, it effectively ended the gold standard in the U.S. He was looking to print more money to get it in circulation. Money being backed by gold did not seem as important anymore. -
Glass Steagall Act
This act was put in place in response to the stock market crash in 1929. Banks were blamed in part for the crash because they had begun to be "too" involved in stock market investments and gave out unsound loans to businesses, then encouraged people to buy stock in those same companies. This act gave banks one year to choose between commercial or investment banking. The wall between the two was strictly regulated so the banks would be less likely to take advantage of the American people. -
Banking Act of 1935
This act shifted power from regional Federal Reserve banks to a board in Washington D.C. It also made banks insure the deposits that were put into them. This is very important for customer confidence in the bank system. -
Treasury-Fed Accord
A debate over interest rates and who should control them ensued between president Truman and the Federal Reserve. The Accord took monetizing debt out of the Fed's hands. This was a huge step toward the independence of central banking and the set-up of the Federal Reserve even to this day. -
Monetary Control Act of 1980
Skyrocketing interest rates in the 1970s demanded regulation. This required all banks that accepted deposits to be subject under Fed requirements. This put them back in control of monetary circulation. -
Crash of 1987
Insider trading had taken over the market, and when the SEC decided to investigate, many investors moved quickly out of the market. With the emergence of computer systems, this rapid buying and selling could not be handled and it overwhelmed the system. In a panic, investors began to pull out much like "Black Tuesday" in 1929. This panic led to refinements in how and when stocks can be traded. -
9/11
This national crisis tested the effectiveness of the Federal Reserve. Directly afterward, interest rates lowered and millions of dollars were loaned out. But by the end of September, interest rates were back to normal. The Federal Reserve passed the "test" so to speak. -
House prices falter.
Because of low interest rates and credit availably, the demand for houses rose. This led to risky mortgages given to people who did not have a good financial background. For that reason, when prices began to fall in 2006, people were not able to pay for their mortgage. This let bankers and investors know that residential mortgages may not be a good idea. -
Term Auction Facility created
After the economic instability, banks were not confident enough to make short-loans with banks, so this facility was created to help build confidence in this again. It also increased the availability of loans in foreign countries. -
The fall of Lehman Brothers and Washington Mutual
With the fall of this investment bank and saving and loan, a panic was created. The people feared that if one failed, all banks would fall. This led to stricter loans and higher interest rates. This caused a recession that really intensified during this year, causing lots of job loss. -
Creation of Troubled Asset Relief Program
Created by President Bush to prevent foreclosures after the panic of 2008. The Emergency Economic Stabilization Act was signed on October 3. He did this by purchasing a failing company's assets and equity,
