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America Gains Independence - Debates Start
America gained independence from Great Britain. No longer a colony, the new nation faced the difficult task of setting up their new government. One debate was over whether or not to have a central bank in America. Thomas Jefferson and his followers were against the idea, stating that the creation of a federal bank would give the government too much power. However, Alexander Hamilton argued that a central bank was vital for the new country since it would promote organization and regulation. -
The First Bank of the United States
The First Bank of the United States was created and promoted by Secretary of Treasury Alexander Hamilton. The bank was created to be the central bank of the United States, expanding federal fiscal and monetary power. Hamilton believed the bank would stabilize and improve the nation's credit. The bank had a 20 year charter and was not renewed when presented before Congress at its expiration. -
The Second bank of the United States
In 1816 the Second Bank of the United States was established. It was very similair to the First Bank of the United States. Once again the bank had a 20 year charter and once again the renewal of the charter failed. In 1836 the renewal charter was vetoed by President Jackson. -
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Free Banking Era
The Free Banking Era was a time in the United States with little bank regulation. Anyone who could meet the minimum requirements could open a bank. This caused for an unprecedented number of banks and types of currency. This led to confusion between states and citizens since there was no standard between banks or regulation. -
The National Banking Act of 1863
The National Banking Act was an act signed by President Lincoln. The act was meant to create a national banking system, float federal war loans, and establish a national currency. The national currency was created and nicknamed the "Greenback". -
The National Banking Act of 1864
The National Banking Act of 1864 brought the federal government into active supervision of any commercial bank. It also established the Office of the Comptroller of the Currency, an entity with responsibilities of monitoring national banks. -
The Federal Reserve Act
The Federal Reserve Act was signed by President Woodrow Wilson in 1913. The act established the Federal Reserve, the central bank of the Unites States, and granted it the authority to issue federal reserve notes. The act also set up the system of the federal reserve, making 12 district banks, the chairman position, and the board of govenors. -
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The Great Depression
The Great Depression was arguably the worst economic downfall of the United States in history. The depression was caused by oversupply, or glut, in the market, overextension of credit, and the failure of the banking system. During this time many were unemployed, starving, and homeless. It also forced many banks to close their doors and money worth anything hard to come by. -
The Glass-Steagall Act
The Glass-Steagall Act created the FDIC, a governement organization that protects consumers and offered insurance on their deposits. This act restored confidence in the American banking system. -
FDR Declares a Bank Holiday
Having taken office only 36 hours earlier, President Roosevelt's first action was to declare a banking holiday. He did this to try and calm down the public as there was multiple runs on the banks occurring. This action did succeed in calming citizens as FDR reassured the public of the banking system. -
The Emergency Banking Act
The act was an attempt to stabilize the banking system. The act also gave the president to power to close down any bank, only allowing them to reopen once they had been inspected by members of the governemtn and declared safe and stable enough to open it's doors. -
The U.S. abandons the gold standard
President Roosevelt in 1933 took the United States off the gold standard. This meant that United States money was no longer backed with gold. Congress also nullifyed the the right of creditors to demand payment in gold. The United States had been on the gold standard since 1879. -
The Gold Reserve Act
The Gold Reserve Act was signed by President Franklin Roosevelt. The act required all citizens to to give all gold and gold certificates held by the Federal Reserve to be surrendered to the U.S. Treasury. It also outlawed most private possession of gold, forcing citizens to sell theirs to the Treasury. -
The Gold Window Closes
In 1971 President Nixon closes the gold window. This means that the U.S. dollar was no longer able to be convereted into gold. -
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2008 Meltdown
The 2008 meltdown was caused by poor underwriting processes by banks, risky loans and investments, and debts unable to be paid. The meltdown was also caused by a housing bubble that banks had created. The finanical crisis resulted in multiple Wall Street banks having to close or be bought out. The crisis ended when the governement bought a huge portion of banking stock.
