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US Currency
THe Continental Congress printed the new nation's first paper money known as the "continentals." They were issued in large quantity, that people lost faith in the notes, saying it was worthless. -
First Attempt at Central Banking
Congress established the First Bank of the United States in Philadelphia. It was the largest corporation, and was dominated by big banking and money interest. Many people felt uncomfortable with a large and powerful bank. It expired in 1811. -
A Second Try Fails
The political climate was leaning towards a central bank again. Congress agreed to the Second Bank of the United States. Again, the Second Bank expired in 1836, and it was not renewed -
National Banking Act
During the Civil War, the National Banking Act was passed, provided for national chartered banks. This required tax on state banks, but not on national banks. This created a uniform currency for the nation. -
Decentralized Central Bank
Aldrich Vreeland Act of 1908 was passed as a immediate response to the panic of 1907. This was an emergency currency issue, and created a banker controlled plan. Progressives attacked the plan, and wanted a central bank under public, not under the bank. In 1912, this plan was killed -
Fed Policy During the War
When WW1 broke out, US banks operated normally because of the emergency currency issued. United States aided trade goods with Europe, which financed the war until 1917. -
Market Crash and Great Depression
Representative Carter Glass warned that the stock market would fail, and in October 1929, the stock market crashed, and the nation fell to the greatest depression in history. Almost 10,000 banks failed, and march 1933, Roosevelt declared a bank holiday. Many blamed the Fed's for this depression. -
Depression Aftermath
Because of the Great Depression, Congress passed the Banking Act, known as the Glass-Steagall Act. This called for seperation of commerical and investment banking. It also established the FDIC (Federal Deposit Insurance Corporation) which was an open market operation and required bank holding companies to be examined by the FED. -
The Treasury Accord
When the Korean Conflict broke out, there was pressure from the Treasury to have low interest rates to help provide funds for the new conflict. This created it to be independent in the open market. -
Inflation and Deflation
During this time period, they saw inflation skyrocket with producer and consumer prices. WHen Paul VOlcker was sworn into Fed Chairman, drastic changes needed to happen. In the 1980's, it was successful because the double digit inflation was under control. -
Longest Economic Expansion
The stock market crashed in October of 1987. In response to the bursting of the 1990 stock market, the Fed's lowered interest rates rapidly. They used monetary policy on a number of occasions, which included credit crunch. This resulted in a declining inflation in our econoic expansion in history of the US. -
September 11th
The central bank was put into test as the terrorist attacks on New York. This made the Fed lower interest rates and loaned more than $45 billion to financial instituions to provide stability. -
Financial Crisis and Response
Low mortgage rates expanded access for credit homeownership, which increased the demand for houses and the prices. This including subprime mortgages, and made borrowers with poor credit records