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1775-1791: U.S. Currency
1775-1791: U.S. Currency
To finance the American Revolution, the Continental Congress printed the new nation's first paper money. Known as "continentals," the fiat money notes were issued in such quantity they led to inflation, which, though mild at first, rapidly accelerated as the war progressed. Eventually, people lost faith in the notes, and the phrase "Not worth a continental" came to mean "utterly worthless." -
The Bank of the United States is chartered
The first bank of the United States is created in Philladelphia. -
Mint Act of 1794
Different types of coin were established when the Mint Act of 1794 was created, -
The Bank of the United States is closed permanently.
The Bank of the United States is closed permanently due to failure. -
The Second Bank of the United States was approved
In 1816, the Democratic Republican Congress chartered the Second Bank of the United States to assist the government and to issue currency. The main reason why the Second Bank of the United States was chartered was because after the War of 1812, the US suffered severe inflation and had difficulty financing military operations. Its charter was not renewed and went bankrupt in 1841. -
1836-1865: The Free Banking Era
State-chartered banks and unchartered “free banks” took hold during this period, issuing their own notes, redeemable in gold or specie. Banks also began offering demand deposits to enhance commerce. In response to a rising volume of check transactions, the New York Clearinghouse Association was established in 1853 to provide a way for the city’s banks to exchange checks and settle accounts. -
Bureau of Internal Revenue
An Act of Congress established the Bureau of Internal Revenue, now known as the Internal Revenue Service. -
Legal Tender Act of 1862
July 10, 1862 and March 3, 1863 - established a statutory limitation of $300 million on the amount of United States Notes "greenbacks" authorized to be outstanding and in circulation. This currency was not backed by any deposit in any bank or government reserve, in contrast to the Gold Certificates at the time. They greenbacks also did not bear interest. A 10% tax was placed on state bank notes to drive them out of business and establish a monetary monopoly for the greenbacks. -
Fractional Currency
Fractional Currency, also known as postage currency, was issued in 5-cent, 10-cent, 25-cent and 50-cent notes. The third issue also included a 3-cent note. -
1863: 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. An amendment to the act required taxation on state bank notes but not national bank notes, effectively creating a uniform currency for the nation. Despite taxation on their notes, state banks continued to flourish due to the growing popularity of demand deposits, which had taken hold during the Free Banking. -
The Coinage Act of 1873
The Coinage Act was passed, which authorized the Treasury Department to place the motto In God We Trust on all United States coins. -
The Treasury was up to 500,000,000!
JANUARY 1885: The Treasury surplus was up to five hundred million dollars. -
The Sherman Anti-Trust Act
The Sherman Anti-Trust Act became law, enacted on the 14th. -
The Aldrich-Vreeland Act of 1908
1908-1912: The Stage is Set for Decentralized Central Banking- 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. Under the leadership of Senator Nelson Aldrich, the commission developed a banker-controlled plan. -
Federal Reserve Banks opened.
The Federal Reserve Banks opened creating an open market. -
The Great Depression
The stock market crashes as millions of shares change hands and billions of dollars in value are lost; Start of the Great Depression -
Banking Act of 1933- Glass-Steagall Act
In reaction to the Great Depression, Congress passed the Banking Act of 1933, better known as the Glass-Steagall Act, calling for the separation of commercial and investment banking and requiring use of government securities as collateral for Federal Reserve notes. The Act also established the Federal Deposit Insurance Corporation (FDIC), placed open market operations under the Fed and required bank holding companies to be examined by the Fed. -
The Banking Act of 1935
The Banking Act of 1935 called for further changes in the Fed’s structure, including the creation of the Federal Open Market Committee (FOMC) 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. Following World War II, the Employment Act added the goal of promising maximum employment to the list of the Fed’s responsibilities. -
Secret Service
The United States Customs Service established four new offices. -
1970s-1980s: Inflation and Deflation
The 1970s saw inflation skyrocket as producer and consumer prices rose, oil prices soared and the federal deficit more than doubled. By August 1979, when Paul Volcker was sworn in as Fed chairman, drastic action was needed to break inflation’s stranglehold on the U.S. economy. Volcker’s leadership as Fed chairman during the 1980s, though painful in the short term, was successful overall in bringing double-digit inflation under control.
