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Hamilton Proposes National Bank
Hamilton was a leader among the federalists. He believed that the government needed a centralized banking system in order to develop healthy industry and trade. -
First Bank of the United States Established
The federalists eventually succeeded in getting a twenty year charter to create the Bank of the United States. It was used by the US Treasury with the purpose of being able to hold government tax money, help the government carry out its power to tax, issue bank notes, and to ensure that the state-chartered banks had enough gold and silver in store. In the beginning, it helped to make American banking more stable, but dissolved after Hamilton died and the charter ended. -
Second Bank of the United States Created
The Second Bank was granted a twenty year charter, and helped people to regain confidence in the government's banking system. This bank dissolved after the tweny years as well because President Jackson did not trust the system, and chose to veto the renewal of the bank. -
Free Banking Era
The free banking era was also known as the wildcat era. This was a period following the end of the Second Bank between 1837 and 1863. The number of state-chartered banks tripled during that time, and led to many problems. People started to lose faith in their banks, and would make "bank runs", some "wildcat banks" were created on the edges of settled areas, some banks cheated people out of their money, and there were too many different currencies because each bank made their own. -
Demand Notes First Issued
Demand notes were issued in 1861 as a way for both the Union and the Confederacy to raise money for the Civil War. This was the first paper currency since the Continental. The money was officially called "demand notes", but they were usually called "greenbacks" because they were printed with green ink. This plan to raise money worked out well enough for the Union, but the Confederacy's loss and the strain on the economy from the war made the greenbacks worthless. -
National Banking Acts
The National Banking Acts were created in 1863 and 1864. They gave the government the power to charter banks, to require banks to hold enough gold and silver in reserve, and to issue one national currency. The creation of a single currency helped to stabalize the nation's banking and money supply. -
Gold Standard Adopted
The nation adopted a "gold standard" in the 1870s in order to solve some of its money and banking problems. The gold standard was a system of money in which coins and paper money were equal to a certain amount of gold. This system worked to create a definite value for the dollar, and provided that the government could only issue currency if they were able to back it with gold in the treasury. This standard helped build people's confidence with the banking system, and created a stable currency. -
Panic of 1907
Although many improvements had been made to stabalize the national banking system, there were still issues, one of which led to the Panic of 1907. Many banks didn't have enough money in reserve, which led to their failure. Some important New York Banks failed, and many people lost their jobs because their businesses couldn't access their money from the bank. This crisis led to the government deciding they needed to recreate their central bank. -
Federal Reserve System Established
The Federal Reserve Act of 1913 set up the Federal Reserve System which created the nation's first real central bank. This central bank set up a system that created up to twelve regional Federal Reserve Banks and a Federal Reserve Board. The federal reserve board allowed member banks to make short term loans, and the new system created a national currency. -
Great Depression Starts
The Great Depression was a economic decline that started in 1929, and lasted for more than ten years. In the 1920s banks made large loans that some businesses couldn't repay. In 1929, the stock market crash led to bank runs, which combined with the unpaid loans, led to the decline. -
The FDIC Was Established
In 1933, Congress passed the act to create the Federal Deposit Insurance Corporation. The job to the FDIC was to insure customer deposits in case a bank were to fail. Today, the FDIC will cover up to $100,000 dollars. -
Savings and Loan Crisis
The Savings and Loan Crisis was caused in part by deregulation. Before, Savings and Loans were protected by government regulation, but when they deregulated, Savings and Loans weren't prepared. In addition, the high interest rates for long term loans, risky loans, and fraud by some important institutions led to the Crisis. -
FIRREA Was Established
Congress formed the Financial Intitutions Reform, Recovery, and Enforcement Act in 1989 following the Savings and Loan Crisis. The FIRREA effectively ended independence in the savings and loan industry. -
Glass Steagall Act Repealed
The Glass and Steagall Act of 1933 was reprealed by congress in 1999. This Act had been in action since the Great Depression, and its repeal led to banks selling their financial assets and establishing customer privacy rules.
