The history of the american bank
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The history of the american bank

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    The history of the american bank The history of the american bank Presentation Transcript

    • The History of the American Bank Economics 2
    • Before the Civil War
      • Banks were informal businesses that merchants managed
        • Not always safe if the merchant went out of business
      • After the Revolution
        • Leaders agreed that a main goal must be to establish a safe and stable banking system
        • Needed for trade with other nations
    • Two Views of Banks
      • Federalists
        • Believed that the country needed a strong central government to establish economic and social order
        • Centralized banking system was necessary for the U.S. to develop industry and trade
      • Antifederalists
        • Wanted to leave power in the hands of the states
        • Decentralized banking system, regulated individually by the states
    • Hamilton vs. Jefferson
      • Hamilton=Federalist
        • Washington appointed him Sec. of Treasury
        • Proposed a National Bank (a bank licensed by the national government)
        • Would issue a single currency; monitor banks; manage federal funds
      • Jefferson=Antifederalist
        • Wanted it to be left to the states
        • States rights
    • First Bank of the U.S.
      • Federalists successful=strong central bank
        • Hold tax money
        • Help government carry out power to tax, borrow money, regulate commerce
        • Issue bank notes
        • Make sure bank notes were backed by gold or silver
      • Opponents argued that a national bank was unconstitutional
      • First Bank only functioned until 1811, when it’s 20 year charter ran out (Hamilton’s death)
    • Chaos…
      • When the charter expired, state banks began issuing bank notes that they could not back with gold or silver
      • Banks were not stable
      • Prices rose rapidly
      • Bankers printed more money than they could back
    • Second Bank of the U.S.
      • President Andrew Jackson opposed the national bank
      • Failed and led to the Free Banking Era
        • States created and ran their own currencies
        • Bank runs and panics
        • Fraud
        • Wildcat banks-wilderness
    • Later 1800’s
      • Civil War
        • Union produced “greenbacks”
        • Confederate issued money backed by cotton
      • National Banking Acts of 1863 and 1864
        • Gave the federal government power
        • Power to charter banks
        • Power to require banks to hold adequate gold and silver reserves to cover bank notes
        • Power to issue a single national currency
          • Ended state currencies
    • Gold Standard
      • A monetary system in which paper money and coins are equal to the value of a certain amount of gold
        • Definite value for the dollar
        • Gov’t could issue currency only if it had gold in the treasury to back notes
        • We do not use this anymore! (1. No gold 2. Our economy/dollar is self sustainable)
    • Comparing Early U.S. to the Euro!
      • After watching “The formation of the Euro,” create a list of comparisons and contrasts between the struggles described in the video and the currency problems that occurred in the early United States!
      • Use your notes, text Ch. 10 Sec. 2, Euro video clip