Question

Summarize the history of banking in the United States.

Answer 1

HISTORY OF BANKING IN UNITED STATE

It all started from Britain, where in early 1700s merchants started travelling form Britain to United States and established bank of Pennsylvania in 1790.In the colonial era, Americans were dependent on the government to provide them money.There was no federal banking system until 1791. The reason to start banking was to fund the American Revolutionary War.

January 4, 1782

The nation's first commercial bank opened in Philadelphia. It lends money to state government as well as federal and businesses. This encouraged relations with other countries in respect to U.S.

February 25, 1791

The bank of United States was established. Alexander Hamilton, who was the secretary of Treasury demands the local party to set up a national bank.It encouraged economic growth as it helped government in paying bills as well as helped variety of businesses to set up.

By 1811 republicans opposes the national bank of United states and the national bank was shut. States banks were working in despite of so much issue but the circulation of money increased and it led to rise in price of products.

April 10, 1816

The second National bank was established as every one who opposed realised that their is need of national bank which can easily regulate money in the market and help government and business grow.

March 6, 1819

Maryland is a state in United States which tried imposing tax on the national bank to again revoke the bank. But the bank refuses to pay taxes and this issue was later then resolved in supreme court where the court states that the state bank have no right to charge tax and interfere in the functioning pf federal bank. This led more power to National Bank.

By 1832, the president of United States, Andrew Jackson wanted to revoke the banks and as a result banks becomes a major issue and votes rejected the Bank's renewal. Also he demanded the money to be deposited in the state banks rather than in National bank.

By 1836, the second bank of United Sates that is B.U.S was forced to shut. As a result State banks started functioning as per their interest and started lending and printing money without any limit that is not protected by any security. Leading this many banks were closed as they were out of money and in total debt. This led to economic depression.

January 1,1861

The first ever Investment banking firm in the U.S was set up by the banker Jay Cooke. He borrowed a huge amount of money from the government. The company deals in selling government bonds.

February 25, 1863

In this year The National Bank Act. comes in with resect to civil war as the war was growing and it was increasing the expense of the government where there were no tax program. This act helped in creating national currency but still the country suffered a lot.

December 23,1913

The Federal Reserve Act came into the effect  as this act gives power and right to government to control the interest rates and money supply according to the economy.

In October 24, 1929 the american economy started collapsing as consumer consumption begin to decline, americans started withdrawing their deposit from the banks and the stock market crashed which led to depression in the economy.

March 6, 1933

President Franklin Delano Roosevelt declared his act to closes all the national banks for four days which is known as Bank holidays. After the banks open public can return the money to the banks and this helped to restore balance in the economy.

June 16, 1933

Glass-steagall act came into the effect which sates that commercial banking and investing banking are two different banking terms. Also introduces federal deposit insurance and regulation of interest rates on deposits. This encouraged banks to lend bigger loans to the public.

After late 1970s banking has undergone a revolution where new technology such as debit and credit card , telephone banking, ATM machines, online banking that has made banking very easy for public as well for the banks. The technology helped to control the risk of the new complex world. The basic mission is to ensure a safe and a competitive national banking system that helps and support the economy of the country.