The Bank of the United States Essay

Hamilton’s creation of the first bank in the United States continues to exist in today’s economic environment. However, at that time Hamilton’s proposal was met with widespread resistance from individuals such as James Madison and Thomas Jefferson who considered the creation of a federal bank as unconstitutional. The analysis made by Gordon in his book is consistent with arguments made by to have a bank that would be effective in order to implement the powers authorized by the government as it was implied in the constitution

Secondly, out of the twenty-five stockholders of the Bank, five of these were government owned. Thus showing support of the Bank by subscribing to one-fifth of its $35 million (Schlesinger 74). In addition, among the Bank’s functions was to hold all government money, sell all government bonds, and make commercial loans. However, no voters could dictate its policies or reign in its power, due to its privately owned status (Roughshod 2). Finally, the government also allowed bank notes to be used as payment for taxes.

Staff, History.com. "Bank of the United States." History.com. A+E Networks, 2009. Web. 11 May 2017. http://www.history.com/topics/bank-of-the-united-states.

States issued new banking charter during the years following the War of 1812 as citizens required more credit. The need for more credit was fueled by better transportation with people immigrating westward in search of land. The US Congress chartered the 2nd Bank of the United States in 1816. The market expansion fueled by rising speculation of lands and rising prices brought about the panic of 1819. The economic downturn forced Congress and the courts to look harder at some of the issues on the forefront of the economy. The Supreme Court handed down a landmark opinion during this period concerning the 2nd United States Bank in McCulloch v Maryland. The case questioned the constitutionality of the bank. The Supreme Court ruled the bank was constitutional under the Necessary and Proper clause of the constitution with it “enumerated powers.” The Congress which had chartered the bank had the power to tax, borrow and regulate interstate commerce. Finally, the court ruled sovereignty of union lay with its people, not the individual states. Feller points out the “The bank, therefore, though a privately owned and managed concern was also in effect an arm of the federal government and states could not touch it” (49). The ruling brought criticism saying the court had brought legitimacy to a private

During Reconstruction, Congress endorsed the Freedman’s Savings and Trust Company in order to help African Americans adjust freedom. Nineteenth century newspapers informed and encouraged African Americans to deposit their money into this bank. Newspapers deceived customers into thinking that the bank was a safe and secure institution because it did not publish that the bank was failing until it closed. This failure shocked most depositors and led them to distrust the banking industry. Perhaps if the government made the necessary changes to ensure the safety and security of the banking industry at this time, they could have prevented future economic instability and panic.

After the War of 1812 the government had realized that it needed a national bank to regulate currency and the insurance of Government Bonds. A good majority of the public was against the ideal of a bank of the United states because it had limited them in their rights of buying land and to pay off debts. When

During the twenty years it was in place the First Bank did change the economic downturn of the country after the war. The First Bank had branches in eight influential port cities and had a wide geographic existence. It influenced the lending policies of the state banks’ lending practices. The First Bank was like the state banks in that it made business loans, accepted deposits, and issued notes that circulated as currency and were convertible into gold or silver. But it differed from the state banks because its

Looking back to the outset of the 19th century, it is impossible to say that any real banking system had really been developed in the US. This is to say that, though there were roughly 120 private commercial banks that had been chartered by new state governments, the so-called system was scarcely organized. It was ad hoc in nature and directly linked to the merchant banking practices of the pre-independence period. The years preceding the turn of the century were important because they brought a central banking authority onto the scene. In 1789 the new federal government established a position for the Secretary of the Treasury. As we know, the first to hold this prestigious title was

In order to have a stable banking system, congress had called a meeting where “the National Monetary Commission” (Bagwell), was formed a year after the panic had passed. The meeting include bankers like J.P Morgan, the National city bank, and many others. They all have gather to discuss the crisis that happened and to add new regulations on how to protect the money from people investing. This action was led for the creation on The Federal Reserve act of 1913. Historians had agree that the creation of the federal reserved was due to The National Monetary Commission, where banking laws where review. According to historians the text shows “Congress formed the National Monetary Commission to review banking policies in the United States” including “the monetary reform movement that led to the establishment of the Federal Reserve

After Congress refused the national bank before the war of 1812, the states started their own banks with their own currency. This made things difficult for the American people. There more than 400 different banks by 1818, with each of them having their own currency. Investors were losing and winning by just by picking different currency to follow. This left America in trouble. “To end the mayhem and strengthen the national government, proponents of the American System designed the Second Bank of the United States” (Shultz, 2014, p. 168). The new bank began in 1816. The start of the bank caused a major economic recession; when it first started it was loose with credit and then suddenly they changed to strict

At the point when Alexander Hamilton required a Bank of the United States in his Report on a National Bank, he imagined a national bank that would manage a creating national economy. The bank would, through the making of bank "notes," supplant a portion of the gold and silver cash available for use. This would take into consideration the development in business action without the need to depend entirely on fares to build cash supply. Furthermore, Hamilton contended that the bank would fortify the national government by loaning cash to its treasury. As it turned out, the First Bank of the United States conveyed more security to the country's money and extension to the economy than was most likely expected even by its most grounded promoters.

Due to the financial disruption of the 1930s, the federal government intervened in the banking system for the sake of the banks’ depositors’ protection of their deposits. With this action, the creation of the Federal Deposit Insurance Corporation enabled stability in the economy and the shortcoming banking system during the times of the Great Depression. Still currently utilized, the FDIC ensures trust within the banking system for the reason that depositors acknowledge that their deposits are insured when banks are failing. This backbone of the economy prevents banks from failing and other financial crisis occurring, while simultaneously easing the panic of depositors. The establishment of the Federal Deposit Insurance Corporation creates

The idea of the National Bank was based on the British banking system and the belief of how it supported the country during times of difficulty and provided a central point for the country to coordinate commerce with other countries. The bank would create a common currency, establish credit here and abroad, and provide a financial backbone for this country to help stimulate economic growth. Shares in the National Bank would be available for purchase to foreign countries as a way to finance the United States, although the majority of the shares would be owned by the United States itself. At least this was the view of

A.) The national bank, though surrounded by political and economic controversy, was valuable in certain aspects of the development of the United States. According to the fifth reading, the banking system showcased remarkable intelligence, efficiency, energy, and most importantly, independence. The bank served as a sense of security unattainable by local banks. In addition to providing security and independence, the national bank facilitated the majority of foreign and domestic trade.

Central Bank is in charged with the country’s money supply, provides price stability, attaining economic output and employment goals, regulate commercial banks, stabilizing the macroeconomy by acting as the “lender of the last resort” during financial crisis and provide payment system such as check clearinghouses and long-distance payments. The U.S. Central Bank have been around since 1791. The first central bank was called the B.U.S. (Bank of United States). A chronological outline of brief history of the U.S. central banking system.