A History of Central Banking In the United States

A History of Central Banking In the United States

the federal reserve has been the united states’ central bank since 1913 but is

actually its 3rd attempt at central banking.

the first bank of the united states was created in 1791 to help fund the

country’s debt from the...

revolutionary war

the first bank was modeled after the bank of england.

it was chartered by congress in philadelphia and differed from today’s

central bank in many ways. for example...

the u.s. government owned only a 20% share

private investors, many overseas,

owned the rest

and unlike today, it was not solely responsible for the country’s

money supply.

state banks issued their own currency as well.

founding fathers thomas jefferson and james madison opposed, arguing that

the constitution didn’t empower congress to establish such a bank...

that it benefitted

large business over farmers...…

and led to government control by foreign interests.

after all...

70% of the bank was owned by other countries.

including...

great britain. the very nation the united states fought to break free from.

when the bank’s charter came up for renewal in 1811...

it lost by a single vote.

the war of 1812 put the united states in another financial crisis.

as a result, the second bank of the united states was established in 1816.

the second bank was like the first bank...

only larger - with more money and more control.

in 1816, the national debt was paid off by president andrew jackson. it’s the only time in history that the

u.s. has paid off its debt.

but jackson disliked the second bank, believing it was the cause of:

inflation, financial manipulation, and corruption

and that gold and silver was the only true money.

jackson vetoed its renewal in 1836.

for almost 80 years, the u.s. went through different eras of banking.

“Free Banking” Era 1837-1862

National banks 1863-1913

after various nationwide financial panics, like the panic of 1907 in which

the new york stock exchange dropped almost 50% from

the previous year...

a call for banking and currency reform was crucial.

in 1913, the federal reserve was born.

this new and powerful institution would:

regulate banks

manage the nation’s money supply

issue a single new u.s. currency

   but since the inception of the federal reserve, the dollar has been inflated

almost 2,000%!

this inflation has caused the price of goods to rise over the years.

this inflation has caused the price of goods to rise over the years.

the u.s. dollar is steadily eroding.

protect your savings as the dollar continues to fall...