First and Second Bank of the United States from 1791-1836

Abstract

This study examines the U.S. banking experience between the seventeenth and twentieth century and its effects on the economy. It takes into account the historical legacy of colonial times and monetary intense experimentation in the period, the formation of first banks, the ideas of the “founding fathers” and the country's leaders on the issue bank and the consequent political disputes. We analyze the reasons why regulations on loans and debt were as permissible; resulting in various financial panics (Stock, 2010). We conclude that the policy issues associated with building the federative structure were primarily responsible for the type of banking system that developed in the new nation. Highly deregulated, flexible, regionally and conducive to all kinds of financial speculation, the banking followed their own path and original despising the paradigm of making the 'gold standard'. This study also makes a quick review of the role of money, the history of banks that influenced the formation of banking systems national (Smelser and Swedberg, 2010).

ABSTRACTII

1. BANKS1

1.1- Review of the Rising of Banks1

1.2 - The First “Central Bank” in the U.S3

1.3 - The Role of Commercial Banks and Credit5

2. THE FREEDOM OF THE BANKS, THE CALIFORNIA GOLD AND U.S. AND WORLD ECONOMY7

2.1 - Total Freedom of Banks: the “Free Banking Laws”7

2.1.1 - Development Banks and the North United States9

2.2 The World Economic System and the U.S.13

2.3 - The Discovery of Gold in California15

3. CONCLUSION16

ANNEX: KEY DATES IN THE CONSTRUCTION OF THE UNITED STATES BANKING SYSTEM17

REFERENCES18

First and Second Bank of the United States from 1791-1836

1. Banks

1.1- Review of the Rising of Banks

The institutions that had already played the role of banks from Antiquity, as in Mesopotamia, considered the cradle of civilization. In Greece, with the discovery of several deposits, a flood of silver flooded all known countries of the season with a huge variety of types of coins and temple, and Apollo at Delphi, was becoming the first international bank in the world (Hildreth 1837). Many Historians consider that there arose the profession of banker, and with it, the emergence system-interest loan. Even in the Bible, there are already references to the functions typical bank loan, as the “Parable of the Talents (Stock, 2010).”

But banking on the current pattern emerges during the Middle ages. In “Merchants and Bankers in the Middle Ages”, Jacques Le Goff discusses the activity bank in the Middle Ages.

“The problem of credit, which we will see later have been singularly complicated to medieval Christianity because of moral and religious concerns, was solved in several ways. There was, first, the loan on its multiple forms (Hildreth, 1968). One particularly important was the bill of exchange” .

These drawbacks will determine the appearance of the bank note, which is a monetary instrument whose value is invariable, payable in cash representing a cipher “Round”, transmitted bearer and issued by a credit institution known by everyone. Originally, the bank note is a certificate of deposit of coins that gives the holder the right to repayment ...