Bell Ringer!!!!
...Using 100 dollar bills, how much would 1 million dollars weigh??.
Answer:
20.4 lbs
...what about all 1 dollar bills?
Answer:
1.1 tons!
Banking...
Vocabulary
Early 20th Century
Before the Civil War
Later 20th Century Banking
The Great Depression
The Later 1800s
Recently...
1929
- severe economic decline that lasted more than a decade
- banks closely regulated from 1933-1960s due to G.D.
by 1860...
Second Bank
Free Banking Era
First Bank of the U.S.
of the U.S.
did succeed in bringing order & stability
"Wildcat" Era
- repeal of the 1933 Glass Steagall Act
BUT
only lended to the wealthy and big businesses
State chartered banks sky-rocketed
& led to many problems...
Anti-Federalists
argued Congress didn't have the power to create
a national bank--- it was unconsitutional
- Many people still opposed the idea
- holding money collected for taxes
- carrying out the government's power to tax,
- to issue representative money in the form of bank notes (gold & silver)
- 1811 national bank is gone
1. Bank runs & Panics
2. Wildcat Banks
3. Fraud
4. Different Currencies
- State banks start issuing bank notes without supervision or regulations
- although chaos rose from decentralized banking (different currencies), people still distrusted the federal bank (national bank)
- different banks issued different currencies and money was printed with no gold or silver to back it
8,000 different currencies
- Many banks didn't have reserves to back paper money with gold so they couldn't fund projects. As a result, the government made plans to reinstate a central bank
1920s: banks would loan a lot of money to big businesses,
they were unable to pay it back
- 1990s & 2000s- growing trend toward bank mergers
- centralized banking system national bank ---> First Bank of the United States
- bank
- national bank
- bank run
- greenback
- gold standard
- Federal Resreve System
- central bank
- member bank
- Federal Reserve note
- Great Depression
- Federal Deposit Insurance Corporation (FDIC)
- the federal government played no role in providing paper currency or regulating reserves of gold or silver
- 1970s/1980s- deregulation
Savings & Loan Crisis
1980's Caused by...
- deregulation-unprepared for competition
- high interest rates-charged high interest by lenders but gave low interest loans
- bad loans-loans to businesses that were going to fail
...leads to crisis in S&Ls
- served as nation's first true central bank, a bank that can lend to other banks in time of need
How it reorganized the federal banking system:
- Member banks
- Federal Reserve Board
- Short-term loans
- Federal Reserve notes
- The Fed helped restore confidence in banking system, but couldn't prevent Great Depression
- leave power in hands of the states
- decentralized banking
* Who was the President that helped put confidence back into the banking system? *
National Banking Acts
of 1863 & 1864
Currency in North and South
The Gold Standard
1861
1870s
- a monetary system (Gold Standard) in which paper money & coins are equal to value of a certain amount of gold
- both North and South needed currency to support military
These Acts gave the federal government 3 powers:
the power to...
2 advantages of the gold standard:
- In Union, U.S Treasury issues greenbacks, paper currency issued during Civil War
1. set a definite value for the dollar
1. Charter banks
2. Require banks to hold enough gold & silver
reserves to cover bank notes
3. Issue a single national currency
- In Confederacy, currency was backed by cotton but notes eventually became worthless
2. government could only issue currency if it had gold to back it up
Franklin D. Roosevelt
- becomes President in 1933
- 1933- establishment of the Federal Deposit Insurance Corporation (FDIC)
$2,500 to $100,000
The History of American Banking