The Bank of the United States The Bank of the United States is a symbol of the long held American fear of centralization and government control. The bank was an attempt to bring some stability and control and was successful at doing this. However, both times the bank was chartered, forces within the economy ultimately destroyed it. The fear of centralization and control was ultimately detrimental to the U.S. economy. During the Revolutionary War there was much need for a strong centralized government that would have been able to collect taxes.
As a result, America could no longer keep up the funding of war relief efforts in Europe. (Great Depression) Politicians and Citizens were furious at banks for tricking people who had invested by selling stocks at a higher price than was appropriate. Economic historians claim that the Great Depression and the Stock Market Crash that overtook the 1930s had many more causes than just dishonest bank tellers. One crucial catalyst was Americans buying on margin, or buying stocks with borrowed money in the hopes that the stocks will rise. (New York Stock Exchange) This investment was hoping that people could make a profit and repay the loans they made.
Of the nine directors, three represent the commercial banks in the district, three represent the non banking business interest and the last three are responsible for overseeing the bank operations. The last is the federal open market committee. This is the official policy making body of the Federal Reserve System (Boyes & Melvin 2006, p.318). The committee is made up of the seven members of the board of governors plus the five of 12 district bank presidents. All the district bank presidents take turns in serving on the federal open market... ... middle of paper ... ...o serve any good.
What the world needs now is Money Sweet Money"; that is not the way the song goes however that is surely the way our world and economy does. Money and its importance relative to the US Government have always been difficult to figure out especially when it comes to interest rates. Due to our Federal Reserve System, its chairman Alan Greenspan, and his Board of Governors dedicated to seeing that our economy blossoms, those doubts have become a thing of the past, for now. The Federal Reserve System is a central banking of the US Government, most commonly known as the Fed. A central bank serves as the banker to both the banking community and the government.
The Board is the main decision-making body, determines the policy of the World Bank. The member countries are represented on the Governing Board, usually Finance Ministers. The Governing Council meets once a year during the Annual Meetings of the Boards of Governors of the World Bank and the International Monetary
Governors are appointed by the current president and are further confirmed by the Senate. Typically Governors serve fourteen staggered year terms to prevent one particular president from appointing too many governors. The president also appoints the chairman, serves a four year term. The aforementioned reserve banks have nine directors who are responsible for the operations of their specific banks and report directly to the Board of governors. Regional bank presidents are appointed for a period of five years, but the Board of governors gets the final say in the selection process.
The American Revolution was started basically because of problems with the British economy. The major concept of the time was "taxation without representation". After the French and Indian war, the British government was burdened with a huge debt. They wanted to tax more to the colonist because they were the ones helped the most from the war. Ordinary people had always been taxed lightly in America, but they did not want their money to be used to support the British.
The people did not trust centralized government action, and they were largely agrarian people, knowing little about the banking industry. Still, Alexander Hamilton, the first secretary of the Treasury, was determined to create a national bank. His efforts resulted in the establishment of the First Bank of the United States in 1791, and later, its successor, the Second Bank. Both of these banks were unsuccessful. They competed with the state and private banks, with each printing its own banknotes.
The FED also provides financial and banking services to the U.S. Government, the public, and to financial institutions. And lastly, the FED maintains stability in the financial system by reducing systemic risks that may arise in the markets. The Federal Reserve System is made up of the Board of Governors and twelve regional Federal Reserve banks. The Board of Governors consists of seven members who are appointed by the President of The United States, and must be confirmed by the Senate. All seven governors are members of the Federal Open Market Committee (FOMC), and each vote on the conduct of open market operations.
This unregulated economic climate provoked citizens who were shouldering much of the debt as a result. Farmers of western Massachusetts who saw banks moving to foreclose on the mortgages of their farms demanded that the government do something to protect them in their time of financial need. They saw the lower legislative house of Massachusetts draft and approve a measure, which included relief measures for them. Under the influence of the farmers’ creditors, the upper house blocked the actions of the lower house, which further enraged these local farmers. In 1786, a captain of the old Continental army Daniel Shays, led 2000 armed farmers against the state government.