History of Money and Banking

2156 Words5 Pages
bulb-icon

Recommended: Summarizes the history of banking and money

Introduction
In the last few years, there has been a significant debate on what has caused America’s economic woes. However, few people choose to look at what has caused economic downturns in the past. Some believe that it is the government and central banking’s job to steer the economy in the right direction. While others believe that it is not their job, but the free market’s. Perhaps it is something in between as a symbiosis between government and the free market working together to get things done. Many questions should be asked such as: what is the history of money and banking in the United States? What has proven sustainable monetary policy and how all this either helped or harmed by government involvement? These are important questions on the future of the United States. In the words of John Maynard Keynes, “The ideas of economist both when they are right and when they are wrong are more powerful than commonly understood. Indeed the world is ruled by little else.”(Keynes, 2008) p247 The answer to those questions can be answered by research into this subject. As I answer those questions, I will also be able to answer the major question of: What has caused booms and busts in the past and how or can we prevent them?

What is the History of Money and Banking?
Before answering the major question, the history of money and banking must be discussed. It starts with the Colonial era and ends with the closing of World War II. The findings will help one understand the full picture. As F.A. Hayek quipped, “The curious task of economics is to prove to men how little they really know.” (Hayek, Fatal Conceit)
Colonial Era 1607-1762
The Colonial Era was a time of emerging economic development and intrusion by the British Parliament. In ...

... middle of paper ...

...e/c477c1cf-197f-4df7-8e6f-efc425f6fac3/page/709c5245-d33f-40a9-b18f-e56667a40431.
Folsom Jr., Burton. (2009). New Deal or Raw Deal?: How FDR’s Legacy had Damaged America. New York, NY: Threshold Editions.
"National Bank Act of 1863." Gale Encyclopedia of U.S. Economic History. 2000. Retrieved November 26, 2013 from: http://www.encyclopedia.com/doc/1G2-3406400620.html
“First Bank of the United States – Conservapedia” Conservapedia. Retrieved November 26, 2013 from: http://conservapedia.com/First_Bank_of_the_United_States.
“Second Bank of the United States” History Central. Retrieved November 26, 2013 from: http://www.historycentral.com/Ant/Economics/Second.html.
“Great Depression – Mises Wiki, the global repository of classical-liberal thought” Mises Institute. Retrieved November 27, 2013 from: http://wiki.mises.org/wiki/Great_Depression#cite_note-Folsom_spending-55

Show More
Related

  • American Colossus The Triumph Of Capitalism Summary

    1553 Words  | 4 Pages

    He states that the financial system was based on competing state banks with no central bank which promoted a rapid economic growth. As the American banking system developed the money supply developed with it. The federal government began the banking system through the issuing of specie but as the capitalist system developed the banking structure developed as well. During the Civil War, the North printed Greenbacks that drove gold from the domestic circulation to help pay for war necessities. The Greenbacks, however, were rarely used in the South expressing the different economies of the North and the South at the time of the Civil War. With differing economies and the growth of specie and paper money, Brands argues that the basis of knowledge about the money system of this time lays a foundation for how Carnegie, Rockefeller, and others were able to manipulate the market and gain wealth. Leading into price manipulation by those in corporate

    Read More

  • John D. Rockefeller as a Robber Baron

    3611 Words  | 8 Pages

    Biles, Roger. A. "A New Deal for the American People" Taking Sides Clashing Views on Controversial Issues in American History. eds. -. Larry Madaras et al.

    Read More

  • Jacksonian Democrats vs. The Whigs

    1451 Words  | 3 Pages

    The issue of whether or not America should have a National Bank is one that is debated throughout the whole beginning stages of the modern United States governmental system. In the 1830-1840’s two major differences in opinion over the National Bank can be seen by the Jacksonian Democrats and the Whig parties. The Jacksonian Democrats did not want a National Bank for many reasons. One main reason was the distrust in banks instilled in Andrew Jackson because his land was taken away. Another reason is that the creation of a National Bank would make it more powerful than...

    Read More

  • Presidents of the 1930s

    738 Words  | 2 Pages

    "America's Great Depression and Roosevelt's New Deal."DPLA. Digital Public Library of America. Web. 20 Nov 2013. .

    Read More

  • Down And Out In The Great Depression

    1337 Words  | 3 Pages

    During the 1920’s, America was a prosperous nation going through the “Big Boom” and loving every second of it. However, this fortune didn’t last long, because with the 1930’s came a period of serious economic recession, a period called the Great Depression. By 1933, a quarter of the nation’s workers (about 40 million) were without jobs. The weekly income rate dropped from $24.76 per week in 1929 to $16.65 per week in 1933 (McElvaine, 8). After President Hoover failed to rectify the recession situation, Franklin D. Roosevelt began his term with the hopeful New Deal. In two installments, Roosevelt hoped to relieve short term suffering with the first, and redistribution of money amongst the poor with the second. Throughout these years of the depression, many Americans spoke their minds through pen and paper. Many criticized Hoover’s policies of the early Depression and praised the Roosevelts’ efforts. Each opinion about the causes and solutions of the Great Depression are based upon economic, racial and social standing in America.

    Read More

  • Analysis Of Andrew Jackson And The Bank War

    1687 Words  | 4 Pages

    In this study, the author familiarizes The Bank of the United States and Andrew Jackson 's fabrication of an anticipating war, which inadvertently saves America. During the 1820’s and 1830’s, The Bank War, a war between the Bank of the United States and President Andrew Jackson, resulted beneficially to America 's future for numerous reasons. Jackson set standards and pushed boundaries, creating larger presidential responsibilities. The Bank of the United States, which earned a prevailing bad reputation along with a substantial amount of animosity, was abolished. While Jackson and the Bank quarreled, they both unknowingly played a role in constituting a tenacious executive branch. A majority of American 's have over-looked the Bank War’s importance to modern society, this inspired the author of “Andrew Jackson and the Bank War”, Robert V. Remini, to emphasize the importance of the Bank of the United States destruction, maximize presidential powers, and the optimization of the governments Executive Branch.

    Read More

  • Book Review - The Great Depression

    1002 Words  | 3 Pages

    The Great Depression America 1929-1941 by Robert S. McElvaine covers many topics of American history during the "Great Depression" through 1941. The topic that I have selected to compare to the text of American, Past and Present, written by Robert A. Divine, T.H. Breen, George M. Frederickson and R. Hal Williams, is Herbert Hoover, the thirty-first president of the United States and America's president during the horrible "Great Depression".

    Read More

  • Great Depression vs. The Great Recession

    1439 Words  | 3 Pages

    zShmoop Editorial Team. "Politics in The Great Depression." Shmoop.com. Shmoop University, Inc., 11 Nov. 2008. Web. 13 Mar. 2014.

    Read More

  • Pros And Cons Of Andrew Jackson

    820 Words  | 2 Pages

    In the summer of 1832 and Congress renewed the Bank’s charter even though it wasn’t due until 1836. Jackson hesitated to approve of the charter, so Henry Clay and Nicholas Biddle went on the offensive to attempt to persuade Jackson to pass the bill. Jackson, having had his opinion on the banks cemented by Clay’s presence in the organization, then committed to de-establishing the Second National Bank. He waged war against Biddle in particular to make sure Biddle lost power. He vetoed the bank bill, and after winning the race to be reelected, he closed Biddle’s bank. He ordered his Secretary of the Treasury to move money from the Second National Bank to smaller, state banks. When Congress returned from its summer recess, it censured him for his actions. In 1836, Bank of US was dead, and the new democratic-congressmen expunged Jackson’s censure. Because Jackson had no formal plan for managing the nation’s funds after the Second National Bank closed, it caused problems in Van Buren’s administration. He destroyed the Bank of the United States, in the main, for personal reasons. Jackson hated the bank before his presidency because as a wealthy land and slave owner he had lost money due to its fiscal policies. He believed that Congress had no right under the constitution to charter a

    Read More

  • The Purpose of the Federal Reserve System

    2699 Words  | 6 Pages

    Over the past few years we have realized the impact that the Federal Government has on our economy, yet we never knew enough about the subject to understand why. While taking this Economics course it has brought so many things to our attention, especially since we see inflation, gas prices, unemployment and interest rates on the rise. It has given us a better understanding of the effect of the Government on the economy, the stock market, the interest rates, etc. Since the Federal Government has such a control over our Economy, we decided to tackle the subject of the Federal Reserve System and try to get a better understanding of the history, the structure, and the monetary policy of the power that it holds.

    Read More

  • The Effect of the Great Depression on National and Individual Morale

    1064 Words  | 3 Pages

    However, for the worst affected, the most difficult effect on morale must have been the lifelong memory of seeing their children and family suffer, and having no power to change this. For the lack of power to change the future is the exact opposite of the ‘American Dream’. References: Prosperity, Depression and The New Deal, Peter Clements, 2001, Hodder and Stoughton, London Letters To The Roosevelts, various authors, date and publisher unknown An Editor Loses His Job In The Great Depression, Hard Times: An Oral History of the Great Depression, Studs Terkel, 1978, Pantheon Books. Brother, Can You Spare A Dime? , Jay Gorney, 1932, Warner Bros. Music The Great Depression, Mc Elvaine R., 1984, Times Books, New York

    Read More

  • Andrew Jackson and the Bank War

    2332 Words  | 5 Pages

    The United States government in 1816 chartered the Second Bank of the United States. It had a 20-year charter, which was to expire in 1836. Despite this, the Bank was privately owned and during the age of Jackson, the president was Nicholas Biddle. The Bank was large in comparison to other banks, being responsible for 15-20% of bank loans in the United States and accounting for 40% of the bank notes in circulation. Also, the Bank held a specie reserve of 50% of the value of its notes, when normally other banks only had a specie reserve of 10-25% (Davis 1).

    Read More

  • The New Deal

    1629 Words  | 4 Pages

    The New Deal period has generally - but not unanimously - been seen as a turning point in American politics, with the states relinquishing much of their autonomy, the President acquiring new authority and importance, and the role of government in citizens' lives increasing. The extent to which this was planned by the architect of the New Deal, Franklin D. Roosevelt, has been greatly contested, however. Yet, while it is instructive to note the limitations of Roosevelt's leadership, there is not much sense in the claims that the New Deal was haphazard, a jumble of expedient and populist schemes, or as W. Williams has put it, "undirected". FDR had a clear overarching vision of what he wanted to do to America, and was prepared to drive through the structural changes required to achieve this vision.

    Read More

  • The Ascent of Money Has Lead to the Ascent of Man

    1287 Words  | 3 Pages

    The greatest question many have sought to answer is the creation vs. evolution debate. How did we get here? Were we created or did we evolve randomly? Are we the product of purposeful intelligence or are we the result of countless mistakes? Does it even matter? The story of money is similar to the story of humanity. Was money created or did it evolve. If it was created we can assume it will die. If money evolved then we can assume the future is unknown. In his book, The Ascent of Money a financial history of the world, Neil Ferguson historic analysis of money answers many of these questions. Ferguson believes money essentially mirrors mankind, magnifying back to us our progress, failures, values and weaknesses.” (The Ascent of Money, 358) The history of money shares many similarities to the history of man; Ferguson parallels between finance and Darwinism, illustrating the natural mechanism of our financial ecosystem that evolves, creates, competes, and dies.

    Read More

  • The History of Money and Banking

    1178 Words  | 3 Pages

    The invention of money was a major improvement in peoples’ lives. In the past, people usually had to travel all day to find the person who is willing to exchange their goods. In addition, the goods people want to exchange did not have the standard value of measurement. This led to unequal exchanges. Furthermore, it is not convenient to carry heavy goods from one place to another for an exchange. To solve these issues, money will be the only solution. Later, people tend to develop money from cowry shells to credit cards for the convenience and to improve their society.

    Read More

More about History of Money and Banking

Open Document