In response to a rising volume of check transactions, the New York Clearinghouse Association was established in 1853 to provide a way for the city’s banks to exchange checks and settle accounts. Banks also began offering demand deposits to enhance commerce. State-chartered banks and unchartered “free banks” took hold during this period, issuing their own notes, redeemable in gold or specie. His attack on its banker-controlled power touched a popular nerve with Americans, and when the Second Bank’s charter expired in 1836, it was not renewed. But when Andrew Jackson, a central bank foe, was elected president in 1828, he vowed to kill it. 1816-1836: A Second Try Failsīy 1816, the political climate was once again inclined toward the idea of a central bank by a narrow margin, Congress agreed to charter the Second Bank of the United States. When the bank’s 20-year charter expired in 1811 Congress refused to renew it by one vote. Many agrarian minded Americans uncomfortable with the idea of a large and powerful bank opposed it. It was the largest corporation in the country and was dominated by big banking and money interests. Eventually, people lost faith in the notes, and the phrase "Not worth a continental" came to mean "utterly worthless." 1791-1811: First Attempt at Central BankingĪt the urging of then Treasury Secretary Alexander Hamilton, Congress established the First Bank of the United States, headquartered in Philadelphia, in 1791. Known as "continentals," the fiat money notes were issued in such quantity they led to inflation, which, though mild at first, rapidly accelerated as the war progressed. To finance the American Revolution, the Continental Congress printed the new nation's first paper money.
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