 The Free Banking EraRanajoy Ray Chaudhuri
Chapter Chapter 2 in The Changing Face of American Banking, 2014, pp 7-19 from Palgrave Macmillan Abstract: Abstract The period from 1837 to 1863 is known as the free banking period in the history of American banking. After two attempts at establishing a central bank for the country (the First Bank of the United States and the Second Bank of the United States), the federalists lost the power struggle to the advocates of states’ rights, and all banks began to be chartered by the states. The result was a proliferation of banks. Each of these banks issued their own banknotes against their deposits of gold and silver. These notes did not trade one for one, and their value mostly depended on the size of the issuing bank. Issuing paper currency wasn’t just limited to banks; even drugstores and railroad and insurance companies sometimes issued their own notes. The notes were also of varying size and color, and forgers had a field day: approximately a third of all paper currency during this period was counterfeit. Benchmarks like the reserve ratio, the capital adequacy ratio, and interest rates were set by the states. About half of these banks failed, and their average lifespan was five years. Keywords: Central Bank; Money Supply; Banking Sector; Monetary Union; State Bank (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-36121-9_2 Ordering information: This item can be ordered from Access Statistics for this chapter More chapters in Palgrave Macmillan Books from Palgrave Macmillan |
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