Business PME Business PME is a gate of free information bound for the companies in the United States of America. This website offers thousands of contents as well as a companies directory. The group’s other BtoB websites   --  Professional Networking Monday March 22th 2010 Search
articles
Search
companies

Banking in the United States



United States Banking began in 1781 with an act of United States Congress that established the Bank of North America in Philadelphia. During the American Revolutionary War, the Bank of North America was given a monopoly on currency; prior to this time, private banks printed their own bank notes, backed by deposits of gold and/or silver.


 


Robert Morris, the first Superintendent of Finance appointed under the Articles of Confederation, proposed the Bank of North America as a commercial bank that would act as fiscal agent for the government. The monopoly was seen as necessary because previous attempts to finance the Revolutionary War with paper currency had failed; after the war, a number of banks were chartered by the states under the Articles of Confederation, including the Bank of New York and the Bank of Massachusetts, both of which were chartered in 1784.


 


The Bank of North America was succeeded by the First Bank of the United States, which the United States Congress chartered in 1791 under Article One, Section 8 of the United States Constitution, after the Constitution replaced the Articles of Confederation as the foundation of American government. However, Congress failed to renew the charter for the Bank of the United States, which expired in 1811. Similarly, the Second Bank of the United States was chartered in 1816 and shuttered in 1836.


The era of free banking

Prior to 1836, a bank could only be chartered by a legislative act. It has been speculated that this led to many abuses, with proprietors lacking connections in their legislatures being effectively barred from establishing banks. The dissoluting of the Second bank of the United States in 1836 lead 18 states to establish clear rules for incorporation -- any individual or group that met a certain financial requirement was permitted to issue bills of credit.


This lead many a period of fiscally irresponsible of Wildcat banking in many states, which partially destabilized the system of financial intermediation, and lead in part to the massive panic in 1937-1938 in Michigan.


During this period, bills were not redeamable at face value, but could be cashed accoridng to certain common discount rates, which reflected the reputation and solvency of the issuing banks.


 


In 1863, Congress passed the National Bank Act in an attempt to retire the greenbacks that it had issued to finance the North's effort in the American Civil War. This opened up an option for chartering banks nationally. As an additional incentive for banks to submit to Federal supervision, Congress began taxing any issue of bills of credit a standard rate of 10%, which encouraged a large majority of state banks to become national ones.


 


However, by the 1880s an increased demand for savings accounts changed the primary source of revenue for many banks, and the trend was reversed because of the inherent costs of Federal regulation under the National Banking Act. This dual system of banking has survived to this day. New banks may choose either state or national charters, with Federal Banks required to participate in the FDIC, while State Banks usually voluntarily join it in an attempt to bolster their appearance of solvency.


The dual banking system

The National Bank Act of 1863 created a system of banks throughout the United States that were chartered by the federal government. In 1865, an amendment to the act placed a tax on state bank notes, bringing all banks in the United States under federal supervision. However, a number of banks were exempt from the tax and continued under their state charters until the Federal Reserve Act of 1913. This was known as the "dual banking system."

Copyright 2008 - France BtoB from Wikipédia
• Fraudulent conveyance
• Credit insurance
• Working capital management
• Special purpose entity
• Debt ratings, risk and cancellation
• Valuation
• Captive Insurance