Wednesday, March 11, 2009
papper money
In China the issue of paper money became common from about AD 960 onwards but there had been occasional issues long before that. A motive for one such early issue, in the reign of Emperor Hien Tsung 806-821, was a shortage of copper for making coins. A drain of currency from China, partly to buy off potential invaders from the north, led to greater reliance on paper money with the result that by 1020 the quantity issued was excessive, causing inflation. In subsequent centuries there were several episodes of hyperinflation and after about 1455, after well over 500 years of using paper money, China abandoned it.
The Royal Monopoly of Minting
One of the reasons for the rapid spread of the use of coins was their convenience. In situations where coins were generally acceptable at their nominal value there was no need to weigh them and in everyday transactions where relatively small numbers were involved counting was quicker and far more convenient than weighing. By the Middle Ages monarchs were able to use this convenience as a source of profit.
On page 168 Glyn Davies writes, "because of the convenience of royally authenticated coinage as a means of payment, and with hardly any other of the general means of payment available in the Middle Ages being anything like as convenient, coins commonly carried a substantial premium over the value of their metallic content, more than high enough to cover the costs of minting. Kings could turn this premium into personal profit; hence ... the wholesale regular recall of coinage... first at six yearly, then at three-yearly intervals, and eventually about every two years or so. In order to make a thorough job of this short recycling process it was essential that all existing coins should be brought in so as to maximize the profit and, in order to prevent competition from earlier issues, the new issues had to be made clearly distinguishable by the authorities yet readily acceptable to the general public."
These recoinage cycles were far more frequent than was justified by wear and tear on the coins but the profits from minting, known as seigniorage, supplemented the revenue that English monarchs raised from the efficient systems of taxation introduced by the Normans. However, revenue from minting depended on public confidence in the coinage and consequently an elaborate system of testing was introduced.
"Anyone who had occasion to handle coins of silver or gold in any volume, whether merchants, traders, tax collectors, the King himself, the royal treasury, or the sheriffs, required reliable devices for testing the purity of what passed for currency." (Page 144). One of these methods was rough and ready - the use of touchstones which involved an examination of the colour trace left by the metal on the surface of a schist or quartz stone. The other, the Trial of the Pyx, was a test held in public before a jury. This Trial involved the use of 24 "touch needles", one for each of the traditional gold carats, with similar test pieces for silver.
Thus, despite the challenge of counterfeiters, governments controlled coin production and hence the money supply. Not until the rise of commercial banking and the widespread adoption of paper money was this monopoly broken, with profound consequences for the growth of democracy.
On page 168 Glyn Davies writes, "because of the convenience of royally authenticated coinage as a means of payment, and with hardly any other of the general means of payment available in the Middle Ages being anything like as convenient, coins commonly carried a substantial premium over the value of their metallic content, more than high enough to cover the costs of minting. Kings could turn this premium into personal profit; hence ... the wholesale regular recall of coinage... first at six yearly, then at three-yearly intervals, and eventually about every two years or so. In order to make a thorough job of this short recycling process it was essential that all existing coins should be brought in so as to maximize the profit and, in order to prevent competition from earlier issues, the new issues had to be made clearly distinguishable by the authorities yet readily acceptable to the general public."
These recoinage cycles were far more frequent than was justified by wear and tear on the coins but the profits from minting, known as seigniorage, supplemented the revenue that English monarchs raised from the efficient systems of taxation introduced by the Normans. However, revenue from minting depended on public confidence in the coinage and consequently an elaborate system of testing was introduced.
"Anyone who had occasion to handle coins of silver or gold in any volume, whether merchants, traders, tax collectors, the King himself, the royal treasury, or the sheriffs, required reliable devices for testing the purity of what passed for currency." (Page 144). One of these methods was rough and ready - the use of touchstones which involved an examination of the colour trace left by the metal on the surface of a schist or quartz stone. The other, the Trial of the Pyx, was a test held in public before a jury. This Trial involved the use of 24 "touch needles", one for each of the traditional gold carats, with similar test pieces for silver.
Thus, despite the challenge of counterfeiters, governments controlled coin production and hence the money supply. Not until the rise of commercial banking and the widespread adoption of paper money was this monopoly broken, with profound consequences for the growth of democracy.
Gold Standard
Although paper money obviously had no intrinsic value its acceptability originally depended on its being backed by some commodity, normally precious metals. During the Napoleonic Wars convertibility of Bank of England notes was suspended and there was some inflation which, although quite mild compared to that which has occurred in other wars, was worrying to contemporary observers who were used to stable prices and, in accordance with the recommendations of an official enquiry Britain adopted the gold standard for the pound in 1816. For centuries earlier silver had been the standard of value. The pound was originally an amount of silver weighing a pound. France and the United States were in favour of a bimetallic standard and in 1867 an international conference was held in Paris to try and widen the area of common currencies based on coins with standard weights of gold and silver. However when the various German states merged into a single country in 1871 they chose the gold standard. The Scandinavian countries adopted the gold standard shortly afterwards. France made the switch from bimetallism to gold in 1878 and Japan, which had been on a silver standard, changed in 1897. Finally, in 1900, the United States officially adopted the gold standard.
With the outbreak of the First World War in 1914 Britain decided to withdraw gold from internal circulation and other countries also broke the link with gold. Germany returned to the gold standard in 1924 when it introduced a new currency, the Reichsmark and Britain did the following year, and France in 1928. However the British government had fixed the value of sterling at an unsustainably high rate and in the worldwide economic crisis in 1931 Britain, followed by most of the Commonwealth (except Canada) Ireland, Scandinavia, Iraq, Portugal, Thailand, and some South American countries abandoned gold.
The United States kept the link to gold and after the Second World War the US dollar replaced the pound sterling as the key global currency. Other countries fixed their exchange rates against the dollar, the value of which remained defined in terms of gold. In the early 1970s the system of fixed exchange rates started to break down as a result of growing international inflation and the United States abandoned the link with gold in 1973.
With the outbreak of the First World War in 1914 Britain decided to withdraw gold from internal circulation and other countries also broke the link with gold. Germany returned to the gold standard in 1924 when it introduced a new currency, the Reichsmark and Britain did the following year, and France in 1928. However the British government had fixed the value of sterling at an unsustainably high rate and in the worldwide economic crisis in 1931 Britain, followed by most of the Commonwealth (except Canada) Ireland, Scandinavia, Iraq, Portugal, Thailand, and some South American countries abandoned gold.
The United States kept the link to gold and after the Second World War the US dollar replaced the pound sterling as the key global currency. Other countries fixed their exchange rates against the dollar, the value of which remained defined in terms of gold. In the early 1970s the system of fixed exchange rates started to break down as a result of growing international inflation and the United States abandoned the link with gold in 1973.
The Invention of Banking and Coinage
The invention of banking preceded that of coinage. Banking originated in Ancient Mesopotamia where the royal palaces and temples provided secure places for the safe-keeping of grain and other commodities. Receipts came to be used for transfers not only to the original depositors but also to third parties. Eventually private houses in Mesopotamia also got involved in these banking operations and laws regulating them were included in the code of Hammurabi.
In Egypt too the centralization of harvests in state warehouses also led to the development of a system of banking. Written orders for the withdrawal of separate lots of grain by owners whose crops had been deposited there for safety and convenience, or which had been compulsorily deposited to the credit of the king, soon became used as a more general method of payment of debts to other persons including tax gatherers, priests and traders. Even after the introduction of coinage these Egyptian grain banks served to reduce the need for precious metals which tended to be reserved for foreign purchases, particularly in connection with military activities.
Precious metals, in weighed quantities, were a common form of money in ancient times. The transition to quantities that could be counted rather than weighed came gradually. On page 29 of A History of Money Glyn Davies points out that the words "spend", "expenditure", and "pound" (as in the main British monetary unit) all come from the Latin "expendere" meaning "to weigh". On page 74 the author points out that the basic unit of weight in the Greek speaking world was the "drachma" or "handful" of grain, but the precise weight taken to represent this varied considerably, for example from less than 3 grams in Corinth to more than 6 grams in Aegina. Throughout much of the ancient world the basic unit of money was the stater, meaning literally "balancer" or "weigher". The talent is a monetary unit with which we are familiar with from the Parable of the Talents in the Bible. The talent was also a Greek unit of weight, about 60 pounds.
Many primitive forms of money were counted just like coins. Cowrie shells, obtained from some islands in the Indian Ocean, were a very widely used primitive form of money - in fact they were still in use in some parts of the world (such as Nigeria) within living memory. "So important a role did the cowrie play as money in ancient China that its pictograph was adopted in their written language for money." (page 36) Thus it is not surprising that among the earliest countable metallic money or "coins" were "cowries" made of bronze or copper, in China.
In addition to these metal "cowries" the Chinese also produced "coins" in the form of other objects that had long been accepted in their society as money e.g. spades, hoes, and knives. Although there is some dispute over exactly when these developments first took place, the Chinese tool currencies were in general use at about the same time as the earliest European coins and there have been claims that their origins may have been much earlier, possibly as early as the end of the second millennium BC. The use of tool coins developed (presumably independently) in the West. The ancient Greeks used iron nails as coins, while Julius Caesar regarded the fact that the ancient Britons used sword blades as coins as a sign of their backwardness. (However the Britons did also mint true coins before they were conquered by the Romans).
These quasi-coins were all easy to counterfeit and, being made of base metals, of low intrinsic worth and thus not convenient for expensive purchases. True coinage developed in Asia Minor as a result of the practice of the Lydians, of stamping small round pieces of precious metals as a guarantee of their purity. Later, when their metallurgical skills improved and these pieces became more regular in form and weight the seals served as a symbol of both purity and weight. The first real coins were probably minted some time in the period 640 - 630 BC. Afterwards the use of coins spread quickly from Lydia to Ionia, mainland Greece, and Persia.
In Egypt too the centralization of harvests in state warehouses also led to the development of a system of banking. Written orders for the withdrawal of separate lots of grain by owners whose crops had been deposited there for safety and convenience, or which had been compulsorily deposited to the credit of the king, soon became used as a more general method of payment of debts to other persons including tax gatherers, priests and traders. Even after the introduction of coinage these Egyptian grain banks served to reduce the need for precious metals which tended to be reserved for foreign purchases, particularly in connection with military activities.
Precious metals, in weighed quantities, were a common form of money in ancient times. The transition to quantities that could be counted rather than weighed came gradually. On page 29 of A History of Money Glyn Davies points out that the words "spend", "expenditure", and "pound" (as in the main British monetary unit) all come from the Latin "expendere" meaning "to weigh". On page 74 the author points out that the basic unit of weight in the Greek speaking world was the "drachma" or "handful" of grain, but the precise weight taken to represent this varied considerably, for example from less than 3 grams in Corinth to more than 6 grams in Aegina. Throughout much of the ancient world the basic unit of money was the stater, meaning literally "balancer" or "weigher". The talent is a monetary unit with which we are familiar with from the Parable of the Talents in the Bible. The talent was also a Greek unit of weight, about 60 pounds.
Many primitive forms of money were counted just like coins. Cowrie shells, obtained from some islands in the Indian Ocean, were a very widely used primitive form of money - in fact they were still in use in some parts of the world (such as Nigeria) within living memory. "So important a role did the cowrie play as money in ancient China that its pictograph was adopted in their written language for money." (page 36) Thus it is not surprising that among the earliest countable metallic money or "coins" were "cowries" made of bronze or copper, in China.
In addition to these metal "cowries" the Chinese also produced "coins" in the form of other objects that had long been accepted in their society as money e.g. spades, hoes, and knives. Although there is some dispute over exactly when these developments first took place, the Chinese tool currencies were in general use at about the same time as the earliest European coins and there have been claims that their origins may have been much earlier, possibly as early as the end of the second millennium BC. The use of tool coins developed (presumably independently) in the West. The ancient Greeks used iron nails as coins, while Julius Caesar regarded the fact that the ancient Britons used sword blades as coins as a sign of their backwardness. (However the Britons did also mint true coins before they were conquered by the Romans).
These quasi-coins were all easy to counterfeit and, being made of base metals, of low intrinsic worth and thus not convenient for expensive purchases. True coinage developed in Asia Minor as a result of the practice of the Lydians, of stamping small round pieces of precious metals as a guarantee of their purity. Later, when their metallurgical skills improved and these pieces became more regular in form and weight the seals served as a symbol of both purity and weight. The first real coins were probably minted some time in the period 640 - 630 BC. Afterwards the use of coins spread quickly from Lydia to Ionia, mainland Greece, and Persia.
Actually Fun / Interesting Facts
Bank of America has merged/acquired plenty of other banks, the most prominent of which was the Bank of Italy. In fact, when Bank of Italy merged with Bank of America, it was the Bank of Italy’s founder that served as its head. So you could say that Bank of America could’ve just as easily been Bank of Italy!
The largest cash robbery, about $18.9 million) to have taken place in the United States was called the Dunbar Armored robbery, which took place at the Dunbar Armored facility in Los Angeles, CA. While everyone was caught, about $10M of the stolen loot was lost. It was an inside job and no bank was involved but it’s still worth mentioning, don’t you think?
The largest cash robbery of a bank was the Loomis Fargo bank robbery in 1997, in which $17.3 million was stolen from a regional office vault in Charlotte, NC. Again, another inside job and the thieves were caught (so was 95% of the cash).
Moments before the US started bombing Baghdad, nearly $1 billion dollars was stolen from the Central Bank of Iraq and considered the largest heist in history. $650 million was later recovered in the walls of one of Saddam’s palaces but the balance is still missing.
The N.A. after the name of a bank indicates it’s a national bank, it stands for “National Association.” It means that the bank is chartered by the Office of the Comptroller of the Currency.
The FSB after the name of a bank indicates that it is a Federal Savings Bank or a Federal Savings Association. It differs from a bank in that it’s overseen by the OTS and takes deposits for the purposes of lending it out for residential mortgages.
Savings and loans are slightly different, they’re like FSBs/Thrift banks but for all types of mortgages, not just residential ones. The distinction is very slight and the lines are blurring among the three types.
The North Hollywood shootout occurred after the pair of heavily armed thieves robbed a branch of Bank of America.
The Riegle-Neal Interstate Banking and Branching Efficiency Act, passed in 1994, has a provision that states no bank may hold more than 10% of the all deposits in the United States. The bill also made it possible for banks to buy other banks headquartered in other states, this was previously illegal.
Bank of America is the official sponsor of the United States Olympic Teams, the National Football League, the National Hockey League, NASCAR (National Association for Stock Car Auto Racing), Major League Baseball, Minor League Baseball, and even Little League Baseball!
In the NFL, there are currently five stadiums sponsored by financial institutions. M&T Bank (Baltimore Ravens), Invesco (Denver Broncos), Lincoln Financial (Philadelphia Eagles), Bank of America (Carolina Panthers), and Raymond James (Tampa Bay Buccaneers).
In the NBA, there are currently five six arenas sponsored by financial institutions. TD Banknorth (Boston Celtics), Conseco (Indiana Pacers), TD Waterhouse (Orlando Magic), Quicken Loans (Cleveland Cavaliers), Key Bank (Seattle Supersonics), and Wachovia (Philadelphia 76ers).
In the MLB, there are currently five stadiums sponsored by financial institutions. Chase (Arizona Diamondbacks), Comerica (Detroit Tigers), Citizens Bank (Philadelphia Phillies), PNC (Pittsburgh Pirates), and Safeco (Seattle Mariners).
In the NHL, there are currently eight arenas sponsored by financial institutions. Wachovia (Philadelphia Flyers), Mellon (Pittsburgh Penguins), TD Banknorth (Boston Bruins), HSBC (Buffalo Sabres), Scotiabank (Ottawa Senators), BankAtlantic (Florida Panthers), Scottrade (St. Louis Blues), and Pengrowth (Calgary Flames) RBC (Carolina Hurricanes).
Blueprint for Financial Prosperity is not sponsored by any bank, but would certainly entertain offers!
The largest cash robbery, about $18.9 million) to have taken place in the United States was called the Dunbar Armored robbery, which took place at the Dunbar Armored facility in Los Angeles, CA. While everyone was caught, about $10M of the stolen loot was lost. It was an inside job and no bank was involved but it’s still worth mentioning, don’t you think?
The largest cash robbery of a bank was the Loomis Fargo bank robbery in 1997, in which $17.3 million was stolen from a regional office vault in Charlotte, NC. Again, another inside job and the thieves were caught (so was 95% of the cash).
Moments before the US started bombing Baghdad, nearly $1 billion dollars was stolen from the Central Bank of Iraq and considered the largest heist in history. $650 million was later recovered in the walls of one of Saddam’s palaces but the balance is still missing.
The N.A. after the name of a bank indicates it’s a national bank, it stands for “National Association.” It means that the bank is chartered by the Office of the Comptroller of the Currency.
The FSB after the name of a bank indicates that it is a Federal Savings Bank or a Federal Savings Association. It differs from a bank in that it’s overseen by the OTS and takes deposits for the purposes of lending it out for residential mortgages.
Savings and loans are slightly different, they’re like FSBs/Thrift banks but for all types of mortgages, not just residential ones. The distinction is very slight and the lines are blurring among the three types.
The North Hollywood shootout occurred after the pair of heavily armed thieves robbed a branch of Bank of America.
The Riegle-Neal Interstate Banking and Branching Efficiency Act, passed in 1994, has a provision that states no bank may hold more than 10% of the all deposits in the United States. The bill also made it possible for banks to buy other banks headquartered in other states, this was previously illegal.
Bank of America is the official sponsor of the United States Olympic Teams, the National Football League, the National Hockey League, NASCAR (National Association for Stock Car Auto Racing), Major League Baseball, Minor League Baseball, and even Little League Baseball!
In the NFL, there are currently five stadiums sponsored by financial institutions. M&T Bank (Baltimore Ravens), Invesco (Denver Broncos), Lincoln Financial (Philadelphia Eagles), Bank of America (Carolina Panthers), and Raymond James (Tampa Bay Buccaneers).
In the NBA, there are currently five six arenas sponsored by financial institutions. TD Banknorth (Boston Celtics), Conseco (Indiana Pacers), TD Waterhouse (Orlando Magic), Quicken Loans (Cleveland Cavaliers), Key Bank (Seattle Supersonics), and Wachovia (Philadelphia 76ers).
In the MLB, there are currently five stadiums sponsored by financial institutions. Chase (Arizona Diamondbacks), Comerica (Detroit Tigers), Citizens Bank (Philadelphia Phillies), PNC (Pittsburgh Pirates), and Safeco (Seattle Mariners).
In the NHL, there are currently eight arenas sponsored by financial institutions. Wachovia (Philadelphia Flyers), Mellon (Pittsburgh Penguins), TD Banknorth (Boston Bruins), HSBC (Buffalo Sabres), Scotiabank (Ottawa Senators), BankAtlantic (Florida Panthers), Scottrade (St. Louis Blues), and Pengrowth (Calgary Flames) RBC (Carolina Hurricanes).
Blueprint for Financial Prosperity is not sponsored by any bank, but would certainly entertain offers!
Consumer Protection
If your bank has FDIC insurance, your deposits are protected up to $100,000.
To check if your bank is FDIC insured, use the FDIC’s Bank Find tool. Just because they say they are insured doesn’t mean they are.
Credit unions deposits are protected under the National Credit Union Administration.
To check if your credit union is NCUA insured, use the NCUA Find A Credit Union tool.
The insurance coverage increases to $250,000 if the account is a retirement account.
There are over a dozen Fed Regulations and laws that protect consumers, a page on the Chicago Fed website has a list of all of them. You will notice a few popular ones such as the Fair Credit Reporting Act and Regulation CC (how long a bank can hold your check funds as they process). It may make for some dry reading but it’s useful information to know.
I wanted to specifically call out Regulation AA, Unfair or Deceptive Acts or Practices, which governs the procedures a consumer should follow to report unfair or deceptive acts or practices performed by a bank with respect to the extension of credit. This is especially appropriate nowadays but the regulation spells out specifically what you should do.
To check if your bank is FDIC insured, use the FDIC’s Bank Find tool. Just because they say they are insured doesn’t mean they are.
Credit unions deposits are protected under the National Credit Union Administration.
To check if your credit union is NCUA insured, use the NCUA Find A Credit Union tool.
The insurance coverage increases to $250,000 if the account is a retirement account.
There are over a dozen Fed Regulations and laws that protect consumers, a page on the Chicago Fed website has a list of all of them. You will notice a few popular ones such as the Fair Credit Reporting Act and Regulation CC (how long a bank can hold your check funds as they process). It may make for some dry reading but it’s useful information to know.
I wanted to specifically call out Regulation AA, Unfair or Deceptive Acts or Practices, which governs the procedures a consumer should follow to report unfair or deceptive acts or practices performed by a bank with respect to the extension of credit. This is especially appropriate nowadays but the regulation spells out specifically what you should do.
Central Bank History
The first chartered bank of the United States was the First Bank of the United States, formed in 1791 by The United States Congress.
If you want to visit, it’s located at Third Street, between Chestnut & Walnut Streets in Philadelphia; but it’s not open to the public.
The bank was the brainchild of then-Secretary of the Treasury Alexander Hamilton, who proposed that the bank sell $10M in stock to help establish its initial funding. Of the original $10M, $2M would be purchased by the United States. However, since the newly formed United States didn’t actually have $2M, the bank would loan the government $2M that the government would pay back in ten annual installments.
The creation of the bank was lumped in with an increase in excise taxes on liquor and the minting of paper currency. In order to push the bill through opposition to the excise taxes from southern members of Congress, Hamilton brokered a deal to support a bill that would move the capital from Philadelphia to what later would become Washington, D.C.
The First Bank of the United States was not the first chartered bank in the territory that is now the United States, that distinction belongs to the Bank of North America. That bank was chartered on the last day in 1781 by the Congress of the Confederation.
The Bank of North America would be succeeded by the First Bank of the United States.
The Bank of North America, with national bank charter #1, still exists today and is held by Wachovia, N.A. Wachovia still operates a branch at the northwest corner of 6th and Chestnut in Philly, the site of the original bank.
As you may have expected, that Wachovia branch is the longest continuously operating branch bank in the US, having been there since 1781.
The Second Bank of the United States was chartered 5 years after the charter for the First Bank of the United States expired and the Second Bank was again located in Philadephia.
Why a Second bank if the government allowed the charter for the First Bank to expire? War! The US found itself unable to finance the War of 1812 and thus chartered a Second Bank of the United States.
There was quite a bit of controversy around the bank, there’s plenty of resources out there to read about it if you’re interested so I’ll skip it here, but eventually it went bankruptcy five years after the expiration of its charter in 1836.
If you want to visit, it’s located on Chestnut Street between 4th and 5th Streets and it’s open to the public free of charge( National Parks Service info page).
There was no Third Bank of the United States, or any central bank, for 80 years following the expiration of the Second Bank’s charter. That’s when the Aldrich plan, named after Republican Senator Nelson W. Aldrich of Rhode Island, of fifteen regional central banks was floated and discussed.
Eventually, the Federal Reserve Act of 1913 instituted 12 Federal Reserve banks, headed by a seven member Federal Reserve board plus a single US currency, a Federal Reserve Note.
The twelve Federal Reserve banks are located in Boston , New York Philadephia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas and San Francisco
All nationally chartered banks are required to become members of the Federal Reserve System, which means they must buy non-transferable stock in their regional Federal Reserve bank.
In the 1930’s, the Federal Reserve Act was amended to include the Federal Open Market Committee that consisted of the seven members of the Board of Governors of the Federal Reserve System and five representatives from the regional Federal Reserve banks.
If you want to visit, it’s located at Third Street, between Chestnut & Walnut Streets in Philadelphia; but it’s not open to the public.
The bank was the brainchild of then-Secretary of the Treasury Alexander Hamilton, who proposed that the bank sell $10M in stock to help establish its initial funding. Of the original $10M, $2M would be purchased by the United States. However, since the newly formed United States didn’t actually have $2M, the bank would loan the government $2M that the government would pay back in ten annual installments.
The creation of the bank was lumped in with an increase in excise taxes on liquor and the minting of paper currency. In order to push the bill through opposition to the excise taxes from southern members of Congress, Hamilton brokered a deal to support a bill that would move the capital from Philadelphia to what later would become Washington, D.C.
The First Bank of the United States was not the first chartered bank in the territory that is now the United States, that distinction belongs to the Bank of North America. That bank was chartered on the last day in 1781 by the Congress of the Confederation.
The Bank of North America would be succeeded by the First Bank of the United States.
The Bank of North America, with national bank charter #1, still exists today and is held by Wachovia, N.A. Wachovia still operates a branch at the northwest corner of 6th and Chestnut in Philly, the site of the original bank.
As you may have expected, that Wachovia branch is the longest continuously operating branch bank in the US, having been there since 1781.
The Second Bank of the United States was chartered 5 years after the charter for the First Bank of the United States expired and the Second Bank was again located in Philadephia.
Why a Second bank if the government allowed the charter for the First Bank to expire? War! The US found itself unable to finance the War of 1812 and thus chartered a Second Bank of the United States.
There was quite a bit of controversy around the bank, there’s plenty of resources out there to read about it if you’re interested so I’ll skip it here, but eventually it went bankruptcy five years after the expiration of its charter in 1836.
If you want to visit, it’s located on Chestnut Street between 4th and 5th Streets and it’s open to the public free of charge( National Parks Service info page).
There was no Third Bank of the United States, or any central bank, for 80 years following the expiration of the Second Bank’s charter. That’s when the Aldrich plan, named after Republican Senator Nelson W. Aldrich of Rhode Island, of fifteen regional central banks was floated and discussed.
Eventually, the Federal Reserve Act of 1913 instituted 12 Federal Reserve banks, headed by a seven member Federal Reserve board plus a single US currency, a Federal Reserve Note.
The twelve Federal Reserve banks are located in Boston , New York Philadephia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas and San Francisco
All nationally chartered banks are required to become members of the Federal Reserve System, which means they must buy non-transferable stock in their regional Federal Reserve bank.
In the 1930’s, the Federal Reserve Act was amended to include the Federal Open Market Committee that consisted of the seven members of the Board of Governors of the Federal Reserve System and five representatives from the regional Federal Reserve banks.
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