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Essay / Research Paper Abstract
A 14 page paper. The essay traces the evolution of the banking system in the United States to demonstrate the different systems that were tried. The first central bank was established in 1791, free banking was the model between 1837 to 1862 and the Federal Reserve was established in 1913. The writer then comments on which system would be more stabilizing. Bibliography lists 10 sources.
Page Count:
14 pages (~225 words per page)
File: MM12_PGfrbnfd.rtf
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Unformatted sample text from the term paper:
receive a Congressional charter was the Bank of the United States in 1791 (Flaherty, 2003). Controversy about this central bank was almost immediate with farmers believing the bank would favor
"commercial and industrial interests over their own" (Flaherty, 2003). They were also concerned about using paper as money instead of gold and silver (Flaherty, 2003). Ownership of the bank was
a huge issue, as well it should have been, because by 1811, foreigners owned 70 percent of the banks stock (Flaherty, 2003). Thomas Jefferson argued strongly against the bank even
alleging it was unconstitutional in that it extended federal powers to the bank (Flaherty, 2003). Jefferson believed it expanded the power of Congress too far (Flaherty, 2003). Hamilton argued that
the Congress had the right to tax citizens, that it regulated commerce and that it could borrow money (Flaherty, 2003). President Washington was convinced and signed the charter (Flaherty, 2003).
These are similar arguments to those being used since that time up to the present. Historians have declared the Bank of the United States was a success because it was
managed well Bank of the United States (Flaherty, 2003). Unlike todays banks, it had very high liquidity and it was even earning a profit through large loans to both private
and public entities (Flaherty, 2003). However, the charter was not renewed in 1811 (Flaherty, 2003). With the lack of a central bank giving orders, the state banks began issuing more
of their own currency, i.e., bank notes (Flaherty, 2003). The number of banks grew exponentially, the rule seemed to be if there were a church or a saloon, that town
was big enough for a bank (Flaherty, 2003). Inflation ran rampant, as high as 13.3 percent (Flaherty, 2003). With currency out of control, a new push was made for a
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