United States Banking System

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understand or at the very least will care about the value of their money. This holds true today as well and with the advancement of technology this has become mainstream conversation. Although, economic theory or more particularly the Federal Reserve is talked today about more frequently and among many more individuals, I am amazed how little people know about the Federal Reserve (including myself).
To help understand the reason for the Federal Reserve one must understand the events prior to its inception. There have been two prior attempts of a central bank in America, both lasting for terms of twenty years. But I think we need to look a little further back to understand the reasoning for a central bank. Prior to the first attempt of a central bank in 1791 the banking system was work in progress to say the least. During the American Revolution the Continental Congress in need of financing for the war created the nation's first paper money, known as "continentals". Many ...

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or specie. It was during this time that National Banking Act was passed in 1863 this allowed nationally chartered banks to have their notes back by the government. This created a common currency and gave the added security that the public needed. However, the main problem with this type of banking system still existed. If people were concerned with their money or loss and or the value of their money the constant threat of" bank runs" or "panics" was still very much a concern for the bank owners. The inability of this current system of creating money during times of need and contracting money as well without devaluing money was a problem that seemed to create separation among the ...

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