Position:Home>History> About Hamilton's National bank , and banks in general?

A national bank and a central bank are not necessarily the same thing!. A national bank system we do not have but we do have a central banking system!.

The subject of the American central banking system is long, complex, and filled with a myriad stories about the people and events surrounding it!. There have been those who passionately support such a (central) system of banking as well as those who detest it as the ruination of the country!. Both views have merit and both have are replete with allegations based on more emotion than fact!. Here we can only offer snippets of the story which truly deserves a life time of study!.

The short version is that the efforts of Alexander Hamilton brought the first American central bank into existence and this bank continued until 1832 when the renewal of its charter was vetoed by President Andrew Jackson!.

Some things that you should keep in mind:

While there have been many banks, only the federal government has the Constitutionally delegated power to create money and thereby control the monetary system!.

Through all of the years of America, there have been State chartered banks!.

The desire is to have a ‘reliable’ monetary system from which business can financial decisions in which they have confidence in futures!.

Banks have financial reserves, that is, funds which bank up actions of the bank for such things as loaning money!. While it may seem strange, banks loan more money than they have in reserves!. They can do this for two reasons, one is that real (hard) money doesn’t leave the bank but rather the loaned amount is ‘noted’ as being in the customer’s account!. Secondly, banks depend on the reality that bank customers will not all ask for their personal funds at the same time and therefore only a small portion of the reserve funds are required for use at any given point!.

The higher the confidence the public has in the bank, the less will be the demand on bank reserves!. In part such confidence is impacted by the business cycle and its relationship to the monetary system!. Through the years business has cycles of highs and lows which can be impacted by a loss of confidence in the economic conditions!. One theory is that central banks can help control such cycles!.

In 1907 a panic on Wall Street, aborted by J!. P!. Morgan, demonstrated (to some) the need for a central bank, which was created six years later in 1913!. This is the central bank system that exists today!.

Even so, there are still State charted banks!. These banks are not entirely independent of each other!. Local banks are correspondent with regional banks and these regional banks are correspondent with the central bank!. In part the idea is that any bank which has troubles is covered by all of the other banks in the central bank system!. This bank also monitors each bank and (based on performance) determines the size of the reserves each bank must hold!.

There is much, much, more to the banking system but this is a start!.Www@QuestionHome@Com

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there have been many instances in history where a president (like andrew jackson) did not like the banking system, and consequently removed it!.

Right now we do not have a national baking system!.Www@QuestionHome@Com

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