Financial Markets and Institutions (2-downloads)

1933

1913

1863

1832

1816

1811

1791

1782

F I G U R E   1 9 . 1

Time Line of the Early History of Commercial Banking in the United States

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Part 6 The Financial Institutions Industry

lax in many states, banks regularly failed due to fraud or lack of sufficient bank cap-

ital; their banknotes became worthless.

To eliminate the abuses of the state-chartered banks (called state banks), the

National Bank Act of 1863 (and subsequent amendments to it) created a new bank-

ing system of federally chartered banks (called national banks), supervised by

the Office of the Comptroller of the Currency, a department of the U.S. Treasury. This

legislation was originally intended to dry up sources of funds to state banks by impos-

ing a prohibitive tax on their banknotes while leaving the banknotes of the feder-

ally chartered banks untaxed. The state banks cleverly escaped extinction by

acquiring funds through deposits. As a result, today the United States has a dual