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The Bank of North America was the first chartered bank in the United States, and served as the country's first de facto central bank. [1] It was chartered by the Congress of the Confederation on May 26, 1781, and opened in Philadelphia on January 7, 1782. [2] [3] [4]
Also, it was not solely responsible for the country's supply of bank notes. It was responsible for only 20% of the currency supply; state banks accounted for the rest. Several founding fathers bitterly opposed the bank. Thomas Jefferson saw it as an engine for speculation, financial manipulation, and corruption. [3]
[2] Investment banking began in the 1860s with the establishment of Jay Cooke & Company, one of the first selling agents for government bonds. [2] In 1863, the National Bank Act was passed to create a national currency and a federal banking system, and to make public loans. [2] But at that time not all parts of the country had become states.
1652 pine tree shilling Obverse and reverse of a three pence note of paper currency issued by the Province of Pennsylvania and printed by Benjamin Franklin and David Hall in 1764. Early American currency went through several stages of development during the colonial and post-Revolutionary history of the United States.
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[2] On many issues the interest rate was chosen to make interest calculations particularly easy, paying either 1, 1 + 1 ⁄ 2, or 2 cents per day on a $100 note. Characteristically, the issues were not extensive and, as it has been observed, "the polite fiction was always maintained that Treasury Notes did not serve as money when, in fact, to a ...
These banks could issue bank notes against specie (gold and silver coins) and the states regulated the reserve requirements, interest rates for loans and deposits, the necessary capital ratio etc. Free banking spread rapidly to other states, and from 1840 to 1863 all banking business was done by state-chartered institutions.
The overseas credit allowed colonists to develop a system of domestic credit. The domestic credit was administered in two forms: book credit and promissory notes. Promissory notes are very similar to bonds, because they detailed the amount of debt, date of issue, date of redemption, form of repayment and an interest rate.