Talk:History of central banking in the United States

Merge US Banking and Central Banking?

Central banking is very different historically from banking. They do not fit well in same article, despite the similar titles. Rjensen 12:28, 10 April 2006 (UTC)

I concur with Rjensen. Banking and Central Banking are two very different subjects from an economic point of view. US Banking History should, no doubt, have a hot link to this article on US Central Banking History. However, the idea of Central Banking, originating in Europe in the late 19th Century, and much debated in the US from that time until its implementation with the Federal Reserve Act of 1913, is most assuredly a quite separate subject. The articles should not be merged. N2e 17:40, 30 May 2006 (UTC)

• Merge Paul 04:09, 13 June 2006 (UTC)

• Strongly oppose. The US Banking History article could certainly use a lot of improvement, but that is definitely not a reason to merge these two articles on very different aspects of US Banking. Cmadler 15:51, 28 August 2006 (UTC)

• Also strongly oppose. Private banking is very different from central banking, which serves a public policy function.

• Also strongly oppose. Not only this, but after the Second Bank of the United States was dismantled in 1836, there was a period of some 30 years with no central/federal administration of the US banking system, demonstrating that these institutions are distinct.

strongly oppose-not the same topic. It would be mixing micro with macro-economics

Hi, I originally proposed to merge the two articles because the content is partially redundant. I understand the logic between keeping private and federal banking separate. How about a merge in the other direction? Remove all the references from private banking from this article and transfer them to Wildcat Banking? Tony 22:38, 26 May 2007 (UTC)

• Oppose of course, as per above. Ridiculous suggestion. Will remove tag. Luwilt (talk) 01:38, 23 February 2009 (UTC)

Neutral POV

This article is chock full of assessments of what and who was good or bad, and there is usually little or nothing in citations to back up the opinions.

Agreed. This article is filled with arbitrary assessments of what ideas are "right" or "wrong". It fails to include a great degree of harsh criticism of the Federal Reserve and fails to mention the questionable constitutional grounds that this private organization was founded on. —The preceding unsigned comment was added by 64.126.161.11 (talk) 22:09:27, August 19, 2007 (UTC)

Edited section on "first central bank" for balance. Also edited section on creation of Federal Reserve in regards to "correct" thought as opposed to simply stating facts. —The preceding unsigned comment was added by 64.126.161.11 (talk) 22:25:46, August 19, 2007 (UTC)

Agreed. This is a very controversial topic and no assumptions should be made about who is right or wrong and the legality of the federal reserve is questionable and this article should make no assumption of that —Preceding unsigned comment added by 140.160.81.161 (talk) 21:29, 10 November 2008 (UTC)

While there is no doubt that this is a controversial topic and that the article itself should make no assumptions about what is right or wrong, that does not mean that the article should not mention the legal and constitutional issues. Also, I do believe there should be at least a mention of Jekyll Island, especially since other Wikipedia articles mention the connection of Jekyll Island and the Federal Reserve. —Preceding unsigned comment added by Crazypower (talk • contribs) 16:06, 21 November 2008 (UTC)

First Bank vs Fed: Profit, Money Supply

Profit

The section about First Bank of the US states that it "differed in many ways from today's central banks". The first given example to illustrate these differences is that "it was partly owned by foreigners, who would share from its profits".

If you carefully consider what the Federal Reserve System has to say about itself (http://federalreserve.gov/generalinfo/faq/faqfrs.htm, "Who owns the Federal Reserve") then you'll figure that the Fed issues shares (without telling anyone how many an to whom). The tonality in the Fed's FAQ appears to be carefully chosen to suggest that there are differences between private banks and the Fed, and in fact, it appears the Fed cannot be "owned" by someone due to restricted rights which apply to those shares (and probably the nomination process of chairpersons). However, as a matter of fact, these shares pay a 6% dividend by law, and the shaeholders are private banks which are then called "member banks".

This is the difference between the Fed and other central banks which give their profits to the respective treasuries. As an example, take the Dutsche Bundesbank (unfortunately, currently only the German Wikipedia article contains a section about the profits -- have added the issue to the english discussion page).

So when it comes to sharing profits, the current tonality suggests First bank was sharing profits while the Fed (which is implicitly assumed to be one of today's central banks) does not, which is not the case.

Next point, sharing profits with foreigners. Obviously, the Fed issues shares autonomously without disclosing the reipients. Given the founding history, so the public can't know. Given the founding history it doesn' seem unlikely at least a few european banks hold shares.

So while the nature of the Fed's shares do not justify the notion of ownership, it may still be the case that it shares earnings with foreign shareholders, directly or indirectly through one of the US shareholding banks.

Again, this is not what the current tonality suggests.

Money Supply

Then, the next sentence is, "It was also not solely responsible for the country's money supply; its share was only 20%, while private banks accounted for the rest."

I don't see much difference to today's situation, where most of the fiat money is created by private banks; and especially given the first paragraph of the referenced http://en.wikipedia.org/wiki/Money_supply : "There are several ways to define "money", but standard measures usually include currency in circulation and demand deposits."

Hence, I find the current wording somewhat misleading with respect to the underlying definition of money supply. I guess what's really meant is that when First was in business, "normal" banks were allowed to issue currency (bank notes) too but I'm not familiar with those historic details. —Preceding unsigned comment added by 80.187.104.56 (talk) 08:39, 12 May 2009 (UTC)

-FED?-

When you call it the "Fed" throughout the whole article it makes you sound like a "Ron Paul-er". Maybe if you called it the Federal Reserve people would take you more seriously? — Preceding unsigned comment added by 143.236.117.102 (talk) 22:39, 22 November 2011 (UTC)

Intro?

What's with the short intro, that just paraphrases the title in bold? Was it the subject of an edit-war that got stubbed, or just not developed. 71.224.206.164 (talk) 15:00, 16 February 2010 (UTC)

Should we call it "free banking" or not?

I just have to say that the usage of this term "Free Banking" is misleading. I realize that all the scholars call the period from 1836-1862 by this name "Free Banking" but, in fact, it was relatively more regulated than the period from 1810-1835. By "Free Banking", it is clear that the intent is the refer to federal banking regulation. In that period, from 1836-1862, there was a high degree of state regulation on banks, and I would argue that it was a relatively high regulation period of time, higher in fact than the period during the "Second Bank of the US". So, I want to suggest that the term "Free Banking" be corrected to "Federally Free Banking Period". Going one step further, I think it would be more accurate to call the period of 1810 to 1835 as the "Free Banking" period and call the period from 1836-1862 as the "State Regulated Period". — Preceding unsigned comment added by Djangofan (talk • contribs) 16:27, 21 July 2013 (UTC)

I agree with your facts (and you obviously know your stuff). However I think the wikipedians would say that this borders on "original research". That is, they want the wikipedia to reflect a summary of accepted knowledge and break no new ground. So, for example, you might instead write a refereed paper in an academic journal on use of the term 'Free Banking' and see if you get any traction. Alternatively, if you had a strong outside source already making this point, you could edit the article here and reference it. Just trying to be helpful ... --LondonYoung (talk) 10:50, 22 July 2013 (UTC)

Clarification of back up with Treasury securities

"National banks were required to back up their notes with Treasury securities," - Could someone expand on this? Did they have to buy securities and keep them as reserve? Was it a fixed ratio of deposits? Or only some percentage of issued credit had to be backed by securities? Thanks Pas (talk) 02:30, 21 April 2014 (UTC)

simple reading of the Act would explain:--

---An Act to provide a national Currency, secured by a Pledge of United States Stocks, and to provide for the Circulation and Redemption thereof.

Sec. 15. And be it further enacted, That every association, after having complied with the provisions of this act preliminary to the commencement of banking business under its provisions, shall transfer and deliver to the Treasurer of the United States any United States bonds bearing interest to an amount not less than one third of the capital stock paid in; which __bonds shall be deposited with the Treasurer of the United States__, and by him safely kept in his office until the same shall be otherwise disposed of, in pursuance of the provisions of this act.

Section 16. And be it further enacted, That upon the making of any such transfer and delivery, the association making the same shall be entitled to receive from the Comptroller of the Currency circulating notes of different denominations, in blank, registered and countersigned as hereinafter provided, equal in amount to __ninety per centum of the current market value of the United States bonds__ so transferred and delivered, but not exceeding the par value thereof, if bearing interest at the rate of six per centum, or of equivalent United States bonds bearing a less rate of interest; and at no time shall the total amount of such notes, issued to any such association, exceed the amount at such time actually paid in of its capital stock.

Sec. 41. And be it further enacted, That every such association shall at all times __have on hand, in lawful money of the United States__, an amount equal to at least twenty-five per centum of the aggregate amount of its outstanding notes of circulation and its deposits;

"lawful money" ie. United States notes, commonly reffered to as "greenbacks" — Preceding unsigned comment added by 184.69.162.158 (talk) 19:37, 20 October 2014 (UTC)

Clarification and Citation of "Free Banking" era section.

The current contents of the "Free Banking" era portion seem entirely underdeveloped and worth revisiting for someone so properly motivated. While dodging the question of naming conventions (yes, state regulations did exist, but they also call the Panic of 1819 a panic, things will end up with poor names inevitably), the data table provided and most of the successive claims lack citation. While some of it is invariably true, other claims lack citations despite being disputable. Bank and systemic instability, especially measures of risk during the free banking era has continued as a topic of discussion amongst academics, especially stemming off the work of Gorton (2015), Rolnick and Weber (1983), and Rockoff (1975). The citations that do exist in this portion, including Shaffer (2005), are neither credible, nor convincing. In fact, the book by Shaffer being cited under this heading was not published until 2010. It seems likely that a bulk of the content featured in the section actually stems from Chapter 2 of "The Changing Face of American Banking" by R.R. Chaudhuri (2014), but more work would need to be done to verify this and add citations or corrections where needed. 72.77.93.16 (talk) 03:28, 16 November 2024 (UTC)

As an addendum, the "Michigan Act" referenced in this portion is more likely 'The Act to Organize and Regulate Banking Association,' which was passed in 1837, by the Michigan legislature. — Preceding unsigned comment added by 72.77.93.16 (talk) 03:36, 16 November 2024 (UTC)