1. Mid-1700'sThe The colonies have no banking system and no common currency. European banks and governments are meeting capital needs. While foreign coins and some colonial paper money is in circulation, bartering is a common means of payment. 1782 The Bank of North America, established by the Continental Congress, becomes the first chartered bank in the U.S. 1784 The state of New York charters The Bank of New York. 1791 The U.S. charters the First Bank of the United States—the government’s first attempt at a central bank. The bank has a 20-year charter, which is not renewed. In 1811, the bank is bankrolled by New York merchants and chartered by the state of New York. Today the bank is known as Citibank. 1799 A group of New York investors establish the Bank of Manhattan to fund construction of a water supply for New York City. The state of New York charters the bank.

2. The Early 1800s The Industrial Revolution produces a new class of merchants and manufacturers. The need for capital increases. Between 1815-1819, the U.S. economy booms and more banks exist. As a developing country, the U.S. has a reputation for not repaying loans, and many European banks refuse to lend to the U.S. government. 1809 The Farmer's Exchange Bank in Glouchester, Rhode Island, fails—the first U.S. bank failure. 1816 The Second Bank of the United States, which is the U.S. government's second attempt at a central bank, is established. Its 20-year charter is not renewed, and the U.S. does not have another central bank until 1913. 1819 More than 420 banks exist in the U.S. All of them printing bank notes and making loans. The Panic of 1819 The Second Bank of the United States calls its loans, a panic sweeps the U.S., and many banks fail. 1820 Approximately 300 banks operate in the U.S. 1829 New York is the first state to adopt an insurance plan for bank obligations. Between 1829 and 1866, five other states adopt similar plans. 1831 Comly Rich house, Philadelphia. First U.S. home financed by a savings and loan association. Rich, a maker of combs, received a loan in 1831 from the Oxford Provident Building Association, the nation's first savings institution. 1837 With the demise of the Second Bank of the United States in 1837, only state-chartered banks exist. During this period, known as the Free Banking Era, state chartering standards often are not very stringent, and many new banks are formed. Large numbers of them will fail. The era ends with the passage of the National Currency Act in 1863. 1843 The first issue of the Bank Note Reporter is published. This weekly report on the value and validity of the bank notes was the most respected of many such publications that merchants relied upon to evaluate the reliability of currency.

3. State Banks The Suffolk System and Safety Fund Six Boston banks joined the Suffolk Bank in presenting county banks with their notes. In this way the Suffolk Bank a clearing house for currency. The deposits into the Suffolk bank made it one of the most profitable banks. Other banks shared in the profits by ownership of Suffolk stock. Through this system New England had a uniform currency. This system was continued until the legislation did away with state bank notes. The Suffolk system was the model for the Federal Reserve System. The state deposit insurance schemes were the fore runner to the Federal Deposit Insurance that started in the 1930’s.

4. Free Banking The most important of the bank experiment was free banking. This banking started in New York when the Assembly passed a law in 1838. The law stated that an individual or group of individuals could create a bank if they meet the regulations. Free banking law required that these banks deposit bonds with the state banking authority. If the bank refused to redeem a note in specie, a complaint could be issued to the state banking authority and the bonds would be sold to redeem the bank notes. This law created one of the most successful systems in the country. The Michigan law only required the bank to show that they had specie on hand. The inspectors noticed that the species from many inspections look similar. Later they found that a sleigh drawn by fast horses preceded them from bank to bank. Almost all banks that operated this way were gone by 1840 but many people were left with worthless notes.

5. The Forstall System Louisiana law of 1842 set up this system that was a conservative and a model of sound banking. This law required that the banks have one-third of their reserve be in specie compared to notes and deposit liabilities. New York and Louisiana were the main shipping port in the US.

6. 1849 The Gold Rush begins. 1850-1899 The Mid-1800s European banks finance 30,000 miles of railway tracks in the U.S.—a new phase in high finance with the potential for large returns. Railroads become the driving force of the economy. The railroads open up the West and provide demand for the new steel industry, which makes new commerce and new industries possible. New cities emerge along the railways, and commerce organizes around these cities. Speculators seek capital for their new ventures. Prior to the Civil War, the U.S. has a loose system of finance and banking. As the nation grows, it demands a more mature financial system. The National Banking Acts of 1863, 1864, and 1865 are a significant movement in that direction. With the demise of the Second Bank of the United States in 1837, only state-chartered banks exist. During this period, known as the Free Banking Era, state chartering standards often are not very stringent, and many new banks are formed. Large numbers of them will fail. The era ends with the passage of the National Currency Act in 1863. 1860 There are 1,562 state banks. 1862 9,000 different bank notes are in circulation; 5,500 fraudulent bank notes are in circulation.

7. 1863 The Civil War destroys the South's economy; the North's economy flourishes. President Abraham Lincoln composes the final Emancipation Proclamation on January 1, 1863. National Currency Act of 1863 (Became known as the National Banking Act in 1864) This act: Establishes a national currency: the dollar Establishes national banks, which creates the dual banking system with national and state chartered banks—the only such system in the world. National Banking Act of 1864 This act: Establishes the Office of the Comptroller of the Currency (OCC) Initiates a system of bank examinations. National Banking Act of 1865 This act, intent on getting rid of bank notes, levies a tax on state currency. The tax goes from 2 percent to 10 percent, resulting in the use of checks. 1865 There are 349 state banks. There are 1,294 national banks.

8. Sources Sited: Walton, Gary M., and Hugh Rockoff. History of the American Economy. International ed ed. United States: South-Western, Div Of Thomson Learning, 2010. Print. "FDIC: Learning Bank." FDIC: Federal Deposit Insurance Corporation. FDIC, n.d. Web. 7 Oct. 2010. <http://www.fdic.gov/about/learn