106
Unit 2 Money and Regulation
Terms
central bank
era of free banking
National Currency
Act
Office of the
Comptroller of the
Currency (OCC)
National Banking Act
bank note
bank panic
bank run
bond
Section 5.1
History of the Federal Reserve
System
Objectives
After completing this section, you will be able to:
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problems.
Central Bank in the US
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and developed the First Bank of the United States. A central bank is the
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that a central bank would make the country stronger. The First Bank,
chartered in 1791, was considered a central bank and:
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1811. Rural interests, as voiced by Thomas Jefferson, did not like the idea
of a central bank. Opponents believed it took power away from the states
and put it into the hands of eastern bankers.
Congress again saw a need for a central bank and chartered the
Second Bank of the United States in 1816. The Second Bank was very
similar to the First Bank, but it was much larger. The First Bank began with
$10 million on deposit and eight branches. The Second Bank started with
challenged. Farmers from the South and West strongly opposed it.
1811 . Ru
of a cent
a nd p ut
Con
S econd
similar t o
$ 10 milli
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Th e i d ea of a ce ntra l ba n k i n th e
US was co ntrove rs i a l beca use
ru ra l fa rm e rs fe lt it favo red
u rba n po p u l ati o ns .