108 Unit 2 Money and Regulation Creation of the Federal Reserve System Its development was affected by events and failures in the two previous central banks as well as the development of the country. Figure 5-1 illustrates historical events in relationship to the development of the US central bank. Checkpoint 5.1 1. Why were rural citizens opposed to the First Bank of the United States? 2. What did the US Supreme Court decide in McCullough v. Maryland? 3. Why is the time from 1837 to 1863 known as the era of free banking? 4. What two things did the Offi ce of the Comptroller of the Currency accomplish when it was first created? fi 5. How does a bank panic usually start? Build Your Vocabulary As you progress through this course, develop a personal glossary of banking terms and add it to your portfolio. This will help you build your banking vocabulary. Write out a defi nition for each of the following terms, and add it to your personal glossary. central bank era of free banking National Currency Act Offi ce of the Comptroller of the Currency (OCC) National Banking Act bank note bank panic bank run bond 1776 American Revolution 1812–1814 War of 1812 1861–1865 Civil War 1791–1811 First Bank of the United States 1816–1836 Second Bank of the United States 1863 OCC created 1913 The Fed created Figure 5-1. Timeline of US Central Banks BIZ TIPS idea of a cen e idea of a central bank e e The The d d idea d e e h f a a a a a f a f The T T T i e e e o o e d a o a e T e ce T o he is not a mod is not a modern one. The mod t o i s o n s s m d n m n n m i s m i Bank of Eng Bank of England, which n E B B B B B B f o E E n k is the cen is the central bank for cen i s r e the United Kingdom, was founded in 1694. Other nations also had central i l h d l banks centuries ago.