Whether you realize it or not, banks are a business. They’re one of the oldest and most important businesses in America. For instance, the Bank of New York, now the Bank of New York Mellon, was founded in 1784. It’s now well over 200 years old and still going strong. But how have they stood the test of time and become ingrained in our society?
Banking Back in the Day
Before the birth of modern-day banking in 1784, Colonial Americans got by on credit; lending to each other, and borrowing both from merchants and banks in the UK. Money like dollars and cents weren’t around yet, so they relied on foreign money issued by the governments of each colony.
When George Washington became America’s first president there were only three banks. Alexander Hamilton was appointed Secretary of the Treasury and began to organize America’s financial system, implementing the federal revenue system. He created the US dollar using gold and silver coins that acted as reserves, backing the money of banks as more began opening.
Hamilton founded the Bank of the United States, which had a $10 million value. The federal government-owned 20% of the Bank’s shares and had the power to open branches of the bank in any American city. Just before the Civil War started, there were over 1500 of them and their expansion greatly influences the overall exponential growth of the US economy.
Despite this, the Bank of the United States met opposition. Some state banks disliked competing against it and being under its regulation, amongst other things. The Bank of the United States came up against stiff competition in congress. When its charter expired in 1836, it was no longer America’s central bank.
This led to several problems, such as financial instability, high unemployment and different types of money which made counterfeiting big business in its own right. It was in Abraham Lincoln’s presidency that national banks were chartered that produced one currency, a national currency that was backed by American bonds and improved the overall financial system.
Banking Today
Centuries later, banks are still the cornerstone of American society. Nearly everyone will have some connection to a bank, whether it be investments, an account, or paying bills. Unlike back when they were first formed, they are no longer seen as exclusively belonging to the financial sector. Society knows more about them thanks to their expansion into other areas of our lives.
Banks have been featured as the main backdrop in films, like The Banker and Point Break. They’ve become integral parts of plots in books, such as Free to Trade and The Predator. Banks have even formed the basis of entertainment, such as the bingo game, Reel Banks, and Basset, a card game. Having banks appear in different genres has enabled them to become more integrated into society and less shut off than they were when first opened.
Modern-day American banks have been built on the foundations of the banks created by Hamilton and subsequently Lincoln’s administration. It’s not to say their journey has been easy, far from it. But learning about their evolution and their place in America’s financial industry is something that will never lose significance.
Also Read: 8 Advantages of a Cloud-Based Core Banking System
