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National Banking Acts

In the mid-1860s the United States passed a series of national banking acts that try to improve the soundness of the nations money supply and to help finance the Civil War by allowing the sale of US government bonds. A state chartered banks that issued banknotes had to pay a 10% annual tax on them thereby making them prohibitively expensive to issue.          

In the mid-1860s the United States passed a series of national banking acts that try to improve the soundness of the nations money supply and to help finance the Civil War by allowing the sale of US government bonds. A state chartered banks that issued banknotes had to pay a 10% annual tax on them thereby making them prohibitively expensive to issue.
However, banks were allowed to obtain charters as national banks and issued banknotes provided that they met certain conditions and agreed to be regulated by the newly authorized Comptroller of the Currency. It would be interesting to see how the best forex trading investors could have operated in such a climate.
Among the conditions necessary for issuing banknotes were the requirement that each bank have its banknotes printed by the US Mint to cut the risk of counterfeiting and the requirement that each bank back its banknotes with holdings of US government bonds that slightly exceeded the value of each banknotes issued. In that way each banknotes could always be redeemed at face value even if the bank failed.
state banks were allowed to continue to operate after the National Banking Acts were passed. Federal bank regulators expected the numbers of state banks to dwindle because the 10% tax on their banknotes would make it difficult for them to compete against national banks. However, they could only issue demand deposit liabilities otherwise known as checking accounts instead of banknotes. To the surprise of federal bank regulatorsFree Articles, checking accounts quickly became popular with the public. Just as the same way that investors receive forex trading tips the public also got word of the national agenda. But today we don't seem to be as wise as our forefathers. The fiat system that we have dilutes our purchasing power with the printing of more money. No longer is the money backed by any kind of precious metal are hard currency. Right now it is all paper and that will soon be replaced by an integer on some hard drive.

Article Tags: National Banking Acts, National Banking, Banking Acts

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ABOUT THE AUTHOR


Rhab Hendrik is an author who shares his best forex trading articles with others. He likes to help people learn forex trading and forex trading strategies.



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