U.S. Free Banking Period
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This research examines the so-called ôFree Banking Periodö in the United States. This period officially began in 1837, when the first free banking law was enacted in Michigan in the wake of the demise of the Second United States National Bank (Hammond, 1957, p. 572). Free banking had been proposed in New York State as early as 1825, and the concept originated in England at a much earlier date (Hammond, 1957, p. 572). Free banking came to its ultimate end in 1865, when Congress enacted legislation imposing a ten-percent tax on all bank notes issued under state authority (Morison & Commager, 1951, p. 7). Subsequent to that time, no one would accept bank notes other than those issued by the United States government. Tariffs imposed on foreign goods in 1857 had earlier resulted in financial distress in the South, and many free banks in that area failed as a result. Subsequent to the beginning of the Civil War in 1861, Southern banks and firms refused to honor debts to Northern banks and firms. Further, the tariffs of 1857 were increased. The combination of these factors placed severe financial stress on the North, and many free banks in that area failed. The National Bank Act became law in 1863, and its provisions made it more difficult for the remaining free banks to operate (Parkes, 1953, p. 373). The imposition of the ten-percent tax on their bank notes in 1865 put all free banks in their graves.In this examination of the free banking period,
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ause, because no was quite sure just what a particular supporter or group of supporters of the Loco Foco movement sought in the long-term (Hammond, 1957, p. 576).
Prior to the enactment of free banking legislation, New York State enforced strict laws on who could conduct banking. Anyone engaged in banking without specific authorization from the state was subjected to severe penalty. New York State offered a $500 bounty for the conviction of each unauthorized banker (Hammond, 1957, p. 577). Further, all promissory notes for borrowed money made in favor of unauthorized bankers were deemed null and void (Hammond, 1957, p. 577).
Several aspects of New York State law muddied the waters of banking authorization. One of these aspects was a provision of the 1821 revision of the state constitution that required the approval of two-thirds of the elected members of each branch of the state legislature for the creation of any new corporate body (Hammond, 1957, p. 578). With respect to banks, the issue was whether a bank was a corporation in the context of the state constitution. This issue played a major role in the free banking period in New York State. There was not doubt that this provision of the state constitution was intended to
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Some common words found in the essay are:
Loco Foco, Bank Act, Supreme Court, Beard Beard, Safety Fund, Correction Errors, Furlong Keeley, United Bank, England York, Loco Focos, free banking, hammond 1957, banking law, banking system, beard beard, free banking law, supreme court, free banks, bank notes, banking concept, united bank, court correction errors, free banking concept, hammond 1957 573, beard beard 1960,
Approximate Word count = 4955
Approximate Pages = 20 (250 words per page)
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