Compare the National Banking Acts of 1863 with the chartering of the First and Second Banks
of the United States. Specifically, address the motivations behind each and the impact that each
had on 19th-century banking in the United States. (4 points)
The National Banking Acts of 1863 were implemented during the Civil War as a way to create a national banking system that would fund the Union war effort. The acts established a system of nationally chartered banks that were required to hold federal government bonds to issue banknotes. This helped to create a more stable currency system and promoted economic growth by providing a standardized banking system across the country.
The chartering of the First and Second Banks of the United States, on the other hand, were motivated by a desire to create a central banking system that could regulate the financial system and manage government funds. The First Bank was established in 1791, but its charter was not renewed in 1811 due to opposition from states' rights advocates and those who believed it gave too much power to the federal government. The Second Bank was established in 1816, but its charter was not renewed in 1836 after a veto by President Andrew Jackson who believed it was unconstitutional and favored the interests of the wealthy.
In terms of impact, the National Banking Acts of 1863 helped to modernize and stabilize the banking system in the United States by creating a uniform currency and providing a system for banks to regulate themselves. This helped to promote economic growth and stability during a period of rapid industrialization and expansion.
The First and Second Banks of the United States had a significant impact on 19th-century banking by laying the groundwork for the creation of a central banking system in the United States. While both banks faced opposition and were ultimately dissolved, they helped to establish the idea of a central bank that could regulate the financial system and manage government funds. Their legacy can be seen in the creation of the Federal Reserve System in 1913, which continues to play a central role in the American banking system.