As Americans, we have all been taught in school about American history. The story is age-old and every kid knows it – but one thing we aren’t taught about is how our financial system came into existence. America’s financial system has been the subject of much contention for years now; some hail it as a work of genius, whilst others call for reform, citing the 2008 economic crash and the current COVID-19 pandemic’s economic downfall for their reasoning.
Why Is Our Banking History Important?
America’s financial history is important because it set the wheels in motion that still propel our current society today. For better or for worse, this knowledge will help you to better understand your own financial situation, your rights and the avenues you could be exploring. It also can heighten your respect and admiration for the foundations of this country; conversely this knowledge can advance your ability to critique America for its inherent problems which stem from the constitution.
How was America’s bank started?
In 1791, just after the American revolution which saw the American army win the war against the British and achieve freedom, the US Treasury Secretary Alexander Hamilton created America’s bank. The reasons for starting the bank were:
- To pay debt. That’s right, America’s financial system was created to pay off debt which was owed to France, after the French had aided the Americans in the war. In order to become a part of the global financial system and make their credit competitive, the American congress sanctioned the beginning of the bank, kick-starting the system which we still live within today.
- To standardize the currency. At the time, after having used British currency up until then, the conception of the American bank allowed the country to establish its own currency and make it an official currency in global terms.
- To help out the new governmental system. Without funds to live on, America’s new congress would have fallen flat pretty fast. The creation of the American bank helped the revolutionaries to fund and support the congress as they worked on the new order of things; this propped up congress’ power and helped them function.
The constitutional convention, which aided the creation of the bank, is a fundamentally important milestone in American history. Read more about the banking history in America to educate yourself on this fascinating piece of history.
What has changed?
Of course, many things have changed since 1791 – not least the abolition of slavery, two world wars, multiple economic crashes and drastic changes in government. The times have moved at a rapid pace, constantly reinventing America’s financial system which has had to adapt to many adverse circumstances of late.
Nevertheless, the fundamentals of our financial system, for better or for worse, still lie in the hands of Alexander Hamilton in 1791. Educating ourselves on America’s capital and how it came to be is an essential step to understanding our own country better, and progressing it into new heights as the years go by.