Lec5_1_26 - Lecture 5: History of American Business:...

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Lecture 5: History of American Business: Business, Economics, and the Civil War National Bank issue. The wealthy planter class in the South and merchant elite in the North precluded extensive regional solidarity. Alexander Hamilton argued for a National Bank – in 1791 Congress gives the bank a 20-year charter and establishes the bank. 4/5 of stockholders were private, wealthy investors and 1/5 is government held. This First Bank of the United States was a place for the government to deposit its money. It set up branches in regional port cities. This allows merchants to move money from place to place, making regional trade easier. The bank also stabilized currency. The First Bank issued bank notes entitling people to a certain amount of gold at any bank branch. Thus the bank could control the money supply and stabilize business transactions, inflation, etc. People would be more willing to borrow and loan. For business people, this system is quite healthy and popular. Others, however, opposed the bank as an elitist, monopolist, monarchist institution. It was aimed at wealthy people and not small farmers, etc. It helped the Northern elite more than the Southern planters, who had less liquid capital (cash). Around 1800, the Jeffersonian Revolution occurs and the principles undergirding the national bank come under fire. In 1811, congress fails to renew the charter for the bank. The next year, the US goes to war with Britain, 1812, and finds itself going to war without any central monetary policy/institution. Wealthy individuals have to loan money to banks and government to finance the war. Different regional banks issue their bank notes, but there was uncertainty regarding this
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This note was uploaded on 10/17/2011 for the course MGNT 364 taught by Professor Staff during the Spring '11 term at UNC.

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Lec5_1_26 - Lecture 5: History of American Business:...

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