Page 17 - Book4E
P. 17
$13 trillion in banking assets, more than 84% of all deposited money. These banks could be expected to continue to control the greatest amount of money because, based on the concept of loaning money on the amount of money held in deposit, those banks with large amounts of deposited money available to them would be able to make the great- est number of loans and for the greatest amount of money.
State banking
In 1832, attempts to create a Bank of the United States had failed, and state governments became the overseers of the banking sys- tem. Each bank developed its own currency to use for loans. Bank examiners had the job of visiting the banks regularly to ensure the bank carried enough cash, i.e., gold and silver, to redeem the paper currency should the depositors require it. Because the examiners didn’t always do their jobs as they should, those hold- ing the paper currency sometimes found themselves with worthless pieces of paper. By 1860, there were more than 10,000 different currencies in circulation. As you can imagine, counterfeiters had a heyday, and many banks failed.
History of Banking 7
