By removing federal funds and disbursing them to various state banks on Sept. 10, 1833, Jackson began a period of rather uncoordinated American banking that would last until the establishment of the Federal Reserve in 1913 — and even that would not restore American banking to completely sound footing, as the Great Depression later proved. The Senate censured Jackson a year later for this act, which had been accomplished unilaterally without congressional support.
The United States went on to spend nearly half of the intervening eight decades between the collapse of the Second Bank and the beginning of the Federal Reserve mired in a number of recessions. Real per-capita GDP grew 225% over those 80 years, but the 80 years following the establishment of the Federal Reserve produced real per-capita GDP growth of 450%.
Few of the banks established before Jackson’s Bank War exist in any form today. The FDIC’s directory counts only 16 extant banks with a founding date earlier than Jackson’s destruction of the Second Bank, but some of the world’s most notable institutions are part of that list. The Bank of New York Mellon Corporation (NYSE:BK) has the most history of any American bank, as it was formed less than a year after America signed the peace treaty that ended its war of independence. It also happens to be the home of what remains of the first central bank of the United States. JPMorgan Chase & Co. (NYSE:JPM) is not far behind: It contains the remnants of the Bank of Manhattan, which was formed shortly before the start of 19th century. Citigroup Inc. (NYSE:C) also traces its origins to New York City, where its forerunner, the City Bank of New York (NYSE:BK), was founded in 1812. State Street Corporation (NYSE:STT) holds the oldest continuous charter in the United States, which dates back to 1792. These four megabanks, having survived both the early days of American central banking and eight decades of banking laxity, now hold a combined $3.6 trillion in total assets — a sum 125 times the inflation-adjusted GDP of Andrew Jackson’s America.
The article An America Without a Central Bank originally appeared on Fool.com and is written by Alex Planes.
Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more insight into markets, history, and technology.The Motley Fool owns shares of Citigroup Inc and JPMorgan Chase.
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