I’m reading the Mystery of Banking, A History of Money and Banking in the US, and a few other books, but I’m having trouble seeing what the major differences were between: 1.) the first two national banks of the early years 2.) the national banks of the Civil War era, and 3.) the Federal Reserve. The one major difference I see between #1 v. #2 and #3 is that in #1, there were still a lot of state banks using their own bank notes. This is different in #2, because they taxed the state banks until they couldn’t really use their own notes (or function, for that matter). It’s obviously different in #3 because the universal currency was developed. If you could help me clear up the differences between the three I would really appreciate it.
Each iteration of federal government intervention involvement more centralization. The First and Second Banks of the United States began to centralize the gold reserves of the banking system and allowed some degree of coordinated monetary inflation among the commercial banks. The NBS went further, as you point out, by forcing the state banks into the system through the destruction of state bank notes. After that, state banks used the notes of national banks as reserves against their issue of demand deposits. The NBS also required each national bank to accept the notes of other national banks on demand at par and thereby, created a national market for the notes of each national bank. The Federal Reserve went even further by providing Federal Reserve Notes as a national currency and as reserve for commercial banks instead of gold. The Fed also requires commercial banks to accept the deposits of other commercial banks on demand at par with currency.