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Chapter 5: The Fed on Steroids

Corporation, JP Morgan Chase and Co., Citigroup Inc.,
Wells Fargo and Co., Goldman Sachs Group Inc., and
Morgan Stanley.

HISTORY OF BANKING IN AMERICA

At the urging of Alexander Hamilton, Congress
established the First Bank of the United States in 1791.
Many Americans, were uncomfortable with the idea and
opposed it. When the bank’s 20-year charter expired in
1811, Congress refused to renew it by one vote.

In 1816, Congress agreed to charter the Second
Bank of the United States by a narrow margin.
However, when the country elected Andrew Jackson as
president in 1828, he vowed to kill the bank. Citizens
supported his attack on the bank, and when the Second
Bank’s charter expired in 1836, he did not renew it.
In 1893, a bank panic triggered a depression; the
economy stabilized only after the intervention of
financial mogul J.P. Morgan. Some people began to
wonder what would happen if there was no J.P. Morgan
to bail the country out in the next crises. It was clear
that the banking and financial system needed serious
attention.

The U.S. Federal Reserve got its start on Jekyll
Island in 1910, a privately owned island off the coast of
Georgia. The small group of powerful bankers at the
meeting represented influential banks worldwide. The
institutions included the J.P. Morgan companies, the
banking conglomerate of William Rockefeller, and
Kuhn, Loeb, and Company, the Rothschild banks of
England and France and the Warburg banking
consortium of Germany and the Netherlands.

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