Many historians agree that one of the culminating reasons, the “last straw,” that lead to the Revolutionary War in America was due to central banking.

Specifically to the English attempt to place the colonies under the monetary control of the Bank of England.

Not all of America's Founding Fathers were against central banking and the new powers for the fed that it created.

Alexander Hamilton, America's “Founding Lawyer,” believed that a central bank was the answer to the new nation's financial woes after the Revolution.

The First Bank of the United States was created, under his plan, in 1791 and chartered by Congress to stabilize the economy and eliminate the war debt.

Bitterly opposed by others such as Thomas Jefferson and James Madison, the bank could only be created if Hamilton agreed to an automatic dissolution of the bank at the end of its charter.

Compared to today's central banks and our own Federal Reserve System (“The Fed”), the First Bank of the United States was very liberal.

That bank's shares in the total national money supply accounted for only 20% while private, unaffiliated banks accounted for the rest.

After the dissolution of the First Bank and the similar Second Bank, an era known as the Free Banking Era ensued, where no centralized bank was existant.

WHAT BANKS ALWAYS DO

During this time, the average life span of most banks was about five years, as banks quickly succumbed to the temptation to over extend themselves, despite the value of gold and silver (upon which most notes were based) being stable.

During this same time frame, in order to offer stability, local banks took over what today's FDIC does, acting as deposit insurers and trading notes from various banks as a clearinghouse.

As a measure to provide loans and keep the Union going during the Civil War, the National Banking Act was passed in 1863. This created a uniform, national currency and National Bank notes were backed up by Treasury securities (the promise of the United States Treasury) to give their money more confidence.

The government, flush with new powers for the fed, then instituted a new tax on state (non-national) banks at 10%, forcing most of these banks to convert to the National Bank standard.

STATE BANKS FIGHT BACK

To combat this, savings and loan accounts were converted to “checking” accounts