Dweezel

In the midst of the Civil War, banking in the United States was chaotic and unruly. With no central regulation by the states there were thousands of financial institutions and no confidence by Americans because they didn't know if their Bank would be open the next day. In today's financial market, it was the equivalent of banking with venture capitalists. In 1863, the National Banking Act privatized all national banks and created the Office of Comptroller of the Currency (OCC) for regulation. This created a check and balance system between private industry and the government to make the country's money more secure. All the bank notes issued by these financial institutions were backed by an interest in the U.S. Treasury which created a transparent picture of the money supply in the country. Although State chartered banks remained, they were not a part of the U.S. Treasury and were more likely to fail than the national banks.

The National Banking Act was the seed that created the Federal Reserve System we have today, but the road was rocky. After The Civil War and up to World War I, 100 years of financial insolvency had severed the trust that that citizens had with their banks. This period of growth was tough because banks were still failing, the stock market was down, currency was disappearing, and people were panicking. The fear that financial institutions would fail became a self-fulfilling prophecy and for every step forward the country took two steps back.