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Show Land Banks Came Early To Colonies j Have you ever wondered ! where the term "land banks" ; came from? Even though ; banks first appeared in the Colonies as early as the i mid-1660's, we would hardly consider them banks accord- j ing to today's standards. ! THE MAIN purpose of the banks at that time was to print ; money. They did not accept L deposits, nor did they loan ' money. Most of the Colonists ! sent their money to England i for deposit and lending was !; usually handled by business-5 business-5 men and merchants. ! But the first paper money in ; this country was backed by I land and so the banks became ; known as land banks. ; Although most of the trading ! was done by bartering with j the actual products, banks did ; print both paper money and j experimented with coins. j MOST COINS being used at j that time were of foreign I mints. That was due mainly to j England's severe restrictions I on the amount of gold and ! silver that could enter the ! Colonies. I And the money being print- i ed here in our banks i frequently presented j problems. Often they would ; print too much money and the ' value would decline. ! TO HELP end these abuses, j Parliament prohibited the : colonies from making bills of I credit, legal tender for debts. ! They also stopped the es- ; tablishment of new land ! banks. Of course, there were many j. factors which led to the ; Revolutionary War, but these ! restrictions showed the j Colonists the need for a voice i in their government. ! AFTER WE received our ; independence, the federal ; government had the exclusive I right to mint gold and silver coins, but the relatively small supply of these metals in our country limited how many coins could be produced. The federal government still did not print paper money. The states, however, could allow private banks to issue paper money and so the bankers were still responsible for providing cash for commerce com-merce and national expansion. expan-sion. THERE WERE many that disliked the bank note system and preferred using the coins. The bank note system offered some obvious advantages, however, and enjoyed the support sup-port of some very influential people. Thomas Paine and George Washington were among the defenders of the 1 bank note system. Alexander Hamilton, first secretary of the Treasury, helped establish the Bank of New York in 1784. The bank made a major contribution to our nation's growth by providing a sound and stable currency backed by gold and J silver. 1 THIS FIRST Bank of the United States was allowed its first charter for 20 years. At the end of this time it was believed that the bank had too much power and the charter i was allowed to expire in 1811. The period before the Revolution was full of restric- 1 tions and restraints imposed j on the Colonists by England. " The freedom enjoyed after the war was a difficult one for banking because of the confusion con-fusion in banking procedures and the lack of real government govern-ment guidance on banks and bankers. OUR NEXT look at banking history will be at the establishment es-tablishment of banks with government control and the effect of the Civil War on banking. |