How Did The Bank War Affect The Economy

If some of you have been studied the U.S history before, you might have the overview of how the bank war goes on and its huge influence on the economy. The ban war refers to the political struggle between the president of Unite State Andrea Jackson and the president of the national bank of the United State Nicholas Biddle over the issue of renewing the bank. The conflict between was started by the struggle of who was taking control of the money, and it did not really solve the question of who controlled the money. Even the war was ended with the destruction of the national bank and the flourished state banks, the Bank War still have great influence on today’s issue. Every successful private corporation have a threat to the country. From

It had the tremendous power of cushioning the economic booms and busts which today is the job of the Federal Reserve. Unlike modern central banks, the Bank of the United States back then did not set monetary policy, and it probably not emerged even the ideas. It did not regulate how many reserves rate the financial institutions should have, or be the last lender(it is the things what the central bank do today). What it did to control money supply was to conduct rudimentary policy to take the money back. Because the government did not print the paper money in this period, the official government money was only gold and silver coins and the bank would give you the note with its name on it which you can use it to take your gold back if you put your money on the bank. These banknotes functioned similarly to today’s monetary policy, and it was an efficient tool to control the money supply in the market. The Bank would collect the notes of the state banks for gold when it wanted to slow the economic growth, and thereby the reserves on the state bank reduced in such way. When it wanted to speed up the growth, the Bank would hold on these state banks’ notes, and thereby increase the reserves of the state bank, allowing more loans to be made. With the help of these banknotes and substantial gold, the bank could alter the supply of money in the economy and managed the interest rates charged to borrowers indirectly, which is what today’s central bank does. For example, if the economy seemed a little overextension or showed the symbol of inflation, the bank could make it harder for people to borrow money so that people would decide to put their money on the bank rather than using it. On the contrary, if the economy seemed a little panic or showed the symbols of deflation, the bank could make easier for people to borrow money or make more loans