Econ Ch 11 Sec 2

greenbacks, national currency, gold certificates, silver certificates, treasury coin notes

5 types of paper currency issued before banking system was overhauled in 1913

state chartered banks to join the NBS

A 10% tax was issued on all privately issued bank notes in order to force

people more secure about money; prevented overprinting (couldn't print more than they could back in gold)

Advantages of gold standard

bonds; paper currency

After selling _____ did not work in order to supply the Civil War, Congress decided to print _____ ________ for the first time since the constitution was adopted.

declared a national emergency that anyone holding more than $100 worth of gold/gold certificates must file a disclosure form with the Treasury

Because people felt more secure holding onto gold as opposed to paper currency, what did President Franklin D Roosevelt do?

gold stock may not grow fast enough; lots of people may decide to convert currency into gold, draining reserves; price of gold is not fixed; political risk of failure

Disadvantages of gold standard

notes could be exchanged for gold and silver

How did state banks assure the public that their money was useful?

Article 1 Section 8, Article 1 Section 10

Which articles prevented the government from printing paper money and instead left that power to private banks?

Civil War

Which war forced politically powerful local bankers to comply with changes concerning banking?

State banks

banks that received their charter to operate from the state government. Able to issue their own paper money by printing them in local shops.

United States notes

federal fiat currency that did not have gold or silver backing.

legal tender

fiat currency that must be accepted in payment for debts. AKA greenbacks

Gold standard act

fixed the price of gold at $20.67 per ounce

wildcat banks

fraudulent banks that printed large amounts of currency in remote areas to make currency redemption difficult

managed money supply

government or a designated agent controls the quantity, composition, and quality of the money supply

Establishing the national banking system

how did Congress prevent greenbacks from becoming worthless like the continental dollars?

inconvertible fiat money standard

monetary standard under which fiat money supply cannot be converted into silver or gold by its citizens

Gold standard

monetary standard under which the basic currency unit is equal to and can be exchanged for a specific amount of gold

gold certificates

paper currency backed by gold placed on deposit the the United States Treasury

silver certificates

paper currency backed by silver dollars and bullion placed on reserve with the Treasury

Treasury coin notes

paper currency issued by the Treasury that was redeemable in both gold and silver

National bank notes/national currency

paper currency of uniform appearance that is backed by US government bonds

Legal Tender Act

passed in 1862, authorized the Union government to print United States notes

Continental dollars

printed during the Revolutionary War, but became too abundant and caused people to distrust the government's money unless it was coin

National banks

privately owned banks that received their operating charters from the federal government

each bank issued currency in different sizes, colors, and denominations; temptation to issue too many notes; counterfeiting

problems with currency

Gold Reserve Act

required citizens, banks, and businesses to turn in their gold and gold certificates over to the US government

monetary standard

the mechanism designed to keep money portable, durable, divisible, and limited in supply