For questions 17-20: Discuss the historical debate in the United States about the creation of a national banking system by addressing each of the following points:
17: Describe the two sides of the debate for both the original Bank of the United States and the Second Bank of the United States
18: State which side of the debate ultimately had the stronger argument.
19: Explain the historical events that took place after each Bank of the United States was terminated that made the stronger argument clear.
20: Evaluate how this historical debate shaped the banking system we have in the United States today.
17: The debate over the creation of a national banking system in the United States centered around two main sides. One side, led by Alexander Hamilton, argued in favor of establishing the original Bank of the United States in 1791. Hamilton believed that a national bank would provide stability to the country's financial system, help fund the government, and promote economic growth. On the other side, Thomas Jefferson and his followers opposed the creation of a national bank, arguing that it was unconstitutional and would centralize too much power in the federal government.
When the Second Bank of the United States was established in 1816, a similar debate emerged. Supporters of the bank, such as Henry Clay, believed it was necessary to regulate state banks and maintain a stable currency. Opponents, like Andrew Jackson, argued that the bank was unconstitutional and favored wealthy elites over the common people.
18: Ultimately, the side in favor of the national banking system had the stronger argument. Both the original Bank of the United States and the Second Bank of the United States played crucial roles in stabilizing the country's financial system, regulating state banks, and facilitating economic growth. The fact that the U.S. government continued to establish and support national banks despite the opposition from some political figures shows that the benefits of a national banking system outweighed the concerns raised by critics.
19: After the original Bank of the United States was not renewed in 1811, the country experienced financial instability and inflation, leading to the War of 1812. This demonstrated the importance of a national bank in maintaining economic stability. Similarly, after the Second Bank of the United States was terminated by Jackson in 1836, the country faced a series of financial crises, such as the Panic of 1837, which highlighted the need for a centralized banking system.
20: The historical debate over the creation of a national banking system in the United States ultimately shaped the banking system we have today. The establishment of the Federal Reserve System in 1913 was a direct result of the lessons learned from the previous national banks and the importance of having a central bank to regulate the country's financial system. The Federal Reserve plays a crucial role in regulating the economy, controlling inflation, and ensuring financial stability, all of which were key arguments in favor of the original national banks. Overall, the historical debate highlighted the necessity of a national banking system in promoting economic growth and stability in the United States.