What challenges did the united states faced in organizing its new financial system

The first attempt to create a national bank in the United States resulted in the development of the Bank of Pennsylvania in 1780, founded in order to financially support the continental army during the Revolutionary War. This bank, however, was quickly replaced by the Bank of North America in 1781. When the bank was created, they had to deal with the problem of people using many different currencies, such as Spanish, French, English, Portuguese and local scrip. Supporters of a national bank also supported the idea of creating an American currency and a United States Mint.

Afterwards, in 1791, the First Bank of the United States was created. This bank was jointly owned by private stockholders and by the federal government. When depositors brought state bank notes, they would demand gold. This affected the bank's ability to issue notes and maintain adequate reserves. The bank's charter was not renewed after 1811.

From 1837-1863, during what is known as the "Free Banking Era," mostly unstable banking system and overexpanded credits were the norm. In order to correct this, Congress passed the National Banking Acts of 1863 and 1864. These created the United States National Banking System and provided a system of banks chartered by the federal government. It also encouraged the development of a national currency backed by bank holdings of the U. S. Treasury securities.

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