The Origin And Early Development Of Deposit Insurance In The U.S.A.

Deposit insurance system is a financial security system,and a key component of the financial safety network.Modern deposit insurance system didn’t start from European countries such as Netherlands or Britain which developed modern banking earlier,but from American which late.The origin and early development of the deposit insurance system in the U.S.A.,as a starting point and clues,will be discussed in this paper.The insurance programs of bank obligations from 1829 to 1866 was the elementary form of deposit insurance system.At the time when the insurance programs of bank obligations was born in the early nineteenth century,the socioeconomic status and development conditions of financial bank in the U.S.A.was very different with U.K.and France,which had already developed capitalism for a long time.Primarily as an agricultural country,the main economic growth point was also the agricultural development of the western wilderness in the U.S.A.Farmers,plantation owners and other bullionist was the strength and vitality of the American society at that time,and objectively limited the creation and continuation of the central bank which could ensure national financial security.In the “Free Banking Era” when the Second Bank of the United States had lost its power in financial circles,states insurance program of bank obligations could make up for maintaining the financial stability and protecting the financial security,until the beginning of National Banking System.The deposit insurance programs from 1908 to 1930 was the second stage of deposit insurance system.In the late nineteenth century without deposit insurance system,frequent financial crises burst,because the American financial security network and even the entire financial system was imcomplete and unprepared to the rapid development of capitalist economy.After the financial crisis of 1907,states deposit insurance system restarted in several western agricultural states.During this transitional period when the National Banking System became less effective but Federal Reserve System was juvenility,states deposit insurance system played some role while there were many drawbacks.Its greatest significance consisted in providingvaluable experience for the following federal deposit insurance system.As the formal molding of deposit insurance,the federal deposit insurance system was established in 1933.The “Great Depression” of 1930 s put the capitalist system on the edge of collapse,but it promoted the birth of a series of important economic system,including the federal deposit insurance system well known as one key program.The Banking Act of 1933(the Glass-Steagall Act)was passed by the United States Congress in the period of “Roosevelt’s New Deal”,and decided the establishment of the Federal Deposit Insurance Company(FDIC).The nationwide implement of deposit insurance system effectively curbed the frequent occurrence of bank failures and bank runs greatly improved the stability of the American financial system.In brief,it’s conducive to the vitality of economic development to ensure financial freedom and flexibility,while it matters to maintain financial security and stability.Throughout the early development of American deposit insurance system,there is the contradiction between financial freedom and financial security.It’s also an important issue for people today how to resolve this contradiction.Maybe the history can tell us a way of having regard for both sides.