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The Federal Reserve and the Economy
In the 19th century, no real banking system had really been developed in the US. This is to say that, though there were roughly 120 private commercial banks that had been chartered by new state governments, the so-called system was scarcely organized. It directly linked to the merchant banking practices of the pre-independence period. The years preceding the turn of the century were important because they brought a central banking authority onto the scene.
The last quarter of the 19th century was very difficult. The economy was subjected to several deflationary crises; The Se…
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