Abstract

"The National Banking Acts & Narrowly Defined U.S. Commercial Banks "

Christy Chapin, University of Maryland, Baltimore,County (cchapin@umbc.edu)

The 1860s National Bank Acts operated as time capsules that institutionalized significant aspects of mid-nineteenth-century commercial banking thought and operations. Federal policymakers defined commercial banking in such a restricted way that they inadvertently constrained national bank growth while encouraging the formation and expansion of state banks and of alternative financial intermediaries. This conference paper will review two aspects of how federal legislation shaped commercial banking. First, the paper examines how the legislation discouraged banks from branching and encouraged unit banking. Though unit banking is a profoundly significant feature of American banking, legislative history indicates that congressional members did not intend to outlaw national bank branching, and it appears that the topic was not even discussed before the 1863 and 1864 acts were passed. Accordingly, this paper explores the traditions, assumptions, and misconstruals that led late-nineteenth-century and early-twentieth-century policymakers to prohibit branch banking. Second, the paper will investigate how Anglo conceptions of segmented financial markets – neatly divided among commercial banks, investment banks, insurance companies, and thrifts – worked in conjunction with an Americanized version of the “real bills” doctrine to narrowly define commercial banking in the United States.