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91
After the state bank boom in the early 1880s, the government set a 10% tax on A (1 word) notes replacing the previous 2% tax. What effect did this have on State and National banks and their notes issued? What was the intended and unintended consequence of raising the tax? By 1900, were there more national or state banks?
A. state notes
The tax essentially prohibited SB notes. Immediately after, state bank charters declined and national bank charters grew in number.
Intended: Increase the number of national bank charters which would increase the amount of money from Treasury bonds.
Unintended: Five years later in 1870s, SBs began to increase. They found a way around bank notes (and the tax) with demand deposits (checking accounts).
By 1900, there were more state banks and also greater total assets in state banks.
The tax essentially prohibited SB notes. Immediately after, state bank charters declined and national bank charters grew in number.
Intended: Increase the number of national bank charters which would increase the amount of money from Treasury bonds.
Unintended: Five years later in 1870s, SBs began to increase. They found a way around bank notes (and the tax) with demand deposits (checking accounts).
By 1900, there were more state banks and also greater total assets in state banks.
Flashcard info:
Author: savhighsmith
Main topic: Economics
Topic: History of Economics
School / Univ.: UGA
City: Athens
Published: 12.10.2010