| Ehhh... I don't like either of your characterizations. USA started on... very chaotic period. Continental Dollar was a failure in 1780s and the citizenry largely used the Spanish Peso, at least until the next Dollar came out IIRC. Eventually US Banking solidified upon the dual-standard of silver and gold. But... not really? A lot of those banks didn't actually hold that physical silver or gold, it was all virtual notes and paper pretending to be silver or gold. (Is this fractional reserve banking but on the silver standard? Depends on who you ask) In the 1880s (if I got that right), the Silver standard was eradicated and the USA was largely on the gold standard. We were in a pretty turbulent time regardless, until the big-whammy hit in 1930s. While "technically" on the Gold standard, FDR then issued Executive Order 6102 making gold illegal. Simultaneously, from the 1910s in this period, the US banking system was transitioning to the modern Federal Reserve system. I'm not sure exactly when fractional reserve banking hit in the Federal Reserve system, but I remember some important laws passing in the 1930s as well. Its all a moving target and difficult to say "X happened" at a particular point of history. It was all happening at the same time. Different banks, different parts of the country, different states were in a complex web of Silver, Gold, dollars, independent notes, and so forth. I'd personally say by the 1930s, with Gold becoming literally illegal, was when the USA fully transitioned into fractional reserve banking for the masses. Gold remained illegal until Nixon re-legalized it in the 1970s, but also finally removed gold from officially backing our currency (granted: with Gold being illegal, it didn't practically back our currency anymore for decades, so Nixon just made Gold float to the market rate and match reality, as opposed to pretending that we had a gold-backed system). But that's just my opinion on the matter. Others can draw lines in the sand and almost arbitrarily argue any of these points we were "doing fractional reserve banking", or "on the gold standard", or whatever. |