Flash Fact: America’s 1st and 2nd Central Bank Was 80% Owned By Private Investors

“Although the nation’s first two central banks had slight differences, particularly in their size, they were alike in many key structural ways. In both cases, private investors held an 80 percent ownership stake while the government held the remaining 20 percent. Investors acquired their shares through an initial public offering (IPO) process that was similar to other public stock offerings”

“Shares for both the First and Second Banks were prohibitively expensive for most
Americans. Stock in the First Bank, for example, was initially offered at $400 per share (the
equivalent of about $10,000 in 2016 after accounting for inflation). Stock in the Second Bank
was still pricey at about a quarter of that cost. As a result, U.S. central bank ownership was
vested primarily in the hands of wealthy and powerful individuals (including—perhaps
unexpectedly—a number of foreign investors). Similarly, the majority of the directors of the
First and Second Banks were elected from the ranks of the politically and financially
powerful, including some members of Congress, who lived in and did business in the
nation’s power centers. The lack of diversity of central bank leadership was a major
criticism, especially from those living outside of the East Coast”.

STRUCTURE, GOVERNANCE, REPRESENTATION:
Federal Reserve Member Banks and Federal Reserve Bank Stock, Esther L. George
President and Chief Executive Officer
Federal Reserve Bank of Kansas City, 2016

Full Report

Image By Beyond My Ken – Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=26164813

 

 

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