#2bus

[cureattroy]

Why Americans Hate (and Love) Banks by Now & Then

OH MY GOD THE SECOND BANK THE SECOND BANK

[eric4u169-blog]

This is the second part to the first clip when she popped hell of a lot of some tuff tony shit until shit gets real!!!!!💪🏼💨#2Bus (at Tremont, Bronx)

[eric4u169-blog]

#2Bus #itsashame #theworldisending Riding on the concourse on a number 2 bus 🚌 in da Bronx and is the sun ☀️ to blame, you decide? (at Tremont, Bronx)

[thedjstore]

Alto Professional ZMX122FX | 8-Channel 2-Bus Compact Mixer with 16 Inputs and 256 On-Board Effects

Alto Professional ZMX122FX | 8-Channel 2-Bus Compact Mixer with 16 Inputs and 256 On-Board Effects

Alto Professional ZMX122FX with Built-In Alesis Effects Professional Mixing Features with a Go-Anywhere Attitude The ZMX122FX is an eight-channel, two-bus mixer with all the inputs, outputs, routing, EQ, and effects you need for more intimate live performance reinforcement situations. It features four microphone inputs with balanced TRS jacks (two with Phantom Power), a three-band EQ and two AUX…

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[fauvester]

remember that one time when the jxon administration literally paid off friendly banks, after outright accusing the 2BUS of politically partial lending

[fauvester]

How the 1-2BUS operates macroeconomically, and a short digression regarding 19th century economics

The defining characteristic of the early American economy can be summed up in one word: optimism.  The country was rapidly maturing, evolving from a colonial, primarily agrarian economy into one that actively promoted manufacture and import independence.  The invention of the improved roller cotton gin turned cotton into the single largest commodity on the American market, and millions of bales of cotton were shipped across the Atlantic each year to pay for a flood of dirt cheap British manufactured imports.  After the War of 1812, British goods rushed into the American market, soon accompanied by a commensurate flood of British capital.  Bankers and capitalists in England had a lot of money to burn, and they plowed it into American startups, funding planters’ land and slave acquisition, factory owners’ expansion, states’ internal improvements, and new state-chartered banks.  Aside from the Panic of 1819, America was flush with capital and opportunity, and as more goods and money changed hands, new financial instruments needed to be created in order to make the transition from buyer to seller as smooth and economical as possible. 

The most basic of these instruments was bank paper, also known as notes or scrip.  The global economy was based on metal - in the US, gold and silver (although an artificial undervaluation of gold meant that silver was the de facto currency base.)  But there isn’t a whole lot of bullion in the world, bullion circulation i dependent on the unpredictable method of Mining Shiny Rocks From the Earth, and it’s heinously impractical to carry bags of metal money around.  Enter banknotes.  In the 19th century, any state chartered bank or corporation could issue notes.  These were essentially paper promises that the issuing bank would give you that amount of specie for any note of theirs that you redeemed.  There was no set reserve ratio - a bank could theoretically issue bank notes with NO bullion in their vaults, but that would destroy their credibility.  Generally, banks didn’t run a 1:1 ratio of paper money printed vs. specie in vault - the approximate rate was 1:5, but varied hugely.  In normal times, banks assumed that no more than (1/5) of note holders would demand specie for their notes and deposits, and if they had no reason to doubt the bank’s ability to pay specie they wouldn’t go to the trouble of redeeming at all (unless the exchange rate made it profitable, but that’s another issue.)  If a bank stopped being able to pay out specie for their notes, they would suspend specie payment, which was generally seen as Cheating, and Frowned Upon (most banks didn’t actually run out - they suspended discretionarily).  In order to maintain credibility and protect against a bank run, banks maintained a lower reserve, but in order to make a profit, they would issue ore notes than a 1:1 ratio.  If a bank printed more notes, money was more abundant, there was inflation (which diminished the real value of debts) and prices rose; the opposite is true for a contraction.

The BUS printed bank notes, too.  Unlike today’s bank notes, the central bank notes were not the sole legal tender.  They had to compete and coexist with notes from, say, the Manhattan bank, or the Mechanics Bank, or the Bank of Chillicothe.  But the BUS had one major advantage: it had branches all over the nation, while state chartered banks were barred from establishing branches outside of their state.  The BUS was the only bank that was constitutionally allowed to do so (and not get taxed by the states, heyo, thanks John Marshall!)  This meant that if you had a BUS dollar, you could take it to any BUS branch nearby to redeem it for one dollar’s worth of specie.  it’s so simple!  If, however, you lived in Ohio and got a Mechanic’s Bank dollar, well, you’re out of luck, since that’s in NY on the other side of the country.  Unless you wanted to take a trip out East, you’d have to sell that dollar to another bank or a bill broker, and they’d give you, say, 90% of the face value in specie or local notes, ‘discounting’ for the trouble of taking the bill to NY, and also for the risk of the Mechanic’s Bank suspending payment.  The BUS notes’ circulation allowed them to circulate at par - at face value - throughout the country.  By expanding or contracting circulation, the BUS could directly affect a large portion of the money supply.  By changing the discount rate for certain bank notes, they could change the demand for those notes - if the BUS is taking a big discount on the Bank of Chicago, well, who wants to hold Bank of Chicago notes? You can’t get face value for them at a reputable institution.  The BUS must know something that we don’t.  Similarly, the BUS also dealt in discount - allowing merchants and bankers to open an account with the BUS, so the BUS would redeem their notes in specie or BUS notes at par up to a certain point.  Expanding discounts meant more credit and easier money; and vice versa.

The BUS also printed what were called branch drafts, which were functionally the same as notes, but not politically the same (I’ll write about the branch draft debate later!)

The BUS also had inordinate power in the credit market - they were the main purchasers of domestic and international bills of exchange (BXs).  These were the middlemen between planters selling cotton and British manufacturers buying it.  When a planter wanted to sell a bale of cotton off a dock in New Orleans, they would negotiate with a factor for a British backed merchant house.  The factor would draft a BX, essentially saying, “when this BX gets to my bank in England, they’ll credit the bearer’s account $x and debit mine $x.”  Now of course the planter doesn’t have much use for that BX because he’s in America, not England (although he probably has an account in England too.)  So he takes the BX, goes to an American bank and sells it for a discounted value (say, 90% of the face value, once again, to accommodate transportation and risk.)  The bank pays him in specie and notes that he can use in America or with a credit in his account at the bank.  The bank can then sell the BX or send it to England and credit it to their own account with the factor’s English bank.  The same process of BX selling occurred from western America to the east.  The BUS was one of the main agents in these transfers. They provided essential liquidity in a market in which money was tied up in illiquid assets - crops, land, slaves - for 90% of the year. As long as everyone believed that everyone else was good for the money eventually, all was well. 

The BUS’ work in exchange allowed them to keep the UK/US gold ratio within enough of a range of at par to prevent a flow of specie from one country to another (keep the booty[bullion] in the house, my Euro teacher says - but if the booty is leaving England the Bank of England’s gonna flip its shit and raise the discount rate, which is categorically bad news for America.)

The BUS also acted as a regular private bank, making loans and keeping deposits with or without interest. But it had the largest capital of any bank in the country, which allowed it to do so on a much larger scale than its competitors.

The abovementioned are general bank functions that were not unique to the BUS - the difference between state banks and the BUS in these respects is a matter of scale and geography.  But the BUS was not a regular bank.  It alone was a repository of government funds, and it alone was their disburser.  When money was collected by the government - the most money came to the government via tariffs on imports and land sales - that money would go through the Customs Office or the Land Office straight to the nearest BUS branch.  When a government employee needed to be paid, they would go to the nearest BUS branch with their pay check to get notes and specie.  The BUS acted as the federal government’s bookie, a system that was infinitely preferable to the Secretary of Treasury keeping that money in his coat pocket, for the sake of efficiency and usefulness - that money could be put to use earning more money!   This system gave the BUS an immense amount of power and responsibilities, for several reasons.

In terms of responsibilities: the BUS needed to make sure that money was always where it was needed.  Most tariffs were collected in port cities, so New York and Boston tended to have a lot of available capital, but most federal expenditures were made in the West, or in specific places like DC.  The Bank transported the government funds wherever they were needed, free of charge to the government itself.  The BUS also managed the significant federal debt, which was a big issue - if the BUS needed $5 million for an installment of the debt payment it would need to collect that money very gradually, because if they suddenly demanded $5 mil from its branches, they would have to suddenly curtail their business and invoke an artificial panic.

In terms of power:  when merchants paid tariffs, some of that money came in the form of state bank notes.  Those notes naturally ended up in BUS vaults.  The BUS could either take those notes to the state bank and demand their redemption, or they could keep the notes in their possession for the time being.  The former would remove capital from the state bank, forcing them to restrict their business; the latter allowed them ease.  The BUS used this power discretionarily, asking for redemption when they thought the state banks were managing their business profligately and holding back demand in times of tightness to give state banks a break.  The BUS also got to decide which notes were acceptable payment for land sales - it had to be a bank that consistently returned specie.  If the BUS wanted to really hurt a bank they could refuse to accept their notes for land payment - the value of their note would plummet, since they were useless for land sales and immediately suspect.

As you can see, the BUS had to balance its obligations as a private, profit-making institution and as an institution that had to promote public good.  The BUS’ size and power meant that changes in policy (the discount rate, loans, printing) would affect the whole nation at once. The BUS was highly centralized; the Bank President was essentially unchallenged, and could act with alacrity to institute nationwide policy without any of the roadblocks that Congress or the President would pose to, say, a spending bill.  The branch directors reported back to the head branch in Philadelphia constantly and it was receiving regular news about the financial world abroad, so the BUS directors and president were exceedingly well-attuned to the economic needs of the nation and could move to stabilize the exchange market and prevent booms and busts before they happened.  Its power was a blessing and a curse- managed by an intelligent president who wasn’t cowed by state banks or the business community, it secured a stable currency and stable markets.  Managed by an ignorant, greedy or political president, and it could create incredible suffering.

[fauvester]

Do you believe in the practice of capitalism then, or is Biddle just sort of like your problematic fav? (I say problematic just in case you don't support capitalism, then yeah...)

considering the fact that the Communist Manifesto was published in 1848, I dont believe that it would be feasible for somebody who practiced banking in America in the 1820s-30s to be a full-fledged Marxist.  as far as antebellum politicians go, biddle was probably slightly...slightly to the left, by modern standards, than his contemporaries.

in terms of my own economic-political views, I'm not a communist.  But cognitive dissonance between my moral beliefs and those of historical figures that im interested in has never been a problem before, so it probably wouldn’t pose an issue here either.  biddle is still a problematic fave, but not because he’s a capitalist (although his capitalist endeavors do constitute some of the reasons why he’s Problematic)

[fauvester]

this is probably the funniest thing ive ever read