Contrary to the frantic pace of today’s economic environment , the origin of banking and capital markets in the United States was not an overnight phenomenon . The form of organization called a corporation developed very slowly in the states . Early joint-stock companies , in which each member was responsible for the obligations of the mutual enterprise , were principally nonprofit corporations for religious worship , philanthropy , education , or land companies . Commercial corporation didn’t make their appearance until the early to mid-1700s , with a Connecticut trading corporation , a Massachusetts wharf company , a number of fire insurance and water supply companies , and the United Company of Philadelphia , which was organized to promote industry . By the late 1700s , particularly the period from 1783 to 1789 , the corporate structure expanded when numerous corporations were organized for building roads , canals , and bridges and for banking .
America’s first private commercial bank , then Bank of North America , was chartered by Congress on December 31 , 1781 . The Bank of New York and the Bank of Massachusetts followed in 1784 , but all these banks were local and limited . In December 1791 , national banking originated with the first national bank , which opened its main office in Philadelphia . In 1816 , the second national bank was chartered for twenty years . Meanwhile state banks began to proliferate throughout the country .
The late 1800s saw an emergence of investment banking houses that promoted mergers in railroads , utilities , and factories and provided the capital for expansion . Commercial banking also flourished , but after a high rate of bank failures , the Federal Reserve System was established in 1913 to correct deficiencies in existing banking legislation on the national and state levels . The Federal Reserve Act set the foundation for modern banking .
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