Citizens' Bank of Louisiana $5 - Obsolete Note - Broken Bank Note Remainder

$5. New Orleans, Louisiana. PMG #66 Graded. The Forstall System was a banking system developed by Edmund J. Forstall in 1842 and used until the end of the Civil War. After the Panic of 1837, banks underwent two main reformations. New York adapted a free banking system while Louisiana set up a banking system with specie reserve requirements. The Forstall System propelled Louisiana to economic maturity with its sound and credible banking system. It has been called one of the building blocks of the modern financial system still in place today.

Prior to the Panic of 1837, the banking system across the nation was expanding and greatly contributed to economic growth and development. During and after the Panic, banks stopped issuing specie requirements. A five-year depression followed with record-high unemployment. A bill to recharter the Second Bank of the United States failed to pass, after which the United States also faced a period of high inflation and deep depression. Two major legislative efforts attempted to reform the American banking system. New York passed a free banking system in 1838 that undertook long-term credit interest while the Louisiana Bank Act of 1842 passed the Forstall System. Edmund Forstall was the president of Citizens Bank of New Orleans, a legislator, and an agent of Baring Brothers. In 1842 he influenced Louisiana to require all banks to hold short-term self-extinguishing assets similar to the real bills principle in Britain. The Forstall System was officially put into place on February 5, 1842. Read more at https://en.wikipedia.org/wiki/The_Forstall_System

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