There is no certainty as to when bankingbegan, but the act of exchanging variousforms of payment dates from prior to thethird millennium BC (Heathcote 2000, p.9). The first banks were likely temples,where people could exchange items such ascattle, implements, or precious metals, be-fore the use of coins. When coins of pre-cious metals began to be used as payment,“money changers” were those who under-stood the relative value of various coins andcould provide the means for a desired ex-change.

Banking then declined in medieval Eu-rope because of religious opposition to“usury,” which is the collection of interestadded to a loaned amount. The Renaissancebrought a revival of banking, most promi-nently in Italy where Marco Polo had intro-duced a trade route to the east, and withthat, its exotic products. In the fourteenthcentury, the famous banking houses inVenice and Florence brought about themodern practice of banking as it came to beknown. In fact, the English bank derivesfrom the Italian banco, meaning“bench”⎯the tables where early bankingtransactions occurred (Mayer 1987, p. 26).

As trade increased and more people trav-eled greater distances to exchange goods, theneed for an accurate means of monetarymeasure increased as well. Coins soon be-came difficult and unwieldy to carry in largenumbers, and the need for an alternative resulted in the creation of paper money,which was first used in China (Williams1997, p. 149).

In England, the safekeeping of preciouscoins or objects was entrusted to gold-smiths, who had the only safe storage vaultsor boxes. Their customers knew that washow the goldsmiths kept safe their valuablesand began to ask if their own could be keptin the smiths’ vaults as well. Written re-ceipts allowed both customers and the gold-smiths to know what was stored at a giventime. Soon, customers, and then the gold-smiths, began to exchange these written receipts, instead of the actual stored items.Thus began an early form of monetary note(Moore 1987, p. 9).

The practice became so commonplacethat in 1694 the Bank of England was char-tered by the government and allowed to is-sue its own notes, early forms of papercurrency. This originally private bank waslater to become England’s Central Bank(Mayer 1987, p. 27).

BANKING IN THE UNITED STATESBanking in the United States developed rela-tively late. The economy in colonial Americawas principally agricultural, and credit wasextended to farmers by merchants in citiessuch as Boston or Philadelphia. These mer-chants then bought on credit from theirBritish suppliers, and when the harvest camein, the whole chain was paid off. Becausethe British credit system was cut off duringthe Revolutionary War, the need for indige-nous banks became clear. Several of thecolonies had previously established “landbanks.” These issued notes to make loansagainst land, but they very soon experienced

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problems with over-issue and depreciationof their notes. The few that did not fail wereclosed by the British Colonial administra-tion in 1741 (Kohn 2004, p. 134).

In 1781, the Bank of North America waschartered within the Commonwealth ofPennsylvania, to help finance the Revolution-ary War, but for another ten years there wasno nationally chartered bank. In 1791, Con-gress granted the First Bank of the UnitedStates a twenty-year charter at the behest ofAlexander Hamilton, the first Secretary of theTreasury. The bank building’s design was at-tributed to Samuel Blodgett, although thishas been questioned (Belfoure 2005, p. 16).The early colonial banks—which had sincebecome state institutions—were then com-peting with the First Bank of the UnitedStates. They objected to its continuation, andin 1811 Congress failed to renew its charter.

Economic complications resulting fromthe War of 1812 prompted Congress to cre-ate the Second Bank of the United States in1816, also with a twenty-year charter. Thebuilding was designed by William Strickland.Continuing political differences resulted inPresident Andrew Jackson’s veto of the ex-tension of that charter in 1836. From thenuntil the Civil War era, free banks could beestablished by anyone who could provide aminimum capital outlay and deposit speci-fied amounts, in the form of bonds, with astate agent. With such minimal restraint,however, many of these failed, often becauseof defaults on the states’ bonds they wereholding. By 1860, eighteen of the then thir-ty-two states had enacted “free charter” laws,and these contributed significantly to thewestward expansion of the country.

For the most part, banks of this era were

� First Bank of the United

States, Philadelphia,

Pennsylvania, 1797; attributed

to Samuel Blodgett. Greek

temple–inspired architecture

was selected for many early

bank projects. Historic

American Buildings Survey.

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designed in the classical Greek, Italianate,French Second Empire, Victorian Gothic, orEnglish Queen Anne style. Then the workof Henry H. Richardson brought about a re-vival of the eleventh-century Romanesquestyle in the 1870s. Surprisingly, Richardsononly designed one bank, the Agawam Bankin Springfield, Massachusetts, and it was notin the style for which he became famous.His many other commissions, however, werethe inspiration for countless banks through-out the United States well into the earlytwentieth century (Belfoure 2005, p. 104).

In 1863, Congress enacted the NationalBanking Act to finance the Civil War, andby 1866 there were 1,600 nationally char-tered banks, which accounted for 75 percentof all bank deposits in the United States.This act also brought about the first uni-form national currency and established the

Office of the Comptroller of the Currency(OCC),1 the bureau that has authority overall national banks to this day. (See chapter 2for a description of the duties and responsi-bilities of the OCC.)

The new banks were required to backtheir notes with federal government securi-ties, and the numbers of new banks quicklygrew. Severe financial panics occurred, de-spite these safeguards, in 1893 and again in1907. These led to the establishment of theNational Monetary Commission, whichthen recommended passage of the FederalReserve Act (1913).2

The Federal Reserve was then establishedin order to provide a central bank as the

� Second Bank of the United

States, Philadelphia,

Pennsylvania, 1820; William

Strickland. Simple Doric

columns were used here.

Historic American Buildings

Survey.

Banking in the United States

3

1. http://www.occ.gov (accessed September 15, 2007).2. http://federalreserve.gov (accessed September 17,2007).

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lender of last resort, and to establish moni-tory policy for the entire country. (Chapter2 provides a description of the Federal Re-serve and its responsibilities.)

Louis Sullivan and the Prairie StyleLouis Sullivan was already a noted architectwhen he designed his first bank project in1907, the famous National Farmers Bank inOwatonna, Minnesota.

Sullivan’s design philosophy of “form fol-lows function,” which his even morerenowned protégé Frank Lloyd Wright alsoespoused, influenced other, lesser-known butsignificant architects of the upper Midwest.These early twentieth-century architects be-lieved American architecture should ceasecopying the classical styles. George G. Elms-lie, who had worked for Sullivan on the Na-

tional Farmers Bank project, together withWilliam G. Purcell, formed Purcell andElmslie, Architects. They produced severalimportant bank projects, including the Mer-chants Bank of Winona, in Minnesota(Belfoure 2005, pp. 194–211). Completedin 1912, it was significant for its innovative,Sullivan-inspired exterior.

Frank Lloyd Wright, who produced so many significant buildings in his long career, designed relatively few banks. Thearchitectural significance of the earlyPrairie-style banks is acknowledged by crit-ics and historians alike, but unfortunatelythis design movement did not spread to therest of the country, where the majority ofbanks continued to be designed in a classi-cal revival style. It was not until the late1920s that architects and their banker

� National Farmers Bank,

Owatonna, Minnesota, 1908;

Louis Sullivan. Louis Sullivan’s

most famous bank is still

beautiful more than 100 years

later. Historic American

Buildings Survey.

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� Merchants Bank of Winona,

Minnesota, 1912; Purcell and

Elmslie. This plan is

remarkably similar to bank

plans that became popular

many years later. Some

branch facilities today are

reminiscent in their use of

lobby, teller, and desk space.

Illustration by the author, after

an image from Western

Architect, January 1915.

Banking in the United States

5

� Merchants Bank of Winona,

Minnesota, 1912; Purcell and

Elmslie. The terra-cotta

ornament made popular by

Louis Sullivan is clearly visible

on the facade of this bank

building, perhaps the best

work of Purcell and Elmslie.

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clients would consider a more modern stylefor bank design.

THE GREAT DEPRESSIONThe stock market crash of 1929 marked thebeginning of the Great Depression, whichsoon became a worldwide circumstance.Bank construction came to a halt, and mar-

ket events led to the insolvency of numerousbanks across the country. Most hard-hitwere rural banks that had financed agricul-tural loans, but banks in cities also facedgreat hardship. Continuous “runs” were be-ing made, wherein customers, fearing an im-mediate collapse of their bank, lined up toask for their money to be refunded. Thesedifficulties led to the “bank holiday” of1933, during which all U.S. banks wereclosed for four days to allow for an evalua-tion of remaining banks and to assure thepublic of their solvency (Klebaner 1990, p.138).

The events stemming from the Depres-sion led to the establishment of the FederalDeposit Insurance Corporation, which ini-tially provided for $2500 in insurance foreach depositor, in case the insured institu-tion became insolvent. This limit was laterincreased to $100,000, until recently, whena temporary limit of $250,000 was estab-lished as a result of the nationwide financialturmoil of 2008. It is expected to be re-duced to $100,000 again at the end of2009. The Great Depression also broughtabout significantly more oversight by theregulating governmental agencies.

Another effect of the Great Depressionwas a change in the characteristic architec-tural style of American banks. Although theDepression did not end immediately, the re-maining financial institutions eventually re-gained their viability and a new outlook indesign began to prevail. One of the earlymodern banks was the 32-story PhiladelphiaSavings Fund Society building, built in1932. It was designed by William Lescazeand George Howe and has been calledAmerica’s first “truly modern skyscraper”(Belfoure, p. 227).

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The National Credit UnionAdministrationIn 1934 President Roosevelt signed into lawthe Federal Credit Union Act, which autho-rized the formation of federally charteredcredit unions in all states. The NationalCredit Union Administration (NCAU) wasestablished to charter and supervise the fed-eral credit unions. Backed by the full faithand credit of the United States government,the NCAU operates the National CreditUnion Share Insurance Fund (NCUSIF),which insures the account holders of thefederal credit unions and many of the state-chartered credit unions.3

WORLD WAR II AND THE POSTWAR ERAAmerican commerce and industry werecompletely dedicated to the war effort afterthe Pearl Harbor attack, and almost all bankconstruction was put on hold. The waryears did provide bankers with an opportu-nity to reconsider the kind of bank that theywanted and their customers needed.

After the war, bankers were much less in-terested in the old classical influences. Ofthe immediate postwar banks the most dra-matic was the Fifth Avenue branch of theManufacturers’ Trust designed by Skidmore,Owings & Merrill (SOM) in New York Cityin 1954 (Belfoure 2005, p. 248). An in-house competition was held over a weekend

� Manufacturer’s Trust, New

York City; SOM, 1954. This

bank became a design

pacesetter for the postwar

years in the United States.

Illustration by Dwain South.

�� Philadelphia Savings Fund

Building, 1932; Howe &

Lescaze. The clean vertical

lines and ribbon windows

were well ahead of their time

in this building, considered

the first International Style

high-rise project. It was

placed on the National

Historic Register in 1976.

Historic American Buildings

Survey.

World War II and the Postwar Era

7

3. http://www.ncau.gov/AboutNCAU/Index.htm(accessed October 29, 2007).

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at SOM and the winner was Charles EvansHughes III, who designed a four-storybuilding with a glass curtain wall that fea-tured the vault prominently visible from the street, a practice that is still favored bymany bankers today.

FROM THE 1960s TO THE PRESENTOver the last forty years, banking has un-dergone dramatic technological changes.Electronic banking, banking by phone, useof debit and credit cards, and the ubiquityof automated teller machines (ATMs) haverevolutionized banking and financial insti-tution buildings. Other, less visible innova-tions in planning, equipment, and thedelivery of financial services have also beenmade, and these are featured in the follow-ing chapters.

The Bank Protection Act of 1968 andits amendment in 1991 have been signifi-cant to bankers and their architects alike,because it spelled out in great detail the se-curity requirements for buildings and oper-ations. The responsibilities it delegated tobanks’ boards of directors, and thereby thearchitects in their employ, became muchgreater as well. All agencies that regulate thefinancial industry in the United States aresubject to these requirements. This legisla-tion will be discussed in greater detail inlater chapters.

Equally important were the regulatorychanges brought about in 1999 by the

Gramm-Leach-Bliley Act, which in essenceoverturned the strict banking laws enactedin 1933. The earlier legislation had preclud-ed commercial banks from offering invest-ment banking, insurance, and other services.It remains to be seen what the long-lastingeffects of the 1999 act will be, given thecredit difficulties lately seen, which stemmedfrom the subprime lending and other prac-tices that followed its passage.

A most significant operational changewas brought about in 2004 with the adventof Check Clearing for the 21st Century,called Check 21. This law allows a new ne-gotiable instrument, called a substitutecheck, which permits a bank to truncate theoriginal check and process the check infor-mation electronically. This has had an enor-mous impact on banking operationsthroughout the United States, with implica-tions for the design of financial institutions.

The even more recent development of “remote deposit capture,” which allows merchants to combine the processing andimaging of checks at the beginning of thepayment cycle, rather than at the end, mayhave an even greater impact on banking andthe bank’s relationship with customers (Fisher2006, p. 108). More will be presented in the following chapters about the physical requirements these changes have brought.(Chapter 9, for example, features a bankworkroom that has been recently convertedfor use of the new Check 21 equipment.)

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