Post Civil War in the 1860’s, many changes were occurring in the US financial system. Prior to the Civil War, paper money was not issued by the federal government. Instead, more than 1,500 state banks issued paper notes. In 1860 there were more than 10,000 different kinds of currency. The federal government passed two important pieces of legislation to get a better hold and regulate the country’s financial system more efficiently: The Legal Tender Act of 1862 authorized the federal government to issue paper money. This paper money was known as green paper, because these notes were printed on green paper. In 1863 the National Bank Act created the nation's first truly national banking system. Eventually, the National Banking Act of 1863 had a large impact on the US financial system because it chartered national banks which met certain requirements, made the notes of national banks legal tender for all public and private debts, and levied a tax of 2 percent on state bank notes, which gradually increased over time. In turn the Federal government forced state banks to join the federal system, by imposing a tax on state bank notes. By 1865, national banks had 83 percent of all bank assets in the United States. After 1870, state banks made a comeback by issuing checks and avoiding the tax on their banknotes.

During the period of time from the passage of National Banking Act from 1863 to 1913, new innovations in the financial system and economic development largely changed the structure of the financial industry. However, during these years there was minimal growth in the financial industry. There were widespread bank failures in 1907, suspension of gold payments, and depression in business created a feeling that banking laws were flawed. The Aldrich-Vreeland Act of 1908 laid groundwork for banking systems. In response, the National Monetary Commission (NMC) was appointed to carry out extensive investigations of banking system before 1910. The National Banking Act failed mainly due to the financial instability and faults in banking system during that time. In 1913 the Federal Reserve Act was established and it gave the United States its first Central Bank. In the five year span from 1915 to 1919, the Federal Reserve Board recommended and encouraged branching of national banks, which was denounced by American Branching Association (ABA) because they feared that it would ruin the banking system. In the years between 1919 and 1929 there were more than twelve states that passed restrictive legislation, and they did not encourage branching of banks. The National Banking Consolidation Act of 1918 facilitated full-service branching by the national banks by allowing them to keep the offices of state banks that they acquired. This sparked The McFadden Act in 1927, which relaxed the restrictions and made it easy for national banks to operate full service branches. Numerous federal and state laws were put into effect to make the banking industry essentially more competitive and serve the people in a better way. Since the time that banks started increasing their branches and operations, the banking system has undergone dramatic changes and new technologies made the banking more convenient, comfortable, safe and secure.