When the United States was formed in the 1770s, all of the commerce was conducted by local merchants using only locally owned banks. Merchants and traders located in Boston used only locally owned and controlled banks, as did the merchants and traders in New York. There was no national system in place. This was actually done by the deliberate design of the founding fathers as they and their successors had a great distrust of national institutions, especially those of England. In fact, this was the reason that the founding documents specifically prohibited the coining of money by any state or other private entity. In the founding documents, the task of minting Americas coin was only to be done under the express authority of the Congress of the United States. At that time, the common coin denomination was the American Dollar and it was minted using only fine silver or gold of an exacting specification.
The using of precious metals for minting money was part of the uniqueness of our fledgling government. It meant that all the wealth of the nation was put in the absolute control of the average citizen. No other government had ever done this. Early on in our history, there were several attempts by the Bank of England to wrest control of the minting of America's money away from Congress, but they was beaten back by president Andrew Jackson in 1791. This, however, all changed in 1917 when Congress passed the Federal Reserve Act and President Woodrow Wilson signed it into law. This act established America's first permanent national system, The Federal Reserve. The Federal Reserve acted as the head of twelve reserve districts that covered the entire country. The Federal Reserve had the authority to print bills and notes, and up until the 1930s these bills and notes were exchangeable for an equal amount of gold and silver. It seemed like nothing had really changed.
In the 1930s, it did change and drastically. Under the Presidency of Franklin Roosevelt, the Federal Reserve and the United States switched from using substance based money to using strictly currency as a medium of exchange. Currency is fundamentally different from real money in that all currencies have no intrinsic value. In addition to this change, the monetary system moved into a new era where wealth was determined not by substance but by a balance of your debits and credits. Credit became King because the idea took hold that it was easier to create and transfer non-physical credits and debits than physical assets like gold and silver. This idea became more and more entrenched as the world of commerce moved into the age of computer transfers and Internet exchanges. The culmination of these changes is that now the entire world is completely entangled in the new money system of instant credits and debits. This was done almost entirely by world banks. It has been heralded by some as a bright new age for commerce and growth but detractors like to point out that we have become so financially entangled that if one country has financial problems and fails, that failure can affect the whole world. This point was brought home by the damaging ripple effect that the housing crash caused not only in America but also around the globe. Other countries financial woes in the European Union have also caused ripple damage to global stock and currency markets.