I'll focus mainly on the United States. So the United States started out as a confederation of individual states. And financial regulation was mostly local, but I'm calling a state, a local government. We had two banks of the United States. One created in the 1790s called the Bank of the United States. It was a central bank of sorts but it didn't conduct monetary policy. But it expired, according to the original legislation, after 20 years and they renewed it in 1816 with what was called the Second Bank of the United States, which also had a 20 year charter and it expired in 1836. And after that there was really no central government regulation of financial activities. Until the National Banking Act of 1863 under President Lincoln during the Civil War, which created a system of national banks that were regulated by the federal government instead of the state government. So a lot of cities then started setting up, starting right after the legislation, with national banks that had a national bank charter, so they weren't regulated by the local state government. And some of them listed their name as First National Bank of whatever city, meaning they were created right after the act. But even so, then still most of the regulation was in the state governments. The big change came in 1934 when the federal government set up the Securities and Exchange Commission. At this point the securities law passed substantially to the central government, there has been a trend towards centralization. However, corporate law is still held by the state governments. It was partly inspired by the observation that there was a lot of shenanigans being played in the financial sector. Louis Brandeis wrote a book called Other People's Money in 1914 that argued for more regulation of financial activities. Before the Securities and Exchange Commission there was some expansion of regulation in what was called the progressive era in the United States. That was the first 20 years or so of the 20th century, and a lot of states created what were called Blue Sky Laws, which were laws regulating tricks and deception in financial markets. There was a lot of fraud and deception in the 1920s brought on perhaps by the telephone, which made it possible for people to make cold calls with financial deals offered to the general public. They could easily get away, because the person never met the person on the other side of the phone call. The blue sky laws, the first one was in Kansas in 1911. And it became a model for other states. They virtually all establish blue sky laws, which typically required the registration and regulated the offering and sale of securities.
