How did Charlotte, a small southern city become the second largest financial center in the United States? The answer is found in a mix history, industry and legal quirks.
Charlotte’s earliest financial boom started with gold. In 1799, just outside Charlotte, a young boy found a 17-pound gold nugget and unknowingly started the first United States gold rush. Over the following decades gold mines dotted the region and by 1837, over 50 mines were in operation. In the same year, a Charlotte branch of the U.S. Mint opened and minted coins consisting of North Carolina gold.
The gold boom continued until 1848, when the California Gold Rush lured prospectors westward. Although mining continued, Charlotte’s heyday ended and the Charlotte Mint closed in 1861. However, gold and the Mint provided Charlotte with its first taste of the finance market.
Like most southern towns, the Civil War was devastating to the city of Charlotte. During the war every bank in the Carolinas failed. However, by the 1870s Charlotte emerged as a rail center and textile hub in need of a local bank. In response, local business leaders started raising money to build banks.
Established in 1874, the Commercial National Bank of Charlotte was founded with $50,000 in equity from various local businessmen. Other banks followed, including Union National Bank in 1908, whose first branch was simply a large roll top desk set in the lobby of the Buford Hotel on West Tryon Street. Over time, Commercial National and Union National became two of the largest banks in the United States, eventually known as Bank of America and Wells Fargo, respectively.
In 1927, the Federal Reserve Bank opened a local branch in Charlotte to serve as a regional hub for processing checks, providing currency and monitoring the local economy. This was a major boost to the local economy and one of the first major steps towards making Charlotte the center of North Carolina finance. By the 1970s, Charlotte was on its way to being one of the largest financial centers in the country.
Until the late 1980s, a hodge-podge of state laws throughout the country prevented banks from having branches in more than one state. However, in 1985, with lobbying from Charlotte banks, the state legislature passed the Southeastern Regional Banking Compact, a law allowing North Carolina banks to own branches in other states. At the same time, the law forbid outside banks from purchasing in North Carolina. Therefore, there was little fear of acquisition, yet North Carolina banks were free to pursue outside options.
Commercial National, now North Carolina National Bank (NCNB), and Union National, now First Union, took full advantage of the new legislation. NCNB quickly acquired banks in Florida and Texas while First Union soon purchased banks in Florida and Georgia. While most financial institutions were struggling with interstate branch restrictions, North Carolina banks were rapidly expanding.
By the late 1990s, bank acquisitions grew larger, bolder and riskier. First Union acquired Wachovia National Bank of Winston-Salem and adopted the Wachovia name. NCNB acquired a number of banks and after purchasing California-based BankAmerica, changed its name to Bank of America. Soon, Wachovia and Bank of America were two of the largest banks in the United States, with branches stretching from coast to coast and offices around the world.
Unfortunately, the recent recession hit both banks hard. Bank of America stumbled, but recovered. Wachovia’s struggle was more difficult and led to acquisition by Wells Fargo of California.
Although the era of large mergers and outsized growth ended with the recent recession, Charlotte remains a strong financial center. Bank of America’s Charlotte headquarters employs over 15,000 people, while Wells Fargo employs close to 20,000. Additionally, dozens of smaller financial companies and banks moved to Charlotte to take advantage of the high concentration of employees with financial experience. Today, Charlotte remains the second largest financial hub in the United States—the Queen City of Finance.
Rick Rothacker, Banktown (Winston-Salem, 2010).
Mary Norton Kratt, Charlotte: Spirit of the New South (John F. Blair Publisher, Winston-Salem, NC 1992).
Hugh Talmage Lefler and Albert Ray Newsome, North Carolina: The History of a Southern State (Chapel Hill, The University of North Carolina Press, 1954).
Greg Farrell, Crash of the Titans (New York, 2010).