The+Creation+of+the+US+Federal+Reserve+Bank

For the third time in the history of the republic of the United States, 1913 brought about the creation of a central banking system in America. As in the past two attempts, the first in 1791 and the second in 1816, the idea of a central bank was a controversial one. After a near catastrophic financial disaster in 1907, much of the country was still distrustful of bankers and of banking in general. A movement for banking reform began to take hold; however, this movement was led not by anti-banking zealots, but rather by Wall Street bankers themselves. At a clandestine meeting at a resort on Jekyll Island, Georgia a small group of powerful Wall Street investors and politicians gathered and began to lay the framework for what would later become the central banking system of the United States as passed into law by the Federal Reserve Act of 1913. This act, also known as the Owen-Glass Act, created a system of eight to twelve autonomous regional reserve banks. These banks were commercial enterprises operating on their own but under the supervision and coordination of a committee appointed by the President. The Federal Reserve System would essentially be a privately owned banking system, operated in the public interest. The Federal Reserve Act of 1913 also gave the Federal Reserve the legal authority to issue Federal Reserve Notes (dollars) in order to create a more elastic currency that could grow or shrink according to the demands of business and the economy. It is this ability that caused many opponents of a central bank to cry out against it. Those in opposition felt Congress did not have the constitutional power to delegate its power to coin money to another body. Others still debated the constitutionality of the Federal Reserve’s power to issue paper money. However, a legal precedence of constitutionality had been set by a Supreme Court ruling on similar charges levied against the second reserve bank of the United States. The scope and breadth of the powers granted to the Federal Reserve by this legislation have impacted of nation’s economy on a grand scale. However, the merits of a central bank are still debated to this day, remaining a hot button topic of political discourse. [|Federal Reserve, banking, and the economy] [|Educational Game - You be the Fed Chairman]