Mike, I appreciate the endorsement, but to clarify, the President in 1913 when the Federal Reserve system came into being was Woodrow Wilson.
The idea of a central bank has been kicked around since before the US was founded - the founding fathers had differing opinions when the Constitution was adopted, and there was no provision made at that time, but there was always pressure for one. Alexander Hamilton, who believed in a strong national government, wanted one; Madison and Jefferson did not.
There were two earlier national banks created as central banks for the national government - the First Bank of the United States (1791-1811), and the Second Bank of the United States (1816-1836).
After the Panic of 1907, it was generally agreed again that a central bank would be a good idea.
There were two proposed plans - Nelson Aldritch's plan, the one which came from the fabled meeting on Jekyll Island, and Carter Glass's plan. Aldritch was a Republican, Glass, a Democrat. Wilson, a Democrat, approved Glass's plan, but insisted on the addition of the Federal Reserve Board to control and coordinate the regional banks. Carter Glass is probably better known now for the Glass-Steagel Act.
Wilson struck a compromise between those who wanted only public control for the central bank, and those who wanted only private control. We have a curiously hybrid institution which is under public control with respect to broad policy, and private control for day to day operations. Quasi-private, I should say, since the Board of Governors does control day to day operations, but the public influence on the Board of Governors is indirect.
The 1913 Federal Reserve Act was heavily revised in 1935, giving even more power to the federal government. FDR was president then. |
