The Owen Glass Federal Act of 1913 was made to protect the economy by setting a Federal Reserve System. An operation that is supervised under a board in Washington D.C. They have the power to set the interest rates which is charged to the other banks by the reserve banks. The objective included of financial Danes and availability of cash from a money reserve.
1. National Banking Acts of 1863 and 1864 The National Banking Acts of 1863 and 1864 were attempts to assert some degree of federal control over the banking system without the formation of another central bank. The Act had consists three primary purposes such as (1) create a system of national banks, (2) to create a uniform national currency, and (3) to create an active secondary market for Treasury securities to help finance the Civil War (for the Union 's side).
These banks issued Federal Reserve Notes. The Federal Reserve Act was mainly put into action because the government wanted more economic
The Federal Reserve Act was the first tool to take power away from large investment banks (Bauer 9). After that, he passed the Clayton Antitrust Act in 1914. The aim of this act was to control and against the monopoly in the economy. It was also strengthened the Sherman Anti-Trust Act. This act made it prohibited for companies to buy stock in other companies if doing so would create a monopoly.
FDR’s first incentive was to make “The Emergency Banking Act which authorized the Federal Reserve Board to issue new banknotes and allow the reopening of banks that had adequate assets, and arranged for the reorganization of those that did not” (Source 2). The New Deal helped reopen banks and provided loans to banks that needed help, and closed banks that were too unstable to open (Source 4). Along with this, he made the Glass-Steagall Act that insured bank accounts through the FDIC’s (Federal Deposit Insurance Corporation) main purpose is to insure deposits, examine and supervise financial institutions for safety, soundness, and consumer protection, make large and complex financial institutions resolvable (Source 5).
The Federal Reserve from the very start was created to control. And gain financial power by bankers. The intent and cover was to secure financial system for economy. The bankers figured out by controlling the money they could control the country.
In 1791, the United States was in debt (due to the Revolutionary War) and each state had a different form of currency. Treasury Secretary, Alexander Hamilton urged the congress to establish the First Bank of the United States in 1791. Alexander created this bank to assist the states in paying their debt from the war and to aid the government in its financial transactions. The First Bank was the largest corporation in the United States and at the time big banking unnerved many Americans. The First Bank of the United States issued paper money to pay any debts owed to the government and taxes.
“The Bank of the United States was established in 1791 to serve as a repository for federal funds and as the government’s fiscal agent. Initially proposed by Alexander Hamilton, the First Bank was granted a twenty-year charter by Congress in spite of the opposition of the Jeffersonians to whom it represented the dominance of mercantile over agrarian interests and an unconstitutional use of federal power.” (Bank of the United States, par. 1) The main supporters of the Bank of United States were the businessmen and those who were involved in industry.
While this system lasted a significantly long amount of time, it would eventually be brought down by the Federal Reserve Act made in 1913. This act was initially issued in the year of 1840; however, the Whig-conquering Congress had repealed it within the next year. The act was also made to be a replacement for the Second Bank of the United States. Beginning with reducing tariffs, James cut tariffs in 1845 in an effort to stimulate trade and resulted in creating an independent U.S. Treasury. Robert J. Walker, James’ secretary of treasury, firstly thought of reducing tariffs much more lower than Polk had intentions.
The Federal Reserve has four main areas that they focus on and they are. • Conducting the nation's monetary policy by influencing money and credit conditions in the economy in pursuit of full employment and stable prices. • Supervising
This system was established many years ago and is still in effect and functioning today. The Federal Reserve was officially established after President Wilson signed off on “The Federal Reserve Act” which Congress had proposed in December 23, 1913 (Federal Reserve.gov). “The Federal Reserve act” gave power to The Federal Reserve to issue Federal Reserve notes which we know today as dollar bills. The Federal Reserve notes are to act as a means of exchange that is to help make the financial system in America more constant. The Federal Reserve helps bring several other benefits such as making the US dollar internationally recognized as currency.
This resulted in the creation of national banks would be able to purchase bonds to be deposited into the treasury. One third of the money received was invested into US securities. Originally, there was not much regulation. The National Banking Act created basic changes in the banking system and how credit was distributed. A single capital market began to emerge and there was the creation of a uniform and stable currency.
The need for a national bank was very much so necessary. Hamilton also convinced president Washington to sign the bank bill by his lengthy report that stated: “This criterion is the end, to which the measure relates as a mean. If the end be clearly comprehended withan any specified powers, collecting taxes and regulating the currency, and if the measure have an obvious relation to that end, and is not forbidden by any particular provision of the constitution, it may safely be deemed to come with the compass of national authority.”
History Of The Federal Reserve Why was it Formed? The Federal Reserve was formed due to financial crises which caused massive problems, not just for the bank that was falling but for all banks. The panic of one bank falling triggered a domino effect on other banks. As one bank failed people not even using that bank saw the panic and would withdraw their deposits even when their bank was not in any danger of failing.
Before the Fed system came along, America was financially very unstable. Some people did not want a central bank because they thought it was a model of England. There were two tries before the central bank was a success. J.P. Morgan forced action on a banking plan because the country was going through a crisis that could push the economy over the edge. Finally, based on an act of Congress in 1913 by President Woodrow Wilson, the Federal Reserve Banking System (The Fed) was created.
