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Explain Why The Congress Passed The Federal Reserve Act Of 1913

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Congress passed the Federal Reserve Act of 1913 to put more control of the banking system in the hands of the federal government. This act made the government the lender of the last resort. The Federal Reserve Act created a central bank or Federal Reserve System (FED). The Federal Reserve is responsible for creating a single currency and the managing of the central currency. All the banks in the nation were required to join the federal system, which created an uninformed banking system in the United States. By November 16, 1914, the 12 district banks were created with 25 branches inside. The Federal Reserve System also created the Monetary Policy to control inflation, gross domestic product (GDP), the unemployment rate, and striking a balance
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Twelve federal reserve banks were created that served as depositories for the cash reserve of the banks that joined the system, 12 banks were governed by a federal reserve board whose seven members were appointed by the president. The act gave the federal reserve system the authority to print the money and set the monetary policy of the U.S.   They were also allowed to sell treasury

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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).

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These banks issued Federal Reserve Notes. The Federal Reserve Act was mainly put into action because the government wanted more economic

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By this act, two bank systems were created. The regular privately owned state banks were regulated by a system of Federal Reserve Bank. This Federal Reserve Banks provided services to member banks. Initially, it was a system to decentralize the banks and keep the banks from failing. This act was also to determine interest rates for loans.

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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).

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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.

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“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.

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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.

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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

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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.

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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.”

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The Federal Reserve Banking System (Fed) is the central bank of the United States. Its primary purpose is to improve the stability of America's banking system. It also supervises financial institutions, provides services to the U.S. government and foreign official

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