Essay on The Federal Reserve System During The United States

1670 Words Dec 7th, 2015 null Page
Congress established the Federal Reserve System, also known as “The Fed”, almost a century ago to serve as the U.S. central bank. President Woodrow Wilson signed the Federal Reserve Act into law on December 23, 1913. Prior to the formation of the Fed, the U.S. economy was afflicted by numerous episodes of panic, bank failures, and credit scarcity. The history of the Federal Reserve is affiliated with the effort to build a more stable and secure financial system. This paper describes major important events leading to the creation of the Federal Reserve and the evolution of the Federal Reserve System in response to the needs of the ever-changing U.S. economy.
II. Body

A) The First Bank of the United States

Congress created the First Bank of the United States in 1791, at the insistence of the then Treasury Secretary Alexander Hamilton. Its center of operations were stationed in Philadelphia, but had many other branches in other major cities. The bank was set with a 20-year charter, which would expire in 1811. It was a nationwide bank and the largest corporation in the country, filled by big banking and monetary interest (Gardner, 1962). The bank carried out basic banking functions such as accepting deposits, making loans, issuing bank notes, and purchasing securities. As a result of its great impact on the economy, the First Bank became an influential tool for both American commerce and the federal government (Patrick, 1988).
However, many Americans were frightened by the…

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