The Federal Reserve System Of The United States Essay
In the late 1890s through early 1900s, a depression resulting in the loss of millions of dollars in the United States prompted the government to come up with a system to remedy the nation’s financial state. The Federal Reserve System has been the primary banking system of the United States of America ever since 1913 as a result of the Federal Reserve Act. The Federal Reserve System works to provide the United States with a safer and more stable monetary system for the economy.
The Establishment of the Federal Reserve: The Federal Reserve Act
The Federal Reserve System was established on December 23rd, 1913 through the enactment of the Federal Reserve Act. The Federal Reserve Act contains four primary points: a supply of elastic currency for business; it is secured by commercial bills, United States bonds, and gold; the act works under an interest charge in an attempt to prevent inflation; and lastly, it is controlled by the government (Owen 1919). The Federal Reserve System was established with the intention to act as clearing houses which held the responsibility to clear checks, according to the Federal Reserve Act. In addition to this, the United States Congress has established three primary monetary goals in the Federal Reserve Act: to maximize employment, to stabilize prices, and to moderate long-term interest rates (12 U.S.C. § 225a). The Federal Reserve System is an agent of the United States Congress. Therefore, Congress…