The Federal Reserve System

Paper Summary:

This paper examines how banking was quite different before the Federal Reserve was created. It looks at how, currently, there is a centralized banking system consisting of twelve banks and how, before, there was no centralized system at all. It discusses the differences between then and now in order to create an understanding of the truly significant differences that were created by the Federal Reserve System.

Outline
Introduction
The Early Years
The National Banking System
The Current Banking System
Conclusion

From the Paper:

"A national banking system was established as one of the ways to fund the Civil War. The new government banks put such heavy taxes on the state banks that they were forced to fold. After this, the government had the monopoly on banking and money once again, and they used it to the fullest extent. One of the problems with the banking system, however, was that there were still cash flow problems and other banking weaknesses that led to panics for individuals who were holding bank notes (Wells, 1987). There were so many restrictions placed on these new banks that they could do virtually nothing at all. This was frustrating for them, and they weren't able to do anything that helped the economy in any way. Part of this was caused by a lack of branching, but must was related to strict control."

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• Research Paper # 103753 : "The History of the Federal Reserve System"

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