The History of the Federal Reserve System

Paper Summary:

This paper examines the nature of the Federal Reserve System, the push towards centralized banking in the United States, the panic of 1907, the evolution of the Federal Reserve during the 20th century, and the future of the institution.The paper highlights the significant role that the Federal Reserve System has played in the history of the United States since its creation. The paper explains that the Federal Reserve System was the final and most successful attempt by the United States government to create a centralized banking system for the nation that could help stabilize the economy and centrally coordinate financial policy-making. The paper then points out that, though significant criticism has been leveled at the Federal Reserve, throughout its history, there are few indications that the Federal Reserve will be abolished in the near future. In conclusion, the paper shows that for the foreseeable future, the Federal Reserve System will be an undeniable feature of American political and economic life.

Outline:
Introduction
What Is the Federal Reserve System?
Early History of Banking the United States, 1791-1913
The Panic of 1907 and the Birth of the Federal Reserve
From 1913 to the Present: The Evolution of the Fed
Criticism and the Future of the Fed
Conclusion

From the Paper:

"The Federal Reserve System was first established in the wake of the Panic of 1907. Earlier attempts to create such a system of federal banks had failed, but the Panic provided the impetus by apparently highlighting the need for a system like the Federal Reserve System. The Federal Reserve Act (1913) called for a system of eight to twelve mostly autonomous regional reserve banks. These banks would be owned by commercial banking interests, but coordinated by a committee appointed by the President of the United States (Flaherty sec. 13). In this way, the Federal Reserve System was originally devised as a private banking system that could operate largely in the public interest."

Sample of Sources Used:

• "Born of a Panic: Forming the Federal Reserve System." Federal Reserve Bank of Minneapolis. Aug. 1988. 14 Apr. 2007 <http://www.minneapolisfed.org/pubs/region/88-08/reg888a.cfm>.
• "Central Banking at a Glance." History of Central Banking. Federal Reserve Bank of Philadelphia. 13 Apr. 2007 <http://www.phil.frb.org/education/history/history_of_Banking10.html>.
• Flaherty, Edward. "A Brief History of Central Banking in the United States." From Revolution to Reconstruction. 2006. 13 April 2007 <http://odur.let.rug.nl/~usa/E/usbank/bankxx.htm>.
• Greenspan, Alan. "Monetary Policy in the Face of Uncertainty." CATO Journal 21.2 (Fall 2001): 161-168.
• Keleher, Robert E. "Transparency and Federal Reserve Monetary Policy." Joint Economic Committee Study. Nov. 1997. 13 Apr. 2007 <http://www.house.gov/jec/fed/fed/transpar.pdf>.

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