Essay on Federal Reserve Act - 1877 Words

The Federal Reserve: A Knight in Shining Armor quot;To suffer either the solicitation of merchants or the wishes of government, to determine the measure of the bank issues, is unquestionably to adopt a very false principle of conduct.quot; nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;-Henry Thornton, 1802 nbsp;nbsp;nbsp;nbsp;nbsp;The banker was frantic. A large mob was gathering outside his bank and the people were clamoring for their money. The banker called the Federal Reserve Bank in Minneapolis and warned that unless this quot;mad runquot; were stopped, he would soon be out of currency. With the bank nearly two-hundred miles from†¦show more content†¦The credit system of the country had ceased to operate, and thousands of firms went into bankruptcy (Born...,.12). Something had to be done that would provide for a flexible amount of currency as well as provide cohesion between banks across the United States. (Hepburn, 399) This knight in shining armor, as described in the story of the bank run, was the Federal Reserve. The Federal Reserve Act of 1913 helped to establish banks as a united force working for the people instead of independent agencies working against each other. By providing a flexible amount of currency, banks did not have to hoard their money in fear of a ban k run. Because of this, there was no competitive edge to see who could keep the most currency on hand and a more expansionary economy was possible. nbsp;nbsp;nbsp;nbsp;nbsp;The evolution of the Federal Reserve did not begin on December 23, 1913 with the passage of the Federal Reserve Act. Rather, it began with the Banking Panic of 1907, the most severe of the four national banking panics that had occurred in the precious thirty-four years. In response to this panic, a committee was established to find the flaws of the current banking system. This committee, the National Monetary Commission, found there were two main flaws dominating the system. First, the currency was not responsive to changes in demand. (Born...13). This meant that the bank had a fixed amount of currency, regardless of theShow MoreRelatedThe Federal Reserve Transparency Act1492 Words   |  6 PagesWhen discussing various issues affecting the federal government, transparency issues have to be put on the front line because the Federal Reserve’s should have one of the most transparent systems. The Federal Reserve transparency act was formulated in order to ensure that there is transparency in the federal reserves through making the federal government publicize most of the financial institutions that it offers loans to and the organizations which use the open market operations in order to purchaseRead MoreU.s. Federal Reserve Act1177 Words   |à ‚  5 Pagesvalue of currency throughout the years, the Federal Reserve changes either the inflation or the interest rates so that prices will be able to balance the debt amount. With actions like such, there are purposes sought by the Federal Reserve Act set toward â€Å"the Board of Governors and the Federal Open Market Committee†¦: to promote†¦ the goals of maximum employment, stable prices, and moderate long-term interest rates† (Federal Reserve). These are a matter of acts under the monetary policy. 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The purpose of the legislation was to provide a uniform national currency and to raise revenue for the federal government during wartime (Broz, 1999). While effective in its main purposes, it was flawed in the fact that the increase of available currency had little to no effect on consumer demand which led to large seasonalRead MoreThe Federal Reserve Act Single Handedly Broke893 Words   |  4 PagesThe Federal Reserve This brings us to the Federal Reserve. The Federal Reserve is a private entity that is not connected or governed by the United States. It came into existence in 1913 by the Federal Reserve act. Many people believed are still believe it is a part of our government. Sadly, they are greatly mistaken. It originated from Jekyll Island are very wealthy people gathered to create it for their own selfish and personal gain from which only they controlled. The founding fathers stated clearlyRead MoreDiscussion of the Article The Influence of Economists on the Federal Reserve Act by Caporal562 Words   |  3 PagesDiscussing the Federal Reserve After reading the article, The Influence of Economists on the Federal Reserve Act, it is apparent the author is trying to suggest that the economists played a major role in the banking reform which led to the development of the Federal Reserve Act. During the late 1800’s and early 1900’s, issues regarding the framework for which the bank operates on was inconsistent and did not perform as projected in foreseeable emergency situations. For this reason, economistsRead MoreWoodrow Wilsons Acts Of Progressivisms1100 Words   |  5 PagesWilsons Acts to Progressivisms In the year of 1912, Democrat electoral candidate Woodrow Wilson was running in the Presidential Election against T.R. Roosevelt, W. Taft and E. Debs. After winning by a sland slide, and being nominated as the 28th President of the United State. President Wilson quickly went to work to save this nation from them, thus he created 2 antitrust laws and establishing the first federal bank. Thus, in 1912 Wilson started to reshape America The Federal Reserve Act of 1912