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This Month in Business History

Federal Reserve Act Signed

Federal Reserve Building, Washington, D.C. 1941. Library of Congress Prints & Photographs Division.

The history of the Federal Reserve—often referred to as "The Fed"—can in many ways trace its history back to the early days of the United States with the First and then Second Banks of the United States. Both banks were controversial and unpopular with many, and once the Second Bank of the United States ended in 1836, the country went without a central bank.

However, the desire for a central bank didn’t die with the demise of the Second Bank of the United States and President Wilson set to the task of creating a central bank again. The history of the Federal Reserve Act actually has its genesis with the legislation passed after the Panic of 1907 (History of the Federal Reserve). The Aldrich-Vreeland Act passed in 1908, provided for an emergency currency and established the National Monetary Commission which was tasked to study banking and currency reform.

In 1910, Nelson Aldrich the chief of the National Monetary Commission, met with executives representing the banks and developed a plan. While the plan the Commission developed met with a lot of opposition and didn’t result in any actions at the time, it did serve as a basis for another bill - H.R. 7837 sometimes called the currency bill or Glass-Owens, that Carter Glass introduced on August 29, 1913 and it laid out many of the functions this new bank was responsible for. The bill—An Act to provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purpose. The prospects of the legislation were aided by the findings of the Money Trust Investigation - the Pujo Committee, and the law was passed by Congress and President Wilson signed it on December 23, 1913.External

One of the first tasks was to appoint Charles Sumner Hamlin as the first Chairman in 1914. After that, the discussion turned to where to put the various District banks and on April 2, 1914, the Reserve Bank Organization Committee announced its decision for the location of the twelve Federal Reserve district banks. By November 1914 the Fed was operational. From the founding until 1937, the Board of Governors met in the Treasury building though employees were scattered in other locations in Washington, D.C. In 1937, their new headquarters on Constitution Avenue was completed and in 1982, it was named the Marriner S. Eccles Federal Reserve Board Building after Marriner S. Eccles, Chairman of the Federal Reserve under President Roosevelt. The first meeting of the Federal Reserve was August 13, 1914.

Today, there are 12 Federal Reserve District banks: External Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. They include twenty-five Branches each serving particular areas within each District.

The President appoints the Chairman of the Board of Governors of the Federal Reserve System from among the members of the Board of Governors. He or she, serves for a four-year term which may be appointed for several consecutive terms.

The Federal Reserve System is the central bank of the United States. According to the Fed, there are five general functions it performs in order to promote the effective operation of the U.S. economy and the public interest:

  • conducts the nation’s monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy;
  • promotes the stability of the financial system and seeks to minimize and contain systemic risks through active monitoring and engagement in the U.S. and abroad;
  • promotes the safety and soundness of individual financial institutions and monitors their impact on the financial system as a whole;
  • fosters payment and settlement system safety and efficiency through services to the banking industry and the U.S. government that facilitate U.S.-dollar transactions and payments; and
  • promotes consumer protection and community development through consumer-focused supervision and examination, research and analysis of emerging consumer issues and trends, community economic development activities, and the administration of consumer laws and regulations.1

Print Resources

We have included a few resources that look specifically related to the Federal Reserve, as well as a few that include information about the First and Second Banks of the United States for those that want to research those institutions. The following titles link to fuller bibliographic information in the Library of Congress Online Catalog. Links to additional online content are included when available.

Library of Congress Digital Resources

The following resources created or digitized by the Library of Congress can be used to find out more about the man as well as the events of the day.

Internet Resources

These freely available online resources provide additional information on the topic.

Search the Library's Catalog

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  1. About the Fed. Federal Reserve Board. Accessed: 10/23/2020. Back to text