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First Attempt at Central Banking
At the urging of then Treasury Secretary Alexander Hamilton, Congress established the First Bank of the United States, headquartered in Philadelphia, in 1791. It was the largest corporation in the country and was dominated by big banking and money interests. -
A Second Try Fails
By 1816, the political climate was once again inclined toward the idea of a central bank; by a narrow margin, Congress agreed to charter the Second Bank of the United States. -
A Second Try Fails
Andrew Jackson, a central bank foe, was elected president in 1828. -
A Second Try Fails
Andrew Jackson's attack on its banker-controlled power touched a popular nerve with Americans, and when the Second Bank’s charter expired in 1836, it was not renewed. -
The Free Banking Era
The New York Clearinghouse Association was established in 1853 to provide a way for the city’s banks to exchange checks and settle accounts. -
National Banking Act
During the Civil War, the National Banking Act of 1863 was passed. -
Financial Panics Prevail
In 1893, a banking panic triggered the worst depression the United States had ever seen, and the economy stabilized only after the intervention of financial mogul J.P. Morgan. -
A Very Bad Year
In 1907, most Americans were calling for reform of the banking system, but there was a growing consensus among all Americans that a central banking authority was needed to ensure a healthy banking system and provide for an elastic currency. -
The Stage is Set for Decentralized Central Bank
The Aldrich-Vreeland Act of 1908, passed as an immediate response to the panic of 1907. -
The Stage is Set for Decentralized Central Bank
The Aldrich-Vreeland Act begin. -
The Stage is Set for Decentralized Central Bank
The 1912 election of Democrat Woodrow Wilson killed the Republican Aldrich plan. -
Woodrow Wilson as Financial Reformer
By December 1912, they presented Wilson with what would become, with some modifications, the Federal Reserve Act. -
The Federal Reserve System is Born
December 23, 1913, President Woodrow Wilson signed the Federal Reserve Act into law. It stood as a classic example of compromise—a decentralized central bank that balanced the competing interests of private banks and populist sentiment. -
Open for Business
by November 16, 1914, the 12 cities chosen as sites for regional Reserve Banks were open for business, just as hostilities in Europe erupted into World War I. -
Setting the Stage for Financial Modernization
The Glass-Steagall Act of 1933 allowed banks to offer a menu of financial services, including investment banking and insurance. -
Setting the Stage for Financial Modernization
The Monetary Control Act of 1980 required the Fed to price its financial services competitively against private sector providers and to establish reserve requirements for all eligible financial institutions. -
The Longest Economic Expansion
The stock market crashed on October 19, 1987. -
Setting the Stage for Financial Modernization
The Gramm-Leach-Bliley Act was passed. -
Terrorist Attacks on New York
The effectiveness of the Federal Reserve as a central bank was put to the test on September 11, 2001 as the terrorist attacks on New York. -
Discount Window Operation Changes
In 2003, the Federal Reserve changed its discount window operations so as to have rates at the window set above the prevailing Fed Funds rate and provide rationing of loans to banks through interest rates.
