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Creation of US Currency
In 1785, the dollar was selected to be the monetary of the United States. (not exact date) -
First Attempt at Central Banking
Because of Alexander Hamilton, the Treasury Secretary, the Congress established the first bank of the US based in Philadelphia in 1791. After twenty years, in 1811, the charter was over and the Congress refused to renew it.
(1791-1811) -
Second Attempt at Central Banking
By 1816, the political climate was again willing to make a Central Bank. Congress agreed to charter the second bank of the US but when Andrew Jackson was elected president, he swore to kill it. When this second banks charted ended, in 1836, they did not renew it.
(1816-1836) -
A Very Bad Year
A bout of speculation of Wall Street ended in failure, triggering a particularly bad banking panic. Most Americans were calling for improvement of the banking system and J.P Morgan was called upon to avoid disaster. At the time, all Americans thought that there should be a central banking authority to ensure a healthy banking system and elastic currency. (not exact date) -
The Federal Reserve is Created
On December 23, 1913, president Woodrow Wilson signed the Federal Reserve Act into law - it showed a classic example of compromise. -
The Federal Reserve Policy During War
Once World War I broke out in July of 1914, the banking system continued to operate normally. The US traded goods to Europe helping to finance the war.
(1914-1919) -
The Beginning of Open Market Operations
Benjamin Strong, head of the New York fed from 1914 to 1928, realized that gold was no longer the central factor in controlling credit. His action was to stem a recession in 1923 using a large purchase of government securities. This gave clear evidence of the power of open market operations.
(1920s) -
Market Crash/Great Depression
In the 1920s, Virginia Representative Carter Glass warned people that the stock market speculation would lead to terrible consequences. In October of 1929, people started to realize that his prediction was indeed correct and the stock market crashed - it led the nation into the worst depression in history. From 1930-1933, 10,000 banks failed and by March, Franklin Roosevelt declared a bank holiday. Many people blamed the fed for this crash.
(1929-1933) -
Aftermath of the Depression
Because of the Depression, the Congress passed the banking act of 1933 separating commercial and investment banking. (not exact date) -
More Changes
The banking act of 1935 called for more changes in the Federal reserve's structure. This included the creation of the Federal Open Market Committee as a whole separate legal entity. (not exact date) -
The Treasury Accord
An agreement between the US Secretary of Treasury and the Federal Reserve Board on government financing and monetary policy. (not exact date) -
Inflation and Deflation
In the 1970s, people saw inflation prices skyrocket because consumer and producer prices rose. In 1979, Paul Volcker was made Fed chairman and they needed to break the inflation on the US economy. His leadership, during the 1980s was overall very successful.
(1970s-1980s) -
The Monetary Control Act of 1980
This "act" gave the Federal Reserve more control over non-member banks (a bank that is not a member of the Federal Reserve system) -
Financial Crisis
In the 2000s, low mortgage rates and the expansion of access to credit made it possible for many people to be able to buy homes. So, this increased the price and demand for homes. The financial crisis was the worst tragedy since the great depression. Some people think it is able to happen again. (not exact date) -
9/11
How effective the Federal Reserve was really put to the test on September 11th, 2001 when the terrorists attacked. This attacked majorly affected the United States financial markets. The Federal Reserve played an essential role in muffling the effects of 9/11.
