Federal Reserve Act

The 1913 United States law that established the Federal Reserve System, creating a central banking structure with regional Reserve Banks and a federal governing board.

Federal Reserve System: The United States central banking system, comprising the Board of Governors, twelve regional Reserve Banks, and member banks. The Act established this system and defined its original institutional framework.
Panic of 1907: A severe United States financial crisis in 1907, marked by bank runs, trust-company failures, and a sharp contraction in credit. The crisis exposed the limits of relying on private financiers to stabilize the banking system.
Banking Act of 1935: A United States law that reorganized the Federal Reserve and strengthened the Board of Governors’ authority over monetary policy. It substantially revised the governance structure first established by the Act.
Independent Treasury: A United States government system, operating from 1846 to 1921, that held federal funds separately from private banks. The Federal Reserve replaced this fragmented approach with a central banking system.
Federal Reserve Board: The federal body originally created by the Act to supervise the Reserve Banks; it was later renamed the Board of Governors. The Act placed national oversight in this presidentially appointed board.
National Monetary Commission: A United States commission established in 1908 to study banking and currency reform after the Panic of 1907. Its investigations and recommendations shaped the debate that preceded the Act.
Federal Open Market Committee: The Federal Reserve body that directs open-market operations to implement United States monetary policy. Later legislation added this committee to coordinate a major monetary-policy tool.
National Banking Acts: United States laws enacted during the Civil War that created a national bank-chartering system and a uniform national currency. They standardized currency but left the banking system vulnerable to liquidity shortages the Act addressed.
Federal Reserve Banks: The twelve regional institutions that carry out Federal Reserve functions across the United States. The Act created regional banks to combine local representation with national coordination.
Aldrich Plan: A 1911 proposal for a privately controlled central reserve association, developed by the National Monetary Commission. It shared the goal of banking reform but differed from the Act’s public governance and regional structure.

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