How the Federal Reserve has evolved over the time

by IRA Rollover in Federal Reserve with Comments Off on How the Federal Reserve has evolved over the time

federal reserve

Many people will never actually search this – Hence its our duty to inform our readers about the interesting history that Federal Reserve has gone through. A long time ago in a galaxy far, far away:

1791 – 1816

The First Bank of the United States was created by Congress in 1791, under the guidance of US Treasury Secretary, Alexander Hamilton. The First Bank’s charter’s renewal was rejected by Congress in 1811. The Second Bank of the US was charted by Congress in 1816.

1836 – 1913

Under the authority of Andrew Jackson, the president at the time, the US Congress voted to refuse renewal of the Second Bank’s Charter in 1836. During the period between 1836 and 1865, there was a brief rise in “free banks,” where notes were distributed to customers who could redeem them in for silver or gold. Bank runs were fairly well spread back then. President Woodrow Wilson passed the Federal Reserve Act in 1913 and the US President Chose a board of seven members to lead twelve reserve banks.

1929 – 1933

In October of 1929, the Great Depression which is still famous today rocked the country. The nation found itself wavering, since it was already at odds about banking reforms. Over the span of 1930 through 1933, around 10,000 United States banks failed. In 1933, the Glass-Steagall Act was passed by Congress, which required the dividing of commercial banks and investment, and all Federal Reserve notes required collateral of government securities. The Federal Deposit Insurance Corporation or FDIC was established in the same year by the Glass-Steagall Banking Act. The Fed was also provided with a few new powers. President Franklin Delano Roosevelt recalled silver and gold certificates, which was a huge blow and killed the gold standard effectively.

1951 – 1999

There was an agreement in 1951 between the US Treasury and the Federal Reserve that overturned the earlier organization of the treasury through a promise of low-cost securities through the Fed. Basically, this meant the Fed’s fixed rate monetization was done away with. Congress, acting in response to a double-digit runaway inflation, made a ruling in 1978 that the Federal Reserve Chairman would have to testify before them twice a year. Then in 1980 a law known as the Monetary Control Act, initiated a period of reforms in the present-day banking industry.

Following that in 1987, Fed Chairman Greenspan helped the country ward off a major crisis following the crash in the stock market referred to as Black Monday. The Gramm-Leach-Bliley Act overturned the Glass-Steagall act in 1999, and banks were allowed to provide a wide range of financial services like investment and insurance instruments.

We had planned to break this further into many more years but then face it – not everyone likes history lessons !!

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