Establishment and Evolution of the Federal Reserve … Fed/Fed (History).pdf · The Establishment...

The Establishment and Evolutionof the Federal Reserve Board: 1913-23

Sayre Ellen Dykes, of the Division of Researchand Statistics at the Board of Governors, andMichael A. Whitehouse, of the Board's Office ofthe Secretary, prepared this article.

When, on December 23, 1913, Woodrow Wilsonsigned the act establishing the Federal ReserveSystem, he felt grateful, he said, for having had apart in "completing a work . . . of lasting benefitto the business of the country." The nation hadbeen without an organization performing centralbanking functions since the charter of the SecondBank of the United States had expired in 1836.Financial stresses caused by the Civil War and aseries of devastating liquidity crises and bankfailures, especially the Panic of 1907, had fo-cused public awareness on the need for bankingand monetary reform. The Congress passed theAldrich-Vreeland Act of 1908, which providedfor the issuance of currency in an emergency.The act also created the bipartisan NationalMonetary Commission, headed by Senator Nel-son Aldrich, to study banking and currency re-form and to develop some recommendations.After making a detailed study of banking inEurope and North America, the commission in1912 published its findings in 38 massive vol-umes. Aldrich formalized the commission's rec-ommendations in a bill, generally known as theAldrich Plan, calling for one central bank and 15branches.

Although members of the Congress agreed onthe need for reform and on its general goals, theydiffered strongly on its shape. The Aldrich Planstirred up a deep-seated distrust of the central-ization of power and of the banking establish-ment. Alternative plans, which attempted dif-ferent balances between public and privateinterests and between central and regional con-trol, were proposed. The members finally over-came their partisan differences and adopted the

plan forged by President Wilson, CongressmanCarter Glass, and Senator Robert Owen, whichbecame the Federal Reserve Act—an act "tofurnish an elastic currency, to afford means ofrediscounting commercial paper, to establish amore effective supervision of banking in theUnited States, and for other purposes."

While the process of investigation, discussion,and compromise leading to the act had endedwith President Wilson's signature, another longprocess was beginning: that of organizing andestablishing in practice the central banking sys-tem of the United States and of developing newpolicies and tools to meet the changing needs andcircumstances of the economy. At the time of thesigning, Paul Warburg, one of the members of thefirst Board, said prophetically that "the FederalReserve Act as passed should not be consideredas a finality, and . . . actual experience in itsoperation would prove the need of importantmodifications or amplifications."1

The process of modifying and amplifying theact over the next 10 years was far from smooth.H. Parker Willis, the first Secretary of the Board,in a rhetorical flourish implied that it could evenbe considered a war: "[The struggle that pro-duced the Federal Reserve Act] is not merely achapter in financial history; it is also an accountof the first battle in a campaign for safe andscientific banking that has only just opened."2

Willis's metaphor was apt. During its first dec-ade, the System struggled to gain acceptancewhile facing the stresses caused by World War Iand its aftermath.

1. Paul M. Warburg, The Federal Reserve System: ItsOrigin and Growth, vol. 1 (Macmillan, 1930), p. 141.

2. Henry Parker Willis, The Federal Reserve System:Legislation, Organization and Operation (Ronald Press,1923), pp. 20-21.

228 Federal Reserve Bulletin • April 1989

The System was to consist of the FederalReserve Board in Washington; Federal ReserveBanks, each in its own district and known by thename of the city in which it was located; andmember banks, that is, all national banks andthose state-chartered banks willing and qualifiedto join. Initially, all the parts of the interdepen-dent System struggled for acceptance. Whileseparating those parts is often difficult, this arti-cle focuses on the struggles of the Board, whichwas to be, according to President Wilson, the"capstone" of the new Federal Reserve System.During its formative years, the Board had its ownproblems of establishing its authority, of recog-nizing the possibilities of its tools, and of devel-oping its role as a policymaker. By the end of1923, 10 years after the passage of the act, theBoard was beginning to resemble the influentialpolicymaking body it is today.

PROVISIONS OF THE FEDERAL RESERVEACT

The Federal Reserve Board was established bySection 10 of the Federal Reserve Act. Thissection carefully spelled out the organizationalaspects of the Board, which was to consist of"seven members, including the Secretary of theTreasury and the Comptroller of the Currency,who shall be members ex officio [that is, byvirtue of their offices], and five members ap-pointed by the President of the United States, byand with the advice and consent of the Senate."

Making the members presidential appointeeswas an attempt by the framers of the act, and ofPresident Wilson in particular, to keep the Sys-tem under a centralized public authority so as tobalance the power of private "money interests."The earlier Warburg and Glass plans, while giv-ing the government some voice, had given thebanks that were members of the system (bysubscription to stock in the regional banks) rep-resentation on the Board; and the Aldrich planhad even given the banks essential control (for acomparison of the features of the various propos-als, see the box on pages 230 and 231.). ButPresident Wilson, believing that interested, pri-vate parties should not sit on a board of control,stated:

[T]he power to direct this system of credits is putinto the hands of a public board of disinterestedofficers of the Government itself who can make nomoney out of anything they do in connection with it.No group of bankers anywhere can get control; noone part of the country can concentrate the advan-tages and conveniences of the system upon itself forits own selfish advantage.3

Through presidential appointment of the mem-bers of the Board, the framers of the act hoped toavoid a system that had even the appearance of amonopolistic institution likely to fall victim topartisan politics as had the First and SecondBanks of the United States.

Section 10 further stipulated that no more thanone of the five appointive members was to beselected from any one Federal Reserve Districtand that the President should have "due regardto a fair representation of the different commer-cial, industrial and geographical divisions of thecountry." At least two Board members were tobe "persons experienced in banking or finance."

These provisions for membership of the Boardwere intended to limit the degree to which theBoard was subject to partisan pressures and tohelp ensure that it would not be dominated byany one interest group or region. In particular, amajority of the framers wanted to avoid givingsubstantial control to New York financial inter-ests. The requirement that two members beknowledgeable in banking and finance was in-tended to ensure that the System would begoverned by sound and "scientific" principles inaddressing the commercial and financial needs ofthe nation.

While the President was to select the membersof the Board and to designate one as Governorand another as Vice Governor, no direct line ofcommunication was set up between the Boardand the President. The salaries and operatingexpenses of the Board were to be paid from theearnings of the Reserve Banks rather than fromcongressional appropriations, but the Board wasto make a full report of System operations to theCongress annually.

3. Letter, Woodrow Wilson, to Oscar Wilder Underwood,October 17, 1914, in Arthur S. Link (ed.), The Papers ofWoodrow Wilson, vol. 31 (Princeton University Press, 1979),p. 172.

The Establishment and Evolution of the Federal Reserve Board: 1913-23 229

These arrangements were intended to help insu-late the Board from pressures from the executiveand the legislative branches.

In a further attempt to insulate the Board frompartisan politics, Section 10 provided for 10-yearterms for Board members. These terms werelonger than those of any other executive appoin-tees except for those of the federal judiciary,which were lifetime appointments, and that ofthe Comptroller General, which was for 15 years.The first appointed members were to serve var-ied terms of 2 ,4 ,6 , 8, and 10 years, so that futureappointments would be staggered and any futurePresident would be unlikely to appoint a majorityof the Board.

Powers and Duties of the Board

While the organizational aspects appeared in onesection, the powers and duties of the Board werespread throughout the act. Section 11 gave theBoard the functions of examining the "accounts,books, and affairs" of the Reserve Banks and ofthe member banks; of permitting or requiring aReserve Bank to rediscount the discounted paperof other Reserve Banks and to fix the rate forsuch rediscounting;4 of regulating the amount ofgold reserves held against Federal Reservenotes; of supervising and regulating the issue andretirement of these notes; of changing the num-ber and designation of Federal Reserve cities;and of carrying out various supervisory andregulatory functions concerning the ReserveBanks. But other powers and duties of the Boardappeared in sections dealing with additional or-ganizational and functional elements of the Sys-tem. For example, the Board's power to desig-nate three of the nine directors of each ReserveBank appeared in Section 4; its duty to determineor define the character of the paper eligible fordiscounting fell under Section 13; and its powerregarding rates of discount fell under Section 14,"Open-Market Operations."

Besides being spread throughout the act, theBoard's functions were in some cases presentedvaguely and indirectly, almost as an after-thought. For example, each Reserve Bank's

4. The term "rediscount" is no longer in use.

power to establish rates of discount was "subjectto review and determination of the Federal Re-serve Board." What "determination" meant wasnot clear, and so the line between the ReserveBanks' power and the Board's power in fixingdiscount rates was left ill-defined. In other in-stances, provisions in one part of the act seemedto contradict or overlap provisions in other parts.Thus, Section 11 (a) authorized the Board to"examine at its discretion the accounts, books,and affairs of each Federal Reserve bank and ofeach member bank," and Section 21 empoweredthe Comptroller of the Currency to "appointexaminers who shall examine every memberbank at least twice in each calendar year andoftener if considered necessary" and later re-ferred to the examinations "made and con-ducted" by the Comptroller of the Currency.

There were two reasons for such lack of pre-cision. First, the act was a political compromisebetween different conceptions of what the Fed-eral Reserve System as a whole, and the Boardas part of that System, was to do and was not todo and what kind of checks and balances wereneeded. Having a public body oversee a systemof privately owned commercial banks raisedquestions not only about lines of authority butalso about what the Board's function was andhow the Board was to fulfill it. The attempt tosatisfy different interests led at times to vague-ness and even to contradiction. Second, the typeof system that was set up by the act was new anduntried. Thus, even some provisions that wereless vague, such as the number and the qualifi-cations of persons to be on the Board and theability of the Board to alter Reserve Districts andcities, were later reinterpreted and amended ascircumstances required.

Some Unsettled Issues

The issues regarding the Board that the act leftunsettled can be grouped into three categories:(1) the Board's relation to the government, pri-marily the Department of the Treasury; (2) theBoard's relation to the rest of the Federal Re-serve System; and (3) the Board's specific role ormission within those frameworks. During thefirst decade of the Board's existence, the needfor its independence from the Treasury became

Major twentieth-century plans for a governing body for the central banking system

Plan, bill, or act

Name Date

Governing body

NameNumber

ofmembers

Term of office(years) Composition Function

Warburg Plan November Board of1907; ManagersrevisedApril1908

Fowler Plan February1908

Court ofFinance

Aldrich Plan January1911

ReserveAssociationBoard

42 1, or until their Secretary of Treasury; Comp-successors troller of the Currency; U.S.qualify Treasurer; 6 members of Con-

gress; 20 chairmen ofbranches; 12 others voted bystockholding member banks;a salaried board governor

17 Serve until age 6 members from Atlantic coast;72, unless 6 from Mississippi region; 4majority of from Pacific coast; all experi-Court ex- enced in business and bank-tends appoint- ing; one at-large appointee toment preside over court; all

appointed by the President

45 3 Secretaries of Treasury, Com-merce, Labor, and Agriculture;Comptroller of the Currency; 14members elected by boards ofbranches; 12 representing stock-holding interests; 12 represent-ing agriculture, commerce, andindustry; governor and deputy

Issue notes based on commercialbills and gold; fix the discountrate and rediscount short-termcommercial paper; maintain cen-tral cash reserve; establishbranches; manage and superviseactivities of 20 regional bankassociations

Issue notes based on secured bankassets; consider appeals frommember banks not satisfied withrulings from regional associa-tions; manage central gold re-serve

Act as fiscal agent for government;determine discount rate forshort-term commercial paper,bills of exchange, and so on;engage in open marketpurchases

Owen Bill

of theNationalCurrency

pleasure ofthe President

in commerce, 1 in manufactur- ing, 1 in transportation, and 1 inbanking and credit

general supervision overreserve banks and examine -accounts of national and '"reserve banks; act as fiscal agentfor government; adjust bound-aries and districts of reservebanks if necessary; superviseissuance of national currency;suspend for no more than 30days reserve requirements speci-fied in b i l l ; approve reservebank accounts in foreign coun-tries; oversee foreign exchangeoperations


clearer; its struggle for power with the regionalReserve Banks, particularly the New York Bank,intensified; and its sense of its own mission andhow to carry it out strengthened and solidified.

The Board's Relation to the Treasury. Becausethe Board was a public body charged with over-seeing the nation's financial institutions, thosewho drafted the act believed that the Boardclearly had to have a close relation with theTreasury. That close relation, however, raisedthe issue of the System's independence from theTreasury, which soon became manifest in threeconflicts involving the Board: (1) about the re-spective responsibilities of the Treasury officialswho sat on the Board and of the membersappointed by the President; (2) about the Board'sfinancial accountability; and (3) about the divi-sion of powers between the Treasury and theBoard.

The Secretary of the Treasury and the Comp-troller of the Currency (a Treasury Departmentofficial) sat on the Board and voted as part of theduties of their respective offices. Thus, the Trea-sury had a substantial influence on the decisionsof the Board. The Secretary of the Treasury wasdesignated by the act as the Chairman of theBoard, but the responsibilities of this positionwere not spelled out. The appointed memberdesignated by the President as Governor was the"active executive officer," but his duties, too,were left unclear. Later, Secretary of the Trea-sury William McAdoo interpreted "active exec-utive officer" to mean "manager and administra-tor." But the heavy influence of the Treasury andthe lack of a clear definition of roles put somestrain on the relations among the Board mem-bers.

The act gave the Board the power to levy anassessment on the Reserve Banks to pay itsexpenses, including the salaries of members andstaff, and thus made the Board independent ofthe congressional appropriations process, thoughit required the Board to make a yearly report tothe Congress. The Treasury, however, claimedthe right to audit the Board's books as theBoard's funds were initially construed to bepublic moneys. As early as December 19, 1914,the U.S. Attorney General ruled on this issue,saying that while the moneys the Board had were

public and thus were subject to audit by an agentof the Treasury, the Board was an independentboard or government body separate from theTreasury. Despite the ruling, the debate contin-ued for a long time. (The issue of financialindependence was settled with the Banking Actof 1933, which stated that the Board's funds werenot to be construed as public moneys. But thelingering issue of accountability was not settleduntil the Federal Banking Agency Audit Act of1978, which authorized the General AccountingOffice to audit the Board.)

The division of powers between the Board andthe Treasury also was cloudy. Some of thefunctions that the act gave to the Board over-lapped those of the Treasury, as in the examina-tion of member banks. Also, the Comptroller ofthe Currency chartered national banks, all ofwhich were required to be members of the Sys-tem, so the question arose as to who had regula-tory power over them. (This confusion oversupervisory and regulatory jurisdiction has beensettled over the years through informal agree-ments among the System, the Comptroller, andthe Federal Deposit Insurance Corporation. Gen-erally, the System has authority over state mem-ber banks and bank holding companies; theComptroller has authority over nationally char-tered banks; and the FDIC oversees state non-member banks.)

The issue of the Board's, and the System's,independence from the Treasury caused conflictsbetween the two agencies and among the Boardmembers themselves. (It was defused in part bythe Banking Act of 1935, which removed theSecretary of the Treasury and the Comptroller ofthe Currency from the Board and placed respon-sibility for monetary policy solely in the hands ofthe Board and the newly established FederalOpen Market Committee.)

The Board's Relation to the Reserve Banks. Asestablished by the act, the Board had an ambig-uous position vis-a-vis the Reserve Banks. TheBoard was a central public body having supervi-sory and regulatory powers over private com-mercial banks that were members of the System.To help ensure that commercial bankers' con-cerns would be heard, the act established theFederal Advisory Council, consisting of one rep-


resentative from each Reserve District elected bythe member banks of that District, who acted asthe banks' representatives to the Board. Thecouncil was, however, empowered only to re-ceive and provide information and to make rec-ommendations. The Board had its representativeat each of the Reserve Banks: one of the threeClass C directors it appointed was designated theFederal Reserve Agent. The delineation of pow-ers between the Agent and the Governor (nowcalled the President) of the Reserve Bank was atfirst unclear. By the end of the first decade,however, the Governors had emerged as theprincipal leaders of their respective ReserveBanks.

But the Board was more than the governmentregulatory agency that President Wilson charac-terized as analogous to the Interstate CommerceCommission. It also had managerial duties andserved to direct, coordinate, and guide the Sys-tem's activities. In his 1914 opinion on the statusof the Board, Attorney General T.W. Gregorystated that the Board was "not merely supervi-sory, but . . . a distinctly administrative boardwith extensive powers." These powers, how-ever, had to be defined.

According to the act, the Board and the Re-serve Banks would exercise jointly the functionsof issuing and retiring Federal Reserve notes.But the act assumed that cooperation and coor-dination between the Board and the ReserveBanks, as well as among the Reserve Banks,would be automatic.5 One example of the prob-lems arising from this assumption regarded thediscount rate, which each Reserve Bank wasempowered to set for its own district. Was therate to be uniform or to vary across the country,and was it to depend on the type of paper thatwas being discounted? If the rates were to varygeographically, might not money accumulate inone Reserve District while draining away fromanother, a situation that the act was intended toprevent? Who would then decide when the ratewas to change, and what principles were togovern this decision?

Each Reserve Bank could engage in openmarket operations "at home and abroad" for itsown earnings. Who would regulate the competi-tion for funds that might arise among the ReserveBanks? How would the others fare against theNew York Bank, the one that was the largest andmost influential and likely to do the most busi-ness? How were policies regarding the discountrate and those regarding open market operations,which could work against one another, to becoordinated?

In international operations, who would speakfor the System, and what body would take theinitiative? After the passage of the act and evenbefore the selection of the first Board, J.P. Mor-gan, Jr., and other bankers and businessmen toldthe Reserve Bank Organization Committee, acommittee established by the act to designate theFederal Reserve cities and districts, that oneReserve Bank, probably in New York, should beof "commanding importance," especially with aview to its recognition by the central banks ofEurope.6 Secretary of the Treasury WilliamMcAdoo and Secretary of Agriculture DavidHouston, both on the committee, put forward thecontrary view that the activities of all 12 ReserveBanks should be coordinated through the Boardand that the Board should be the entity to whichthe foreign authorities looked. In practice, how-ever, the New York Reserve Bank became theprincipal representative in international affairsduring the early years of the System. This situa-tion arose because of the superior knowledge andexperience in international finance and the closecontacts with foreign bankers of that Bank'sgovernor, Benjamin Strong.

The Board's Mission. Much rhetoric sur-rounded the establishment of the Board. Presi-dent Wilson called it the "Supreme Court ofFinance," and William McAdoo saw it as a"bulwark against financial disaster."7 But therhetoric did not fit the reality of the Board's jobas outlined in the act.

5. Milton Friedman and Anna J. Schwartz, A MonetaryHistory of the United States, 1867-1960 (Princeton Univer-sity Press, 1963), p. 190.

6. "Commanding Bank Most Needed Here," New YorkTimes, January 7, 1914.

7. "New Reserve Board Sworn into Office," New YorkTimes, August 11, 1914.


The Board's role and its means for filling itwere not well defined because the framers of theact were concerned about limiting the Board'spowers and because the System's role in theeconomy and the tools of monetary control hadnot been tested and thus were not well under-stood. Was the Board to be the partly automaticregulator of an organization that was generallypassive except when an emergency required it toaccommodate commerce and business? Or wasthe Board to be the central policymaker in aSystem that actively participated in regulatingthe economy through managing the availability ofmoney and credit? The discussion in the Con-gress just before the passage of the act wasindicative of the concerns that the legislators hadabout the powers of an activist central bank. SaidCongressman Rufus Hardy of Texas: "A centralbank, so much desired by Wall Street. . . [wouldhave] powers for evil which the Board does nothave. . . . The Board could not loan, earn, own,or borrow one dollar. It could not finance anenterprise. It could not finance a candidate or acampaign."8 What the Board could or should dowas not so clear.

In its First Annual Report, published less thansix months after it was sworn in, the Boardrejected a passive role for the Reserve Banksand, by extension, for itself: The System's"duty" was "not to await emergencies but, byanticipation, to do what it can to prevent them."9

But because the Board was unsure of its mandatefor setting policy as well as of the tools at itsdisposal and also because it immediately faced anextraordinary situation—World War I—it couldnot act according to this principle.

The muddiness in the division of powers be-tween the Board and the Reserve Banks andbetween the Board and the Treasury, as well asin the conception of the Board's mission, led tofloundering and conflict in the early years of theSystem. How powers were to be divided andduties performed had to be worked out by trialand error in an ever-changing economic milieu.In its first 10 years, the Board began to establishitself within the System and in relation to the

8. Congressional Record, September 13, 1913, p. 4865.9. Board of Governors of the Federal Reserve System,

First Annual Report, 1914 (1915), p. 17.

Treasury Department and to learn what tools ithad and how to use them in setting and carryingout policy. Under pressure of circumstances, theBoard, and the rest of the System, evolved inways not foreseen by the framers of the act.

THE FIRST BOARD

The first Federal Reserve Board was sworn intooffice on August 10, 1914, after a selection proc-ess that was long and difficult for several reasons.First, President Wilson had to wait for the Re-serve Bank Organization Committee to selectFederal Reserve cities and draw District linesbecause the act specified that not more than oneappointive member could come from any oneReserve District.

Second, Wilson was aware of a widespreadbelief that the success of the Reserve Systemdepended on his selections. Like the First andSecond Banks of the United States, the ReserveBanks had been assigned a 20-year charter, andWilson wanted the System to last. (In the Mc-Fadden Act of 1927, the Congress showed itsagreement with Wilson's position by extendingthe Reserve Banks' charter indefinitely.) Whilethe composition of the Board had been addressedin the act, demands persisted from various quar-ters that Board members have certain creden-tials. Some interests, for example, urged that amember of a labor union, a farmer, and a formerU.S. President be placed on the Board. Wilsonhad to consider these requests and weigh theirimportance.

Third, the confirmation process took time.Two of Wilson's original choices—Richard 01-ney, a lawyer from Boston and a former Secre-tary of State, and Harry A. Wheeler, a Chicagobusinessman and a former president of the U.S.Chamber of Commerce—declined their appoint-ments. A third choice, David D. Jones, a Chica-goan who was a close friend of the President,encountered strong opposition because he hadbeen a director of International Harvester, a trustthat in 1914 was under indictment for illegalrestraint of trade. Jones was ultimately rejectedby the Senate. A fourth choice, Paul M. War-burg, a partner in the Wall Street investment firmof Kuhn, Loeb & Company, met with suspicion


because of his ties to the New York "moneyinterests" and because of his backing of theAldrich Plan and his original opposition to theFederal Reserve Act. After testifying before theSenate Banking Committee, Warburg, who hadprotested at being the only nominee besidesJones requested to appear, was finally confirmed.

Besides Warburg, the appointive members ofthe first Board were Frederic A. Delano, presi-dent of the Monon Railway, from Chicago;Charles S. Hamlin, a lawyer from Boston and aformer Assistant Secretary of the Treasury;William P.G. Harding, president of the FirstNational Bank of Birmingham, Alabama; andAdolph C. Miller, a noted economist and formerprofessor at the University of California, whowas at that time an Assistant Secretary of theDepartment of the Interior. President Wilsondesignated Hamlin as Governor and Delano asVice Governor. These appointments, particu-larly those of Warburg and Harding, who wereexceedingly knowledgeable about banking, werewelcome to the business and banking communi-ties. The Commercial and Financial Chroniclenoted at the time that "the sentiment of thefinancial community as a whole on learning of thepresident's nominations for the Federal ReserveBoard has been one of profound relief."10

Once appointed, the Board members were notdirectly responsible to the President, who had noformal channel of communication to the Boardand no legal power over Board policies.11 But inpractice, the presence of the Secretary of theTreasury and the Comptroller of the Currency onthe Board gave the Executive Branch consider-able weight; and the differing interests wereexpressed in quite a bit of friction between the"Treasury" faction, which included Hamlin aswell as the ex officio members, and the "non-Treasury" faction, which included Delano, War-burg, and Miller. In 1916, when Hamlin wasreappointed to the Board for a 10-year term,some members of the Board objected to hiscontinuing as Governor because his close con-nection to the Treasury threatened the Board's

10. In Gerald T. Dunne, "The Federal Reserve: The FirstFoundations," Business Horizons (Winter 1966), p. 56.

11. Donald F. Kettl, Leadership at the Fed (Yale Univer-sity Press, 1986), p. 4.

independence and because they wanted a rota-tion of the governorship. So President Wilsonappointed Harding as Governor and Warburg asVice Governor.

EARLY TASKS AND ISSUES: 1914-17

The first task of the Board was to complete theestablishment of the System begun by the Re-serve Bank Organization Committee. The Boardhad a great deal of work to do before November16, 1914, the date Secretary of the TreasuryMcAdoo had set for the opening of the ReserveBanks. The Board members selected three ClassC directors for each of the 12 Reserve Banks (theClass A and Class B directors were elected bythe member banks in each Reserve District);drafted uniform bylaws for the Reserve Banks;dealt with staffing and housing the ReserveBanks; oversaw the design and printing of thenew Federal Reserve notes; supervised the trans-fer of gold reserves to the Reserve Banks fromthe subtreasuries; set guidelines for the types ofpaper that were eligible for discounting by theReserve Banks; and worked out a mechanism fordiscounting.

On October 20, 1914, soon after announcingthe appointment of the Class C directors, theBoard called a meeting in Washington of thedirectors and other officers of the Reserve Banksto deal with practical items that required unifor-mity and cooperation among the Reserve Banks,such as a check-clearing and -collection systemand a method of accounting. Some of the exec-utive officers (or "Governors," as they thenwere called), especially Benjamin Strong of theNew York Bank and Alfred L. Aiken of theBoston Bank, recognized the need to continuesuch meetings and helped to establish a confer-ence of Governors that met several times a yearto discuss common concerns and objectives. The"Governors Conference" began to take on a lifeof its own, to issue resolutions on System poli-cies, and to criticize rulings and orders from theBoard. In January 1916, the Board decided tocheck the authority of the Governors Conferenceby refusing to approve its expenses for a secre-tary and for travel not undertaken at the behest


of the Board. The Board also insisted that anymeetings of the group take place in Washingtonat a time designated by the Board. Some Gover-nors complained that the Board was exceedingits mandated authority; but the Board prevailedand, through this early internal contest, began todefine and exert its authority within the System.

Some of the tasks of setting up the System,complex in themselves, were made even moredifficult because of opposition from various quar-ters. The establishment of a universal par check-clearance system, for example, was opposed bymany member banks, particularly those in smalltowns, that did not want their "exchangecharges," or processing fees, abolished sincethese were a means of earning income. (Thisissue actually went into litigation, and the casewas not settled until a 1923 Supreme Courtdecision affirmed the right of a Reserve Bank tocollect checks within its District for other Re-serve Banks, for member banks, and for affiliatednonmember banks without paying an exchangecharge.)

In a further effort to strengthen the System andto unify U.S. banking, the Board issued regula-tions fixing the conditions under which statebanks could join the System (under the terms ofthe act, national banks were required to becomemembers within a year or forfeit their federalcharters). But the state banks, finding thoseconditions less satisfactory than the ones underwhich they currently operated, did not rush tojoin.

At the same time, the Board was developing itsown staff and operations. To support its work,the Board hired a staff of 45 from 1,250 appli-cants, dealing with considerable pressure fromvarious sources for particular appointments; es-tablished three divisions—the CorrespondenceDivision, the Division of Reports and Statistics,and the Division of Audit and Examination—anda legal department under the charge of a generalcounsel; and appointed two administrative of-ficers, the secretary (H. Parker Willis) and theassistant secretary (Sherman P. Allen). In ac-cordance with the act, Treasury Secretary McA-doo provided office space in the Treasury Build-ing for the Board and its staff. This arrangementwas disturbing to some of the Board members,who suggested moving the Board's operations to

Chicago to mitigate what seemed at times to beoverwhelming Treasury influence.

In May 1915, the Board created the FEDERALRESERVE BULLETIN as a monthly publication to"afford a general statement concerning businessconditions and events in the Federal reservesystem that will be of interest to all memberbanks." The provision of statistical and otherinformation on a consistent basis for all ReserveDistricts was another move toward coordinationand unity.

Soon after the Board took office, it was askedto review the decisions of the Reserve BankOrganization Committee regarding the designa-tion of Federal Reserve cities and the drawing ofDistrict lines. Pittsburgh and Baltimore had re-quested designation as Federal Reserve cities inplace of Cleveland and Richmond respectively.Some areas, such as Fairfield County, Connect-icut, had applied to be transferred from oneReserve District to another. A few members ofthe Board believed that the System would bemore efficient with fewer Districts. Since thecapital of some of the Reserve Banks was closeto the statutory minimum of $4 million and sincetransferring territory among Districts could insome cases reduce capital below the limit, theAttorney General was asked for an opinion aboutthe Board's power to readjust the Reserve Dis-tricts. On November 22, 1915, the AttorneyGeneral said that the Board could not reduce thenumber of Reserve Districts or Reserve Banksbelow 12, and on April 14, 1916, he indicated thatthe Board could not change the location of anyReserve Bank but that it could adjust the bound-ary lines of the Districts.

Policy Questions

According to the act, one of the main functions ofthe System was to "furnish an elastic currency,"that is, a currency that would respond to theregional, seasonal, and cyclical needs of the U.S.economy as well as its emergency needs. Thediscounting of "eligible" paper would be theprimary policy tool with which to achieve thiselasticity. Each Reserve Bank was to set its owndiscount rate, subject to "review and determina-tion" by the Board. The act assumed the coor-dination of discount policy to be automatic,


relying on the gold standard and the "real bills"doctrine. That doctrine held that if credit wereissued only on the basis of short-term, self-liquidating paper associated with goods in com-mercial transactions, money and credit wouldexpand and contract with the volume of goodsproduced. However, the Board quickly saw thenecessity for developing a Systemwide discountpolicy so that all the Reserve Bank discountrates, even if differing among the Districts, wouldat least bear a consistent relation to one another.In an effort to standardize Reserve Bank prac-tices, the Board defined the different classes ofpaper that were eligible for discount and decidedon a schedule of graduated rates based on thematurity and character of the paper discounted.

Carrying out such tasks and deciding on suchsensitive issues would have been difficult enoughin peacetime; but even as the Board was beingsworn in and the System was being organized,war erupted in Europe. In the time of uncertaintyas to whether the United States would enter thewar, the Board adhered to a policy of strength-ening the System for preparedness in case of thedeclaration of war. It attempted to maintain theliquid character of the Reserve Banks' assets, toconcentrate and conserve the gold supply withinthe System, and to discourage excessive expan-sion of credit. In May 1915, the Board estab-lished the Gold Settlement Fund, with eachReserve Bank depositing with the Treasury$1 million in gold or gold certificates. With theBoard acting as a clearinghouse, the fund elimi-nated the need for shipments of gold in adjustingbalances among Reserve Banks. In September1916, the Federal Reserve Act was amended topermit member banks to carry all required re-serves as balances with the Reserve Banks. InJune 1917, the act was amended again in accord-ance with Board recommendations to makemembership in the System more attractive tostate banks and trust companies, to modify re-serve requirements to increase the gold holdingsof the Reserve Banks, and to make gold moreavailable as a basis for elastic note issue. Also,the Reserve Banks began to issue Federal Re-serve notes against not only gold but a combina-tion of gold and commercial paper. Whereasearlier the centralization of the gold supply hadbeen seen as a way of discouraging excessive

expansion of money and credit, now it was seenas a way of encouraging needed expansion. As aresult of these changes, the Federal Reserve notewas becoming, rather than an occasional emer-gency currency, the most important constituentof the U.S. "circulating medium."

Emergency Measures

While the declaration of war in Europe in thesummer of 1914 served to moderate opposition tothe System, it diverted attention from longer-term issues to emergency measures. Althoughthe United States was not yet directly involved inthe war, the country's economic and financialsystems were from the first affected by the Eu-ropean conflict. Fortunately, the Congress hadextended the Aldrich-Vreeland Act of 1908 untilJune 30, 1915, which helped to prevent a panic byproviding for the issuance of notes through na-tional currency associations. This extension en-abled the Board to respond to other emergencyconditions caused by the war.

At first, the war curtailed ocean transportationand disrupted international trade, creating strainsin commodities markets and hardships for U.S.farmers, particularly those growing cotton. Thecotton crop in 1914 had been the largest onrecord, and the collapse of the cotton exportmarket (which took about 60 percent of thecotton farmers' output) and the closing of thecotton exchanges in the United States and Eng-land brought pressures from the Congress on theBoard to help support the price of cotton and toprovide credit assistance to cotton farmers. InJanuary 1915, the Board approved a plan for aCotton Loan Fund subscribed to by commercialbanks to supply long-term loans to farmers.

When hostilities started in Europe, the UnitedStates was a debtor nation. Its outstanding obli-gations to Europe, primarily to England, werelarge, and a substantial volume of securitiespayable in Europe were about to mature. Toprevent a drain of gold that could endanger theU.S. banking system and to facilitate gold pay-ments between countries, the Board and theTreasury helped set up in September 1914 a $100million Gold Exchange Fund from which inter-national payments could be made. Although onlya small portion of the fund was used before it was


terminated in March 1915, the existence of thefund did help to prevent panic, restore confi-dence in the economy, and provide an interimsolution to the gold exchange problem until theReserve Banks were fully operational.

As the war in Europe continued, the financialand monetary situation of the United Stateschanged. Many financial centers in Europe expe-rienced difficulties, and several stock exchangesclosed. London gave way to New York as themajor world credit market, and large foreigncredits were negotiated in the United States.Exports, particularly those of war-related goods,increased dramatically, and gold poured into thecountry. From August 1914 to April 1917, thegold stock of the United States almost doubled,to $2.85 billion.

THE BOARD DURING WORLD WAR I:1917-18

When the United States declared war on Ger-many on April 6, 1917, the Board and the Re-serve Banks found themselves involved in newduties and subjected to new pressures. Just be-fore the declaration of war, Secretary of theTreasury McAdoo charged the System, which in1915 had been made a receiver and distributor ofgovernment funds, with a new fiscal-agencyfunction: that of issuing and redeeming short-term Treasury certificates to prepare for thefloating of the $2 billion Liberty Loan of 1917.The Board objected both to the amount of theborrowing and to the low rate of interest for thefirst certificates, which were for $50 million at 2percent. In response, McAdoo threatened toinvoke the Overman Act, which would haveallowed him to take over the System's funds togain immediate control of all U.S. banking re-serves in the emergency. The Board withdrew itsobjections. During the war, the System assistedthe Treasury in floating four Liberty Bond issues;by October 1918, $17 billion in bonds had beenfloated. Because of this heavy borrowing, thefederal government debt expanded from roughly$1 billion in June 1916 to $21 billion in December1918.

Discount Policy

In its discount policy, the Board faced conflictingobjectives: (1) facilitating the war-financing,emergency operations of the Treasury, whichmeant keeping discount rates low, to allow thefinancing of the government debt at low rates,and (2) preventing the overexpansion of credit toprotect business and commerce, which meantraising interest rates and using "moral suasion"to encourage a "policy of common sense practi-cal economy" (that is, appealing to commercialinterests to borrow and the banks to lend only forlegitimate business needs and not for speculativepurposes).12 Most often, the Board sought tofacilitate the Treasury's financing. Thus, theBoard urged the Reserve Banks to establishpreferential discount rates on loans to memberbanks secured by government obligations ascompared with discounts of commercial paper.By 1918, the Board looked toward the time when"the war obligations of the Government havebeen digested, and the invested assets of theFederal Reserve Banks have been restored to acommercial basis, [so that] rates can be estab-lished with reference to the commercial require-ments of the country."13

Strengthening the System

During the war, the Board continued its efforts tostrengthen the System. After the 1915-16 influx,the movement of gold into the United Statesvirtually ceased as European countries went offthe gold standard. The Board attempted to con-serve the U.S. gold supply by limiting exports ofgold to neutral countries. It also attempted tomake membership in the System more attractiveto state banks. President Wilson supported theseefforts, saying that membership in the Systemwas a "solemn obligation," and many bankstook heed. During the System's first year ofoperation, 17 state banks joined; by June 1919,spurred by appeals to patriotism and concernedabout possible war emergencies, 1,042 statebanks had joined, bringing the total number of

12. Fourth Annual Report, 1917 (1918), p. 9.13. Fifth Annual Report, 1918 (1919), p. 87.

The Establishment and Evolution of the Federal Reserve Board: 1913—23 239

System members, including the 7,780 nationalbanks, to 8,822. Responding to the growing com-plexity of the economic and financial system, theBoard in 1918 added the Division of Analysis andResearch to its staff with headquarters in Wash-ington and a working office in New York.

The System as a whole gained strength andprestige because it was able to facilitate themobilization of funds for the war effort and tohelp bring the country through the collapse of theEuropean financial and commodity markets. TheBoard itself, however, felt that it was losingcontrol not only to the Treasury but also to theNew York Reserve Bank, which operated underthe forceful and able leadership of BenjaminStrong. After the first Liberty Loan, the Trea-sury began to bypass the Board and to dealdirectly with the Reserve Banks, particularly theNew York Reserve Bank. In 1917, in an effort todefine its authority, the Board discontinued theregular meetings of the Federal Reserve Agentsand those of the Governors of the ReserveBanks. It also took the stand that "in all vitalmatters of general policy calling for prompt anddecisive action concentration of responsibilitywithout division of authority is indispensable."14

But the Board was still hampered in its attempt toassume leadership by its location in Washingtonwith no immediate access to financial markets,with only a limited research staff, and within tooeasy reach of the Treasury's influence.

AFTERMATH OF WORLD WAR I:1918-23

As a result of the war, the United States becamea creditor nation. At first, domestic productionsurged with the increases in exports and U.S.government expenditures, both of which re-mained high for some time after the Armisticewas signed on November 11, 1918. With theincrease in reserves resulting from the inflow ofgold and from the use of Treasury bonds ascollateral for advances to member banks, creditexpanded. The expansion of credit and a surge indemand for consumer goods, which had beenpent up during the war years, contributed to

postwar inflation. During 1919, speculation andconsumption increased while production beganto drop off and, with the lifting of the goldembargo, gold began to flow out. In its AnnualReport for 1920, the Board described the postwareconomy in strong language: the year was "char-acterized by an unprecedented orgy of extrava-gance, a mania for speculation, overextendedbusiness in nearly all lines and in every section ofthe country, and general demoralization of theagencies of production and distribution."15

The Discount Rate and Controversy

As early as December 1918, members of theBoard were stressing the connection betweenlow discount rates and excessive expansion ofcredit and inflation. However, the Board, led byGovernor Harding, believed that its duty was tocooperate with the Treasury, which wanted tofloat a Victory Loan in 1919. In April 1919, theBoard discussed at length suggestions by severalReserve Banks to raise the discount rate butdecided to keep the rate low to discourage com-petition with the buying of Victory bonds and toassist the Treasury in keeping the government'sinterest payments low. It did, however, expressconcern over the unhealthful tendencies in theprocess and discussed acting after the close ofthe Victory Loan campaign. During that cam-paign, the Board attempted to use moral suasionby issuing warnings to member banks to restrictcredit except for essential purposes.

By 1920, the wholesale price index was morethan twice its 1914 level, and the Board and theReserve Banks saw clearly that, despite theTreasury's opposition, something had to be doneto contain inflation and speculation. In January,with approval from the Board, the discount ratewas raised from 4 3/4 percent to 6 percent. Mem-ber bank borrowing from the Reserve Banks stillcontinued to mount: it went from $1.8 billion inJune 1919 to $2.5 billion in May 1920. In May, theBoard approved another increase—to 7 per-cent—initiated by the New York Reserve Bankand three other Reserve Banks, which went intoeffect in June.

14. Fourth Annual Report, 1917 (1918), p. 29. 15. Seventh Annual Report, 1920 (1921), p. 1.


These increases in the discount rate contrib-uted to a brief but severe recession in businessactivity and to a collapse in prices in 1920-21.There was a precipitous liquidation of discountcredits at the Reserve Banks, accompanied by alarge-scale contraction of money in circulation.The agricultural sector was particularly affected:farmers who had incurred large mortgage andcapital obligations on the basis of high wartimeprices found the carrying costs beyond theirmeans when prices dropped. Farm mortgages atmany small banks became uncollectable, and in1921 more than 500 banks failed.

Although the price collapse was internationalin scope, the System received much of the blamefor the situation. Many of the buyers of theLiberty bonds at low interest rates discoveredthat bond prices fall when market rates rise andwere resentful that the System had imposedcapital losses on them so soon after they hadbought the bonds. Charges were made in theCongress against the System, the Board, andeven Governor Harding personally. Some mem-bers of the Congress claimed that the System wasacting for its own benefit and not for the econ-omy and that the System had discriminatedagainst certain sectors, especially agriculture.Some asserted that the situation showed themisuse of funds by the Board and that someBoard members acted for their own gain. EvenComptroller of the Currency John Skelton Wil-liams, who sat on the Board, charged that theBoard and the Reserve Banks had conspired todrive up rates to create deflation for the profit ofbankers.

In an effort to resolve the controversy, theBoard requested a congressional investigation.The Joint Congressional Commission of Agricul-tural Inquiry started hearings in August 1921 andsubmitted a report to the Congress in January1922. The commission concluded that the Fed-eral Reserve System had erred in not actingsooner to raise interest rates. It also establishedthat the charges of discrimination against agricul-ture or of personal gain had no basis. Mostimportant for the evolution of the Board and theSystem, the commission noted that the Systemwas in a difficult position vis-a-vis the Treasury,and it emphasized that the Federal Reserveshould answer, not to the Treasury, but to the

Congress. Thus, the commission, as had theAttorney General earlier, underscored the prin-ciple of the Board's independence from the Trea-sury.

Changes in the Board

After the war, the membership of the Board,which had remained intact for nearly fouryears, underwent repeated changes. One seatchanged four times in five years: Delano hadresigned in 1918 to serve in the U.S. Armyoverseas, and in 1919 Henry A. Moehlenpahfilled his place, to be followed in 1920 by DavidC. Wills, in 1921 by John R. Mitchell, and in1923 by George R. James. From 1918 to 1921, theVice Governorship had three occupants—PaulWarburg, Albert Strauss, and Edmund Platt—and the office of Secretary of the Treasuryand Chairman of the Board had four—WilliamMcAdoo, Carter Glass, David Houston, andAndrew W. Mellon.

In 1922, as a result of the congressional inves-tigation, an amendment to Section 10 of the actprovided for an additional member of the Boardto represent agricultural interests. In 1923, MiloD. Campbell of Michigan was appointed to thatnew position. But he died suddenly after havingserved on the Board only eight days, and EdwardH. Cunningham of Iowa replaced him.

Governor Harding's term expired in 1922, andDaniel R. Crissinger, who had been Comptrollerof the Currency, was appointed to fill the va-cancy in 1923. In that year, too, Henry M. Dawesassumed the office of Comptroller and member-ship on the Board. By the end of the first decade,only two of the original members—Charles S.Hamlin and Adolph C. Miller, both of whom hadbeen reappointed—were still serving (theyserved until 1936).

By the end of the war, the Treasury could nolonger house the staff of the Board, which nownumbered 345. While the Board members, theSecretary, the General Counsel, and the GoldSettlement Division still had offices in the Trea-sury building, the Division of Reports and Statis-tics and the Division of Operations and Exami-nations were in two other Washington locationsand the Division of Analysis and Research was inNew York. Coordination was at best difficult.


Thus, the Board began planning for its ownquarters, which would not be completed until1937.

The Board and the Reserve Banks

During the postwar period, power in policymak-ing began to shift from New York to Washington,a process that continued for some years. In May1922, the Division of Analysis and Researchmoved from New York to Washington, and inSeptember of that year Walter W. Stewart re-placed H. Parker Willis as director of that divi-sion. In 1923, the division was combined with theOffice of Statistician and renamed the Division ofResearch and Statistics under the directorship ofStewart.

After the wartime hiatus in their meetings, theGovernors of the Reserve Banks, led by Benja-min Strong, again sought the right to consult as abody. In May 1922, the Governors Conferencemet in Washington with the Board's approval(that group meets today as the Conference ofPresidents). At that meeting, the Reserve BankGovernors set up the Committee of Governorson Centralized Execution of Purchases and Salesof Government Securities by Federal ReserveBanks. As originally conceived, this GovernorsCommittee was to coordinate the ReserveBanks' purchases and sales of government secu-rities; however, it soon began to influence policyand, as with the Conference of Governors beforethe war, it came into conflict with the Board. InMarch 1923, while Strong was in Colorado recu-perating from an episode of tuberculosis, theBoard asserted its jurisdiction over ReserveBank open market operations, disbanded theGovernors Committee as it was then composed,and reappointed the same officials to a newcommittee that would operate under the aegis ofthe Board. Despite disagreements about the rightof the Board to act in such a manner, the OpenMarket Investment Committee, as it was called,had its first meeting on April 13, 1923. TheBoard's action brought open market operationsunder its direction for the first time and reducedthe autonomy of the individual Reserve Banks incarrying them out. It also signaled a majorchange in policy.

Changes in Policy

The breakdown of the gold standard in severalcountries during the war and the issuance ofgovernment securities to finance the war effort ofthe United States heralded the beginning of theend of the gold standard and the real bills doc-trine as a guide to policy. There was a growingrecognition among System officials that the secu-rities transactions had affected bank reserves andthus economic conditions. Also, the largeamount of speculation during 1919-20 hadshowed that regulations, even with the mostprecise definition of eligibility, could not controlthe ultimate use of Federal Reserve credit.

These changes in the Board's thinking onpolicy are indicated in the Tenth Annual Report,First of all, the Board and the System shiftedfrom the sole reliance on changes in discountrates to the inclusion of open market operationsin carrying out general credit policy. Thus, theBoard stated the principle that Reserve Bankpurchases and sales of government securitiesshould be made with reference to prevailingcredit conditions and for the accommodation ofcommerce and business, not just to provideearnings to the individual Reserve Banks or tofacilitate Treasury financing operations. Thisstatement put open market operations under thesame guiding principle as that prescribed by theact for the discount rate. Second, the Boardindicated that the need for coordination anduniformity in pursuing open market operationswas the basis for its actions in setting up theOpen Market Investment Committee. It alsoaffirmed the need for uniformity in setting dis-count rates. Third, in recognition that it could notprevent speculation by defining the kinds ofpaper that were eligible for discounting, theBoard asserted the principle that the quantity ofpaper discounted was as important as the qualityin guarding against the overexpansion of credit.

In these statements, the Board demonstrated itsgrowing ability to analyze and adapt to new uses thetools it had and its growing recognition of itself, notmerely as a regulator, but as a policymaking body.The questions of the centralization of power withinthe System, of independence from the Treasury,and of the mission of the Board were not settled, butthe process was under way.


BIBLIOGRAPHY

Anderson, Clay J. A Half-Century of FederalReserve Policymaking, 1914-1964. Philadel-phia: The Bank, 1965.

Beckhart, Benjamin H. The Federal ReserveSystem. New York: Columbia UniversityPress, 1972.

Board of Governors of the Federal Reserve Sys-tem. Annual Report, for the years 1914-23.Washington: Board of Governors, 1915-24.

. Banking and Monetary Statistics. Wash-ington: Board of Governors, 1943.

Chandler, Lester V. Benjamin Strong: CentralBanker. Washington: The Brookings Institu-tion, 1958.

Clifford, A. Jerome. The Independence of theFederal Reserve System. Philadelphia: Uni-versity of Pennsylvania Press, 1965.

Dunne, Gerald T. A Christmas Present for thePresident. St. Louis: The Bank, 1964.

. "The Federal Reserve: The First Foun-dations," Business Horizons (Winter 1966),pp. 49-60.

Eccles, George S. The Politics of Banking. SaltLake City: University of Utah, 1982.

Elliott, David C. "The Federal Reserve System,1914-29," in Herbert V. Prochnow, ed.,The Federal Reserve System. New York:Harper & Brothers Publishers, 1960, pp.295-316.

Friedman, Milton, and Anna J. Schwartz. AMonetary History of the United States, 1867-1960. Princeton, N.J.: Princeton UniversityPress, 1963.

Glass, Carter. An Adventure in ConstructiveFinance. Garden City, N.Y.: Doubleday, Pageand Company, 1927.

Goldenweiser, E.A. American Monetary Policy.New York: McGraw-Hill Book Company,1951.

Harding, W.P.G. The Formative Period of theFederal Reserve System. Boston: HoughtonMifflin Company, 1925.

Harris, S.E. Twenty Years of Federal ReservePolicy, vol. 1. Cambridge, Mass.: HarvardUniversity Press, 1933.

Hepburn, A. Barton. A History of Currency inthe United States. New York: Macmillan,1915.

Johnson, Roger T. Historical Beginnings . . . TheFederal Reserve. Boston: The Bank, 1977 (re-printed, 1982).

Kettl, Donald F. Leadership at the Fed.New Haven, Conn.: Yale University Press,1986.

Laughlin, J. Lawrence. The Federal ReserveAct, Its Origins and Problems. New York:Macmillan Company, 1933.

Link, Arthur S., ed. The Papers of WoodrowWilson. Princeton, N.J.: Princeton UniversityPress, 1979.

McAdoo, William G. Crowded Years. Boston:Houghton Mifflin Company, 1931.

Miller, A.C. "Federal Reserve Policy," Ameri-can Economic Review, vol. 11 (June 1921), pp.195-206.

Noyes, Alexander D. "A Year after the Panic of1907," Quarterly Journal of Economics (Feb-ruary 1909), pp. 185-212.

Parthemos, James. "The Federal Reserve Act of1913 in the Stream of U.S. Monetary His-tory," Federal Reserve Bank of RichmondEconomic Review, vol. 74 (July/August 1988),pp. 19-28.

Reed, Harold L. The Development of FederalReserve Policy. Boston: Houghton Mifflin,1922.

. Federal Reserve Policy 1921-1930. NewYork: McGraw-Hill Book Company, 1930.

Rowe, J.Z. The Public-Private Character ofUnited States Central Banking. New Bruns-wick, N.J.: Rutgers University Press, 1965.

Sprague, O.M.W. "The Crisis of 1914 in theUnited States," American Economic Review,vol. 5 (September 1915), pp. 499-533.

Stein, Herbert. Government Price Policy in theUnited States during the World War. William-stown, Mass.: Williams College, 1939.

Timberlake, Richard H. The Origins of CentralBanking in the United States. Cambridge,Mass.: Harvard University Press, 1978.

U.S. Congress. Federal Reserve Act. PublicLaw No. 43. 63 Cong. 2 Sess. 38 Stat. 251.Washington: Government Printing Office,1913.

Warburg, Paul M. The Federal Reserve System:Its Origin and Growth. 2 vols. New York:Macmillan Company, 1930.

West, Robert Craig. Banking Reform and the


Federal Reserve, 1863-1923. Ithaca, N.Y.: Willis, Henry Parker. The Federal Reserve System:Cornell University Press, 1977. Legislation, Organization and Operation. New

White, Eugene N. The Regulation and Reform of York: Ronald Press Company, 1923.the American Banking System, 1900-1929. . The Theory and Practice of CentralPrinceton, N.J.: Princeton University Press, Banking. New York: Harper & Brothers Pub-1983. lishers, 1936.

Establishment and Evolution of the Federal Reserve … Fed/Fed (History).pdf · The Establishment...

Documents

Transcript of Establishment and Evolution of the Federal Reserve … Fed/Fed (History).pdf · The Establishment...