The Federal Reserve Bank

April is Financial Literacy Month. Most Americans have very little knowledge and understanding of how monetary policy works via the Federal Reserve. During the recent recession, the Federal Reserve acted as the lender of last resource to help stabilize the banking industry that was in crisis.

It also financed much of the American Recovery and Reinvestment Act (ARRA) (or "stimulus") tax cuts to stimulate demand and reduce business layoffs. The Stimulus also provided funds to states to reduce budget shortfalls and save the jobs of many teachers, police, firefighters, and other public employees.

The Federal Reserve Act of 1913 provided for the establishment of federal banks to support and regulate the banking industry in the United States. The law was enacted to address the problems of a series of financial panics, but especially the currency shortage in 1907, that led to a bank panic and recession. Sponsored by Carter Glass in the House and Robert L. Owen in the Senate, the final legislation provided for a system of twelve Federal Reserve banks, each serving a regional area.

The twelve Federal Reserve banks were to be overseen by the Federal Reserve Board that was appointed by the president, approved by the Senate, and charged with setting policies for the banks. However, member banks—not the federal government—would own the Federal Reserve Banks. This arrangement, along with the 14-year terms of Federal Reserve Board members, attempted to strike a balance between government and banking interests.

The Federal Reserve Banks were authorized to lend funds to member banks in times of banking crisis and to issue currency. Despite almost unanimous opposition by the nation's bankers, the Federal Reserve Act was passed by Congress on December 23, 1913, and signed into law by President Wilson. The Federal Reserve System became fully operational over the next few years, and has with some modifications, remained the U.S. national banking system since.

Assign students to address the Document Based Question (DBQ) correlated to the topic of the Federal Reserve: "Describe the economic problems the Federal Reserve Act, which established a central banking system in the United States, sought to address and summarize its major provisions." Cite at least three resources in an essay of at least 150 words.

1910s > The Federal Reserve Act > click Document Based Question (DBQ) link

Use our custom ProQuest models for written and PowerPoint-style reports.