Federal Reserve Act (1913)What eventually emerged was the Federal Reserve Act, also known at the time as the Currency Bill, or the Owen-Glass Act. The bill called for a system of eight to twelve mostly autonomous regional Reserve Banks that would be owned by commerical banks and whose actions would be coordinated by a committee appointed by the President. The Federal Reserve System would then become a privately owned banking system that was operated in the public interest. Bankers would run the twelve Banks, but those Banks would be supervised and by the Federal Reserve Board whose members included the Secretary of the Treasury, the Comptroller of the Currency, and other officials appointed by the President to represent public interests.
The House of Representatives passed the Federal Reserve Act by a vote of 298 to 60. The Senate also passed the measure 43 to 25. In both chambers of Congress, it was the anti-banker Democrats that overwhelmingly supported the Act, while for the most part the pro-banker Republicans opposed it. President Wilson signed the bill on December 23, 1913 and the Federal Reserve System was born. Bankers largely opposed the Act because of the presence of the Federal Reserve Board in the legislation and because only one of its seven members could represent the banking community.
The Federal Reserve system as it exists today is not quite the same creature that was produced in 1913. The system has undergone rare, but susbstantial overhauls over the years. The two most important changes occurred in response to the Great Depression and to the mini-crisis of the late 1970's. Both of these reforms will be discussed later.