Everything Everywhere Daily The Origins of the Federal Reserve
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Nov 3, 2025 Discover the secretive origins of the Federal Reserve, established in 1913 to avoid the pitfalls of earlier national banks. Delve into the clandestine Jekyll Island meeting where the Aldrich Plan was born. Learn how the Democrats reshaped this plan into a public-centric institution. Explore the Fed's turbulent early years, including challenges during WWI and the 1929 crash. Finally, uncover the reforms of 1935 that enhanced the Fed's independence and its modern role in the global economy.
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Postwar Banking Lacked A Central Authority
- The National Banking Acts created uniform national currency but left no lender of last resort or coordinated monetary policy.
- That gap caused recurring seasonal interest spikes and bank panics after the Civil War.
The Secret Jekyll Island Meeting
- Senator Nelson Aldrich secretly met bankers at Jekyll Island in 1910 to draft the Aldrich Plan for a central bank.
- They traveled under assumed names and pretended the trip was a duck hunt to avoid publicity.
Compromise Built The Federal Reserve
- The Aldrich Plan shaped the Federal Reserve though it never became law, prompting a public redesign under Democrats.
- The final system combined a public board with regional reserve banks owned by member commercial banks.