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    Anything Bat

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    Anything Bat

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    Anything Bat

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    of 21

    FED Timeline

    by: Paul Lopez & Jonathan Cordero


    http://www.federalreserveeducation.org/about-the-fed/history/

    1775-1791: U.S. Currency


    * During the American Revolution, Congress came out with the first paper

    money known as Continentals.


    * They exceeded the amount of currency circulating, causing inflation. * In the end. the were considered worthless.

    1791-1836: First Attempt at Central Banking


    Alexander Hamilton was trying to start a Central Bank and it was called the First Bank of the United States in 1791. It was located in Philadelphia It was the largest corporation in the country It was funded by big banking and money interests

    People were not sure in having one big bank.


    20 years after it was established, its charter ran out and it was renewed in 1811

    1816-1836: A Second Try Fails


    * 1816- Congress made the Second Bank of the United States. * 1828- Andrew Jackson was elected president. * Jackson wanted to get rid of the bank. * 1836- Banks charter expired (never renewed.)

    1836-1865: The Free Banking Era


    State-chartered and unchartered free banks began Each bank started to issue their own money, backed by gold They offered demand deposits to enhance commerce

    Because of too many check transactions, the New York Clearinghouse Association was started
    The Association helped, in 1853, to give people a way to exchange checks and control accounts

    1863: National Banking Act


    * 1863- National Banking Act was passed. * Circulating notes were backed by U.S. government securities to the nationally chartered banks * Uniform Currency for U.S.

    1873-1907: Financial Panics Prevail


    The nations economy is plagued with bank runs and financial panics In 1893, there was a banking panic that started the worst depression in the United States J.P. Morgan stabilized the economy

    1907: A Very Bad Year


    * 1907- Wall Street Panic * People started thinking we need a more secure banking system. * Central banking authority needed to ensure healthy banking system and provide elastic currency.

    1908-1912: The Stage is Set for Decentralized Central Bank


    The Aldrich-Vreeland Act of 1908 was passed because of the panic of 1907 It made the emergency relief fund It established the National Monetary Commission Nelson Aldridge developed a bankercontrolled plan Progressives attacked this plan extensively Woodrow Wilson stopped the plan

    1912: Woodrow Wilson as Financial Reformer


    Woodrow Wilson, although not knowing much about financial issues, gave expert advice to Carter Glass, which allowed him to be Chairman of the House on Banking and Finance The committee had an adviser called H. Parker Willis, which helped Wilson develop the Federal Reserve act

    1913: The Federal Reserve System is Born


    From December 1912 to December 1913, the Glass-Willis proposal was debated and edited heavily In December 23, 1913 Woodrow Wilson signed the Federal Reserve Act This was a compromise for a decentralized central bank that took care of checks and balances

    1914: Open for Business


    The Reserve Bank Operating Committee had to make working banks that were based on the new laws In November 16, 1914, 12 cities were chosen to have reserve banks Soon after, World War I broke out in Europe

    1914-1919: Fed Policy During War

    During World War I, banks continued regular function because of the Aldrich-Vreeland act The biggest impact at this time was the Federal Reserve banks being able to discount bankers acceptance.

    1920s: The Beginning of Open Market Operations


    After World War I, Benjamin Strong, the head of the Fed in New York in 1914, realized that gold cannot be used as the central factor of controlling credit Strong wanted to change to a paper standard which would make a recession but it would allow a large purchase of government securities and it shows how strong open market operations are

    1929-1933: The Market Crash and the Great Depression


    in 1920, Carter Glass, a Virginia representative warned people about the stock market crash In October, 1929, the stock market crashed and the United States was in the Great Depression From 1930-1933, about 10,000 banks were bankrupt In March 1933, the president had to do a bank holiday to help banks to rebuild

    1933: The Depression Aftermath


    After the Great Depression, Congress passed the Glass-Steagall act in 1933, which comprised of the separation of commercial and investment banking and making people use government securities as Federal Reserve Note replacements The Glass-Steagall act also started the Federal Deposit Insurance Corporation or the FDIC

    1935: More Changes to Come


    The Banking act in 1935 made the Federal Reserve change its structure These changes made the Federal Open Market Committee, which is a separate legal entity from the Fed, and the Treasury secretary and the comptroller of currency were removed from the feds board The Employment act was passed after World War II

    1951: The Treasury Accord


    The Fed committed to having a low interest rate peg on government bonds after the United States entered World War II This was supported by President Harry Truman and Secretary of the Treasury John Snyder The goal at this time of the Federal Reserve is to settle interest rates and monetary policy with the Treasury

    1970s-1980s: Inflation and Deflation


    In the 1970s, inflation started making consumer prices, producer prices, and oil prices rise When Paul Volcker was the head of the Fed, inflation was ended

    1980: Setting the Stage for Financial Modernization


    The Monetary Control Act of 1980 made the Fed price their financial services competitively In 1999, the Gramm-Leach-Biley Act overrode the Glass Steagall act of 1933

    1990s: The Longest Economic Expansion


    The Stock Market Crashed on October 19, 1987 which made the Fed issue a statement before October 20 There was a 10 year period of economic expansion which was halted because of a small recession from March to November 2001 The Fed lowered interest rates rapidly in the early 1990s

    September 11, 2001


    The Fed was put to a test when terrorists attack the World Trade Center The fed was forced to make another statement, lower interest rates, and loan out more than $45 billion to financial institutions After September, the Fed lending had lowered to about before September 11

    January 2003: Discount Window Operation Changes


    In 2003, The Fed changes its discount window operations

    2006 and Beyond: Financial Crisis and Response


    In the early 2000s low mortgage rates and expanded access to credit lead to a housing boom This boom lead to the mortgages to be bundled and traded

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