Federal Reserve Act
When the Pujo Committee revealed how Morgan could manipulate industries, Congress passed the Federal Reserve Act. Congress created a Federal Reserve after seeing that Morgan's actions as a pseudo-central bank saved the economy from collapse in 1907. This would help redistribute wealth. President Wilson signed it into law on December 23, 1913, and revisions to the 16th Amendment validated the Federal Reserve. Morgan was decisive enough to alert Congress that it was about time monetary policy changed.
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"The Fed was argued for as a means by which to put an end to financial crises, like the Panic of 1907" ("The Octopus"). |
(Personal Interview with Professor Ghironi from the University of Washington Department of Economics)
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"Intended to provide the United States with a sound and adequate money supply and avoid inflation and deflation, the Federal Reserve supports stability in the economy of American Industry by granting industrial, commercial, and agricultural short-term loan loans, ensuring that businesses have enough money to meet day-to-day needs" (Leab 29). |
"The outlook is decidedly better, and I think the crucial point is past. Conditions will begin to approach more of a normal state in a few days. ...The failure of the smaller banks is not disturbing. They did not have much cash on hand, and it was better for them to suspend than to stand a run. They are perfectly solvent and will be able to resume business when the present hysteria subsides" (Morgan). |
(Photo Courtesy of The New York Times Company)
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