"An Act To provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes." — Federal Reserve Act (1913), Preamble
The Federal Reserve Act was enacted primarily in response to
- Acheck_circle
the Panic of 1907 and the lack of a flexible national currency
- B
the collapse of the Second Bank of the United States
- C
World War I financing demands
- D
the silver-coinage controversy of the 1890s
Explanation
The 1907 panic, contained only by J.P. Morgan's private intervention, exposed the need for a public lender of last resort and elastic currency—prompting the 1913 Act under Wilson.