The Federal reserve is the central bank of the United States; incorporates 12 Federal Reserve branch banks and

all national banks and statechartered commercial banks and some trust companies.

During the American Revolution they had to finance the revolution. This was done by the continental congress who printed the first paper money. This money was called Continentals A lot of money was made that it led to inflation. After a while people began to lose faith. So the moneys worth wasnt useful.

Congress established the first bank of the US which was in Philadelphia in 1791. It was the biggest business they had & it was all for big banking and money interest A lot of people were against the bank because of all the power After 20 years in 1811 Congress refused to renew the bank.

People in 1816 wanted to open another bank. Congress agreed but when President Jackson in 1828, he wanted to close it. 1836 the contract was expired.

Redeemable in gold or specie Check transactions began to increase, so banks demanded deposits New York Clearinghouse Association was established in 1853 so people could exchange checks and make accounts

The National Bank Act was passed, and it provided the banks to be backed up by US Government securities Taxation was required due to growth of deposits B/c of taxation the free- banking era came up

During this time, the banking panic triggered the depression of the US; they blamed J.P Morgan in 1893 they decided the bank needed a new financial system The growth of the bank caused lack of stability, so the banks fell.

J.P Morgan was blamed for the failure on Wall Street; a lot of Americans went to banks to get their money Americans protested b/c they wanted a healthy bank systems, but most of the solutions werent able to pass- they tried but it all failed

The Adrich-Vreeland Act of 1908 was one of the solutions for the banking panic; it provided emergency currencies in these type of crisis and established long-term solutions for financial issues Senator Adrich was the leader of this plan, but William Jennings attacked this act b/c he wanted the bank under public control vs. banker control The election of 1912 Adrichs act wasnt passed

In 1912 Glass and Willis proposed a central bank act By December 1912 They presented it to Wilson The Act changed to what is now the Federal Reserve Act

From 1912-1913 The proposal was changed and made accurately By December 23rd President Wilson sign the Federal Reserve Act officially into a law In the act it balanced the interest of private banks.

The Reserved bank operating had to compromise with other people (treasuries) in order for it to be in a working institution November 16th 1914, 12 cities were chosen to have Reserve banks to open for business.

World War 1 the bank continued to run normally The Emergency currency helped bank to continue running The impact in the Us came from the Reserves banks ability to discounts bankers acceptances. Because of this the US was able to have foreign affairs (trade with Europe) This helped finance the war in 1917.

Benjamin Strong before his death in 1928 he realized that gold was no longer valid as money (valuable) This influenced the ability of credit the bank existed in. During the 1920s the bank began using open markets as money or policy tool.

During the 1920s a representative from Virginia warned the stock market would have consequences October 1929 the stock market crashed and the fell in the Great Depression 1930-1933 Nearly 10,000 banks fell and by 1933 President Roosevelt declared a bank holiday while the Government struggled to find solutions Many people blamed the Fed. For failing to put limits to lending and that they had a low understanding of economics which could have helped to lessen the drepression.

As a result of the Great Depression congress passed the banking act of 1933 also known as Glass-Steagall Act which separates commercial investment, banking & required Government security The act also started the Federal Deposit insurance corporation under the Fed. Which made companies to be examine by them. Roosevelt collected all gold and silver to end their value.

The banking act of 1935 made more changes to Feds plan which meant the new creation of the federal open market committee as a separate legal part. After World War 2 the employment act added more responsibilities for Feds In 1956 the bank holding company act made the head of bank holding companies and in 1978 the Humphrey Halkins required the chairman of the Fed to report to congress 2 a years to state goals and objectives.

In 1942 the US entered WWII, and the Fed wanted to maintain the steady rate, but the government wanted to lower the rate Pres. Truman and Secretary Snyder wanted to lower the interest rate; Truman wanted to lower the value of bonds purchase during the war, but the Fed argued it would bring inflation The board of governors supported the Fed b/c low rates= inflation Independence of central banking is now run by the Federal reserve

In 1970 Inflation increased due to the price increase on goods 1979 Paul Volcker wanted to take action and decreased inflations double digit and put everything back to normal andunder control by 1980

Monetary Control Act was passed in 1980 which what helped all eligble financial institutions stay protected and secured from inflation In 1933 the Glass- Steagall Act was passed and it offered banks various financial services and insurance

The Stock Market crashed on October 19, 1987 and Alan Greenspan ordered a one-sentence statement before trading on october 20 1990 the stock market increased and the Fed lowered interest rates. The Russian default helped keep potential financial problems from affecting the world. Decreased of inflation.

The Federal Reserve was put on the test on September 11. 2001 when it was attacked by terrorist 9/11 New York, Washington & Pennsylvania financial markets were highly affected by this attack A couple of days after the attack the Fed lowered interest rates and loaned more than 45 million to financial institutions to keep the economy safe

In 2003 the Fed changed the discount operations Provided rationing loans to banks using interest rates

In 2006 there was low mortgage rates which made it possible for more people to have a higher increase in demand for housing Made house prices increase Housing boom happened because there was an increase in mortgages In Early 2006 house prices started to fall which meant home owners owed more on their mortgages than there homes were actually worth The situation reached a crisis point in 2007

This household wealth caused people to cut back on spending in this weakening hurt business and plants and laid off workers The U.S entered a recession economic activity shrunk in 2007 In 2008 financial panic increased causing more jobs to be lose The Federal Reserve responded by cutting federal fronts which helped lowered the cost borrowing households and business on mortgages To further lower the cost they purchased 300 billion dollars in long terms securities & 1.25 trillion dollars on mortagage securities.