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Federal Reserve Act (1913): Board and 12 regional banks
Dec 23, 1913· Law or rule
Fact, law or dataA rule, statute, definition or measured number.
The 1913 law that created the Federal Reserve: a Washington board, 12 regional Reserve Banks and a new currency.
See it on the Money & Finance map →How it works
President Woodrow Wilson signed it on December 23, 1913, after the Panic of 1907 showed the US had no lender of last resort. Sponsored by Carter Glass and Robert Owen, it was a compromise between bankers who wanted one central bank and populists who feared Wall Street control: a Federal Reserve Board in Washington plus 12 regional Reserve Banks. It created Federal Reserve notes, an 'elastic currency' that could expand when banks needed cash.
Why it matters
It is still the Fed's charter. Nearly every later power, from the 1935 FOMC to the 1977 dual mandate and 2010 limits on emergency lending, is an amendment to it.
Facts, rules and data
The statute itself (Title 12 of the US Code), congressional records, and participants' accounts of the secret 1910 Jekyll Island meeting that drafted an earlier plan.
Debates and risks
Historians debate how much the bankers' 1910 Jekyll Island draft shaped the final law; claims that the meeting was a sinister conspiracy are fringe.
Connections (3)
▸Federal Reserve Act (1913): Board and 12 regional banks created The Federal Reserve System (the Fed)Fact, law or data
The connection
The act set up the system's parts: a Federal Reserve Board in Washington, 12 regional Reserve Banks whose stock member banks must hold, and a new currency, Federal Reserve notes. Later amendments, especially the Banking Act of 1935, shifted power toward the Board and the FOMC.
When and why
Signed by Woodrow Wilson on December 23, 1913; the 12 Reserve Banks opened on November 16, 1914, in cities from Boston to San Francisco.
How we know
The statute itself, still in force as amended, and the Fed's own published histories of its founding.
Debates and risks
Why those 12 cities were chosen, including two in Missouri (St. Louis and Kansas City), still raises questions about politics in the 1914 selection.
▸Panic of 1907 and J.P. Morgan's rescue led directly to Federal Reserve Act (1913): Board and 12 regional banksFact, law or data
The connection
The panic showed the US had no lender of last resort; a 70-year-old private banker had to play the role. Congress responded with the 1908 Aldrich–Vreeland Act and a National Monetary Commission, whose studies and a 1910 draft plan fed into the Federal Reserve Act of 1913.
When and why
Washington and New York, 1908–1913: Senator Nelson Aldrich's commission, the secret Jekyll Island meeting in Georgia, and the final bill by Carter Glass and Robert Owen.
How we know
The National Monetary Commission's published reports and the congressional debates cite 1907 directly; historians broadly agree it was the catalyst.
Debates and risks
How much the final Fed design owed to Aldrich's banker-friendly plan versus Woodrow Wilson's push for public control is debated by historians.
▸The dual mandate: maximum employment and stable prices was added in 1977 to Federal Reserve Act (1913): Board and 12 regional banksFact, law or data
The connection
The 1913 law said nothing about jobs or inflation; it aimed at an elastic currency and sound banking. After the 1970s mix of high unemployment and high inflation, Congress amended it in 1977 to spell out the Fed's goals, and in 1978 required regular reports and testimony.
When and why
Federal Reserve Reform Act of 1977 (Section 2A) and the Humphrey–Hawkins Full Employment Act of 1978, Washington, D.C.
How we know
The amended text sits in Section 2A of the Federal Reserve Act, codified at 12 U.S.C. 225a.
Debates and risks
Whether the 1977 language changed Fed behavior or merely wrote down what it was already trying to do is debated by historians.