A century ago this week, Congress passed the Federal Reserve Act, creating a central bank for a nation that was only beginning its economic ascendance. This is the story of how it came to be, from a nearly catastrophic financial panic to secret meetings of plutocrats on the Georgia coast to the pitched battle in the halls of Congress, excerpted from The Alchemists: Three Central Bankers and a World on Fire.
I take the following from the article verbatim and link its entirety here or below. It is a interesting account albeit a historically debated one, which you can read at the link below. For those who want to know why we are the economy we are one should know about the history of a central bank and the early 20th century creation of the Federal Reserve. There is no other institution on planet earth that will have as much influence on your life and the life of your posterity as the Federal Reserve! The author's article begins as follows:
The mustachioed man in the silk top hat strode to his private railcar parked at a New Jersey train station, a mahogany-paneled affair with velvet drapes and well-polished brass accents. Five more men — and a legion of porters and servants — soon joined him. They referred to one another by their first names only, an uncommon informality in 1910, intended to give the staff no hints as to who the men actually were, lest rumors make their way to the newspapers and then to the trading floors of New York and London. One of the men, a German immigrant named Paul Warburg, carried a borrowed shotgun in order to look like a duck hunter, despite having never drawn a bead on a waterfowl in his life.
Adapted from “The Alchemists: Three Central Bankers and a World on Fire,” by Neil Irwin. Irwin, a Washington Post columnist and economics editor of Wonkblog, was the Post’s beat reporter covering the Federal Reserve and other central banks from 2007 to 2012. The book tells of how the central bankers came to exert vast power over the global economy, from their 17th century beginnings to the present, and tells the inside story of how they wielded that power from 2007 on as they fought a global financial crisis. Excerpted by permission of The Penguin Press, a member of the Penguin Group (USA), © Neil Irwin.Buy it from Amazon here.
Two days later, the car deposited the men at the small Georgia port town of Brunswick, where they boarded a boat for the final leg of their journey. Jekyll Island, their destination, was a private resort owned by the powerful banker J.P. Morgan and some friends, a refuge on the Atlantic where they could get away from the cold New York winter. Their host — the man in the silk top hat — was Nelson Aldrich, one of the most powerful senators of the day, a lawmaker who lorded over the nation’s financial matters.
For nine days, working all day and into the night, the six men debated how to reform the U.S. banking and monetary systems, trying to find a way to make this nation just finding its footing on the global stage less subject to the kinds of financial collapses that had seemingly been conquered in Western Europe. Secrecy was paramount. “Discovery,” wrote one attendee later, “simply must not happen, or else all our time and effort would have been wasted. If it were to be exposed publicly that our particular group had got together and written a banking bill, that bill would have no chance whatever of passage by Congress.”
For decades afterward, the most powerful men in American finance referred to one another as part of the “First Name Club.” Paul, Harry, Frank and the others were part of a small group that, in those nine days, invented the Federal Reserve System. Their task was more than administrative. Because the men at Jekyll Island weren't just trying to solve an economic problem — they were trying to solve a political problem as old as their republic.
Neil Irwin's book "The Alchemists. " I provide at link to it here and below. I have not read this book yet but I hope to. It is summarized as follows
When the first fissures became visible to the naked eye in August 2007, suddenly the most powerful men in the world were three men who were never elected to public office. They were the leaders of the world’s three most important central banks: Ben Bernanke of the U.S. Federal Reserve, Mervyn King of the Bank of England, and Jean-Claude Trichet of the European Central Bank. Over the next five years, they and their fellow central bankers deployed trillions of dollars, pounds and euros to contain the waves of panic that threatened to bring down the global financial system, moving on a scale and with a speed that had no precedent.Neil Irwin’s The Alchemists is a gripping account of the most intense exercise in economic crisis management we’ve ever seen, a poker game in which the stakes have run into the trillions of dollars. The book begins in, of all places, Stockholm, Sweden, in the seventeenth century, where central banking had its rocky birth, and then progresses through a brisk but dazzling tutorial on how the central banker came to exert such vast influence over our world, from its troubled beginnings to the Age of Greenspan, bringing the reader into the present with a marvelous handle on how these figures and institutions became what they are – the possessors of extraordinary power over our collective fate. What they chose to do with those powers is the heart of the story Irwin tells.Irwin covered the Fed and other central banks from the earliest days of the crisis for the Washington Post, enjoying privileged access to leading central bankers and people close to them. His account, based on reporting that took place in 27 cities in 11 countries, is the holistic, truly global story of the central bankers’ role in the world economy we have been missing. It is a landmark reckoning with central bankers and their power, with the great financial crisis of our time, and with the history of the relationship between capitalism and the state. Definitive, revelatory, and riveting, The Alchemists shows us where money comes from—and where it may well be going.
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