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The Federal Reserve Act of 1913, also called the Glass-Owen Bill, established the Federal Reserve System in the United States. The bill was proposed as a result of hearings held by a Congressional committee, headed by Representative Arsène Pujo of Louisiana, charged with investigating the control of the U.S. economy by influential bankers. The bill was passed by the Senate on the evening of December 23, 1913 by a vote of 43-25, with 27 Senators absent or abstaining. President Wilson signed the bill into law an hour after its passing.
The Federal Reserve System is an independent central bank. Although the President of the United States appoints the chairman of the Fed and this appointment is approved by the United States Senate, the decisions of the Fed do not have to be ratified by the President or anyone else in the executive branch of the United States government.
According to the United States Constitution, the U.S. Congress has the power and responsibility to coin money and set its value. In the 1913 Federal Reserve Act, Congress delegated this power to the Federal Reserve. The constitutionality of this type of action has been controversial many times in the United States, most notably in the early 19th century when Congress chartered the Bank of the United States. Although the constitutionality of the Federal Reserve system has not been a topic of recent judicial or legislative controversy, it has been the target of some who strongly distrust the delegation of power to an unelected and what they see as an unaccountable body.
The Federal Reserve System consists of 12 Federal Reserve Banks:
- Boston, Massachusetts
- New York, New York
- Philadelphia, Pennsylvania
- Cleveland, Ohio
- Richmond, Virginia
- Atlanta, Georgia
- Chicago, Illinois
- Saint Louis, Missouri
- Minneapolis, Minnesota
- Kansas City, Missouri
- Dallas, Texas
- San Francisco, California
All banks chartered under the National Banking Act of 1863 were made members of the Federal Reserve System, while others could join. A Board of Governors appointed by the President of the United States supervised the system.
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