National Banking System: The Origin Of The Federal Reserve System

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The origin of the Federal Reserve System is traced to money problems in the nineteenth century. Under the National Banking System, national banks were required to hold eligible government securities in order to gain national bank notes from the Treasury. Current observers complained that such limitations made the currency inelastic, so that the supply of money did not increase when the demand for money rose, which resulted in periodic shortages of currency and bank panics. The Federal Reserve System was created by the Federal Reserve Act in 1913 and began operating in 1914. The Board of Governors, also known as the Federal Reserve Board, is the national element of the Federal Reserve System. The board consists of the seven governors, appointed

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