Role of the Federal Reserve Bank Today

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The history of the Federal Bank began with America’s paper money, known as “continentals.” The Continental Congress printed out the nation’s first currency to finance the American Revolution. However, the congress issued the “continentals” in such significant quantities that it led to inflation. The people lost faith in the notes worth, leaving the nation once again with no common currency. Alexander Hamilton, the first Secretary of Treasury, took action by starting a campaign to establish the First Bank of the United States. Alexander Hamilton’s willpower for a central bank positively impacted the nation as the Federal Reserve Bank today was created to resolve financial crisis. Alexander Hamilton advocated for a central bank to fix the financial matters the nation was facing. He proposed that the federal government would supply one-fifth of the bank’s initial capital while the private investors would supply the rest. Hamilton’s plan also outlined for the bank to function as a commercial bank. He envisioned the bank would be the central source of capital to provide for new businesses. So while in some ways his proposal foreshadowed the Federal Reserve as known of today, but it also differed from it by offering commercial loans (MINNEAPOLIS). On the other hand, Thomas Jefferson strongly opposed Hamilton’s economic plan stating that it was unconstitutional. Jefferson felt that states should manage their own money, “the foundation of the Constitution as laid on this ground that ‘all powers not delegated to the U.S. by the Constitution, not prohibited by it to the states, are reserved to the states or to the people.’… To take a single step beyond the boundaries thus specifically drawn around the powers of Congress, is to ta... ... middle of paper ... ...eation of the Federal Bank not only benefited individuals, but also the entire nation. The Federal Reserve Bank is able to provide a stable and orderly payment system that it would be difficult to replace. Works Cited http://www.federalreserveeducation.org/about-the-fed/structure-and-functions/ http://www.theatlantic.com/business/archive/2011/01/why-we-need-the-fed/69554/ http://www.federalreserve.gov/faqs/about_12594.htm https://www.minneapolisfed.org/community_education/student/centralbankhistory/bank.cfm http://www.federalreserve.gov/pf/pdf/pf_7.pdf http://www.publiceye.org/conspire/flaherty/flaherty3.html# http://philadelphiafed.org/publications/economic-education/first-bank.pdf Current News http://www.economist.com/news/finance-and-economics/21602271-central-banks-swollen-balance-sheets-have-their-uses-supersize-me Works Cited
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