And then they created the Fed
federal reserve building
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SCOTT JAGOW: We talk a lot about the Federal Reserve on this program. Stacey Vanek-Smith tells us how the Fed got started, in this History of Business segment.
STACEY VANEK-SMITH: In the early 1900s, the international community was appalled at the U.S.'s financial situation.
The country's banks were feeling fat and happy because of hefty gold reserves, and they started extending credit right and left. Times were high and business boomed.
But demand began to slow and the U.S. had no central bank to buffer financial institutions from economic shock.
It got worse, and people grew wary of banks and started withdrawing their money. The banks were forced to suspend payments and the economy screeched to a crawl.
So this week back in 1913, Woodrow Wilson and the Congress passed the Federal Reserve Act.It created a network of 12 central banks all across the U.S.
To this day the banks help stabilize the economy by controlling interest rates and the flow of currency.
I'm Stacey Vanek-Smith.