Origins of the Federal Reserve System: The Interest Group Perspective

18 Pages Posted: 26 Oct 2011 Last revised: 29 Jan 2014

See all articles by Tomáš Otáhal

Tomáš Otáhal

Mendel University - Faculty of Economics and Business Administration

Date Written: September 25, 2011

Abstract

I classify three possible interest group motives for the establishment of the Federal Reserve System. First, is a short description of the National Banking Era. I argue that while (i) the professional community quite truthfully recognized the problems with National Banking, motives of (ii) the political leaders and (iii) interest groups for establishing the Federal Reserve System were stronger. The historical situation characterized by a deepening capital concentration and globalization brought politicians to enforce interventionist public policy followed by imperialism. These reasons significantly contributed to the need for a tighter centralized political control of the money supply that would be provided by the Federal Reserve System.

Keywords: Federal Reserve System, institutions, interest groups, monetary policy, politicians, rent-seeking

JEL Classification: G18, L41, N21

Suggested Citation

Otáhal, Tomáš, Origins of the Federal Reserve System: The Interest Group Perspective (September 25, 2011). Available at SSRN: https://ssrn.com/abstract=1949062 or http://dx.doi.org/10.2139/ssrn.1949062

Tomáš Otáhal (Contact Author)

Mendel University - Faculty of Economics and Business Administration ( email )

Staňkova 578/16b
Brno, 602 00
Czech Republic

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