The US is in a huge recession after an earthquake in San Francisco. People withdraw their money from banks out of panic. Businesses as a result begin to fail. A bunch of powerful bankers seek to find a way to fix the panic. All the bankers signed their agreement and the panic of 1907 was solved. But JP Morgan could not keep solving the panics. Nelson Aldridge comes up with the idea that there should be a government organization that can loan money to banks so people will not panic. Bankers meet and come up with the Aldridge plan. December 1913 President Wilson signs the reserve act based on the Aldridge plan which creates the Federal Reserve.
Good job. Great explanation. The reason that the Fed was created in secrecy was to avoid people going crazy over the idea of a centralized system or a bank.
I agree that the key idea was creating a system that could lend money to banks during crises to prevent panic driven bank runs and stabilize the economy.
Very thorough and well said response. As Hudson has mentioned before me, the fear of centralization gave way to the secret development of the fed.