The Federal Reserve’s Centennial

On December 23, 1913 President Wilson signed the Federal Reserve Act giving the United States a permanent central bank. All these events took place at the end of what is known as the Progressive Era, a period of supposedly great reforms to benefit the common man.

Half-a-century ago historian Gabriel Kolko challenged the orthodox view in his trailblazing book, The Triumph of Conservatism. Kolko argued that the Progressive Era was in reality a time when big business interests used the power of the federal government for their own benefit at the expense of the general public.

According to Frank Chodorov, author of the 1954 book The Income Tax: Root of All Evil, a “revolution” took place in 1913. The Revolution of 1913 shifted power from individuals, communities and states to the federal government and its powerful allies in the private sector.

The 16th amendment to the Constitution granting the federal government the power to tax incomes directly and the 17th amendment, which called for the direct election of senators, were the two other so-called reforms that expanded the power of the federal government beyond what the founding fathers dreamed could happen it in America. 

In short, the Revolution of 1913 cemented crony capitalism in America. 

The documentary, The Federal Reserve: 100 years of Boom and Bust, was first screened at Ramapo College on December 4.  Below is a link to view the 55-minute documentary.

Murray Sabrin Is professor of finance at Ramapo College. He blogs at The Federal Reserve’s Centennial