Since the charter for the Second Bank of the United States expired in 1836, the country had been without a central banking organization. With the Civil War of the 1860s, the Long Depression of the late 1800s and two silver panics, the country was arguably in need of an economic upgrade. Although central banking was still seen as an unconstitutional taboo at this point, American citizens and most of their representatives in the Senate and Congress succumbed to a gradual and controlled redirection towards a central banking system early into the new century, carefully steered by Wall Street bankers.

The idea for a central bank began early in the turn of the century. What would become of those ideas would be the Federal Reserve System, which was not federal in the least and barely a reserve. It was (and still is) a union of private banks that abandoned any scant gold reserve requirements they had originally set for themselves. Some historians, economists, sociologists, bankers and businessmen see the Federal Reserve as representative of the demise of free enterprise and the competition of businesses in the American marketplace. When the Federal Reserve was born, President Woodrow Wilson said about it, and the rise of immense corporations, “The old time of individual competition is probably gone by. It may come back; I don’t know; it will not come back within our time, I dare say.”

Banking was not always like that. Before the Federal Reserve’s existence, Clearing House Loan Certificates were the things that kept the country afloat during a panic. They were highly touted by bankers as an effective means of thwarting economic disaster in times of crisis. The loan certificates lightened the load of a plummeting money supply, “like the emptying of barrels of oil from a storm distressed ship”. During a panic, people hoard their money and bank reserves empty out rapidly. So the banks were issued, by the New York Clearing House Board of Directors, these certificates in lieu of actual money.