| The legislative history of the Federal Reserve Act between the onset of recession in 1930 and adjournment of Congress in August 1935 includes the formulation of more than a dozen laws. The most important changes to the reserve system appeared in four measures: the Glass-Steagall Act of 1932, the Banking Act of 1933, the Gold Reserve Act of 1934, and the Banking Act of 1935. Together these measures fundamentally altered banking law, allowing the reserve to lend to member banks on previously ineligible collateral, separating commercial from investment banking, establishing the Federal Deposit Insurance Corporation, requiring reserve banks to surrender their gold to the Treasury Department, and strengthening authority of the reserve board over reserve and member banks.;The measures enacted in the 1930s, with the exception of the Gold Reserve Act, reveal much continuity between the administrations of Herbert Hoover and Franklin Roosevelt. The widening of reserve bank lending power began in 1932 and continued through the Banking Act of 1935. The Banking Act of 1933 had its origins in House and Senate hearings held in 1931 and 1932. The authority of the reserve board increased steadily from 1932 to 1935. My research does not indicate that a "Second New Deal" began in 1935; Roosevelt's attitudes and beliefs about monetary policy and bank reform appear consistent throughout his first term as president.;In spite of changes in the reserve act, the system's political environment was similar in 1930, 1936, and 1980. Although an independent regulatory commission, the reserve board has discovered that it can maintain independence and pursue its own goals only as long as it carefully weighs the opinions of the president, secretary of the Treasury, Congress, and bankers. |
