A century later, Ben Bernanke reignited this debate with his frantic acquisitions of mortgage securities, Treasury bonds, and also the very commercial paper of which Paul Warburg was so enamored.

If Jackson had stood against the supposed evils of centralization, Warburg, more than anyone else, had recognized the weakness in stand-alone banking and crusaded to overcome the Jacksonian view.

The Act would also create a more adaptable currency and strengthen the organization and oversight of America’s wobbly banks.

Paul Volcker, the Fed chief during most of the 1980s, attempted to run policy by counting the total of money in circulation; he soon forsook this approach, known as “monetarism,” because no useful definition of money existed.

onlooker in 1913 could have predicted that one day the Fed’s most well-advertised duty would be setting interest rates. The bill’s primary purpose was to mobilize reserves, the better to avert a crisis, and to modernize the banking system.

The goal was to establish collective reserves to replace the archaic pattern of every bank for itself. In practice, many bankers treated their vault reserves as a drug that—however harmful in theory—was impossible to give up.

He cited three principles for banking reform. One was the cliché that the currency should be “elastic,” by which he meant flexible in quantity, to meet the ebb and flow of demand. Another echoed Warburg: “Our banking laws must mobilize reserves,” Wilson said. And this, he asserted, would accomplish a third purpose—abolishing the concentration of mo

Wilson’s compromise was a step in that direction: a step, that is, toward fiat currency.

Put simply, Owen wanted government money, Glass, private bank notes. Also, Owen wanted the entire Federal Reserve Board to be appointed by the president; Glass thought some of the directors should be chosen by bankers.