William Gibbs McAdoo and the development of the Federal Reserve.

As Treasury Secretary under Woodrow Wilson, William Gibbs McAdoo influenced the development and passage of the Federal Reserve Act and oversaw its rapid implementation. Like other progressive of his era, McAdoo believed the U.S. economy needed a monetary system with centralized governmental

control and regional flexibility. He wanted an act that would strengthen the government and Treasury's influence over regional monetary policy at the same time it would weaken the New York money trust. To this end, he lobbied Congress, Secretary of State Bryan, banks, and the public for a bill that would allow asset currency as well as a national currency issued and backed by the government.

McAdoo also used the Treasury to facilitate the flow of credit and funds among regions. For instance, he maintained surplus Treasury funds in subtreasuries and non-New York private banks. These funds, along with discount rate policy, were used to assist farmers and small banks. McAdoo also backed compulsory rediscounting among Federal Reserve banks since this would promote a flow of currency and credit. Under McAdoo's guidance, the U.S. government established a central bank and its right to regulate the U.S. monetary system. (JEL N22)

K. DUNLEAVY AND C. BENZING

West Chester University--U.S.A.