Today, the American government has one central bank containing 15 branches across the country. This allows for a Federal Reserve to be used in crises and panics. However, this wasn’t always the case.

In the nineteenth century, the American economy was struggling. Every fifteen years, America would suffer a financial panic, causing an exhausting cycle of booms and depressions which hindered the country’s economy. At the time, thousands of banks across the country held private reserves of funds. There was no Federal Reserve, so when these financial panics happened; the government had no access to the funds that could provide relief.

Anxiety was rising within the country and our government, and by the “Panic of 1907” it was clear something needed to change.

Around this time, Republican senator and Chair of Senate Finance Nelson Aldrich began brainstorming solutions to this problem. He saw the way the economy teetered on ruin. He connected this to the antiquated systems the country had in place, recognizing the negative impact the lack of a central bank had on imports and exports in the trading industry, as well as the unfortunate cause of these ups and downs. The reserves in America often flowed to larger cities, which would then invest these funds into call loans that were passed on to brokers. This system encouraged the immobility of finances in a crisis, as well as creating a volatile equity market. This created a very unstable environment for the American government.

After the fall of 1910, Congress was finally ready to listen to a new plan. As the Chair of the Senate Finance Committee, Aldrich was called to present his case. A few weeks before the presentation, Aldrich called on his five most trusted colleagues to meet with him and advise him on his proceedings. His personal assistant, Arthur Shelton, A. Piatt Andrews, a Harvard Professor of Economics, Henry Davison, a partner of J.P. Morgan, Frank Vanderlip, the president of National City Bank, and Paul Walburg the successful German financier were the only men invited to the meeting by Alrich.

It is speculated that J.P. Morgan, a member of the exclusive Jekyll Island Club, organized the use of club facilities for the meeting. The meeting was kept top secret, as the men’s connections to Wall Street could cause harmful speculation to their motivation behind the new plan. The men claimed they were simply going to Jekyll Island for a duck hunting expedition, as the island was and still is known for its vast wildlife population. 

After the plan was presented to Congress, it was ridiculed by the Democratic party, as they disapproved of the pull it would give the banks regarding leadership positions of the Reserve. When Woodrow Wilson won the Presidential election in 1913, it seemed the plan would fail to take off. Luckily, Woodrow Wilson and his party members were still interested in discussing a banking reform. The plan was reestablished, and a compromise between parties was reached. The Federal Reserve Act was passed later that year, and is still in practice today. Who knew duck hunting could change the course of American economics?