Abstract

The Federal Reserve System was created to end the banking panics that plagued the United States economy from the end of the Civil War through the early twentieth century. Yet the greatest series of banking panics in American history occurred in the early 1930s, on the Federal Reserve's watch. And the Federal Reserve's failure to stop the banking crises as it allowed the money supply to fall is widely believed by economists to be one key reason why a business recession turned into the Great Depression.