Authored by George Ford Smith via Mises Institute,
It was the Morgans and Rockefellers of Wall Street who turned to government to cage their banking competition, especially the growing challenge from non-national banks in the South and West, and came up with a plan for a central bank. It was the big bankers who took the lead in creating a system that would protect them from the hazards of bank counterfeiting and make them a monopoly issuer of bank notes. After the Act became law, it was Morgan bankers who occupied the seats of power in the new system, particularly at the Fed's New York branch where Benjamin Strong - president of J. P. Morgan's Bankers Trust Company - ran the money machine from the Fed's inception in 1914 to his death in 1928.
The Fed became an indispensable instrument of profit and power. Beginning in 1914, it cut reserve requirements approximately in half, dropping the ratio from 21 percent to 11 percent, roughly doubling the money supply and permitting both financial aid to the Allies and eventual American entry into the European war. Under the impetus of the war, the Fed became the sole fiscal agent of the Treasury, securing the deposit of all Treasury funds at the Federal Reserve. The Morgans - exploiting its ties with England and its position of power at the New York Fed - became the sole purchasing agent in the US for war materials to be shipped to Britain and France. The Morgans also became the sole underwriter for British and French bonds floated in the US to pay for armaments and other goods the Allies wanted.
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