Which U.S. law created the Federal Reserve after the Panic of 1907?

The Federal Reserve Act created the Federal Reserve after the Panic of 1907.

President Woodrow Wilson signed the Federal Reserve Act on December 23, 1913. The law established a central banking system with a Board in Washington and regional Federal Reserve Banks. Its design reflected debates about how to provide an elastic currency and lender-of-last-resort support without concentrating all power in a single private institution.

The Panic of 1907 had exposed weaknesses in the U.S. banking system. A run on the Knickerbocker Trust Company in New York helped spread fear, and financier J. P. Morgan organized emergency support to stabilize banks and the stock market. The episode convinced many policymakers that a permanent institutional mechanism was needed.

The act was not a direct rescue measure for the 1907 crash; it was enacted six years later after extensive political debate. The 1913 Federal Reserve structure also differed from today’s system in important ways, and Congress has amended the central bank’s responsibilities repeatedly.