Public Law 63-43, signed December 23, 1913, 1913 Law That Gave America Control Over Its Own Money
Public Law 63-43, signed December 23, 1913, created the Federal Reserve System—America’s central bank. Sponsored by Rep. Carter Glass and Sen. Robert Owen, this law established twelve regional Federal Reserve Banks to provide elastic currency, prevent banking panics, and give the U.S. government control over monetary policy for the first time since 1836.
Before 1913, America was the only major economy without a central bank. When the stock market crashed in 1907, the government couldn’t help. They waited for J.P. Morgan—a private banker—to organize a bailout and save the banking system.
That terrifying dependence on one wealthy individual convinced Congress something had to change.
The 1907 Panic That Changed Everything
The Panic of 1907 exposed America’s broken banking system. The stock market fell nearly 50% in three weeks. Regional banks collapsed as panicked customers withdrew deposits.
There was no elastic currency—the money supply couldn’t adjust to economic needs. Banks couldn’t get emergency loans. Reserves sat scattered instead of centralized.
J.P. Morgan, then 70, spent weeks locked in his library with other bankers, forcing them to provide liquidity. It worked—barely.
Congress realized America couldn’t keep relying on private financiers’ goodwill. The Aldrich-Vreeland Act of 1908 created the National Monetary Commission to find a solution.
The Secret Jekyll Island Meeting
In November 1910, Senator Nelson Aldrich and top bankers held a secret meeting on Jekyll Island, Georgia. They claimed they were duck hunting. Actually, they were designing America’s central bank.
They used only first names and traveled separately. They knew the public would reject any Wall Street plan.
Aldrich’s National Reserve Association proposal in 1912 got destroyed in Congress. Critics said it gave bankers too much power. The 1912 Democratic platform specifically opposed it.
When Democrats swept Congress and the presidency in 1912, the Aldrich Plan died. But its core ideas survived.
Related article: What is the Supreme Law of the Land? That Overrules Everything—Why the Constitution Beats State Laws, Federal Statutes, and Even Presidential Orders
The Glass-Owen Compromise
Democrats Carter Glass and Robert Owen crafted a new approach. Private banks would control twelve regional Federal Reserve Banks, but a presidentially-appointed board would oversee everything.
President Wilson made this his top priority—essential to his “New Freedom” agenda.
The debates centered on: Who controls the central bank? How much control?
Glass wanted minimal government oversight. Owen pushed for stronger federal authority. Progressive William Jennings Bryan worried about the “Money Trust.”
Wilson convinced Bryan that Federal Reserve notes would be government obligations. That sealed it.
The House passed the bill 286-85 in September 1913. After extensive Senate hearings, it passed 54-34 on strict party lines.
What the Law Created
Public Law 63-43 established structures still operating today:
Twelve Regional Federal Reserve Banks across America. This decentralized design reduced Wall Street’s influence. Cities like Atlanta and Kansas City got their own Reserve Banks.
Federal Reserve Board appointed by the president. This gave government control over monetary policy.
Elastic currency where Federal Reserve notes could expand or contract based on economic needs.
Rediscounting authority letting banks get emergency loans using commercial paper as collateral.
Improved banking supervision with the Fed overseeing national banks.
Centralized reserves that were lower than before but more useful during crises.
The law distinguished between checking and savings accounts, requiring lower reserves for savings.
The Law’s Impact
The Federal Reserve Act transformed American finance.
It internationalized the U.S. dollar. Before 1913, the pound sterling dominated. The Fed gave the dollar credibility as stable currency backed by a real central bank. The dollar became the world’s reserve currency.
It ended recurring banking panics. While economic downturns still happened, catastrophic 1800s-style bank collapses largely stopped.
It centralized monetary authority as Alexander Hamilton envisioned in 1791—but America had rejected for 80 years.
It gave government tools to respond to crises instead of depending on private financiers.
It permitted national banks to make farm mortgage loans, expanding rural credit.
Major Amendments
Congress has revised the Federal Reserve Act dozens of times:
1917 amendments relaxed gold backing during WWI, letting the money supply double to finance the war.
Banking Act of 1933 (Glass-Steagall) separated commercial and investment banking and created the Federal Open Market Committee.
Humphrey-Hawkins Act of 1978 established the Fed’s dual mandate: maximum employment and stable prices.
Dodd-Frank Act of 2010 expanded Fed oversight after 2008 and required emergency lending audits.
The Law Today
Public Law 63-43 remains in effect 111 years later. The Federal Reserve is arguably the most powerful economic agency.
The twelve original regional banks still operate. The Board of Governors makes key monetary policy decisions.
The Fed controls interest rates, supervises thousands of banks, acts as lender of last resort, and maintains price stability and employment.
During 2008 and 2020 crises, the Fed used authorities from this 1913 law to provide massive emergency support.
Critics say the Fed has too much power. Supporters say independence from politics makes it effective.
Historical Significance
Legal historians call Public Law 63-43 one of the 20th century’s most consequential laws. It resolved central banking debates dating to Andrew Jackson’s destruction of the Second Bank in 1836.
It represented a Progressive Era victory—government oversight of finance while preserving private banking. Neither pure government nor pure private control, but hybrid.
Senator Owen and Congressman Glass created something surviving world wars, depressions, and financial crises.
The Federal Reserve isn’t perfect. But it’s proven adaptable enough to evolve with America’s economy for over a century.
It started with that 1907 panic when J.P. Morgan had to rescue the country—because nobody else could.
Frequently Asked Questions
Q: What is Public Law 63-43?
The official designation for the Federal Reserve Act signed December 23, 1913. It created twelve regional Reserve Banks overseen by a federal board to manage monetary policy, supervise banking, and prevent financial panics.
Q: Why did Congress create the Federal Reserve?
The 1907 Panic showed America’s vulnerability. Without a central bank, the government depended on private banker J.P. Morgan to prevent collapse. Congress needed a system to provide emergency liquidity and stabilize currency.
Q: Who wrote the Federal Reserve Act?
Congressman Carter Glass and Senator Robert Owen crafted the compromise. President Wilson championed it. The plan drew on earlier work by the National Monetary Commission and secret Jekyll Island meetings.
Q: How did opponents fight it?
Progressives feared Wall Street control. Rural states worried New York would dominate. Republicans pushed pro-banker amendments but lost on party-line votes (54-34 Senate passage).
Q: Is it still in effect?
Yes. Public Law 63-43 remains the legal foundation, though amended many times (Banking Act 1933, Dodd-Frank 2010). The twelve regional banks from 1913 still operate.
Q: What was “elastic currency”?
Money supply that expands during growth or crises and contracts during stability. Before 1913, rigid money supply contributed to panics. Federal Reserve notes could be issued based on economic needs.
Resources:
- Federal Reserve Act Full Text
- Library of Congress History
- Federal Reserve History
- Current Act (as amended)
Disclaimer
This article provides historical and educational information about Public Law 63-43. It is not financial, investment, or legal advice. Readers should consult qualified professionals for advice on banking or monetary policy matters. Information is current as of January 2026.
About the Author
Sarah Klein, JD, is a licensed attorney and legal content strategist with over 12 years of experience across civil, criminal, family, and regulatory law. At All About Lawyer, she covers a wide range of legal topics — from high-profile lawsuits and courtroom stories to state traffic laws and everyday legal questions — all with a focus on accuracy, clarity, and public understanding.
Her writing blends real legal insight with plain-English explanations, helping readers stay informed and legally aware.
Read more about Sarah