Woodrow Wilson's Concerns and Actions to Address the Nation's Banking System

Woodrow Wilson was the 28th President of the United States, serving from 1913 to 1921. When he became President, he was concerned about the state of the nation's banking system. This concern was based on several factors, including the instability of the banking system, the lack of a central banking authority, and the need to protect depositors' funds. In this article, we will explore Wilson's concerns about the banks and the actions he took to address them.

I. Instability of the Banking System

The banking system in the United States at the turn of the 20th century was highly unstable. This was due to several factors, including the lack of regulation, the absence of a central banking authority, and the prevalence of bank failures. In the early 1900s, it was not uncommon for banks to fail, leaving depositors with little or no recourse. The lack of deposit insurance meant that depositors' funds were not protected, and many people lost their life savings as a result of bank failures.

II. Lack of a Central Banking Authority

Another concern of President Wilson was the lack of a central banking authority in the United States. At the time, there was no entity responsible for overseeing the nation's banking system or for regulating the money supply. This lack of oversight meant that banks were free to operate with little or no regulation, which contributed to the instability of the banking system.

III. Need to Protect Depositors' Funds

One of the main reasons why President Wilson was concerned about the banking system was the need to protect depositors' funds. Without deposit insurance or a central banking authority, there was no way to ensure that depositors' funds were safe. This was a significant problem, as many people relied on banks to safeguard their savings.

IV. Wilson's Actions to Address the Banks

To address these concerns, President Wilson took several actions during his time in office. These actions included the following:

A. The Federal Reserve Act

One of the most significant actions taken by President Wilson was the signing of the Federal Reserve Act in 1913. This act created the Federal Reserve System, which became the nation's central banking authority. The Federal Reserve was responsible for regulating the money supply, overseeing the nation's banking system, and ensuring the stability of the financial system.

B. The Clayton Antitrust Act

Another action taken by President Wilson was the signing of the Clayton Antitrust Act in 1914. This act was designed to prevent the formation of monopolies and to promote fair competition in the marketplace. It was intended to address the concerns of small businesses and consumers, who were often at a disadvantage when competing against large corporations.

C. The Glass-Steagall Act

In 1933, President Franklin D. Roosevelt signed the Glass-Steagall Act, which was designed to prevent another financial crisis like the one that occurred during the Great Depression. The act separated commercial banking from investment banking, which was intended to prevent banks from engaging in risky activities that could jeopardize depositors' funds.

V. Conclusion

In conclusion, Woodrow Wilson was deeply concerned about the state of the banking system when he became President. His concerns were based on the instability of the system, the lack of a central banking authority, and the need to protect depositors' funds. To address these concerns, he took several actions, including the creation of the Federal Reserve System, the signing of the Clayton Antitrust Act, and the passage of the Glass-Steagall Act. These actions helped to stabilize the banking system and ensure that depositors' funds were protected.