The core of the modern centralized banking system in the United States has become the Federal Reserve System (FRS), which consists of: 1) 12 Federal Reserve Banks; 2) from a large number of member banks. According to the Federal Reserve Act of 1913, all member banks of the Federal Reserve System were required to: a) contribute 6% of their own capital as a share contribution to the fixed capital of the Federal Reserve Banks; b) keep in the latter their reserves in the amount of 3% of the amount of time deposits and from 7 to 13% of the amount of demand deposits. The Federal Reserve Banks were required to hold 35% of their deposits in gold and legal tender. Thus, the liabilities of the federal reserve banks consist: 1) of their own capitals, created through the share contributions of member banks; 2) from banknote issue; 3) from bank deposits, which represent the reserves of banks – members of the Fed.
The concentration of commercial banks’ monetary reserves in the federal reserve banks was a factor in saving money. The organization of the FRS helped save cash in another way – thanks to the development of non-cash payments, which began to be carried out on a large scale through the Federal Reserve Banks.
At the same time, the creation of the FRS strengthened the centralization of the US banking system and the dominance of large banks – the citadel of the financial oligarchy. From the end of 1915 to August 1972, the share of the FRS in the total number of American commercial banks rose from 28 to 41%, and in the total amount of their deposits – from 48 to 78%. Although many banks are members of the Fed, only a small number of the largest and largest banks have a decisive influence in it.
In August 1935, a law was passed that introduced some organizational changes to the Fed. The meaning of this law was primarily in the further centralization of the US banking system. All full-time banks with deposits of at least $ 1 million were required to join the FRS within a certain period; the rights of the central bodies of the FRS were significantly expanded: at the head of the FRS was: the Board of Governors (consisting of 7 members, appointed by the President of the United States for 14 years), which was given the right to determine the discount rates of the Federal Reserve banks, change the required reserves of member banks, set the norms lending against securities, to approve the boards of directors selected by the reserve banks. A special Committee on Open Market Operations has also been created, with all Federal Reserve Banks to follow its instructions in conducting their operations on the open market.
