Test Your Knowledge Return to Jekyll Island - PowerPoint Presentation

1. Test Your KnowledgeReturn to Jekyll IslandClick on the letter of your choice to test your understanding.

2. Question 1What event in U.S. history in the early 1900s resulted in a call for reform of central banking?

3. Correct!The severity of the financial crisis created by the Panic of 1907 was triggered by F. A. Heinze’s failed attempt to corner the stock of the United Copper Company. The resulting series of bank runs led to a call for reform of the central banking system (no central bank existed in the U.S. at that time). Next

4. Try again!While the October 29, 1929, crash of the New York Stock Exchange caused financial panic, actual calls for central banking reform predated this crisis.Back

5. Try again!World War 1 did have an effect on economies worldwide, but it was not the factor that led to calls for central banking reform. Back

6. Question 2During the Panic of 1907, the U.S. Treasury contributed $25 million to help rescue the economy. Which of the following was NOT part of the additional rescue efforts that occurred during the panic?

7. Try again!J.P. Morgan’s appeal to solvent banking institutions in New York City, including his own, to contribute $25 million in emergency funding for banks during the crisis was a major contribution to the rescue efforts. Morgan also oversaw additional rescue efforts, such as a bond issue, a merger between U.S. Steel and an iron and railway company, and help for a major brokerage firm before the crisis subsided.Back

8. Try again! John D. Rockefeller’s contribution of $10 million from his own personal fortune helped to shore up the reserves of the National City Bank of New York, the bank that is known as Citibank today. Back

9. Correct! While Senator Nelson Aldrich made many contributions as head of the National Monetary Commission to help shape our central banking system today, he did not contribute financially to the rescue efforts during the Panic of 1907.Next

10. Question 3The ________________ established a commission tasked with studying the causes of the Panic of 1907 and developing a plan for a major overhaul of the nation’s financial system.

11. Try again!When the Aldrich Plan was brought to Congress, concerns over its banker-centered structure resulted in the legislation's demise. However, elements in the bill became a blueprint for the Glass-Owen bill, which did lead to the Federal Reserve Act of 1913.Back

12. Correct!The 1908 Aldrich-Vreeland Act, a legislative response to the recent financial panic, first established a means through which emergency currency could be issued during financial crises. The legislation also established the National Monetary Commission.Next

13. Try again!The 1908 Aldrich- Vreeland Act established the National Monetary Commission, a body consisting of 18 members, nine each from the U.S. Senate and House of Representatives. This group, chaired by Rhode Island Senator Nelson Aldrich, was given the charge to draft a proposal of reform for the country’s banking and financial system. Back

14. Question 4The Aldrich-Vreeland Act called for the creation of an 18-member committee to draft a proposal of reform for the banking and financial system. This committee was called the

15. Try again!The 1908 Aldrich- Vreeland Act first established a means through which emergency currency could be issued during financial crises, but the committee it established for national banking and financial reform did not have “financial” in its name.Back

16. Correct!The 1908 Aldrich- Vreeland Act established the National Monetary Commission, a body consisting of 18 members, nine each from the U.S. Senate and House of Representatives. Chaired by Rhode Island Senator Nelson Aldrich, this group was given the charge to draft a proposal of reform for the country’s banking and financial system. Next

17. Try again!The National Economic Committee was a temporary committee established in 1938 to explore monopoly power in U.S. business. Members were drawn from both the legislative and executive branches of government. It was disbanded in 1941. Back

18. Question 5To break the gridlock and draft the report due to Congress, _____________ called a secret meeting in Jekyll Island.

19. Try again!National City Bank of New York president Frank Vanderlip attended the Jekyll Island meeting, but he was not its organizer. Vanderlip later wrote in his autobiography, “None of us who participated felt we were conspirators; on the contrary we felt we were engaged in patriotic work."Back

20. Try again!Jekyll Island Club Member J. P. Morgan granted the group exclusive use of the island for two weeks, but he was not one of the attendees at the meeting.Back

21. Correct!Rhode Island Senator Nelson Aldrich organized the private meeting, whose attendees he drew primarily from the banking industry. Their expertise was thought necessary to produce a feasible plan. The group traveled in Aldrich's private train car from New Jersey to Brunswick, Georgia, and then by boat to the remote Jekyll Island location. All the travel was made under the guise of a private duck hunting retreat. Next

22. Question 6The first and second Banks of the United States failed in part because of the public’s perception that:

23. Correct!Members attending the Jekyll Island meeting felt that an acknowledged association with Wall Street and the New York banking establishment would mean that any plan conceived at the meeting would be dead on arrival in Washington. For this reason, they kept the meeting low profile, and members traveled by first name only.Next

24. Try again!Both the first and second Banks of the United States accepted deposits from the U.S. government, but they were not government controlled. Due to political opposition, neither bank had its charter renewed. Back

25. Try again!The first and second Banks of the United States were not under state control. Due to political opposition, neither bank had its charter renewed. Back

26. Question 7The draft legislation that resulted from the meeting on Jekyll Island was known as the ____; its terms called for the establishment of ____ regional banks called Reserve Associations to be part of a central banking system.

27. Try again!The 1908 Aldrich-Vreeland Act, a legislative response to the Panic of 1907, established the National Monetary Commission. The Act did not include a plan for regional banks, but rather tasked the National Monetary Commission with the job of drafting a proposal for monetary reform. Back

28. Try again!While the legislation that resulted from the Jekyll Island meeting was never passed into law, it did serve as a legislative blueprint for the Glass-Owen bill. This bill became known as the Federal Reserve Act, which was signed by President Woodrow Wilson in 1913. Back

29. Correct!The Aldrich Plan called for a central banking structure consisting of 15 regional banks, known as Reserve Associations. These associations would give emergency loans to member banks, create an elastic currency, and serve as the fiscal agent of the federal government. The Associations would be headed by a governor, appointed by the president for a seven year term. The Aldrich Plan also called for governance of the system by a forty- five member board.Next

30. Question 8Which of the following is a duty specified for the Reserve Associations under the Aldrich Plan?

31. Try again!The Reserve Associations were tasked with creating an elastic currency and the responsibility for providing emergency loans to member banks, but they had other important functions as well.Back

32. Try again!BackThe Aldrich Plan did call for the Reserve Associations to act as fiscal agent for the U.S. government, but they had other important functions as well.

33. Correct!The functions of the Reserve Associations under the Aldrich Plan included creating an elastic currency, providing emergency loans to member banks, and serving as fiscal agent to the U.S. government.Next

34. Question 9Under the Aldrich plan, the central banking system would be led by a board with ____ members headed by a ______.

35. Correct!Under the Aldrich Plan, the Reserve Associations would be headed by a governor, whom the president would appoint for a seven-year term. The governance of the system would be led by a 45-member board with representation that included the secretaries of Commerce and Labor and Treasury, as well as the Comptroller of the Currency. Remaining board members would be elected one each from each of the 15 districts, with 12 additional members elected in a system that allotted votes in accordance with bank members’ shares in the association. These 17 members would then choose an additional 12 members, all non-bankers, to represent industry, commerce, and agriculture. Next

36. Try again!The Federal Reserve Act, not the Aldrich Plan, calls for a Board of Governors consisting of seven members, whom the president appoints and the Senate confirms. Each of the 12 regional reserve banks also elects a president. Back

37. Try Again!Each of the 12 Federal Reserve Banks is subject to the supervision of a nine-member board of directors. The member banks of the respective Federal Reserve District elect six of the directors; the Board of Governors appoints three of the directors. Only three members may be drawn from the banking system, and these members may not serve as either chair or vice-chair of the board. Back

38. Question 10The Aldrich Plan did not successfully achieve passage due to what concern?

39. Correct!The banker-centered structure of the Aldrich Plan led to its legislative demise, but ideas in the bill would become a blueprint for the Glass-Owen bill that would eventually become the Federal Reserve Act of 1913. The Glass-Owen bill brought together elements from the Aldrich plan and the ideas of two opposing congressional camps: one that favored a reserve system and currency owned and controlled by the government and the other that favored a decentralized system in private hands. A compromise resulted in the decentralized regional Federal Reserve structure we have today.Next

40. Try Again!Elements contained in the Aldrich Plan would serve as a blueprint for the Glass-Owen bill, which would eventually become the Federal Reserve Act of 1913. The Glass-Owen bill brought together elements from the Aldrich plan and the ideas of two opposing congressional camps: one that favored a reserve system and currency owned and controlled by the government, and the other that favored a decentralized system in private hands. A compromise resulted in the decentralized regional Federal Reserve structure we have today.Back

41. Try again! Elements of the Aldrich Plan would become a blueprint for the Glass-Owen bill that would eventually become the Federal Reserve Act of 1913. The Glass-Owen bill brought together elements from the Aldrich plan and the ideas of two opposing congressional camps: one that favored a reserve system and currency owned and controlled by the government; and the other, a decentralized system in private hands. The compromise between these groups resulted in the decentralized regional Federal Reserve structure we have todayBack

42. Thank you for participating in “Test Your Knowledge”