Federal Bank Of Commerce : The Knickerbocker Trust Company

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In the year of 1907, New York City had three types of banks which were; national banks, state banks, and trusts. Trust companies were making more money, successfully seizing large portions of stock from major industries. The Knickerbocker Trust company was ranked the 3rd largest Trust company in New York City. This was a major concern for the National bank, and they perceived the success of the Knickerbocker Trust company as a threat. While riding the waves of success, the Knickerbocker Trust company continued pursuing financial endeavors to obtain additional control of the market. With dollar signs in their eyes the Knickerbocker Trust Company placed a bid to purchase stock in the United Copper Company. Unfortunately the offer proved to…show more content…
Morgan leading the forefront, each of the banks consolidated their funds to provide the Knickerbocker Trust company with liquidity. After the Panic of 1907, many years later Congress established that there indeed was a need for a central government to assist in regulating the money supply. They analyzed the components of the Federal Reserve. They determined that a central government would combat bank crises from arising and enable stability in the interest rates. When the Federal Reserve Act was finally passed in the year of 1913, Congress relinquished all powers relating to controlling the money supply and regulating the banking system to the Federal Reserve. The only issue Congress had with forming this central government was that they didn’t want it to become more powerful than them. In efforts to prevent a tug of war involving issues concerning authoritative power, Congress granted and divided power amongst each of the Federal Reserve banks that were present within the country. Once Congress reached an agreement that established the exact number of Federal Reserve banks, again another issue was encountered. The issue Congress now faced was deciding on where each of the Federal Reserve Banks would be located. Thus, can be concluded that the location of each Federal Reserve Bank, denotes an example of the political influences and the distribution of power among senators and representatives dating as far back as 1913.
The Federal Reserve banking
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