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One hundred years ago this December, President Woodrow Wilson signed into law the Federal Reserve Act. The Act's sponsor in the U.S. Senate was Robert Latham Owen, a fron- tier lawyer, banker, and businessman who had been chosen as one of Oklahoma's first two U.S. senators when the state was admitted to the Union in 1907. Owen's bill authorized the creation of the Federal Reserve System, the United States' first central bank in more than 75 years, including both a government agency in Washington, D.C., and 12 semi-independent regional Reserve Banks around the country.
This article describes Owen's role in both championing the forma- tion of the Fed and later criticizing some of its policies after World War I. His role and views are juxtaposed with developments in the economy of what is now the Federal Reserve's Tenth District. The article finds that Owen's interest in central banking began with his personal experiences as president of a community bank in Indian Territory (Oklahoma) dur- ing the Panic of 1893. His preference for a quasi-public, decentralized structure for the Fed came from skepticism about placing too much control in either a central agency in Washington, D.C., or, especially, a small number of bankers on Wall Street, which he thought would make the institution unpopular and unfair to much of the country. Owen generally praised the Fed's early performance but became a critic in the early 1920s, and again in the 1930s, when its deflationary policies were especially harmful to the agricultural economy of his home region.
Section I describes developments in Owen's life and in the regional and national economies around the turn of the 20th century that led to increasing demands for a central bank in the United States. Section II reviews Owen's role in passing the Federal Reserve Act and his views on the Fed's early performance. Section III investigates Owen's criticisms of Fed policy after World War I in light of developments in the regional economy at the time.
I. OWEN AS A COMMUNITY BANKER IN PRE-FED OKLAHOMA
Before the Federal Reserve System was formed in 1913, the United States experienced intermittent financial panics. The last two panics, in 1893 and 1907, hit the states of the future Tenth District especially hard, resulting...