Why Was the Federal Reserve Created? Presumably, the Federal Reserve was created to prevent cycles in the business world and to provide necessary funds. These were the reasons that were given: provide necessary funds to provide proper functioning of the government and business and to prevent panic, which had been plaguing the nation, cyclically, for some time. Unfortunately, it did not solve any of those problems. But those were the good reasons given rather than the real reasons. President Franklin Roosevelt actually turned over the whole banking system to the Federal Reserve in 1933. These were the folks who presumably knew how to manage the monetary systems of the whole nation. The United States, of course, was one of the biggest and most secure economies of the world before the Great Depression, which everyone suffered throughout the entire world. Getting the United States back into shape and getting the economists working and whatever it would take to make a brilliant recovery from the Depression was what was in mind. Remember that a lot of banks were closing and, in many cases, the Federal Reserve was monitoring these various banks and essentially closed down their competition whenever it was valuable to them. You have to remember that the Federal Reserve was and still is a private corporation. It was not an agency of the Federal Government. You would have the name federal in it just like there is Federal Electric and Federal Express. They just have the name federal in them just like federal banks.
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