Aldrich-Vreeland Act
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The Aldrich-Vreeland Act of May 30, 1908, was passed in response to the Panic of 1907 and established the National Monetary Commission, which recommended the Federal Reserve Act of 1913. It also provided for the issuance of emergency currency. Congress modified and extended the law in 1914 when British and other foreign creditors demanded immediate payments, in gold, of amounts which would ordinarily have been carried over and paid through exports of commodities.
Nelson W. Aldrich was largely responsible for the Aldrich-Vreeland Currency Law, and he became the Chairman of the National Monetary commission. Furthermore, the law permitted Senators and congressmen to become involved in the affairs of banks.
A usage of the law occurred at the outbreak of the World War I in 1914 when the first great financial panic of the twentieth century befell the world, necessitating the closure of the New York Stock Exchange. The Secretary of the Treasury appeared in New York City and assured the public that ample stocks of emergency bank notes had been prepared in accordance with the Aldrich-Vreeland Act and were available for issue to the banks. As of October 23, 1914, $368,616,990 was outstanding.
The Federal Reserve Act of December 23, 1913 took effect in the nick of time in November, 1914 when the 12 regional banks opened for business. Ultimately the emergency currency issued under the Aldrich-Vreeland Law was entirely withdrawn.
