Public sentiment following the Panic of 1907 favored major banking reform to halt the nation’s long history of bank panics.
The hastily prepared Aldrich-Vreeland measure provided short-term aid to ease the ongoing credit crunch. The legislation allowed national banks to issue notes on a wider range of securities than previously allowed. In addition to federal government bonds, the Aldrich-Vreeland allowed banks to use the bonds of states, cities, and counties, along with commercial paper. The effect of that liberalization of policy was to put more money into circulation.
Recognizing that a long-term solution to the economic ills was a complex issue, Congress created a National Monetary Commission to study the matter in depth. A report was not issued until 1912 and not acted upon until the Wilson administration. In 1913, Congress passed the landmark Owen-Glass Act, which created the Federal Reserve System, an attempt to correct many of the ills evident in the succession of bank panics.
See other Theodore Roosevelt domestic activity.