Creating the "Supreme Court of Finance": U.S. State-building and the Judicial Roots of the Federal Reserve Board.

This paper explains why the Federal Reserve Board as a fully government-controlled institution regulating regional reserve banks was accepted by U.S. policy makers at its founding, when the central bank manned by experienced bankers was the dominant organizational form of central-banking system. It is demonstrated that the FRB gained legitimacy by being associated with certain existing government institutions that people held in high esteem, namely the Supreme Court and the Interstate Commerce Commission (ICC). The link between the FRB and the two institutions became widely acknowledged, and also the connection worked in favor of the supporters of the Wilson administration's federal reserve bill. In addition, it is shown that the combination of the three institutions was not an ad hoc one, but that it constituted part of a distinct tradition of state building in the United States that has its roots in the judiciary. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]