Question

Why did the US Congress create the Federal Reserve System in 1913?

to establish a central bank where American citizens could deposit their money
to establish a central bank to store the money used by the federal government
to establish a central bank that would help smaller banks survive during economic crises
to establish a central bank that would provide loans for people who were denied them at local banks

Answer 1

Correct answer: to establish a central bank that would help smaller banks survive during economic crises.

Brief explanation: The 1913 Federal Reserve Act was passed largely in response to recurrent financial panics (notably the Panic of 1907). Congress wanted a central banking system that could supply elastic currency, act as a lender of last resort, provide liquidity to banks in trouble, and stabilize the payment system. It was not created primarily as a place for ordinary citizens to deposit money, nor simply to store federal government funds, nor to make consumer loans that local banks refused.