ABSTRACT
The Federal Reserve Act that Woodrow Wilson signed into law on December 23, 1913 was the most significant and enduring legislative legacy of his presidency. It also represented a remarkable reconciliation on financial issues within the Democratic party that would have been unimaginable a few years earlier. United on the principle of a low tariff, differences over money and banking issues kept the party divided and weak for decades. After the silver debate of the 1890s, the nomination of Bryan in 1896 and the bolt of eastern gold advocates, Democrats could unite only in their opposition to Republican financial policies. Under Wilson's leadership, the party moved beyond criticism of the Aldrich Plan and offered a progressive alternative. Bryan Democrats' abandonment of silver and their adoption of a more compromising posture was a necessary, but not sufficient condition for a new party financial consensus. Eastern Democrats' startling transformation enabled them to meet the agrarians more than half-way. Eastern Democrats' rigid adherence to laissez-faire and their desire to restore competitive conditions on Wall Street took a radical, anti-monopolistic turn that was evident in Untermyer's confrontation with financiers during the Money Trust Investigation, Brandeis's Other People's Money and Wilson's New Freedom vision of a nation of small producers. By 1913, when the Democrats had to choose between private or public control of the banking system, “sound money” Democrats' views had become compatible with those of the party's Main Street majority. The economic, ideological and political forces that fueled the anti-Wall Street movement promoted Democratic financial unity and enabled Wilson to steer the party in constructive directions.
