ABSTRACT
As the National Banking System and financial markets encountered increasing stress during 1905 and 1906, the Theodore Roosevelt administration and Republican leaders confronted growing pressure for financial reform. An international trend toward financial stringency heightened Wall Street's anxieties and prompted New York financial leaders to abandon the financial status quo and to propose a central bank. La Salle Street bankers and the American Bankers Association (ABA) stepped up their campaign for an expanded money supply through decentralized issuance of bank notes. In his Report of 1906, Secretary of the Treasury Leslie M. Shaw called on Congress to convert the treasury into a central bank by granting additional power to control bank reserves, to expand and contract the money supply and to establish a treasury central reserve fund. With Wall Street, La Salle Street and Main Street hoplessly at odds, Roosevelt and Congress were unable to choose among alternatives, focus on a single proposal and move banking reform in a clear direction. As financial conditions deteriorated, Congress passed the Aldrich Act of 1907 that provided legal sanction for treasury regulation and a requirement for more equitable sectional distributions of government funds
