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The Federal Reserve was founded in 1913 with the primary goal of stabilizing the banking system and providing an elastic currency. Under the Federal Reserve Act, the system comprised a Board in Washington and 12 regional Reserve Banks, each with its own president and directors. National banks were required to become members (purchasing stock in their Reserve Bank) and hold reserves there; state banks could join voluntarily . Member banks could obtain additional funds by borrowing at the “discount window” of their local Reserve Bank, pledging short-term commercial paper as collateral. This mechanism was intended to let the money supply…