Selective Incentives and the Creation of the U.S. Federal Reserve System

There has yet to be reached a decisive consensus on the primary motivations behind the creation of the U.S. Federal Reserve. The debate typically revolves around the question of the main beneficiaries, whether it was a small elite of national bankers, or society as a whole. In other words, was the Fed created to redistribute wealth, in the form of rents, to this financial elite, or was it created to provide a public good, i.e. a stable monetary framework, the benefits of which would be enjoyed widely? By clarifying the conditions leading to the creation of the Fed, and identifying those who benefited or were harmed by it, we can progress towards a resolution of the rent-seeking vs. public good debate. The conclusion is that a third explanation, selective incentives, will incorporate much of the two preceding explanations and most accurately account for the creation of the Federal Reserve.