Jacob Schiff, Head of Kuhn, Loeb, & Co., Gave a Speech in 1906 that Began the Push for a European-Style Central Bank; the Crisis Atmosphere of 1907 Assisted Greatly in Creating the Conditions Leading to the Fed's Creation

The ostensible impetus for the creation of the Federal Reserve was the banking panic of 1907, but the drive, as mentioned, began long before. Jacob Schiff, head of Kuhn, Loeb, & Co., gave a speech in 1906 that actually began the push for a European-style central bank. He explained that the "country needed money to prevent the next crisis." He worked with his partner Paul Moritz Warburg and Frank A. Vanderlip of the National City Bank of New York to create a new commission that would deliver a report to the New York Chamber of Commerce in 1906. It called for a "central bank of issue under the control of the government." They began to work within other organizations to push the agenda, winning over the American Banking Association and many important players in government.

Once the groundwork was laid, the crisis atmosphere of 1907 assisted greatly in creating the conditions that led to the founding of the Fed. It was a brief contraction, but during it many banks suspended specie payments, that is, they stopped paying out gold to depositors until the crisis passed. This led to a consolidation of opinion in favor of a general guarantor of all deposits.

--Ron Paul, End the Fed (New York: Grand Central Publishing, 2009), 20-21.