The "Structural-Functional" Approach to the Origins of the Federal Reserve System Was Perfected in the Early 1960s by Robert Wiebe and Gabriel Kolko

Kolko comes to rather different conclusions in The Triumph of Conservatism. He argues that the corporate consolidation movement of 1898-1904 utterly failed to rationalize industry or restrict market entry and that diffusion and decentralization in banking "seriously undercut New York's financial supremacy." From these premises he interprets the establishment of the Federal Reserve as the handiwork of New York bankers who could not secure dominance in  their sphere of enterprise without resource to governmental regulation and supervision. The setting and the cast are, then, borrowed from Wiebe, but the drama's central characters are no longer "secondary groups" remaking a national, corporate-industrial economy in their regional or functional image. Smaller businessmen and their collective agencies retain a causative role in Kolko's scenario, but they are positioned offstage; meanwhile, onstage, big businessmen steal the show. In the process, Kolko argues, these magnates did in fact fundamentally alter the relationship between government and society to conserve their profits.

Kolko's conclusions about the relationship between the business community and the various political-economic reforms enacted during the so-called Progressive Era are quite different from Wiebe's. But their divergence on the success of programs advanced by small or "new" businessmen obscures a methodological congruence. Kolko's only innovation in this regard is that he finds a particularly effective set of "larger interests" among a wide assortment of "capitalist blocs."

--James Livingston, introduction to Origins of the Federal Reserve System: Money, Class, and Corporate Capitalism, 1890-1913 (Ithaca, NY: Cornell University Press, 1989), 20.