You can tell who has read their economic history books and who has not. Conradofontanilla and Doc Snow have it right, and the rest, so far don't have an understanding of what has happened in history.
They don't know that EVERY time there has been an economic hiccup, being on a single metal or bi-metal standard has caused positive feedback and made matters worse ... every time from 1812 to 1974. They don't know that EVERY time the state banks were allowed to print and issue there own currency, the economy went to hell-in-a-handbasket because nobody knew what exchanges rates to use for transactions between states and internationally (yes, there was a lot of international trade in the 1800s) And bi-metalism, of which Americans were particuarly fond to support our silver mines, meant for international trade, we had to use gold, because that is all Europe would accecpt, than then silver and gold state-side; what a damn mess.
The Fed HAD to be established in George Washington's administration and again in Andrew Jackson's administration to bail America out of its economic problems; they were not renewed after their 20-year charter ran out. The Fed, a government- run organization led by government-paid personnel "which incorporates a private component" came about because of the near depression caused by two-men who tried to cornor the copper market in 1907 and ended up causing a massive run on banks which was in the process in destroying the American economy, yet again.
However, it was saved by the 1907 version of TARP, but not one created by the government, but by that hated banking cartel one of the commenters mention, one led by J.P. Morgan. He and his cronies managed to save America from a depression, and keep it to a bad recession, by pulling together enough money to keep the major banks of the day afloat, TARP to a 'T'.
The power exhibited by Morgan and his cartel scared the bejezus out of Americans and Congress, as grateful as they were for being saved. From that, the current Federal Reserve System was born.
One not, the system that came out ot the Jykell Island conference as very much like that suggested by Rafken, but what emerged from Congress in 1913 is that described by Conradofontanilla and Doc Snow.
BTW Attikos, you need to reread Article 1, Section 8 about Congress' ability to borrow and Coin [print] money.