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1. According to Chapter 1, where did the idea for the Federal Reserve System originate?

The Federal Reserve System was roughed out in a secret meeting at Jekyll Island off the southern Atlantic coast in 1910.

2. According to Chapter 1, what were banks allowed to lend prior to the establishment of the Federal Reserve System?

The banking system before the Federal Reserve System allowed banks to lend out more money than they held in deposits, up to ninety-nine percent loaned out with only one percent in deposits.

3. According to Chapter 1, what did over-lending by banks result in?

There were public runs on the banks and currency drains from other banks demanding payments.

4. In Chapter 1, how is a "public run" defined?

A public run was when many depositors demanded their cash from a bank and wiped out the bank's reserves.

5. In Chapter 1, how is a "currency drain" defined?

A currency drain happened when many depositors wrote checks, and the receivers of the checks cashed them at another bank, thereby requiring more money from the first bank than it had on hand.

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