# Federal Reserve’s World War I Role Centered on Treasury Debt Support By Token Post Canonical URL: https://www.tokenpost.com/news/insights/53297 Published: 2026-11-10T19:49:27.000Z Updated: 2026-11-10T19:49:27.000Z Section: Insights & Views > The New York Fed served as the Treasury’s fiscal agent for bond sales, while reserve requirements varied by bank class and deposit type. An essay published Monday, Nov. 9, by George Ford Smith ties the Federal Reserve’s role in World War I to Wall Street influence. The documented wartime actions centered on Treasury debt sales and lending to banks that bought the debt. Congress enacted the Federal Reserve Act in 1913 to establish reserve banks, make the currency supply more flexible, allow banks to rediscount commercial paper and strengthen banking supervision. During the war, the New York Fed served as the Treasury’s fiscal agent for bond sales. The Federal Reserve also offered preferential-rate loans to banks buying war bonds and Treasury certificates. Smith alleges that Morgan interests pushed for the Fed to curb banking competition, that Morgan firms were the sole U.S. purchasing agent for war materials shipped to Britain and France, and that they were the sole underwriter of British and French bonds sold in the United States. The documented bond sales and lending do not establish those allegations or Smith’s broader argument that central-bank policy enabled or prolonged the war. Reserve requirements differed by bank class and deposit type. On Dec. 23, 1913, requirements for demand deposits were 18% at central reserve city banks, 15% at reserve city banks and 12% at country banks. The requirement for time deposits was 5%. On June 21, 1917, those rates changed to 13%, 10%, 7% and 3%, respectively. Smith describes a cut from 21% to 11% beginning in 1914, but does not specify which bank or deposit categories those figures cover. The requirements listed above show different rates across bank classes and deposit types, with the displayed changes taking effect in 1917. Smith’s “barbarous relic” reference concerns the gold standard. In his 1923 book A Tract on Monetary Reform, John Maynard Keynes wrote, “In truth, the gold standard is already a barbarous relic.” The monetary question has also appeared in an earlier [comparison of the dollar’s purchasing power since the Fed’s founding with Bitcoin](). ## Links in this article - [comparison of the dollar’s purchasing power since the Fed’s founding with Bitcoin](https://www.tokenpost.com/news/investing/22998?section=insights)