What was the intention behind the establishment of the Federal Reserve in 1913?

The establishment of the Federal Reserve in 1913 was primarily aimed at stabilizing the U.S. economy and banking system. This initiative arose from the need to address the financial crises and bank panics that occurred frequently in the late 19th and early 20th centuries, with the Panic of 1907 being a particularly influential event. The Fed was designed to serve as a central banking system that could manage monetary policy, oversee the banking industry, and provide a more stable financial framework.

One of its key functions is to act as a lender of last resort, which helps prevent the kind of bank runs that can destabilize the economy. By controlling the money supply and interest rates, the Federal Reserve aims to mitigate inflation and promote employment, contributing to overall economic stability. Thus, the creation of the Federal Reserve represented a significant shift towards a more managed economy, rather than relying solely on free-market forces.

The options regarding foreign trade policies, military funding support, and laissez-faire policies do not accurately reflect the primary goals of the Federal Reserve, which focused on domestic economic stability and banking regulation.