This idea is better described as folklore than a full-blown conspiracy theory because I've never been able to find it in print, only on occasion on Usenet or in e-mail from readers. Gary Kah, author of En Route to Global Occupation, came close when he wrote that the bill's supporters waited until its opponents were out of town and it was passed under "suspicious circumstances" (Kah, p. 13-14).
Nevertheless, the myth has no basis in fact. The House passed the bill 298-60 on the evening of Dec. 22, 1913.3 The Senate began debate the following day at 10am, and passed it 43-25 at 2:30pm.4
What of the missing Senators? Since there were 48 states in 1913, forty eight votes plus the tie-breaking vote of vice-President Thomas Marshall would have been sufficient to approve the bill even if all absent votes had been cast against the bill. However, many of the missing Senators had their positions recorded in the Congressional Record.1 Of the 27 votes not cast, there were 11 'yeas' (in favor of the bill) and 12 'nays.'1 Even if the absentee Senators had been there, the Currency Bill would have passed easily.
President Wilson signed the Currency Bill into law in an "enthusiastic" public ceremony on Dec. 23, 1913.4
By the time the fed res act was enacted it did have much support of the people who were tired of the panics and bank runs.
Responsible for the panics and runs was none the less the tendency of banks to over issue bank notes, deliberately and knowing each time what the result would be. Each time the people held worthless paper and someone else held the gold. It is an uncomfortable truth that this country simply has always had trouble getting its financial act together. And one less than noble fix was applied on top of the last.
Is our act any better today? I say not. There is no free lunch. And economic law will not be mocked. If things are not done right there is going to be pain, and if the pain is covered up in one sector it will show up in another. We still have pain but it may be spread across more people who lose their property due to inflation, or to a sharp stock market correction, those who have been suckered into absurd mortgages with ARMs are going to feel pain for years but their borrowing benefitted someone; they're all taking some of the pain that would have otherwise been felt by depositors at a bank that overissued. The pain is not gone, it's just been shifted around, and spread.
A good metaphor is the bed of nails. Lie on one sharp spike and you will be impaled, yet they entertainer who lies on a bed of nails is not penetrated because the weight of his body is spread over hundreds of sharp points supporting a small surface area. A bank failure was for the few depositors at that one bank like being stuck by the spike while the depositors at other banks were unaffected. Having banks constantly be "rescued" spared the few depositors at whichever the bank in trouble was at the time but it put the whole nation on a bed of nails as we all are forced to suffer some discomfort (inflation) so that no one small group has to be ruined. Is this better, or does it encourage more malinvestment, and absurd risktaking with other peoples money because the bank officers are confident they'll be rescued? I think it increases moral hazard, absurd risk taking, malinvestment, makes the economy less efficient.