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FEDERAL RESERVE BANK OF ST. LOUIS
ORGANIZATION CHART
BOARD OF GOVERNORS
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FEDERAL RESERVE SYSTEM
Li U ! 0
BOARD OF DIRECTORS
FEDERAL RESERVE BANK
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MEMPHIS
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|AUDIT COMMITTEEI
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H. H. WEIGEL
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BRANCH BOARD
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This document is protected by copyright and has been removed.
Author(s): Ross M. Robertson
Article Title: On the Changing Apparatus of Competition
Journal Title: [Reprint from] The American Economic Review
Volume Number: XLIV
Date:
May 1954
Page Numbers: 51-62
Issue Number: 2
This document is protected by copyright and has been removed.
Author(s):
Article Title: Input-Output Goes to Work in St. Louis Bank Study
Journal Title: Business Week
Volume Number:
Date:
August 23, 1952
Page Numbers:
Issue Number:
EMIL PLACEK et al.
v*
M. D* EDSTROM, Appt*
LESHARA STATE BANK OF LESHARA, Intervener
Nebraska Supreme Court -- March 7, 1947
(148 Neb 79, 174 ALR 856, 26 NW2d
489)
Chappell, J*
Bank of Prague and Emi1 Placek, its president, instituted this
action to obtain a declaratory judgment construing Chapter 11,
Session Laws of Nebraska 1945, appearing as sections 8-163*01 and
8-163*02, RS Supp, 1945, and hereinafter generally designated as
the act, to be permissive of an alleged new check-clearance
exchange formula adopted by the bank after August 10, 1945, the
effective date of the act, or in the alternative to declare the
act unconstitutional and enjoin its enforcement* The act is generally known as the par check law* The Leshara State Bank intervened, asking similar relief for itself and all other banks
similarly situated who have strictly observed all provisions of
the act since its effective date* All banks involved are state
banks organized under the laws of this state and for convenience
in this opinion will be generally designated as plaintiffs*
After trial upon the issues appropriately presented by the
pleadings, the trial court concluded that plaintiffs' alleged new
formula was prohibited by the act, and in its decree found generally for plaintiffs and against defendant, adjudged the act to be
void as unconstitutional, and enjoined its enforcement* This was
done upon the grounds that the act was repugnant to section 14,
article III, Constitution of Nebraska, in that it was amendatory
of sections 62-213 and 62-1189, RS 1943, and neither contained nor
repealed said sections as amended; that the act was repugnant to
section 10, article 1, Constitution of the United States, in that
it impaired the obligations of contracts; and that the act was
repugnant to section 3, article I, Constitution of Nebraska, and
section 1 of the Fourteenth Amendment to the Constitution of the
United States respectively, in that it deprived plaintiffs of
property without due due process of law, and denied them the equal
protection of the laws*
-2-
Defendantfs motion for new trial was overruled, and he appealed
to this court, assigning substantially that the trial court erred in
so holding the act unconstitutional and enjoining its enforcement*
We sustain that contention.
The act provides: ftSection 1. All checks drawn on any bank or
trust company organized under the laws of this state shall be cleared
at par by the bank or trust company on which they are drawn;
Provided, the foregoing direction shall not be applicable where checks
are sent to banks or trust companies as special collection items*
Sec. 2. Any officer or employee of any such bank or trust company who
violates the provision of this act shall be guilty of a misdemeanor
and, upon conviction thereof, shall be fined not less than five
dollars nor more than ten dollars for each offense*w
Concededly, the proviso contained in section l i s not involved
in any manner and no trust company is a party to this action. Generally speaking, the case is one of first impression, although landmarks of law point the way to constitutional validity.
We have no doubt that the act may be considered as remedial in
character. This court has held that: WA law is entitled to be
considered remedial whether it remedies a defect of the common law or
of a pre-existing statute." Securities Investment Corporation v.
Indiana Truck Corporation, 129 Neb 31, 260. This court has also
affirmed that in a limited and restricted sense a statute may be
penal yet remedial in its nature if designed to remove a condition
inimical to the public welfare. Nebraska District of Evangelical
Lutheran Synod v. McKelvie, 104 Neb 93, 175 NW 531, 7 ALR 1688.
As early as Harmon v. City of Omaha, 17 Neb 548, 23 NW 503, 504,
52 Am Rep 420, this court put its approval
upon the following sage
statement appearing in 1 Blackstone?s Com., p 87: "In construing
remedial statutes there are three points to be considered, viz., the
old law, the mischief, and the remedy; that is, how the common law
stood at the making of the act, what the mischief was for which the
common law did not provide, and what remedy the parliament hath
provided to cure this mischief; and it is the business of judges so
to construe the act as to suppress the mischief and advance the
remedy.ft We have adhered to that position ever since in cases too
numerous to cite here.
It was said in Nebraska State Railway Commission v. Alfalfa
Butter Co. 104 Neb 797, 178 NW 766: ffThe intention of the Legislature is the law, and such intention is to be gathered from the
meaning of the language used, in the light of the necessity for or
reason of the enactment, and the objects sought to be attained, and,
in determining the meaning of the language, its ordinary and its
grammatical construction is to be followed, unless an intent appears
to the contrary, or unless, by following such construction, the
intended effect of the provisions would apparently be impaired.ff
-3-
This court held in Nebraska District of Evangelical Lutheran
Synod v. McKelvie, supra: !fThe legislature must be presumed to have
had in mind all previous legislation upon the subject, so that in
the construction of a statute we must consider the pre-existing law
and any other acts relating to the same subject,!f and f,Where the
general intent of the Legislature may readily be discerned, yet the
language in which the law is expressed leaves the application doubtful or uncertain, the courts may have recourse to historical facts
or general information, in order to aid them in interpreting its
provi si ons.If
The act involved will be construed, therefore, in the light of
such judicial direction. As in every other field, there has come
about an unprecedented but natural evolution in the business of
banking. The public use of its facilities has become almost
universal. Its business is no longer localized. The vast bulk of
the financial business and commerce of the country is now consummated
by the use of checks on banks. They are now generally recognized as
a safe and efficient method by which bank credit is transferred from
one person to another throughout the state and nation, upon which the
necessities of all business, trade and commerce, as well as the
financial safety, convenience, and welfare of the public is dependent.
Before checks came into such general usage, banks naturally collected legitimate exchange charges from their customers or depositors
for making their funds available, by one recognized mode or another,
at a distant place where the customers wished to use them in making a
purchase or paying a debt, and they are not now prohibited by the act
or by any other law from doing so with profit to themselves. However,
with the almost universal use of checks by bank depositors, that
method became more or less obsolete. Thus, in making such funds so
available, the charge originally made to its customer, the drawer or
payer of the check who so transferred his funds to another place, was
arbitrarily shifted by some banks in a manner hereafter apparent,
from their customer or depositor, who received the benefit thereof,
to the payee, or holder of the check, as a so-called exchange charge,
without his permission. The latter practice was ultimately recognized
as an unjust exaction and became a source of greatest irritation both
to banks and to the public. All national banks and most state banks
have now long since generally
abandoned
the practice. Those who have
n
tf
abandoned
it
are
called
par
banks,
and
those who have not are called
f,
nonpar banks." Plaintiffs come within the latter category.
Prior to the effective date of the act, nonpar state banks were
exacting the so-called exchange charge from out-of-town checks drawn
upon themselves, by their own depositors, at the time when such
checks were directly presented by out-of-town banks, wherein they had
been deposited, in cash mail letters for clearance, with request for
collection and remittance, which was customarily consummated by draft
drawn upon a correspondent bank and mailed to the forwarding bank.
Under its original formula, plaintiffs computed such charges at the
-4rate of 5 cents on each check of $10 or less, 10 cents on each check
over $10, subject to a limitation of not more than 50 cents for any
one cash letter. The charges so computed were deducted from the
total of all checks received in any one cash letter, and after such
deduction was made and credited as a profit to itself, a draft was
drawn by the bank and mailed in remittance of the balance to the
forwarding bank.
After the act became effective, evidently conceding that its
original formula was prohibited by it, the Bank of Prague adopted a
so-called new formula which it claims was not prohibited by the act.
Under that formula, it computes the total of all checks received in
any one cash letter, deducts thereform an amount equal to 10 cents
for each $100 or fraction of the total, and after such deduction,
draws a draft for remittance of the balance, which is mailed to the
forwarding bank. The only difference observable to us between the
old formula and the new is that the amount exacted and deducted under
either one or the other might not be the same* In fact, there is
simply a distinction without a difference between the two, and if the
act is constitutionally valid prohibiting one, it certainly prohibits
the other or both of them.
We come then to the question whether or not the act is constitutional. Its efficient words are* flAl 1 checks drawn on any bank • . .
organized under the laws of this state shall be cleared at par by the
bank . . . on which they are drawn; . • .!f . The requirement is not
that all checks shall be paid at par, nor that they shall be collected
at par. It is the manner in which all checks must be cleared by all
state banks, and not that they must be paid or collected at all
events, that is prescribed by the act. It is par clearance which is
required.
In First State Bank of Hugo v. Federal Reserve Bank, 174 Minn
535, 219 NW 908, 912, it was said: "Primarily the benefit from having
checks cleared at par goes to the makers of such checks, the customers
of the bank upon which they are drawn. If such a customer can send
his check to another city or place in payment of his debts or
purchases and have the check cleared at par, he saves money and
inconvenience, saves purchasing a draft and paying the exchange thereon.
He cannot compel his debtor or obligee at the other end to accept his
check subject to exchange charges. His bank is, to that extent,
favoring him and incidently attracting customers to itself.tf
In Farmers & Merchants Bank of Monroe, N. C. v. Federal Reserve
Bank, 262 US 649, 43 S Ct 651, 653, 67 L ed 1157, 30 ALR 635, it was
said: !,Par clearance does not mean that the payee of a check who
deposits it with his bank for collection will be credited in his
account with the face of the check if it is collected* His bank may,
despite par clearance, make a charge to him for its service in
collecting the check from the drawee bank* • . . Par clearance refers
to a wholly different matter. It deals, not with charges for collection, but with charges incident to paying. It deals with exchange.
Formerly, checks, except where paid at the banking house over the
counter, were customarily paid either through a clearing house or by
remitting, to the bank in which they had been deposited for collection,
a draft on the draweefs deposit in some reserve city. For the service
-5rendered by the drawee bank in so remitting funds available for use
at the place of the deposit on the check, it was formerly a common
practice to make a small charge tf called fexchange,f and to deduct
the amount from the remi ttance.
It was a similar deduction by a
drawee bank which the act involved sought to eliminate, but there
is nothing in the act which prevents the bank from charging its
customer or depositor for such services rendered to him for his
benefit. Therefore, the act does not compel such a bank to donate
the use of its services or property without compensation. It is
not thereby, or by any law related thereto, as will be hereinafter
observed, compelled to do anything without compensation* Such banks
are simply told that if they do clear checks, it must be done at
par without deduction of a so-called exchange charge from remittances
to forwarding banks.
A check can be paid by an individual, but it can be cleared only
by a bank. In other words, a check can be paid without being
cleared. In this state, when checks are forwarded to a drawee bank
by another bank in a cash letter, the drawee bank now ultimately
becomes the agent of the forwarding bank, and the holder of the check.
When it charges the amount of the check to the account of its
depositor it pays the check to itself as agent for the holder or
forwarding bank, and thereafter holds the funds in a fiduciary capacity
as such agent. The check is then paid but not cleared. It is only
cleared when such funds are properly remitted to forwarding bank.
This court has held that the drawee bank may and does now act in a
dual capacity, to wit: (1) As drawee in paying the checks to itself,
and (2) as agent for the holder or forwarding bank in receiving its
payment and clearing the check by directly remitting the funds in
their hands to the forwarding bank. State ex rel. Sorensen v.
Nebraska State Bank, 120 Neb 539, 234 NW 82. See, also, sections
62-207 to 62-216, inclusive, RS 1943.
The legal relationship, therefore, of drawee banks as agents with
their principals, the holders of the checks, is entirely distinct and
different from their relationship as drawees with their depositors,
the payers or makers of the checks. Their relation with the depositors is contractual, actual or implied. City of Lincoln v. First
Nat. Bank, 146 Neb 221, 19 NW2d 156. The act, it will be observed,
does not relate to or affect the contract of a bank with its
depositors. Therefore, it does not impair the obligations of such
contracts in violation of section 10, article I, Constitution of the
United States.
A check is a negotiable instrument. Sec. 62-1185, RS 1043. As
such, it contains an unconditional order to pay a sum certain in
money. Sees. 62-101 and 62-1126, RS 1943. It is discharged by payment
in due course. Sec. 62-1119, RS 1943. The bank*s duty to its
depositor is to honor and pay its checks if, when presented, the
drawer has on deposit sufficient funds available for that purpose.
That duty is fully discharged when the bank receives, honors, and
pays the depositor's check and complies with the order contained
therein to pay the sum certain. However, that duty is subject to the
common-law right of the bank, preserved by section 62-213, RS 1943,
to refuse to pay checks drawn upon it as drawee otherwise than at its
own counter. Therefore, the bank may insist that the holder or his
representative receive payment over the counter and is not required
-6to forward the proceeds to another place* Therefore, if a drawee
bank undertakes to and does pay checks presented otherwise than at
its own counter, such as checks received by mail in cash letters, it
does so entirely outside its contract with and its legal duty to
the depositor who draws the check. By doing so, the bank assumes
new and different relationships and duties not based upon its
contract with its depositors*
Section 62-209, RS 1943, provides: "Where the item is received
by mail by a solvent drawee or payer bank, it shall be deemed paid
when the amount is finally charged to the account of the maker or
drawer*ff When that is done we are no longer concerned with the bankfs
legal duty to its depositor* That duty has been fully performed because checks drawn by the depositor have been discharged by payment
in full at par to the bank* From that point on, the bank f s legal
obligation is to the holder, arising from the fact that the bank is
then the holder's agent and possesses and holds the entire proceeds
of the oaid check in an agency-trust relationship* At that point
clearance begins* The act orovides that: "All checks * * * shall
be cleared at par,rf but at that point, the plaintiff bank makes a
deduction from a trust fund held by it and remits the balance
thereafter. It is that mischief which the act sought to remedy,
and it relates to and affects only the capacity of a drawee bank
as agent for the holder of checks drawn upon and paid to itself*
Section 62-1189, RS 1943, specifically provides that a check
does not of itself operate as an assignment of any part of the funds
to the credit of the drawer at the bank, and that.the bank is not
liable to the holder unless and until it accepts or certifies the
check. Certification is not involved here* It is clear that prior
to the time when the check is accepted by the bank, it is under no
legal duty to the holder thereof* That duty which is fiduciary in
character, arises only when the bank accepts the check, charges it
to the drawer!s account, and pays itself the money* It is terminated only when full remittance is made to the holder* The act
simply requires full performance of that dtity.
At this point, it is well to say that we fail to see how the
act could be violative of section 14, article III, Constitution of
Nebraska, since it does not amend, or contain, or in any manner
affect or repeal either sections 62-213 or 62-1189, RS 1943, or any
other statute of Nebraska previously existent. Without doubt those
sections and the act in controversy simply relate to the same or
closely allied subjects and have a common purpose or the same
general purpose and are component parts of the same general banking
scheme or plan, therefore in pari materia. It is fundamental in
this jurisdiction that statutes relating to the same subject,
although enacted at different times, are in pari materia and should
be construed together. Morrill County v* Bliss, 125 Neb 97, 249
NW 98, 89 ALR 932; McQuiston v. Griffith, 128 Neb 260, 258 NW 553;
Enyeart v. City of Lincoln, 136 Neb 146, 285 NW 314; Hadley v. Corey,
137 Neb 204, 288 NW 826.
-7We have heretofore found that the act did not impair the obligation of any contracts between the bank and its depositors* We turn
then to the obligations of drawee banks to the holders of the checks*
It is an elementary proposition of constitutional law that the obligations of a contract cannot be said to be impaired by a statute which
was in force when the contract was made* Generally speaking, the
laws in force at the time a contract is entered into form a part of
it and enter into its obligation, but the law then in force affording
a remedy for its breach may be modified or changed without impairing
the obligation of the contract if an adequate remedy is left. Norris
v. Tower, 102 Neb 434, 167 NW 728*
Section 10, article I, Constitution of the United States, has
reference only to laws enacted after the making of contracts, the
obligations of which are claimed to be impaired. Lehigh Water Co*
v* Borough of Easton, 121 US 388, 7 S Ct 916, 30 L ed 1059; Munday
v. Wisconsin Trust Co* 252 US 499, 40 S Ct 365, 64 L ed 684; City of
New Orleans v. New Orleans Water Works, 142 US 79, 12 S Ct 142, 146,
35 L ed 943.
In the last cited case, it was said: r!. . . we think that, before
we can be asked to determine whether a statute has impaired the
obligation of a contract, it should appear that there was a legal
contract subject to impairment, and some ground to believe that it
has been impaired; and that, to constitute a violation of the provision against depriving any person of his property without due
process of law, it should appear that such person has a property in
the particular thing of which he is alleged to have been deprived*ft
Likewise, in Chicago, B. & Q. Co. v. Cram, 228 US 70, 33 S Ct
437,
440, 57 L ed 734, involving a Nebraska statute, it was said*
ff
The contention is made that the statute impairs the obligation of
the contracts which existed between plaintiff in error and defendant
in error; but that contention was not made in the court below and
cannot therefore be made here. Besides, there is no evidence of the
contracts in the record. Contracts were pleaded, and there appears
to have been some attempt to introduce them in evidence, but unsuccessfully, and they were stricken from the bill of exceptions. But,
assuming the contracts may be considered on this record, a complete
answer to the contention that the statute impairs their obligation
is, they were ff
made subsequently to the statute, and therefore are
subject to it.
Contracts upon which plaintiff banks obligate themselves with
holders of checks drawn on themselves are implied in law. They are
necessarily of short duration and generally performed and fully executed the same day. Plaintiffs neither pleaded nor proved, nor
did the trial court find that any such contracts were in existence
and unexecuted on August 10, 1945, the effective date of the act.
Every check drawn on plaintiff banks and received and paid by them
thereafter was the subject of a new and separate contract between
the bank and the holder, and embraced the act as an integral part
thereof, which includes plaintiffs' statutory duty to remit the
balance in full, that is to clear all checks at par*
-8Upon the basis of the analysis heretofore made, we conclude that
the act did not impair the obligations of any contract between
plaintiff banks and any other person, either depositor or holder,
therefore it is not repugnant to section 10, article I, Constitution
of the United States.
Finally, we have the question whether the act is unconstitutional
upon the ground that it denies plaintiffs equal protection of the
laws or deprives them of property without due process as in violation
of section 3, article I, Constitution of Nebraska, and section 1 of
the Fourteenth Amendment to the Constitution of the United States.
Section 8-110, RS 1943, specifically provides: f,The business of
banking, or the receiving of deposits of money or instruments of
credit subject to be repaid upon check, draft, certificate, passbook
or order; the discounting or negotiating of promissory notes, drafts,
bills of exchange, and other evidences of debt; and the loaning of
money upon personal or other security is hereby declared to be a
quasi-public business and subject to regulation and control by the
state.ff
It is generally held that: tfBanks are indispensable agencies
through which the industry, trade, and commerce of all civilized
countries and communities are carried on; the business which they
transact, though for private profit, is of a preeminently public
nature, and is therefore universally recognized as a proper subject
of legislative regulation under the police power of the state. The
power of the legislature in this regard is supreme, subject only to
such limitations as are imposed by the fundamental 1 aw.Tf 7 Am Jur,
Banks, | 9, p 30. See also, Citizens State Bank v. Strayer, 114
Neb 567, 208 NW 662; State ex rel. Chamberlin v. Morehead, 99 Neb
146, 155 NW 879.
In speaking of due process of law and equal protection of the
law, it was said by this court in Dysart v. Yeiser, 110 Neb 65,
192 NW 953, 955, "These constitutional provisions are intended to,
and do, guarantee the right to make and enforce contracts as
property rights, but the right to make and enforce contracts may be
restricted and is subject to such limitations as the state, in the
proper exercise of its police power, may impose. That is to say,
it is subject to reasonable restraint and regulation in the interest
of the public welfare."
In State ex rel. Sorensen v. Nebraska State Bank, 124 Neb 449,
247 NW 31, it was held: rfThe business of banking involves more than
the creation of a private debtor and creditor relation, and embraces
the establishment of a public instrumentality for the discharge of a
public purpose for the promotion of public good.ff
No part or provision of the federal constitution was ever
intended to take from the states the right to properly exercise
their police powers, which generally extend to all the great public
-9needs which are lawfully recognized as immediately necessary to promote
the public welfare. That such power may be exercised by a state within
reasonable limits to regulate the business of banking, whose facilities
are generally recognized as an indispensable condition of commerce, is
well established* Noble State Bank v* Haskell, 219 US 104, 31 S Ct
186, 55 L ed 112, 3Z LRA NS 1062, Ann Cas 1912A, 487, rehearing,
219 US 575, 31 S Ct 299, 55 L ed 341; Shallenberger v. First State
Bank, 219 US 114, 31 S Ct 189, 55 L ed 117; In re Opinion of Justices,
278 Mass 607, 181 NE 833, 82 AJLR 1021; Holland v. Nakdirnen, 177
Ark 920, 9 SW2d 307, 62 ALR 484; State ex rel. Chamberlin v* Morehead,
supra.
In Wenham v. State, 65 Neb 394, 91 NW 421, 423, 58 LRA 825, this
court said: f,All property in this state is held subject to rules
regulating the common good and the general welfare of our people*
This is the price of our advanced civilization, and of the protection
afforded by law to the right of ownership and the use and enjoyment
of the property itself* Rights of property, like other social and
conventional rights, are subject to reasonable limitations in their
enjoyment, and to such reasonable restraints and regulations by law
as the legislature, under the governing and controlling power vested
in them by the constitution, may think expedient. This power,
legitimately exercised, cannot be limited by contract, nor bartered
away by legislation* It is a power that is necessarily inherent in
every form of government* This inherent power, reasonably used,
may be said to be due process of law. . * * The police power of the
state cannot be put forward as an excuse for oppressive and unjust
legislation, but it may be lawfully resorted to for the purpose of
preserving the public health, safety, or morals; and a large
discretion is vested in the legislature to determine not only what
the interests of the public require, but what measures are necessary
for the protection of such interest*ft
In Pascagoula Nat* Bank v. Federal Reserve Bank of Atlanta,
D. C , 3 F2d 465, 468, of which the United States Supreme Court
refused to take original jurisdiction because the constitutional
question raised was not sufficiently substantial (269 US 537, 46
S Ct 119, 70 L ed 400), it was said: rtThe result of these provisions
of the Reserve Act so construed is to require a member bank to pay
without deduction checks drawn on it when presented by its Reserve
Bank, whether paid over Its counter or by "the more convenient means
of a check on its own deposits elsewhere* This takes none of the
property or property rights of complainant without due process of
law. Complainant may refuse to pay otherwise than in cash over Its
counter, according to the common law, as, on the other hand, the
Reserve Bank may insist on that sort of payment* What Is lost is
the right to agree on a compensation for a more convenient payment
by draft on more accessible reserves when both parties are willing
so to agree* That the state, having power over the state banker
and his business, may regulate his method of receiving and paying
out his deposits was ruled in Farmers' & Merchants1 Bank of Monroe,
(N. C.) v. (Federal) Reserve Bank of Richmond, (Va), Z6Z US 649,
43 S Ct 651, 67 L ed 1157, 30 ALR 635. A similar power must be
-10recognized in the United States to regulate the banking in the Federal
Reserve system. Complainant, being a national bank, chartered to do
its business under the federal laws, cannot complain that those laws
are not, or do not remain, such as it would prefer* It is not
compelled to do anything without compensation. It is simply told that,
if it does the thing in question, it must be done without compensation.
Noble State Bank v. Haskell, 219 US 575, 31 S Ct 299, 55 L ed 341."
We conclude, therefore, that plaintiffs were not deprived of property
without due process of law*
In Farmers & Merchants Bank v Federal Reserve Bank, supra, it was
said: ,fIt is well settled that the Legislature of a state may (in the
absence of other controlling provisions) direct its police regulations
against what it deems an existing evil, without covering the whole
field of possible abuses* . • • If the Legislature finds that a
particular instrument of trade war is being used against a policy
which it deems wise to adopt, it may direct its legislation
specifically and solely against that instrument. . • . If it finds
that the instrument is used only under certain conditions, or by a
particular class of concerns, it may limit itsprohibition to the conditions and the concerns which it concludes alone menace what it deems
the public welfare*" It will be noted that the classification of the
act is all inclusive of all checks drawn upon and cleared by all state
banks* The record in this case discloses ample grounds for such a
classification* Hence, there was no denial of equal protection of the
laws.
In the light of the situation heretofore presented, we can only
decide that the act i s an entirely reasonable exercise of the police
power of this state and not repugnant to section 3, article I,
Constitution of Nebraska, or section 1 of the Fourteenth Amendment
to the Constitution of the United States.
We conclude that the trial court was right when it found that
plaintifffs new formula was prohibited by Chapter 11, Session Laws of
Nebraska 1945, but erroneously adjudged that the act was unconstitutional and void and erroneously enjoined its enforcement by the
defendant. For the reasons heretofore stated, the cause is reversed
and remanded with directions that the trial court enter a decree in
favor of the defendant and against plaintiffs, in conformity with
this opinion, with costs taxed to plaintiffs, Emi1 Placek and Bank
of Prague, except that intervener shall be taxed with all costs of
interventi on.
Reversed and remanded with directions.
Petition for rehearing denied*
Rev* 6-5U*
BENEFITS AND REQUIREMENTS OF
THE FEDERAL RESERVE SYSTEM
Purposes* Following the money panic of 1907, Congress appointed the
National Monetary Commission to inquire into and recommend changes in the banking and
currency laws* The Commission made an exhaustive study, not only of our laws and
experiences, but also of the central banking systems of other countries* It submitted
its report in 1912, which paved the way for needed legislation*
In 1913 the Federal Reserve Act Was enacted, being signed by the President
on December 23* As stated in the preamble, its purposes were lfto provide for the establishment of Federal Reserve Baftks, to furnish an elastic currency, to afford means
of rediscounting commercial paper, to establish a more effective supervision'of bank«*
ing in the United States, and for other purposes*" By amendments since then* the
functions and objectives have been broadened*
Organization* Uftder provisions of the Act, the Federal Reserve System was
established on November 16, 191i*> It comprises the member banks^ over 6,700$ twelve
regional Federal Reserve Banks with 2k branches; the Board of Governors of the Federal
Roserve System) the Federal Open Market Cornmitteo* and the Federal Advisoiy Council*
Located in Washington, the Board of Governors consists of seven members
appointed for li^-year terms by the President and confirmed by the Senate* On the
Open Market Committee are the seven members of the Board of Governors and five
reserve bank presidents designated annually by the reserve institutions. The Advisory
Council is composed of twelve members, one selected annually by each reserve bank*
'The Federal Reserve Banks afro located in Boston, New York, Philadelphia,
Cleveland* Richmond, Atlanta* Chicago, St. Louis, Minneapolis, Kansas City, Dallas,
and San Francisco* and each serves a designated territory* Their activities are coordinated by the Board of Governors, through regulations, examinations, conferences,
and other means.
Member banks include all national banks and such eligible State banks and
trust companies as apply for membership and are admitted. They own the capital stock
of the reserve banks, and maintain their legal reserves in them. The members hold
over 85$ of the demand deposits and about'three-fourths of the total deposits in all
banking institutions in the United States*
Functions* Federal Reserve functions include services and central banking
operations for the general welfare*
The performance of functions to help maintain sound monetary and credit
conditions has become an important activity of the Federal Reserve authorities* This
requires policy decisions from time to time regarding open market transactions in
U* S* securities, discount'rates, reserve requirements, maximum security loan values*
interest rates on deposits, and other factors.
Through the issuance of Federal Reserve notes, the reserve banks furnish an
elastic currency that enables the circulating media to expand or contract in accordance with seasonal and other demands* Besides being obligations of the United States
and a first lien on the assets of the issuing bank, the notes are specifically secured
by gold certificates and other eligible collateral*
Various services are provided by the Federal Reserve Banks for the'member
banks* such as making advances or rediscounting^ supplying currency and coin* collecting checks and noncash items, and transferring funds by wire, as hereinafter described. Making the entries to the reserve accounts of the meiribers expedites and
facilitates such transactions*
In addition* the Federal Reserve Banks act as depositaries, fiscal agents,
and custodians for the U* S* Government and some of its agencies; The reserve banks
carry the principal'checking accounts of the Treasury Department, and handle much of
the work in issuing, exchanging, and redeeming Goverrsnent securities*
Value of System* During the four decades of its existence, the Federal Reserve System has become an integral part of the American economy. In times of peace
and war* the System has demonstrated its usefulness and beneficial influence*
«»2«B
FEDERAL RESERVE BANK OP ST. LOUIS
The Federal Reserve Bank of St* Louis serves the Eighth District, which
embraces'the entire State of Arkansas, all of Missouri except the western tier of
counties, the southern"portions of Illinois and Indiana, the western parts of
Kentucky and Tennessee, and'the northern half of Mississippi* It has branches in
Little Rock (opened 1-6-19), Louisville (12-3-17), and Memphis (9-2-18)*
The Board of Directors of the Federal Reserve Bank of St* Louis is composed of nine members, six of whom (Classes A and B) are elected by the member banks,
and three (Class C) are appointed by the Board of Governors in Washington* One
Class C director is designated Chairman of the Board and Federal Reserve Agent, and
another as Deputy Chairman* Each of its branches has seven directors, four of whom
are appointed by the head office directors, and three by the Board of Governors•
The directors are chosen from industry, commerce, and other pursuits, as well as
banking* Officers of the head office and branches are elected by the St* Louis beard*
At close of 19^3'the'bank had a paid-in capita of $9>1$0,000, surplus and
other capital accounts $32,073,000, total deposits $809,000,000, and Federal Reserve
notes outstanding $1,215,000,000* Its 1^93 national and State bank members ranged in
size from institutions with $2f>,000 capital to the largest in the district*
REQUIREMENTS OF MEMBERSHIP
As stated in Regulation H of the Board 6f Governors, in acting upon the
application of a State institution for membership, the law provides that consideration shall be given to its financial condition, management, corporate powers, and
other factors*
Capital, To be eligible for admission to membership, w a State bank#*«must
possess capital stock and surplus which, in the judgment of the Board, are adequate
in relation to the character and condition of its assets and to its existing and prospective deposit liabilities and other corporate responsibilitiest Provided, That
no bank engaged in the business of receiving deposits other than trust funds, which
does not possess capital stock and surplus in an amount equal to that which would be
required for the establishment of a national banking association in the place in
which it is located, shall be admitted to membership unless it is, or has been,
approved for deposit insurance under the Federal Deposit Insurance Act*"
The minimum capital requirements of new national banks are as follows t
In cities having population of ••
6,000 or l e s s •
Over 6,000 but not over J>0,000 . . .
Over 50,000
Capital required
# f
. . •$ 50^000*
100,000*
. . . . * 200,000*
except that in the outlying districts of a city of over 5>0,000, where the'State laws
permit the organization of State banks with a capital of $100,000 or less, national
banks may have a capital of not less than $100,000#
Deposit Insurance* The Act provides that deposits in member banks shall be
insured by the Federal Deposit Insurance Corporation (up to $10,000 for any one
depositor) *
Stock Subscription* National and State member banks subscribe for stock in
the Federal Reserve Bank equal to 6 per cent of their capital and surplus* Only onehalf of the par value of the stock is paid, the other half remaining subject to call
by the Board of Governors of the Federal Reserve System. Upon the amount paid' in,
the reserve bank pays * cumulative dividends at the rate of 6 per cent per annum,
credited semiannually*
Reserve Requirements* Member banks maintain with the Federal Reserve Bank
reserve balances or not less than the following* Banks in central reserve cities
-3(New York and Chicago), 13 per cent of net demand and 3 per cent of time deposits; in
reserve cities, 10 per cent of demand and 3 per cent of timej and elsewhere, 7 per
cent of demand and 3 per cent of time* The Board of Governors has power to change
these percentages ,fin order to prevent injurious credit expansion or contraction,"
but the requirements may not be made lower than those stated nor more than twice as
high.
The only'reserve cities in this district are Little Rock, Louisville,
Memphis, St* Louis, and National City (111*)* If located in the outlying district
of a reserve city, a member bank may apply for the lower requirements* The reserve
against demand deposits is figured on the net amount, that is, gross demand deposits
less cash items in process of'collection and balances due on demand from banks other
than the Federal Reserve Bank*
All of the States in the Eighth District, except Illinois in which the law
is silent on the subject, provide that when a State bank or trust company becomes a
member of the System, it shall be required to maintain only the reserves prescribed
under provisions of the Federal Reserve Act.
A member bank carries its reserve account with either the head office or a
branch. The reserve account may be freely checked against and may be kept up by
shipping currency at the expense of the reserve bank, by depositing checks and drafts,
by wire transfers, or by borrowing* If the average balance for a reserve period is
insufficient, a penalty is assessed on the deficiency at a rate 2 per cent above the
reserve banMs discount rate. In certain cases the penalty may be waived*
Examinations and Reports* National banks are examined by the Comptroller
of the Currency semiannually, as a rule, and copies of the reports are furnished to
the reserve bank* State member banks are examined by the Federal Reserve Bank*s
examiners ordinarily once a year, and such examinations are usually made in conjunct
tion with State examinations* No charge is made for Federal Reserve examinations.
In practice, the FDIC discontinues its examinations of an insured State bank when it
joins the System.
State member banks furnish the Federal Reserve Bank semiannual reports of
earnings and dividends and not less than three reports of condition each year* The
national banks send the reserve bank copies of similar reports that they submit to
the Comptroller. Member banks also furnish it reports of required reserves - those
on a reserve city basis submitting such reports weekly and those on a country bank
basis, semimonthly*
Miscellaneous* There are certain other Federal'provisions which apply to
State members as well as to national banks; For instance, they are subject to Sec*
5136 (par 7) of the U* S. Revised Statutes, with respect to purchasing, selling,
underwriting and holding investment securities and stock* However, the limitations
do not apply to general obligations of States and political subdivisions thereof or
to obligations of the United States and various agencies. The Federal Reserve Act
(Sec* 22g) limits to $2,5>00 loans to a member^ own "executive officer" (one who
participates or has authority to participate in the operating management otherwise
than as a director)* Inactive officers may be exempted by resolution of the board*
Under Sec. llw, the liinit on loans to a borrower on U. S* direct and guaranteed
obligations is 2f> per cent of a member's capital and surplus, and on other bond and
stock collateral, 10 per cent. In general, the State limitations continue to apply
on loans of a State member*
The Board of Governors prescribes for each State institution approved for
membership conditions to the effect that (1) there shall be no change in the general
character of its business or in the scope of its Corporate powers exercised at the
time of admission, without the Board*s permission, and (2) the net capital and stirplus funds shall be adequate in relation to the character and condition of its assets
and to its deposit liabilities and other corporate responsibilities*
However, subject to the Federal provisions, a State bank or trust company
becoming a member of the System retains its charter and statutory'rights and may
continue to exercise the corporate powers granted it by the State* It may withdraw
from membership if it should so desire*
«4i*»
Other information that m a y b e of interest in this connection is given i n
the following regulations of the Board of Governors: Retention or establishment of
branches, Regulation H ; interlocking bank directorates, Regulation Lj loans to executive officers, Regulation Oj affiliates of members, Regulation P, and relationships
with dealers i n securities, Regulation R*
SERVICES AND BENEFITS
Among the privileges and advantages which banking institutions enjoy as
members of the System are the following*
(1) Borrow from the Federal Reserve Bank on eligible paper, Government obligations, and other sound assets* The reserve bank is authorized to rediscount eligible
paper and to make advances on members1 own promissory notes secured by eligible paper,
United States direct or guaranteed obligations, or other sound assets*
The Federal Reserve Bank may also aid financing institutions in providing
working capital for established industrial or commercial businesses, and assume not
to exceed 80 per cent of any loss* It also handles guarantees of defense production
loans*
(2) Obtain from and ship to the reserve bankt currency and coin, with costs
absorbed* The Federal Reserve kank pays the postage or expressage and insurance on
shipments of paper currency and coin to and from its member banks * At the request of
a member bank, the reserve bank also ships paper currency and coin to any member or
nonmember in the district, but does not pay the charges on shipments to nonraembers*
Wrapped pennies to halves are furnished to member banks at a nominal charge *
(3) Use the expeditious par check collection facilities of the System* The
Federal Reserve Bank performs clearing functions for its member banks* It handles,
without charge, checks on banks on the par list and checks and warrants on the United
States Treasurer* The par list comprises all member banks and also nonmember banks
the checks on which can be collected at par* Over 87 per cent of commercial banks in
the United States are on the par list*
Items are routed directly to the places of payment by the reserve bank or
branch serving the territory in which the drawees are located. In order further to
expedite collection, a member bank may make arrangements to send directly to other
reserve banks and branches items payable in their districts* In such cases the
direct sending bank will be reimbursed for the postage involved* The twelve reserve
institutions maintain an Interdistrict Settlement Fund in Washington, through which
settlements between them are consummated daily over private wires* '
The Federal Reserve Bank also handles postal money orders, crediting member
banks and debiting the U* S* Treasurer*
(h) Collect through the reserve banks3 notes, securities and other noncash'
items*' The Federal Reserve Bank receives from its members for collection, notes,
drafts, acceptances, certificates of deposit, bonds, coupons, and other items which
require special handling* Such items sent to the reserve bank for collection are
subject to charges made b y collecting agents and to certain other charges* A member
bank m a y arrange to send direct to other reserve banks noncash itons payable in their
districts*
(5) Use the Federal Reserve Bank for transfers of funds by wire or mail«
Transfers of funds between member banks in' the district are made througji their reserve accounts at the Federal Reserve Bank, while those from one district to another
are effected through the Interdistrict Settlement Fund in Washington* Transfers of
bank balances of $1,000 or more are made over the Federal Reserve leased wires, with~
out cost to member banks* Telegraphic transfers for other amounts and purposes are
made subject to a charge not exceeding the commercial wire rate* Transfers may also
be made by mail for any amount or purpose*
(6) Issue exchange drafts on the Federal Reserve Bank* having immediate availability at any reserve bank or Wancfa# Besides ordinary drafts, a member bank may
issue exchange drafts on its reserve account after making arrangements* These
exchange drafts are available for immediate credit in the 36 reserve bank and branch
cities, and may be used to supply "exchange" on such cities#
' (7) Deposit securities and commercial paper with the reserve bank for safekeeping under certain conditions* the Federal Reserve Bank receives for safekeeping,
mainly from members outside of reserve bank cities, securities, open market commercial paper, and bankers1 acceptances, owned by them* It will hold for any member
bank collateral pledged to secure deposits of its trust department and of public
officials. Coupons are clipped and maturing obligations are collected* No charge is
involved in the collection of Government securities or coupons, and out-of-pocket
expense incident to collection of miscellaneous coupons is absorbed by the reserve
bank* Other charges arising from shipments or collections are passed to the member
for which incurred*
The reserve bank handles subscriptions for securities of the United States'
Government and certain of its instrumentalities, and some member banks leave with it,
for safekeeping, their' own securities allotted on such subscriptions*
(8) Buy and sell,' through the Federal Reserve Bank, securities of the United
States and its agencies* The facilities of the reserve bank for such transactions
are available to the member banks without charge* In addition to market orders, it
will accept "open orders" to buy or sell bearer securities of the United States
Government or its agencies at specified prices* U* S* direct obligations can be
transferred by wire between Federal Reserve Banks and most branches*
(9) Receive advertising material and supplies of drafts* credit statements and
other forms, without charge* The Federal Reserve Bank furnishes its members forms
for obtaining financial statements from farmers, merchants, and manufacturers; drafts
for use in drawing on their balances with itj stamped envelopes for remittances; foxms
for ordering or shipping currency and coin, and other forms*
The'reserve bank also supplies members with rubber stamps and electrotypes
of the phrase^ "Payable at par through the Federal Reserve'Syston," for use on checks,
and of the standard design, Member Federal Reserve System," for advertising purposes*
Decalcomania membership signs are supplied for their windows and glass doors* It has
an interesting Currency Exhibit for display by members, as well as motion picture
fitos about the System for schools, clubs, banking and other groups*
(10) Obtain publications containing agricultural industrial^ commercial* and
financial statistics and other informatioru The Board of Governors mails to member
banks its annual reports and the monthly Federal Reserve Bulletin, containing information of national and international scope, and the Federal Reserve Bank furnishes
th«m each month a review of conditions in its district, without charge* Arrangements
may be made to obtain copies of the monthly review for local distribution if desired*
Various studies, such as the annual operating ratios of member banks, are supplied*
Comparative statements of banks and some other data are released weekly*
(11) Receive 6% dividends on investment in the reserve bank stock* The amount
paid in by a member bank on its subscription to the stock of the Federal Reserve Bank
bears cumulative dividends at the rate of six per cent per annum* Dividends are
credited to the accounts of the member banks semiannually*
The Board 6f Governors1 counsel expressed the opinion in 191? that, under
Section 7 of the Act, stock of the Federal Reserve Bank held by members and the'dividends thereon are exempt from local taxation* Under Treasury Decision No* & 6 0 , dividends on reserve bank stock purchased prior "'to March 28, \9h2 (effective date of the
Public Debt Act of 191+2) are exempt from'the Federal income tax, but not in the case
of stock purchased on or after that date*
(12) Use the emblem of membership and benefit from the prestige and satisfaction
it affords* State bank members are indicated in the bank directories by a diamond
shaped symbol or otherwise, and their names and locations appear in the Federal Re«»
serve Par List* Many national and State bank members have benefited by displaying
the membership design* Besides helping to attract new customers, membership is a
source of satisfaction to the old ones and also to stockholders, directors, and
officers*
OTHER INFORMATION - VISITORS
The member banks are furnished copies of the Federal Reserve Act, the Regulati&ns of the Board of Governors, and the Operating Letters of the Federal Reserve
Bank, as well as the publications previously mentioned*
mQm*
Members are also given the Board of Governors * booklet entitled "The
Federal Reserve System «• Purposes and Function," which is a comprehensive "and authoritative explanation of the System, including the central banking functions*
Other material issued byttieBoard of Governors, such as banking' studies,
monetary statistics, chart books, and reprints, is also'available* A list, showing
charges if any, appears in the Federal Reserve Bulletin*
The Federal Reserve Bank of St* Louis has prepared an explanation, with
visual aids, of the monetary functions, for presentation to banking, college, and
certain other groups*
Representatives 6f the Federal Reserve offices call on banks in their ter~
ritories about once a year, to answer questions regarding operations of the System
and to discuss general conditionsf
Bankers, students, and other visitorfkare welcome at the head office and
branchest Guides are available to show than the various departments* Explanatory
material will be gladly furnished*
ADDENDA
Following are the Regulations issued by the Board of Governors!
- Discounts for and advances to member banks'by Federal Reserve Banks*
- Open Market purchases of bills of exchange, trade and bankers * acceptances*
- Acceptance by member banks of drafts and bills of exchange*
•• Reserves of member banks*
- Pur chase of warrants*
- Trust powers of national banks*
•* Collection of noncash items*
- Membership of State banking institutions in the Federal Reserve System*
- Increase or decrease of capital stock of Federal Reserve Banks*
- Check clearing and collection*
- Banking corporations authorized to do foreign banking business under Sec* 2£(a)*
- Interlocking bank directorates under the Clayton Act*
- Foreign branches of national banks and of corporations organized under See* 25(a)*
- Relations with foreign banks and bankers*
- Loans to executive officers of member banks*
- Holding company affiliates - voting permits*
- Payment of interest on deposits*
- Relationships with dealers in securities under Sec* 32 of Banking Act of 1933#
- Loans and commitments to provide working capital for established businesses*
m Extension and maintenance of credit by brokers, dealers, and members of national
securities exchanges*
U •• Loans by banks for purchasing or carrying stocks registered on a national seeu~
rities exchange*
V ~ Loan guarantees for defense production*
A
B
C
D
E
F
G
H
I
J
K
L
M
N
0
P
Q
R
S
T
1*
2*
3*
lu
£*
6*
?*
The Operating Letters issued by the Federal Reserve Bank are as follows?
List of directors and officers*
8* Collection of noncash items*
Territory of each office*
9* Collection of cash itms*
Banking hours*
10* Money*
Authorized signatures*
H i Safekeeping*
Capital stock*
12* Transfers of funds*
Member bank reserves* "
13* Federal Reserve exchange drafts*
Advances and discounts*
li** Government coupons*
15* Purchase, sale and telegraphic transfer of Government securities*
(Copies to head office and branches*)
.
> ^ ^ ^ 'P>U*-«J
Proa *%isedes ot My Life*
by Roll* Welle, first Governor of the Federal *teservc Bank of
St* Louis, who had a limited edition polished in W 3 *
THE F&BKRAL
Rmmm
BAHI
or
ST. LOUIS
the outbreak of war in Europe on August h, 19lh$ participated
in later by this country, proved that the enactment of the Federal Reserve
Act, December 23. 1913• was timely* Undoubtedly it prevented great financial distress among the people of the United States, and was an important
factor in the final victory*
the Federal Reserve Act provided for an organisation committee
consisting of the Secretary of the Treasury, the Secretary of Agriculture
and the Comptroller of the Currency* This committee made an extensive
tour of investigation throughout the country, taking testimony regarding
available locations for the Federal Reserve banks*
X learned of the contemplated visit to St* Louis of Secretary of
the Treasury, William 6. McAdoo, and Secretary of Agriculture, Bavid F*
Houston, for the purpose of holding hearings as to the desirability of
locating one of the banks in St* Louis* Because of my personal acquaintance
with both of these gentlemen, and being desirous that they should look with
favor on St* Louis as a location for one of the Federal Reserve Banks, I
invited them to be the guests of honor at a dinner at my home, to meet some
of our prominent bankers and cltisens* the invitation was accepted, and
the guests were* Messrs* Robert S, Brookings, Barnes Campbell, Murray
Carleton, H. I« #avis, John D* Davis, 0* &* Francis, £* f« Goltra, Walker
Hill, Breckinridge Jones, Robert McKittrick Jones, William H. Lee, James G.
McConkey, 1* W« HeLeed, Charles Magel, torn Randolph, A* L* Shapleigh,
James E* Smith, J* Clark Streett, J* C. fan &iper, Festus J* Wads, Julius §«
Walsh, F # 0* Watts, Erastue Wells, Lloyd P« ^ells, fhomas H. lost, Edwards
Whitaker and A, 0. Wilson.
This dinner occurred on January 21, 19tk*
Secretary McAdoo and
Secretary Houston addressed the fathering and responses wore made, setting
out the advantage of St. Louis as a financial center and as a desirable
location for a Federal Reserve Bank*
After public hearings, the organization committee of the Federal
Reserve Board selected the city of St* Louis as a location for one of the
twelve rmt«rw® banks, the district to be known as "District ffumber Eight.*
At this time I had no expectancy or desire to have any official
connection with the Reserve System* I, therefore, was surprised to receive,
on September 15. 191a, the following telegram from Oavid F* Houston,
Secretary of Agriculture!
http://fraser.stlouisfed.org/
Federal Reserve Bank
\ of St. Louis
*Am authorised to inouire if you will accept the Chairmanship of the Board of directors of the Federal
Reserve Bank of St* Louis, acting as a Federal Reserve
agent* Details of compensation sot yet settled*
Opportunity to render a tremendous public service*
Urgent that these banks start oat ri$ht* Earnestly
hope that you can aeoopt and serve at least until
things are in good working order, if not permanently*
Others of your type are being drafted for service*
Will not interfere with your duties as National
Treasurer* Bo not decline* If in doubt, can*t you
come here and discuss itf lou might canvass zaatter
with a few men in confidence*w
'Die following day I made acknowledgment of the telegram, thanking
Mr* Houston for the tender, but declining offer*
On September 19, 191U, X received the following telegram from
illiara 0* McA4oo, Secretary of the treasury I
"Greatly regret to learn that you will not
consider chairmanship we have tendered you and
hope you may reconsider* If you won*t, then
kindly consult with Brookings, Watts and any
others you think advisable and wire me promptly
your suggestions for this place* Kindest regards**
Thinking over the matter, it occurred to me that Mr* William
McChesney Martin would be a desirable candidate for the position* X
knew Mr* Martin, associate trust officer of the Mississippi Valley
Trust Company, who had for some time previous been acting as secretary
of the Fiduciary Committee of the Trust Company, of which I was a
His capable handling of the affairs of the committee had favorable
On Sunday morning, September 20, 1911*, I telephoned Mr* Martin,
requesting him to come to my home, which he did, and during the interview
1 asked him if he would like to be the Chairman of the Beard and Federal
Reserve agent of the Federal Reserve Bank of St* louie. He expressed his
pleasure for being so considered* 1 asked him if he would be able to go
to Washington with me the following day, and he said he could do so* I
then sent the following telegram to Mr* McAdoot
"In compliance with your telegram last
evening I will be in Washington Tuesday afternoon
next, accompanied by a gentleman whom we feel to
be admirably suited for the position under
sideration* If our visit not well timed, please
advise promptly, as we leave on noon train tomorrow*w
Mr* Martin and I arrived in Washington at noon Tuesday, and
immediately called on the Secretary, Mr* MoAdoo, and had a conference
with him in connection with the position of chairman, which ultimately
resulted in Mr* Martin's appointment*
Having in this manner disposed of the question of ay active
participation in the management of tha Federal Reserve Bank, X was,
again, surprised to receive the following telegram from % • ISeAdoo,
dated October 27, 1911**
**ln view of great importance opening
Federal Reserve Bank, H i Louis, November
sixteenth, and difficulties securing satisfactory Governor up to date, will you not
consider taking governorship temporarily
if offered to you? You will render great
public service by so doing* X do not think
it will burden you heavily, and it will not
be necessary for you to give up any of your
business interests or investments* Sincerely
hope you will do this# Have telegraphed to
Watts and Martin^
The Board of Directors of the Federal Reserve Bank were
holding a meeting in $t* Louis at the time, and at an adjourned
meeting the following day, October 28th, a committee of the Board
called on me, stating that they were desirous of having me accept
the position of Governor of the bank, and, after expressing my
willingness to accept, I was duly elected Governor.
Associated with me at the opening of the St* Louis Federal
Reserve Bank werei
William McChesney Martin, Chairman of the Board and
Federal Reserve Agent*
Walter W. Smith, Deputy Chairman and Deputy Federal
Reserve Agent •
Members of the Board of Directorsi
Class A * Walker Hill, St* Louis, Eo.
F. 0* Watts, St. Louis, Mo*
Oscar Fenley, Louisville, Ky*
Class B - Hurray Garleton, 3t* Louis, Mo*
W* B* Plunkett, Little Rock, Ark*
Leroy Percy, Greenville, Miss*
Class C • William McChesney Martin, St. Louis* Mo*
Walter W* Smith, St* Louis, Me.
John 9§ Boehne, Evansvllle, Ind*
The Board appointed Mr* James G. McConkey as Secretary and
General Counsel*
On December 8, 1911*9 the Board elected me a member of the
Advisory Gouncll from District Ho. 8, the other members beingi
'»***
Daniel G.tfing,President, First National Bank, Boston, Mass., representing district 80 • 1| J. t* Morgan, J* P. Morgan & Co., Mew Tork, representing
District Mo. 2| L. L# Hue, President, Philadelphia National Bank, Philadelphia,
representing District Ho. 3$ ^m S. Hove, ^resident, First National Bank,
Cinoinnati, Ohio, director, Federal Reserve Bank of Cleveland, representing
District 8o. hi George J* Seay, Governor, Federal Reserve Bank of Hlehmond,
Va«, representing District Mo. 5; Charles A. Lyerly, ^resident, First iatianal
Bask, Chattanooga, Tenn., representing District No. 6$ James B. Forgan,
President, First national Bank, Chicago, 111., representing District »©• 7I
C. ?. Jaffray, 1st Vice-President, First National Bank, Minneapolis, Minn.,
representing District Mo. 9f fU F. Swinney, ^resident, First national Bank,
Kansas City, I©., representing District £o« 10j J. Howard Ardrey, Cashier,
City iatlonal Bank, Dallas, Texas, representing District Mo. 11} Archibald
Kains, Governor, Federal Reserve Bank, San Francisco, Cal., representing
District Ho. 12.
During ay term of office as Governor, and in later years as
Chairman of the Board, the following gentlemen served as members of the
Board of Directors, in addition to those who were members of the Board of
Directors it the time of the inauguration of the bankt Mr. David C. Biggs,
St. Louisi ^ N jf • c » Supper, St. Louis? ir. Sam A. Ziegler, Albion, 111.;
Mr. C. P. J.tfooney,Memphis, tenn.f $r. J. 0. Utterbaek, i adueah, &y.$
Mr* John G. Lonsdale, St. Louisj Mr. John C. Martin, Salem, Ill.j Mr* Paul
Dillard, Memphis, Tenn.j Mr. Max B. Hafcm, Bowling Green, Ky.| Mr. J, W.
Harris, St. Louis*
A narration in detail of the operation of the bank would be too
tedious a story $ moreover, it is of public record. However, I will mention
the emergency organisation which was created at the outbreak of the war for
the sale of Liberty bonds.
This organisation was made up of hundreds of patriotic and earnest
workers throughout the district—too many for me to name. As Governor of
the bank X was general chairman of the organisation, and X called to my
assistance Mr. William E. Ootspton, to be actively in charge. The people
of the Federal Reserve District Ho. 8 cheerfully met their obligations
to the country, as is shown by the following statement i
First Liberty Leant
Quota. « . • • • • * « * • . • « * « » « « « . * * . . $
Subscriptions * « . . • « * * . « » • . . « . » » . » .
Allotment • « • • * « « « * * * • » • • * • « * » • • • •
Liberty Loans
Quota * • • • « • • «
Subscriptions
Allotment « • • « . *
Third Liberty Loant
Quota « « • • • • • • *
. . . . . . . . * . . • • • • • •$120,000,000.00
.. . . «
181*,280,750*00
* • « • * • • « • • * • * » • » • 150,169,250.00
. . * * . « * • * • « . » » •
Subscriptions . . * • • • * • « . . » * • .
Allotment .
• • • • • • « • • * •
80, OCX), 000.00
So ,liil, 350.00
6$,lj69,600.Q0
—ij—
.$130,000,000.00
199,835,900.00
199,835,900.00
Fourth Liberty Loan*
Quota * • * » • • * * • * • • • • • • * * • « • • * • *
•f>2o0jQGQ,000*00
Subscriptions « • « • • * • • • • » * • * « • • • • • « • 295,329,750*00
allotment * • • « • • • • • • • • • • • • • • « • • * • • 2Q5-|t32!p^7^)*Qp
Total Quota * • • . . . . .
Total Allotment
•
$590,000,000.00
710*80k,500.00
, HI. mi. n
&XC68B • • « • • • • • • •
• • + • • * • * « • • • • • * •
Sales of Thrift Stamps and War Savings ^Stamps
made by the Federal fteservs Bank of #t* Louis
during 1918 » • * • « • « • • • « • « • • « • • • • • • • #
Sales made throu#i the IFnltsd States Post Office
at St* Louis • • • » • • « • » • • • • • * • • • • • • •
Total sales 1918 Issue . .
ii i
»imummymm•——•<
^ I c O jOU«jj500#U0
26,7o8,6l9*17
8*Q97«113*k3
• . $ 3U,$65,732.60
Hairing served as Governor for sore than four years, and being
desirous of no longer continuing, 1 asked to be relieved of the responsibilities, and tendered ray resignation in May, 1918, but X was not relieved of
my duties until the following January, 1919, when ay resignation was
On February £, 1919, M r* David 0, Biggs, a Class B director, was
elected Governor of the bank to fill the vacancy caused by my resignation*
0a April $, 1919, I was elected a Class B director of the Board
of 3irectors, and served continuously as such until January 23, 1929*
X retained my official connection with the Federal Reserve Sank
of St* Louis, as a director and a mesfcer of the Executive Committee,
during the receivership of the United Railimys of St* Louis, which lasted
for a period of eight years and eight months*
On levember 30, 1928, Mr* David 0* Biggs, Governor of the bank,
resigned as Governor, and a*. William McOhesney Martin resigned as Chair*
man of the Board and Federal Reserve Agent, and was elected Governor to
filluie position made vacant by the resignation of Governor Bi^gs.
Ths mesfccrs of the Board of Directors of the bank urged upon
me the acceptance of the appointment as Chairman of the Board and Federal
Agent, and, recognising my reluctance to accept the position,
of the members took up the setter with the Federal Reserve Board
in Washington, urging my appointment* This resulted In a member of the
Federal Reserve Board coming to St. Louis, and, on behalf of the members
of his Board, tendering use the position*
X
West Indies
was already
start lag in
informed this gentleman that
cruise, to be absent about a
booked for a world cruise of
January, 1930, and suggested
-5-
I expected shortly to make a
month, and, in addition, X
about three months' duration,
to him that under the
circumstances it would be well for me to decline the offer. He informed
me that the matter could be arranged, and, on January 23* 1929, I was
appointed a Class 0 director and Chairman of the Board and Federal
Reserve Agent, and assumed the duties of the position.
Mr. Clarence H* Stewart was the Assistant Federal Reserve
Agent, and was most helpful to me in every way*
As the time drew near for me to start on the world cruise,
which would necessitate my being away for three months, or longer,
the realisation of what it would mean for me to carry with me the
responsibility of the position, prompted me before leaving to send
my resignation to the Board in Washington*
Ho action was taken until mf return, as stated in a letter
from Mr. R. A* Toung, Governor of the Federal Reserve Beard in Washington,
under date of May 9, 1930.
Wy years of association with the Federal Reserve Bank of St* Louis
were nsrf pleasant, and I greatly appreciate the cordial relationship I
experienced with all of the officers, members of the Board of Directors,
and the employees of the bank.
"•O"*
This document contains internal or confidential information and has
been removed.
Author(s): Federal Reserve Bank of St. Louis
Title: Four Four News: Organization of Federal Reserve Bank of St. Louis
Date: November 1939
Page Numbers: 3-6
E x c e r p t from m i n u t e s of a meeting of the B o a r d of D i r e c t o r s of the
F e d e r a l R e s e r v e Bank of St. Louis held in L o u i s v i l l e , Kentucky, on
September 18, 1935, as a joint conference with the Louisville B o a r d :
"MAMMOTH CAVE
In the afternoon, upon invitation of M r . Nahm, C h a i r m a n of
the Kentucky National P a r k C o m m i s s i o n and of the M a m m o t h Cave
National P a r k A s s o c i a t i o n , the v i s i t o r s w e r e d r i v e n to M a m m o t h
Cave by Louisville b a n k e r s . The following day, S e p t e m b e r 19, 1935,
during a t r i p through the Cave, the p a r t y , consisting of D i r e c t o r s
H a r r i s , Hitt, L o n s d a l e , Nahm, and Wood, Governor M a r t i n , Deputy
Governor McConkey, S e c r e t a r y Stewart, Managing D i r e c t o r Moore,
H. M. F e r r i s , A s s t . Vice P r e s . of Citizens Union National Bank,
Louisville, W. T. Chapin, Executive Vice P r e s . of Lincoln Bank &
T r u s t Co. , L o u i s v i l l e , M. L. C h a r l e t , Manager of M a m m o t h Cave,
and Young Hunt, Guide, p a u s e d a t 11:30 a . m . in a l a r g e c a v e r n n e a r
the River Styx and C h a i r m a n Wood called the gathering to o r d e r .
He announced that it had b e e n suggested by M r . Nahm that this
unnamed hall be h e r e a f t e r known a s the F e d e r a l R e s e r v e Council
Chamber and that it be so m a r k e d with a tablet. Upon motion of
D i r e c t o r L o n s d a l e , seconded by D i r e c t o r Hitt, the suggestion was
unanimously adopted. Whereupon, G o v e r n o r M a r t i n dedicated the
r o o m a s the F e d e r a l R e s e r v e Council C h a m b e r .
The a p p r e c i a t i o n and thanks of the v i s i t o r s w e r e e x p r e s s e d to
D i r e c t o r Nahm, the M a m m o t h Cave o r g a n i z a t i o n s , the Louisville
b a n k e r s , and o t h e r s who contributed to this delightful and i n t e r e s t i n g
occasion.M
BRONZE TABLET INSTALLED IN '
,
„CKY.
:—
FEDERAL RESERVE COUMCJ'i
Cl-JAMBO
ACifrjfjr
JCJUN s. JVOOD
vtuJmvsst
PAUL D1LLA1*
ufipr/rr ctiMHidAti, itmt
J. VA JlAJtftJS
Mssouai
IUIWOJ8
x&LomnAM
MISSOURI
B&AJt&U &
stfruc&Y
ARJUM5A5
LR^tMlL&r
IWDIAJMA
iiLhSrutRIifyAW
.SJSSJPPJ
MfiMMR P103MJ. ADVISORY COUNCIL
L(Lhic
WftJt'i
OS-WIT CO'/gRMOK
CQHKSY
GOVERNOR I GBHKML COUifiBL
C^J>^r3V/AR-J>
K.S TAI<r
July 6, 1951**
Following the issuance of explanatory folders and booklets by the individual reserve banks and under auspices of the Federal Reserve Agents' Conference,
the Board of Governors published "The Federal Reserve System - Its Purposes and
Functions* in 1939* It recently Issued the 195U edition, containing 200 pages,
which is of especial value to senior students* bankers, and business asm*
Pros tins to tine the need office and branches have prepared explanatory
folders about the System to hand to grade and high school students and other
visitors, as well as to new employees* In 1952, the head office printed an
attractive l&page illustrated booklet entitled "The FederalftaiisrvaBank Welcones Too," which explains the organisation of the System and the operation of
the bank by departments.
The attached two-page description of the purposes, organization, and
functions of the Federal Reserve System is a recent revision of a two-page outline which I arranged after coming to Idttle Rock in 19k?* It was made inclusive
but brief to encourage reading* However, it contains a footnote that more detailed information or an explanatory booklet will be furnished on request*
•'• '% .'
' "'t,
:v. '...•r*
Rev* 6-5U*
THE FEDERAL RES1&VE SISTlSM
Purposes* Following the money panic of 1907, Congress appointed the
National Monetary Commission to inquire into and recommend changes in the banking and
currency laws. The Commission made an exhaustive study, not only of our laws and
experiences, but also of the central banking systems of other countries* It submitted
its report in 1912, which paved the way for needed legislation*
In 1913 the Federal Reserve Act was enacted, being signed by the President
on December 23* As stated in the preamble, its purposes were "to provide for the establishment of Federal Reserve Baiiks, to furnish an elastic currency, to afford means
of rediscounting commercial paper, to establish a more effective supervision'of banking in the United States, and for other purposes*" By amendments since then, the
functions and objectives have been broadened*
Organization* Uftder provisions of the Act, the Federal Reserve System was
established! on November 16, 19lU* It comprises the member banks, over 6,700$ twelve
regional Federal Reserve Banks with 2ij. branchesj the Board of Governors of the Federal
Soserve System; the Federal Open Market Smmittco* arid the Federal Advisory Council*
Located in Washington, the Board of Governors consists of seven members
appointed for lij-year terms by the President and confirmed by the Senate* On the
Open Market Committee are the seven members of the Board of Governors and five
reserve bank presidents designated annually by the reserve institutions. The Advisory
Council is composed of twelve members, one selected annually by each reserve bank*
'The Federal Reserve Banks vto located in Boston, New York, Philadelphia,
Cleveland, Richmond, Atlanta, Chicago, St* Louis, Minneapolis, Kansas City, Dallas,
and San Francisco, and each serves a designated territory* Their activities are coordinated by the Board of Governors, through regulations, examinations, conferences,
and other means*
Member banks include all national banks and such eligible State banks and
trust companies as apply for membership and are admitted* They own the capital stock
of the reserve banks, and maintain their legal reserves in them* The members hold
over 8J$ of the demand deposits and about'three-fourths of the total deposits in all
banking institutions in the United States*
Functions* Federal Reserve functions include services and central banking
operations for the general welfare*
The performance of functions to help maintain sound monetary and credit
conditions has become an important activity of the Federal Reserve authorities* This
requires policy decisions from time to time regarding open market transactions in
U*. S* securities, discount"rates, reserve requirements, maximum security loan values,
interest rates on deposits, and other factors*
Through the issuance of Federal Reserve notes, the reserve banks furnish an
elastic currency that enables the circulating media to expand or contract in accordance with seasonal and other demands* Besides being obligations of the United States
and a first lien on the assets of the issuing bank, the notes are specifically secured
by gold certificates and other eligible collateral*
Various services are provided by the Federal Reserve Banks for the'maiiber
banks, such as making advances or rediscounting, supplying currency and coin, collecting checks and noncash items, and transferring funds by wire, as hereinafter described* Making ihe entries to the reserve accounts of the members expedites and
facilitates such transactions*
In addition, the Federal Reserve Banks act as depositaries, fiscal agents,
and custodians for the U* S* Government and some of its agencies; The reserve banks
carry the principal' checking accounts of the Treasury Department, and handle much of
the work in issuing, exchanging, and redeeming Government securities,
Value of System# During the four decades of its existence, the Federal Reserve System has" become an integral part of the American economy* In times of peace
and war* the System has demonstrated its usefulness and beneficial influence*
FEDERAL RESERVE BANK OF ST. LOUIS
•'District No* 8* The Federal Reserve Bank of St* Louis serves the Eighth
District, which embraces the State of Arkansas, all of Mis souri'except the western
tier of counties, the southern portions of Illinois and Indiana, the western parts of
Kentucky and Tennessee, and'the northern half of Mississippi It has branches in
Little Rock (opened 1-6-19), Louisville (12-3-17), and Memphis (9~2-l8)*
The Board of Directors of the Federal Reserve Bank of St* Louis is composed
of nine members, six of whom (Classes A and B) are elected by the member banks, and
three (Class C) are appointed by the Board of Governors in Washington.' One Class C
director is designated Chairman of the Board and Federal Reserve Agent* Each of its
branches has seven directors, four appointed by the head office directors, and three
by the Board of Governors9 The directors are chosen from industry, commerce, and
other pursuits, as well as banking* Officers are elected by the St* Louis board*
Membership Requirements* The Act requires national banks to be members, and
provides that State banking institutions may become members if they meeVthe capital
and other requirements• A H members must have Federal deposit insurance*
Each member purchases stock in the Federal Reserve Bank equal to 3% of its
own capital and surplus, and maintains in the reserve bank the legal reserve against
its demand and time deposits* This reserve account may be used actively*
Subject to certain Federal provisions, a member State bank retains its
charter and statutory rights* It joins voluntarily and is privileged to withdraw*
The reserve bank receives periodic condition, earnings, and reserve reports
from its members, and copies of examinations made by national bank examiners» It
examines State members usually once a year in conjunction with State examinations*
Services for Members* Among the privileges and advantages which banking
institutions enjoy as manbers of the System are the following *
1* Borrow from the Fedferal Reserve Bank on eligible paper, United States direct
or guaranteed obligations, and other sound assfets*
2* Obtain from and ship to*the reserve bank, currency and coin, with postage or
expressage and insurance paid*
3. Use the expeditious par check collection facilities of the System* Over 87$ of
the commercial banks in the United States are on the par list*
U* 'Collect through the Federal Reserve Bank noncash items, such as notes, drafts,
bonds, and coupons*
5* Use the reserve bank for transfers of funds, by wire or mail* The Interdistrict
Settlement Fund in Washington and leased wires expedite such transfers*
6. Issue exchange drafts on the Federal Reserve Bank, available for immediate
credit in the 36 reserve bank and branch cities*
7. Deposit securities and commercial paper (including bankers* acceptances) with
the reserve bank for safekeeping, under certain conditions*
8« Buy and sell, through the Federal Reserve Bank, securities of the United States
and its agencies* U. S* direct obligations may be transferred by wire in some cases*
9* Receive dividends on the stock of the reserve bank at the rate of 6% a year,
credited semiannually*
10* Use the emblem of membership and benefit from the prestige and satisfaction it
affords*
The Federal Reserve Bank supplies its members decalcomania membership signs
and electrotypes for advertising purposes,'as well as drafts for drawing on it,
credit statement forms, and other material*
Members are furnished current financial, commercial, industrial, and agricultural information through the Monthly Review and the Federal Reserve Bulletin, as
well as results of studies* such as the annual bank operating ratios* Comparative
statements of banks and some other data are released weekly*
The Federal Reserve Bank has an interesting currency exhibit for display by
member banks for limited periods* "A"motion picture film or a talk about the System
may be provided for schools, clubs, banking and other groups*
NOTE* More detailed information or an explanatory booklet will be furnished on
request*
Bankers, students, and other visitors are welcome*
/p
r „
L i s t o f th o s e p r e s e n t a t b a n q u e t g i v e n b y M r . W e l l s at h i s h o m e , w h e n F e d e r a l
R e s e r v e B a n k m o v e d into its p r e s e n t p e r m a n e n t q u a r t e r s , June 3, 1925:
M r.
M r.
M r.
M r.
M r.
M r.
M r.
M r.
M r.
M r.
M r.
M r.
M r.
M r.
M r.
M r.
M r.
M r.
M r.
John W . B o e h n e
John G. L o n s d a l e
John C . M a r t in
W m . M c C . M a r t in
C . P . J. M o o n e y
LeRoy P ercy
W. B . P lu n k e tt
J. G . U t t e r b a c k
B r e ck in r id g e Jones
F e s t u s J. Wade
F . O . W atts
D. C . B igg s
Jam es G. M cConkey
O sca r F en ley
M u rra y C a rleton
C l a r e n c e M . S te w a rt
O lin M . A t t e b e r y
John L a w r e n c e M a u r a n
R olla W ells
E v a n s v i l l e , Ind.
St. L o u i s
S a l e m , 111.
St. L o u i s
M e m p h i s , T en n .
G reen v ille, M iss.
L ittle R o c k , A r k .
P a d u c a h , Ky.
St. L o u i s
St. L o u i s
St. L o u i s
St. L o u i s
St. L o u i s
L o u i s v i l l e , K y.
St. L o u i s
St. L o u i s
St. L o u i s
St. L o u i s
St. L o u i s
D ire cto r
D ire cto r
D irector
C h a i r m a n o f the B o a r d
D irector
D irector
D irector
D ire cto r
A d v is o r y C ou n cil
A d v is o r y C ou n cil
D i r e c t o r and A d v i s o r y C o u n c i l
D ir e c t o r and G o v e rn o r
S ecretary-C ou n sel
D irector
D irector
A s s t. F ed era l R e se rv e Agent
D e p u ty G o v e r n o r
A rch itect
G o v e r n o r and D i r e c t o r .
D in n e r m u s i c w a s p r o v i d e d b y C a r l S t e i n 's O r c h e s t r a :
H e r b e r t 's " P a n - A m e r i c a "
G e m s o f S tephen F o s t e r
G r e ig 's " P e e r G ynt"
"A p p le B l o s s o m s "
S ele ction s fr o m " F i r e F ly "
L is z t 's "S econ d R h ap sod y"
"A ll A lo n e "
"R ose M a rie"
F o r recita tion :
" H ig h la n d L a d d i e "
"M avou rn een "
"M ed ita tion "
"Sw an"
D r e s s e d as a m in s tre l o r trou bad or,
I r e a d the b a l l a d at the d in n e r at
the h o m e o f R o l l a W e l l s .
C . M . S t e w a r t.
E a c h g u e s t w a s p r e s e n t e d a s i l v e r r e p l i c a o f the new b an k b u ild in g and a c o p y o f
" T h e B a l l a d o f the B ank , " w h i c h w a s w r i t t e n b y M r . M a r t i n , w ith the p r o l o g u e
b y J. V io n P a p in .
ADDRESS OF M R. R O L LA W ELLS
While the little so u v e n ir y o u fin d at y o u r r e s p e c t i v e p l a c e s w o u ld in dica te
that this o c c a s i o n is o f an o f f i c i a l c h a r a c t e r , n e v e r t h e l e s s su ch is not a lto g e th e r
the c a s e .
In a fe w w o r d s , w h ich I t r u s t w i ll be c o n v i n c i n g , I want y o u to know I f e e l that
e a c h and e v e r y one o f y o u is m y p e r s o n a l f r ie n d , and in this I a m g r a t i f i e d with
having you a s m y g u e s t s w ithin this the s a n c t u a r y o f m y h o m e .
D uring m y l i f e , in a d d itio n to m y p e r s o n a l o b l ig a t i o n s and i n t e r e s t s , at i n t e r
v a l s , about t h i r t y - f i v e y e a r s have b e e n d e v o te d in an e x e c u t iv e c a p a c i t y to pu b lic
and q u a s i - p u b l i c e n t e r p r i s e s .
If s u c c e s s has r e s u l t e d f r o m th e ir m a n a g e m e n t it w a s th ro u g h m y g o o d
fo rtu n e a lw a y s to b e a s s o c i a t e d w ith l o y a l , c a p a b l e , and c o n s c i e n t i o u s m e n who
c o n s titu te d the w o r k in g o r g a n i z a t i o n .
M y p u r p o s e in r e f e r r i n g to this is le a d in g up to m y c o n n e c t i o n w ith the F e d e r a l
R e s e r v e Bank o f St. L o u i s , s in c e its i n c o r p o r a t i o n - f i r s t , a s its G o v e r n o r ; and,
s e c o n d ly , a s a d i r e c t o r .
It i s , t h e r e f o r e , an ad d itio n al p l e a s u r e to have y ou a s m y g u e s t s this e v en in g ,
f o r a ll o f y ou , a l s o , have b e e n c o n n e c t e d in an o f f i c i a l c a p a c i t y w ith the institution.
I f e e l that it w i ll b e b e c o m i n g - in w h ic h y o u w ill c o n c u r - w hen I e x p r e s s the
b e l i e f that the s u c c e s s and h igh p o s i t i o n w h ic h the F e d e r a l R e s e r v e Bank o f St.
L o u is has attained, ca n be a ttrib u te d to the fa it h fu ln e s s , a b i l i t y and c a p a c i t y that
has b e e n d e v o te d to it b y its C h a ir m a n , M r . W m . M c C h e s n e y M a r t in , and,
o f f i c i a l l y and p e r s o n a l l y , I e x p r e s s m y a p p r e c i a t i o n o f h is m a n y a c t s o f c o n s i d e r
ation and k in d n e s s . He has the s a t is f a c t io n o f know ing that he has handled his jo b
w e l l, and i f kind w o r d s ca n g iv e a h e a r t t h ro b to that, I want h im to h ea r th e m .
We ca n o f f e r the F e d e r a l R e s e r v e Bank no b e t t e r fo rtu n e than a lo n g c o n t in u
a n ce o f the a c t iv e gu id a n ce o f M r . M a rtin .
A s his h o s t th is e v e n in g , you ca n w e l l im a g in e w ith what g r e a t p l e a s u r e I now
p r e s e n t to h im this s o u v e n ir , upon w h ic h is i n s c r i b e d :
" R o l l a W e l l s to W il l i a m M c C h e s n e y M a r t in , in r e m e m b r a n c e
o f o u r a s s o c i a t i o n w ith the F e d e r a l R e s e r v e Bank o f St. L o u i s ,
s in c e its i n c o r p o r a t i o n . "
June 3, 1925.
Federal Reserve Bank o f
St. Louis.
1
•
!
(
iu tig ly yem 'qftrel
/ dye Cdfile W dlf
qtye (jTreqiF ea ft
g&et(Jqne T ijird’
AnyoDominiI925
byyel/ori ifare o f
Cmmettiorciiitieyi.
Opening cf j ' e'
Xew 'B u ild in g .
!
Organization Certificate
executed May 18, 1914,
by bank representatives
from five of the
seven states in the
Eighth District.
Certificate of authority to
commence business issued
by Comptroller of the
Currency November 14,
1914.
prologue
N ancient days when knights rode through the
land
In quest of high adventure,
A nd d ou gh ty bands beneath the banners o f their
feudal lords
Sought conquests mid their foes’ dom ains,
T h e fam e o f deeds o f daring-do u nto the world
was given
B y word o f minstrel and o f troubador.
Beneath the walls o f m any a high-flung keep
Stood the bent form o f the wandering bard;
H oary beard flying in blustering w ind;
H arp slung on shoulder, staff in hand.
From ou t the m ullioned w indow s, and through
portcullis bars,
Strains o f revelry pulsed upon the air;
W ithin the Baron and his com pan y good
W ere feasting in the hall.
A nd thus the Baron spoke:
“ Sir K nights, a minstrel is at the Castle’ s outer
gates,
“ A n d he desires to enter in this B anquet H all,
“ A nd chant ou r virtues, also deeds o f valor.
“ Is it you r wish to listen?
“ F orsooth ’ twill be a m erry lay.
“ So let the postern open and a page send forth
“ T o fetch the singer with his wealth o f lore.”
Such was the custom in the days o f yore.
It hum ors us this custom to revive,
A nd in rhym ing verse we’ ll strive
T h rou gh m instrel’ s lips to tell
O f how we built this bank so well.
®f)e B a lla b of tlje JBanft
^|t*H E Y m et to travel an unblazed trail,
N o bank o f its kind had ever been;
A new thing born must a jou rn ey m ake;
D irectors they were and they had to begin.
First informal meeting
October 13, 1914.
First regular meeting
October 28, Jp14.
T here was Boehne, once m ayor o f E vansville,
Once congressman too, a wise man he,
W h o gave o f his w isdom that no ill
Should com e to the bank that was to be.
John W. Boehne,
September 30, 1914.
Deputy Chairman,
July 25, 1917.
S till Serving.
A nd Carleton trained in the ways o f trade,
Protected the m erchant, who m oney needs
T o turn his goods, to the bank he made
T h e gift o f counsel that succeeds.
Murray Carleton,
August 10, 1914, to
December 31, 1915.
As a banker K en tu ck y sent Fenley here,
For m any years he’d shown the way
T h a t a bank m ust run and have no fear
O f the stress and strain o f any day.
Oscar Fenley,
August 10, 1914, to
December 31, 1916.
W ith a story to tell cam e W alker H ill,—
Experienced he was with deposit and loan,
H e helped the bank its place fulfil;
T o other banks the w ay he’ d shown.
Walker H ill,
August 10, 1914, to
December 31, 1920.
William McC. Martin,
Chairman of the Board,
September 30, TQI4.
Still Serving
A n d M artin was willing and glad to learn
From wiser minds o f banking ways,
H opin g perhaps he m ight return
T h eir confidence in future days.
LeRoy Percy
August 10, 1914Still Serving.
A planter, a lawyer, Senator to o —
P ercy cam e from the cotton land,
His care for the South whose needs he knew
W as ever at the bank’ s com m and.
IV. B. Plunkett,
August 10, 1914.
Still Serving.
H e to o k his place in a quiet way,
D ependable with ju d gm en t sound,
D ecision prom pt, n ot much to say,
T h e bank was safe with Plunkett ’ round.
Walter W. Smith,
September 30, 1014, to
January 1 5, I Q I 5 .
T h e usage good and the usage bad,
E xam iner Smith w ho knew both kind;
O f his knowledge gave and much he had,
W h ich helped the bank its path to find.
F. O. Watts,
August 10, 1914, to
December 31, 191S.
A nd F. O. W atts in his gracious w ay,
W ith wisdom gleaned from m any years,
E xplained that banking was only p lay;
W hen he explains it so appears.
f
'
So nine men sat around the board,
Showing their ju d gm en t naught excells;
T h e y acted all with quick accord,
As G overn or they elected W ells.
Rolla Wells,
Governor, October 28, 1914, to
February 5, 1919.
Director, A pril 4, IQIQ.
Still Serving.
So the first Board w rought and the new bank grew,
In B oatm en’ s Building four room s small
W ere all to o large, then soon to o few,
W e needed a building to house us all.
Opened November 16, IQ14.
M oved to New
Bank of Commerce Building
December, 19 15.
For Providence works, this tim e we saw,
T h ou gh m an y’ s the time we cannot see,
This country needed the System ’ s law,
So victors in the war w e’ d be.
United States entered
World War A pril 5, 1017-
Liberty Loan
*
♦
A nd the bank was ready, the bonds were sold.
A nd business continued unafraid;
T h e war was won and the place we hold
W as by the System made.
Pre-war, war and post-w ar days
This bank prepared w hate’ r the strain;
It met the issues in all their ways,
A nd turned them to the C ou n try ’ s gain.
.
i
Subscribed
Allotted
1 s t ___ $ 86,134,700. $ 65,460,600.
2 n d . . . 184.280,750.
150 ,160 ,25 0 .
3 r d ... . 100,835,900.
190,835,000.
4 t h . . . . 295,329,750 .
Victory 210,418,70 0 .
295 ,329 ,7 50.
201,787,600.
$975,990,800
$012,502,100.
T. C. Tupper, June 2, 1915, to
December 31, 1916.
C. P. J. Mooney,
August 2, 1917.
Still Serving.
Sam A. Ziegler,
January /, 1917, to
December 31, 1922.
John C. Martin,
January /, 1923.
Still Serving.
John G. Lonsdale,
January 1, 1921.
Still Serving.
J. C. Utter back,
January I, 1919.
Still Serving.
D. C. Biggs, Director,
January I, 1916, to
February 3, /p/p.
Governor, February 3, /p/p.
Still Serving.
Rolla Wells, December 9, 1914,
to December 31, 1913.
F. 0. IVatts, April 3, 1916, to
June 21, 1922.
Festus J. Wade,
June 21, 1922, to
December 31, 1924.
Breckinridge Jones,
January 7, 1923.
Still Serving.
Counsel, November I I , 1914.
Counsel and Secretary,
January 3, 1916.
Still Serving.
T en years and more the bank has grown,
O ther directors strength have given
A nd helped to guide, as the years have flown
A nd their best to do have striven.
T here were T upper, M ooney^ Ziegler too,
John C. M artin and John Lonsdale
A nd U tterback, with men so true
N o task could ever fail.
W hen W ells insisted he’ d made the start,
A G overn or new the bank m ust run.
As director, Biggs had done his part,
So G overn or was the chosen one.
A nd C ouncil A dvisory helped to guide,
W ells and W atts and W ade and Jones,
N o better advice the whole world wide
As to m ethods, deposits and loans.
M cC o n k e y as counsel has served well
T h e bank since first its work began;
T h e Law he’ d read, and then he’ d tell
T h e way marked out, the legal plan.
------------------------------------------------------------------ ------- ---------------------------
O. M . A ttebery
Nov. 13, 1914.
Deputy Governor.
Still serving.
Par clearance, time schedules, intricate them es.
A tte b ery 1s worked early and late.
H e's m astered the details; banking seem s
Inwrought in his being by fate.
A nd Stewart, whatever the thing to do,
In daytim e or nighttim e did that thing;
W hatever the task he’ d see it through,
From chaos he would order bring.
November 5, 1914.
Assistant Federal Reserve
Agent, August 2, 1917.
Still Serving.
A decade thus no hom e o f its own
T h e bank served well in seven states;
T o d a y it m oved, its hom e o f stone,
Successful service thus relates.
Arkansas, Illinois, Indian
Kentucky, M ississippi,
Missouri, Tennessee,
June 3, 1925.
He wrought in stone sym bolic strength
A nd service o f R eserve Bank plan.
A story told in breadth and length;
A clever artist is M auran.
J. L. Mauran,
Architect.
It’ s in its hom e, the trail is blazed,
Its place in history is secure,
W h o guided it in early days
T heir names in history will endure.
It *
•
Loyal, Efficient,
KM
DaaaiMtabXa
*s l a ttot an honorary d e g r e e such as E*I .!•••
e a r n i n g wnlch thorp l a §0ae>t&M§ s u s p i c i o n , hut a r e a l
..rned by asbiSIRlM&t*
»St of you g M t l S M B tor© tbrottgb t e a c h i n g and
G
pan! efts h i p gave Mr« C, K4 ; t s w a r t fcbs gpoa&dvoi'fe of h i s
education*
He »aa a good, r e s u l t of your e f f o r t s
whan ha
s t a r t e d b i s h i - h e r e d u c a t i o n with t h e M i s s i s s i p p i
Volley
T r u s t Corn*" any, when) I f i r s t came Jn c o n t a c t with hi in as a
stsho«;r&nhor.
Be bad bad t e n
I Malnene* At Yoatman, but
i S l t l a t t fro:r- t h a t e s t a t e t o
steasgim&her (a t r a n s i t i o n d i f f i c u l t
for i
Lee boy and
asd s o M t i a a s
impossible
• young njen) with o r a d l t so h i s t**i&U*j an
fa*e<& A d i f f i c u l t
alii
-self,
m t0* he worked f o r son* men
s e t i n t h e i r ways and i r r i t a b l e * bat bi BHI% the
feseugfc o f t e n "bawled" out *l s h o a l rmson
situations
die? b i s aovfc
^e 11 •
baa X was appointed Ohaintan of the Foard and
if-'ederal Reserve a f i t t t on Baptessbep JQ* l n l k , and bad the
fcaty of I n a u g u r a t i n g t h e a a t a b l i a f a p a n t of aba f e d e r a l
a#rre
If*
nV of ~t* L o ^ i a , the P r e s i d e n t of the M i s a i a a i n o i
Valley TTUB% Gimpmaji
of which I was flc©**-•'r*aidentt
said
I stigbt choose one nab from h i s o r g a n i s a t i o n t o t a k e w i t h .
I choae
o*» stew* r t »
, r t *d I
Tor bb
• e r a Ion-; an a a b l a s e d t r a i l
o o r a i Bteaarva Syat«a MM something s a t l r e l ? new
in our c o u n t r y ' s banking economy•
For a viae L ca rr?.od a l l
t Stf the bank in a b r i e f saae so I oa
a t ban •
'
saw the f i r s t
i n s t r u c t i o n s , wrote
t h a t bad t o go t o Washington and t o b a n k s , knew of the
t
an i t
'tars
first
payments of c a p i t a l s t o c k of m^m'cmv bank® which b*4 t o be
In g o l d , haloed In s e t t i n : ap o f f i c e s on t h e f o u r t h
of
l
floor
. • B^itit Etolldln , then Juat toting fintahedU
We gr»ort, Ift v«c«mber t 19* 5* &•£ ^ a tf** '
'" OtrtHWWI I**
#ha% I t l "mown aa fclli Saw Sa':k of Conferee bu?l,clin-t, which
i ;.r\?o Ban]-* B u i l d i n g , Wit!) an
• »d t o f e d e r a l
/?
#
e n t r a n c e on P|&* S t r e e t , #u» >*wft m%^wf ^ gr t & V v o ^ RJ«** 4-4
Th^» F e d e r a l Beser^r® Act waa signed by »r»*ld*Ilt
a it
I -fir-y 19i3«
• • * • war cloiKln l a I orooe
but 1! fcl l tn "••-:',t 0« a w pftJPt t h a t t a e y ajigfet overshadow
r ^ ^ v e r , I t vim not l$$g before thia country was being
tts t r ? to aeet i t I
for c
I \
Kt m
known
wag atarted to care
* 1
bn? • I
-.•ven-sftt,* and
r rs
Ei enrrenay a i t oat to
n o t e * nn^la*' -
nesf f
* be*
3 lrich-*"re-3land P i l l ,
was g r e a t
.inch agenwy as the federal Reserve Bantr and
raided t o $een al' 1 12
while- n o t -sntfrr.?/ p r e p a r e d I t •
Femoral *?»sorva
f 3 5j 3.91%*
t h a t t h i s e o n n t r y would ba lirawn I n t o
was
-
o&
"
tn
"!0 had no Idea
-erV*
I , but what
ffny
-e#
'
>one£ ptttg t h e y
were f o r I t ajfcW* us a chance t o l o a m , a t i t wer* f t o
the
I e r e d l t gea^a
em* In ^077,
shift
-^fore we a c t u a l i v -vent I n t o the
Frora t h e e«tfl
t of
:
«n': 1/
'
- been
ad t o leetftt how t o
i s a u e Federal
1 note- .
•* .»tewwrt
;ueh Sttpepvi**
en .-'v-yat : \ b""l? f he MM
. -
M l
Reserve a^ont an<
• a r e t a r y Do i n offiftM
t h i n g of a r e c o r d i n
' t ?uno.
j u s t about t h r e e y e a ra, some-
itself,
• bad a » r t
Sett
I
frost stenoi-ra-jh^r an£
in t h e e e t a
TO d© ttiie sac'
;
Id
1
ipgi
itt
nns
i
one m i l l i o n of dollar© I n gold t o '.vaahington, where a de~
pQtflpant of t h e F e d e r a l Roaerve IMaWl a c t e d a s a c l e a r i n g
batMMM
This today la c l e a r i n g t te '. f i a n c e e from a l l . o v e r
too ?'-•'.'",tr;-f,
Ba helped In w r i t i n g t h e f i r s t Monthly l a v J M of
:\;r^nesa C o n d i t i o n s , hml A pn*t i n anaoarln,, (ttsOOtiona and
pro&arlng l i t e r a t u r e f o r banks t h a t TO r e t h i n k i n g about
j o i n i n g t h e Syatan ana had many s e t t i n g * wit!-.
Pda of <il-
apectors of fcanVa i n tfeo aovon ft a t e a t h a t a r o t n o l
in
'nt.
t 3 a r t In the v a r i o u s L i b e r t y Loan Cam-
pnigna neooeaar? to* aa to fl
'
orid v>a? I and tawta vhnt
voa Roooaoary to soil, bend* tfo* fcorld inn u .
In I
Si took part
LftOttOOiona of ttea orofclans of r e d l a c o u n t t n g p a p e r ,
tyadO OOOOptancea, BnnkOffl a c c e p t a n c e s , t h e el e a r i n g of
chocks, I
• - Ivtn
of Information and c o r r e c t i o n of
raisin-
foMa>tion«
In 1 ° 3 7 ,
QfciO liiver with t h e feel* of t h e
?!lsalsaipr>i g i t on a MaOJpftga I
D i s t r i c t wore f l o o k e d ,
any towns In the
i'^hth
The w&tor cove rod Lou5.avi! 1c u n t i l
v a u l t of t h e L o u i s v i l l e r r a n c h *M fleodod and a? t h e
L o u i s v i l l e bnttfci kept much of t h e i r atoMf i n t h e b r a n c h ?m&
t h e i r own v a u l t s were f l o o d e d , tl
ami c r a c t i c a l l y no cash
that could be used fry tho reaidenta of tl&e>t boon* •>«
Stowart too* t h e i n o c u l a t i o n s t h a t were aonal
I
necessary
and flew t o L o u i s v i l l e X t h i n k t w i c e with it*ig»
• pinna landed as eloao
t h a t p o i n t t h e m^ney Is
-nay,
bar sa poaaiblo and fvnn
» on taken oy true?-; In
ba town.
* was alamya pn & eeafidontial position in the
ttk and in addition to ootng aaaiatant
was node toajioriuupy In 3 *"'", r e a p
-i'T poor**
l a f o r t h e mlnutea of
the Board of ' 1 r e e t o r s and tl I - '-'Cutive $Q!8«itt«**«
h i e t i t l e ona S o c r o t a r y aj
| -nt
In 19J8
a a h l o r and now he l a Vfo#»President*
la do not lllea to too him leave 9tfl Loui«# bnt the
bank ^n r e c o g n i t i o n of h i s a b i l i t y i s OOlldlng him t o L i t t l e
Book, tofeftOft**! fco t a k e charge of t h e Branch t h e r e *
This record of
13 ho r1 I ,
of L , v ,
fttthl»Wtt*nt
Rftk«a I t a l t a r t h a t he
T i c iailfc , Da p• n<la"bl. e f and • nI I 11 ad t o tha d • g r i a
#
HISTORY
OF
LOUISVILLE
FEDERAL
RESERVE
1917
BRANCH
BANK
LOUISVILLE,
-
THE
OF
ST.
KENTUCKY
1 9 52
LOUIS
1952
DIRECTORS OF THE FEDERAL RESERVE BANK OF ST* LOUIS
J. E. Etherton, President
Carbondale National Bank
Carbondale, Illinois
Louis Ruthenburg
Chairman of Board, Servel, Inc.
Evansville, Indiana
William A. McDonnell, President
First National Bank in St. Louis
St. Louis, Missouri
M. Moss Alexander, President
Missouri-Portland Cement Company
St. Louis, Missouri
Phil E. Chappell, President
Planters Bank & Trust Company
Hopkinsville, Kentucky
Russell !• Dearmontl
Chief Counsel for Trustee
Missouri-Pacific Lines, St. Louis
Ralph E. Plunkett, President
Plunkett-Jarrell Grocer Company
Little Rock, Arkansas
William H. Bryce^
Vice President and Director
Dixie Wax Paper Co., Memphis, Tenn.
Joseph H. Moore, Farmer
Charleston, Missouri
1 - Chairman
2 - Deputy Chairman
CFFICSTS OF THE FEDERAL RESERVE BAKF CF ST. LOUIS
PRESIDENT
Delos C. Johns
FIRST
VICE
PRESIDENT
0. M. Attebery
VICE PRESIDENTS
William E. Peterson
Howard
H*
Weigel
Frederick L. Doming
Joseph
C. Wot^wa
C. A. Schacht
Dale M.
Lewis
Paul E. Schroeder
C. M. Stewart
ASSISTANT VICE PRESIDEFTS
J. H» Gales
G. 0. Hollocher
John J. Christ
Frank N. Hall
Earl R. Billon
Fred Burton
(Temporary
assignment)
GOUWSSL AND ASSISTANT SECRETARY
Harold B. Kline
DIRECTORS FOR \S$2
LOUISVILLE BRANCH OF THE FEDERAL RESERVE BANK OF ST. LOUIS
A. C. Voris, President
Citizens National Bank
Bedford, Indiana
Smith D. Broadbent, Jr.
Farmer
Cadiz, Kentucky-
Noel Rush, President
Lincoln Bank & Trust Co,
Louisville, Kentucky
Alvin A. Voit,l President
The Mengel Company
Louisville, Kentucky
M. C# Miner, President
Farmers National Bank
Danville, Kentucky
Pierre B. IlcBride, President
Porcelain Metals Corporation
Louisville, Kentucky
Ira F. Wilcox, Vice President
The Union National Bank
New Albany, Indiana
1
-
Chairman
OFFICERS
LOUISVILLE BRANCH OF THE FEDERAL RESERVE B A M OF ST. LOUIS
MANAGER
C. A. Schacht
L. K. Arthur
Assistant Manager
Fred Burton
Assistant Manager
R. D« Kincheloo
Signs for Assistant Manager
L. S. Moore
Assistant Manager
F O R E W O R D
BANKING
IN
THE UNITED
STATES
Commercial banking began in the United States with the establishment
of the Republic
The first full-fledged commercial bank was the Bank of North
America, organized in Philadelphia by Robert Morris.
This bank was granted a
charter by Congress on May 26, 1781. Because of doubt whether Congress had the
power to charter a bank, the Bank of North America obtained a second charter
from Pennsylvania.
The first Bank of the United States was organized in 1791, and for a
period of twenty years performed the functions of discount, deposit, issue and
fiscal agency for the Government•
The charter expired in 1811 so that during
the War of 1812 the Government was without banking facilities.
In 1816 the second Bank of the United States was organized. This bank
became a football in politics under the administration of President Andrew
Jackson, and was liquidated when the charter expired in 1836. Then there began
a period of so-called "wildcat banking" itfhen all state banks issued paper money.
The panic of 1837 brought about numerous proposals for the handling
of the Governments finances. Finally, after several plans had been presented
to Congress, the Independent Treasury System was adopted under the administration of President Polk in 18)46.
At the beginning of the Civil War, our currency consisted largely of
notes issued by over 1,500 state banks. Many of these notes were worthless and
almost all of them circulated at a discount when at a distance from the place
of redemption.
In financing the war the expedient of issuing legal tender notes
I
(fiat money) was first tried by the Government.
credit.
This procedure impaired its
In order to provide a market for Government bonds, to stabilize the
currency, to improve the fiscal situation, and to correct many other adverse
financial conditions, a change in our banking laws became imperative.
The National Bank Act was recommended by Secretary of the Treasury
Chase as early as 1861, but it did not become a law until 1863•
Among other
features, the Act required all national banks to buy Government bonds, deposit
them with the United States Treasurer, and receive in exchange circulating notes.
Originally, the circulating notes were issued to the amount of 90% of the bonds
deposited. In 1865 a law was passed placing a prohibitive tax of 10$ on all currency issued by state banks. This action caused the disappearance of state bank
currency issues.
For many years and through a series of money panics and bank crises,
the National Bank Act served its purpose well.
However, the money supply did
not expand and contract to meet the demands of business generally,
since the
supply of currency depended on the amount of certain classes of Government bonds
outstanding.
This was one of the basic reasons for the passage of the Federal
Reserve Act on December 23, 1913• Another reason for the passage of the Federal
Reserve Act was to pool member bank reserves in the Federal Reserve Banks. Prior
to that time each bank carried its own reserve in cash and in times of currency
stringency, each banking institution had to watch its own currency supply.
It
was a case of everybody for himself and the Devil take the hindmost. Of course,
there are many other features of the Federal Reserve Act but these two, elastic
currency and creation of central pools for bank reserves, were the main features.
In addition, the Federal Reserve Banks—twelve in number, with twentyfour branches—act as Fiscal Agents of the Government, and have taken
important part in financing World War I and World War II.
II
a
very
Mr. Lee S. Moore in the following article has written a very interesting narrative
on the Louisville Branch of the Federal Reserve Bank of St.
Louis and its operations. This article brings into written form a very timely
story of banking in Louisville since 1917 » and brings to light many intimate
banking happenings in Louisville in a period
of more than a generation. Mr.
Moore is to be complimented on the thoroughness of his research and his comprehensive handling of this subject.
C. A. Schacht
Vice President, Federal Reserve
Bank of St. Louis, and Manager
of the Louisville Branch
Louisville, Kentucky
February 20, 1952
IK THE FEDERAL RESERVE ACT
WE INSTITUTED A GREAT AND VITAL BANKING SYSTEM
NOT MERELY TO CORRECT AMD CURE
PERIODICAL FINANCIAL DEBAUCHES
NOT SIMPLY INDEED TO AID THE BANKING COMMUNITY ALONE
BUT TO GIVE VISION AND SCOPE AND SECURITY TO COMMERCE
Aim AMPLIFY THE OPPORTUNITIES
AS WELL AS TO INCREASE THE
CAPABILITIES OF OUR INDUSTRIAL LIFE
AT HOME AND AMONG FOREIGN NATIONS.
AN ADVENTURE IN CONSTRUCTIVE FINANCE
BY
CARTER GLASS
III
HISTORY OF THE
LOUISVILLE BRANCH
FEDERAL RESERVE BANK OF ST. LOUIS, LOUISVILLE, KENTUCKY
BY
LEE S. MOORS, ASSISTANT MANAGER
The Louisville Branch of the Federal Reserve Bank of St. Louis opened
for business at 9:00 a.m., on Monday, December 3* 1917*
at its quarters on the
second floor of the Fidelity and Columbia Building, Fourth and Main Streets.
According to the Courier-Journal of December 1* 1917> this occasion was preceded
by a gala affair in the banking circles of Louisville on the night of November 30, 1917.
This was a reception to which came bankers from Louisville, West-
era Kentucky, and a few points in Indiana.
The banking rooms, said the Courier-Journal, were tastefully decorated
in palms and potted plants and with huge floral pieces from other banks.
Music
was furnished by a graphophone, punch was served, and cigars were distributed to
the visitors, who were said to be delighted with the new quarters and predicted
great things for Louisville in a "material" way by having the Branch here.
The directors met in the afternoon of November 30, but planned a second
meeting on Monday, December 3* "when the discounts of the day will be gone over"
and such other business as may have arisen would be transacted.
The staff at the
opening was as follows:
W# P. Kincheloe, Managing Director
John T. Moore, Cashier
Ralph P. Jacoby, Manager, Credit Department
John H. Noland, Manager, Transit Department
E. R. Muir, Manager, General Bookkeeping Department
G. W. Harrison, Paying Teller
Miss Mary Rose Moriarty, Transit Clerk
Miss Jessie McDonald, Transit Clerk
Miss Ruth Hover, Transit Clerk
Miss Lillian Messer, Assistant Discount Clerk
S. B. Jenks, Assistant to Transit Manager
Miss Pauline Wuthrich, Secretary to Transit Manager
Alexander Long, Porter
- 2 The Board of Directors of the Louisville Branch consisted of the following:
Charles E. Hoge, Frankfort, Ky.
W. P. Kincheloe, Managing Director
W. C. Montgomery, Elizabethtown, Ky.
George W. Norton, Louisville
F. Mc Sackett, Louisville
The Directors and Officers of the Federal Reserve Bank of St. Louis
wore:
W. McCbesney Martin, Chairman of the Board
and. Federal Reserve Agent
John Wv Boehnc, Evansville, Indiana
D. C. Biggs, St. Louis
Walker Hill, St. Louis
Le Roy Percy, Greenville, Mississippi
W. B# Plunkett, Little Rock, Arkansas
Frank 0. Watts, St. Louis
S. A. Ziegler, Albion, Illinois
Holla Wells, Governor
W. W. Hoxton, Deputy Governor and Cashier
James G. McConkey, Counsel and Secretary
Olin M. Attebcry, Assistant Cashier
R. R. Clabaugh, Assistant Cashier
Mr. Kincheloe was reported as being enthusiastic over the opening and
prospects for the new bank.
"I have received,"
he told the Courier-Journal,
"assurances of rediscounts for the first day in excess of two million dollars.ff
He also said that many banks in Kentucky and Indiana intend to join the Federal
Reserve System now that a Branch bafik has been established in Louisville.
Visitors Impressed with Banking Quarters
The visitors at the reception were much impressed with the banking quarters.
The bank had 1,800 square feet of floor space on the second floor of the
building which included the directors' room, manager's office, teller's cage, Re/
discount Department, and "ample quarters for the Transit Department."
At the opening of business on Monday, besides a transfer of $7 million
deposit accounts from the head office in St. Louis, the new Branch was to receive
$2 million in actual cash, but, said the newspaper account, nthe details of the
transfer of this immense amount were not announced."
- 3Mr. 0* M. Attebery,** Assistant Cashier of the Federal Reserve Bank of
St. Louis, and Mr« William McChesney Martin,*** Federal Reserve Agent and Chairman
of the Board of Directors, were to be on hand Monday to help get matters started.
The Louisville Branch was thus launched on its career in the final month
of 1917 against the grim background of World War I. Woodrow Wilson was President
of the United States, and the year had been one of tremendous events.
In April,
the United States had declared that a state of war existed with Germany, the
Russian czar had abdicated, and Russia was proclaimed a republic. The Selective
Military Conscription Bill had been made law and, just outside of Louisville, Camp
Zachary Taylor had been opened recently and the task of turning civilians into
soldiers had begun. New words were to become a part of everyday language — Ypres,
Verdun, "Somewhere in France," camouflage, and Liberty Bonds.
Problems arising in the establishment of the Branch, of course, were to
be met and solved. There was the loss temporarily of some of the key personnel who
were called to service in the Armed Forces.
Weather conditions that year were
severe, resulting in transportation difficulties and other complications in a wartime atmosphere.
The Branch was adding personnel and equipment in line with the increasing
responsibilities of servicing its member banks (the private wire was installed in
June, 1918) and it was not long after operations had begun that it became evident
the quarters so much admired on opening day would be inadequate. Early in 1919 the
search for larger quarters ended when negotiations were completed for the purchase
*
Mr. Attebery is now (1952) First Vice President of the Federal Reserve Bank of
St. Louis
*•* ^ r # William McChesney Martin, Sr., later Governor of the Federal Reserve Bank
of St. Louis; father of William McChesney Martin, Jr., appointed Chairman of
Board of Governors of the Federal Reserve System in 1951
- h from the National Bank of Kentucky of the building at the northwest corner of Fifth
and Market Streets. This building was constructed in 191ii~l915>* under supervision
of D. X, Murphy & Bro., Architects, for the German Bank.
New Quarters Occupied in 1919
On June 16, 1919* the Branch took possession of its new home. The stafi
by this time had increased from the original two officers and eleven employees to
two officers and thirty-two employees, a growth which was to continue into the next
few years*
The change, to a peacetime economy brought new operating problems aris-
ing from the greatly increased volume of checks, currency, and other items handled
by the Branch.
An important additional function was assumed by the Branch on April 1,
1920, when the clearing of checks on city banks was taken over from the Louisville
Clearing House Association. Mr. Attebery, then Deputy Governor, represented the
Federal Reserve Bank of St. Louis in arranging the transfer which was at the time
something of a novel arrangement in city Clearing House check settlement and which
received some publicity in newspapers and banking publications.
The growth in personnel and operations made an addition necessary in the
official staff and Mr. Earl R. Muir was elected assistant cashier on June 1, 1920.
Mr. Muir was one of the original group who had opened the bank in 1917 and except
for Army service, had remained through the war years and into the postwar period.
It was not so long after the move into the new banking house that once
more additional space was to become a necessity.
Land was purchased in 1923 on
Fifth Street adjoining the building with a frontage of $2\ feet and 10 5 feet in
depth. The addition was designed by D. X. Murphy & Bro., Architects, and the construction contract was awarded to the National Concrete Construction Company. The
addition was completed in 192$ and in July of that year occupany began with the
removal of the Transit Department to the new quarters. The addition consisted of
-5 a basement, first floor and second floor, and furnished approximately 15,000
square feet additional space to the 10,600 square feet of space
building.
in the older
An entirely new vault was constructed in the basement of the addi-
tion, and some rearrangement was made in the original banking room.
The next few years covered a period of more or less stable times in
the story of the Branch, that is, there were no great changes in the number of
people who operated the bank nor changes in the building.
one innovation —
There was at least
in 1928 machines for counting paper currency were installed.
These were the tiines, though, that were leading up to the fateful years to follow the late summer of 1929 —
the years of the Thirties — when a new era was
opened in the history of the nation. The Branch played its part to the best of
its ability during the tragic events beginning in 1930
in the financial world
in which Louisville and Kentucky received more than a full share of misfortune.
Personnel Changes in Early Thirties
Mr. Muir resigned as assistant cashier on August 22, 1931* to accept
the vice-presidency of the Louisville Trust Company,
His successor was Mr.
Stanley B. Jenks who was elected assistant cashier of the Louisville Branch on
September 2, 1931* Mr. W. P. Kincheloe resigned as managing director on October 13* 1931* Mr. John T. Moore succeeded Mr. Kincheloe as managing director,
having been elected to that position on November U, 1931•
Mr. Charles A. Schacht became
November 16, 1931*
cashier of the Louisville
Branch on
Mr. Schacht, who succeeded Mr. John T. Moore as cashier,
came to the Branch from the head office and his election as cashier fell on an
anniversary of his connection with the Federal Reserve Bank of St. Louis as he
had joined that bank on November 16, 1917*
In February, 1931* the Branch began to act as custodian for the Reconstruction Finance Corporation.
The work began with one employee, and as time
- 6 passed, the department handling this activity grew to a staff at its peak of
fifty people.
The functions of this department comprised the disbursement of
loans, collection of paper, custody of collateral and obligations, and operations growing out of these functions*
This activity continued for a number oi
years, but through transfer of operations to the Loan Agency of the Reconstruction Finance Corporation, the department was gradually reduced.
This activity
of the Branch was discontinued altogether by 1951•
The years beginning with 1933 saw the Branch in the midst of some
memorable events. These were the times of the "bank holidays," when long lines
formed in the lobby leading to the tellers1
windows to exchange currency for
gold (later lines formed to reverse this process).
/
The closing month of 1936 and the new year of 1937 brought the Ohio
River flood of painful memory. The story of the flood is a separate historical
narrative which has been told many times, and the story of the part of the
Branch in that time is that of the other banks and business houses in the downtown area of Louisville.
Although operations were suspended for a short time,
a small band of officers and employees remained on 2h-hour duty, camping in the
building during the emergency.
With the subsiding flood waters came the clean
up period and the resumption of operations under trying conditions.
Large
amounts of paper currency and coin were deposited which had been submerged in
the water and mud of the flooded Ohio and its tributaries when bank vaults
throughout the flooded area were under water for several days.
Many
and in-
genious were the methods devised to handle this inflow of liquid assets, for it
was necessary to dry the currency received still soaking wet before it could be
placed in the normal process of counting and redemption. For some time visitors
to the bank could witness the odd assortment of laundry mangles, hair diyers,
and grill work stretched over heaters and resembling barbecue pits,
for restoring the wet money to a stage of dry condition.
all in use
- 7 Mr. John T. Moore, having reached the age which requires retirement
under the proxasions of the Retirement System of the Federal Reserve Banks, left
the service of the bank on December 31* 1937*
Mr. Moore was one of the original
group who opened the Branch, Mr. Moore resided in Louisville after his retirement until his death on July 18, 1939• Mr. Frank D. Rash came to the Branch
^
managing director on February 21, 1938, as successor to Mr. Moore.
Germany declared war on Poland on September 1, 1939* and Great Britain
and France declared war on Germany on September 3* 1939* thus opening World
War II. After December 7* 19^1* the United States entered the war and for the
second time in its history, the Louisville Branch entered into a period of service with the country at war.
Mr. Rash had resigned as managing director on February 29, 19 hO, and
Mr. Schacht became managing director on March 1, 19U0. Mr. Fred Burton was
elected cashier of the Branch on March 15* 19^0.
The Branch in the Forties saw the greatest expansion in its history.
This was due principally to the transfer from the head office of various activities as Fiscal Agent of the United States. The issuance and the redemption of
Defense Bonds, later known as War Bonds and Savings Bonds, were assumed along
with other fiscal agency operations in connection with marketable issues of Government bonds. All these activities required a greatly increased personnel, as
well as additional space (Ifadditional space" runs through any history of the
Branch as a fugue), and it became necessary to rent outside quarters for the new
operations.
The custodian functions performed by the Branch for the Reconstruction
Finance Corporation beginning in 19hh were handled in space secured on Jefferson
Street, and beginning on January 18, 19U3* "the redemption of savings bonds was
carried on at 116 South Fifth Street, a few doors away from the main building.
- 8 Additional Quarters Required
It became imperative to secure more room for fiscal agency activities
soon after occupying the Fifth Street quarters. In July of 19hh occupation began
in the building at 32li West Main Street by all savings bonds operations and later
in the year, the custodian division of the RFC, the latter division by this time
performing greatly increased duties. The building on Main Street, containing
about 30,000 square feet of space, was occupied by these agencies with a staff in
excess of 100 people throughout the war.
In May, 19U7, the principal savings
bonds operations were returned to the parent bank. Through succeeding months the
personnel remaining at the Main Street building was returned to the main office
at Fifth and Market and the Main Street office was subleased to other tenants.
Mr. Lee S. Moore was elected an assistant manager of the Branch on
November 9* 19UJ.
In 19hB the war ended, and before long most of the men who had left for
the Armed Forces began gradually to return to the Branch. During the war there
had gone out into the services from the Branch a total of nineteem men, and the
Branch was glad to welcome back fourteen of these ex-servicemen.
For a portion of 19U5 and 19U6, Mr. Earl R. Billen of the head office
was assigned to the Branch to serve during the absence of Mr. Jenks who was ill.
Mr. Billen at that time was manager of the Check Collection Department of the
parent bank, and later was appointed an assistant vice president of the Federal
Reserve Bank of St. Louis. Mr. Stephen Koptis of the head office was also
assigned to the Branch during a portion of I9I1.7 and I9U8. Mr. Koptis had recently returned to the parent bank.after service in the Army.
Mr* Jenks died on April 29, 19U8, at his home in Jeffersonville after a
long illness.
He had been associated with the bank since its opening and was-an
assistant manager at the time of his death.
- 9Mr* Laurence K. Arthur came to the Branch as an assistant manager
on September 1, 19^8. Mr. Arthur was an assistant vice president at the parent
bank before coming to Louisville, and had been associated with the Federal
Reserve Bank of St. Louis since its opening in 191h*
The years after the closing of the war brought a number of changes in
operating procedures, and the increased volume of activities handled required
additional or replacement machines and equipment.
The Check Collection Depart-
ment, for example, is now equipped with proof machines to the extent of processing all outgoing cash letters through those machines. The Money Department
received new currency and coin machines of latest design, including machines
for wrapping coin, an operation begun in 1950.
In I9I49 it appeared that the Branch might be definitely approaching a
solution of the problems of limited space in the form of a new building.
The
subject was thoroughly explored and progress was being made toward definite
plans in the early part of 1950 —
and then came Korea.
Under such uncertain
circumstances, it was deemed best to defer any plans for a new building
until
some more appropriate time.
Thirty**fifth Branch Anniversary
This is written in 1952 and in the thirty-fifth anniversary year,
therefore, of the Louisville Branch.
The Branch is a part of the Federal Re-
serve System, and the story of the Federal Reserve System has been told
in
hundreds of volumes since its beginning. No more, therefore, has been attempted
in what has been set down here than a record of events as these events relate
to the people who started the Branch on its career and those who were responsible for its operation down through the years•
have been many changes —
Throughout these years there
new functions to perform and variations of existing
- 10 operational methods —
serve System
all a part at least of that record
of the Federal Re-
which was expected from the beginning to change in the light of
the needs of our economic system.
In the inaugural address of Woodrow Wilson appear the following
words:
n
We shall deal with our economic system as it is and as it may be
modified, not as it might be if we had a clean sheet of paper to write uponj
and step by step, wc shall make it what it should be, in the spirit of
those
who question their own wisdom and seek counsel and knowledge, not shallow selfsatisfaction or the excitement of excursions whither they can not tell."
EMPLOYEES OF LOUISVILLE BRANCH WHO SERVED IN ARMED FORCES DURING WORLD WAR II
Name
Entered Service
G# H. Atherton
January 8, 19U3
Douglas 0. Baxter
July 18, 19U2
John M. Bond
September 2, V>\&
Joseph Ei Conkling
April 5, 19U1
Leo G. Floyd
April h, 19k2
Robert E* Harlow
October 9> 19U1
Charles C. Hawley
September 8, 19U1
E. J» Hockersmith
January 1, 19k3
John J* Janson
September 9> 19Ul
Benton R, Jeffries
June ks 19U2
Carl E. Kochert
March 2?, I9I1I
W# D. Owen
August 13, 19U1
Leroy D. Powers
January 15, 19^3
Marvin H« Ramsay
October 11, I9i*2
John L, Reighart, Jr,
November lU, 19U2
Ralph Seibert
February 10, 19U1
Louis M. Smith
August 26, 19U2
Alvin L# Warren
January 5, 19^3
Oscar Smith
March 1, I9I1U
EMPLOYEES CALLED TO SERVICE SINCE BEGINNING OF THE CONFLICT IN KOREA
James Conrad
Leon Duffer
Donald Deuser
Artie Herthel
Kurt Poth
Roy Kerr
Charles Pate
Clarence Swiental
MEMBERS OF THE LOUISVILLE BRANCH STAFF
WITH TWENTY-FTVE OR MORE YEARS OF SERVICE IN 1952
Date Employed
Name
Laurence K. Arthur
11-11-lU
Alex Long
11-1-17
Charles A* Schacht
11-16-17
Anna Belle Muhs
3-1-19
John G. Daeuble
3-10-19
Clinton H. Gernert
ii-lii-19
Robert D. Kincheloe
7^7^19
Lee Sutherland
(Retired)
7-1-16 to 1-31-20
Re-emp.
7-5-21
Louis Ogden Stiles
12-16-19
Charles L. F. Kalkhof (Retired)
ii-15-20
Addis K. Summers
li-19-20
Nutter 0. Cart
6-23-20
Mary Edna King
6-23-20
Lee S. Moore
8-2-20
Fred Burton
11-23-20
Bessie J, Stone
3-21-21
Mary Lillian Collins
ii-19-21
Helen R. Moore
5-2U-21
Marie E. Rieder
12-1-20 to 6-2-23
Re-emp.
9-17-23
Charles P. Corrigan
5-U-22
Laura Evelyn White
11-27-22
Clarence J. Woertz
5-l5-2li
Louis A. Nelson
1-12-26
James Harvey Donahue
5-18-26
Florence M. Collins
Leo G. Floyd
3-26-23 to 2-8-36
Re-emp.
6-7-39
6-3-27
ROSTER OF DIRECTORS - LOUISVILLE BRANCH - FEDERAL RESERVE MNK OF ST. LOUIS
1917 -
l9iiO-19U8
19UO-19U5
19U2-19U7
19U3-19U8
19U3-19U9
19UU-19U8
19U6-1951
19U6
19U8
19U9-1950
19U9
19U8
19U9
1950
1952
x
xx
F. M. Sackett
Charles E. Hoge
George W. Norton
W. P. Kincheloe
x W. C. Montgomery
Louisville, Ky.
Louisville, Ky.
Louisville, Ky.
Louisville, Ky.
Eli2abethtown, Ky.
x
Embry L. Swearingen
William Black
Attilla Cox
xx Max B. Nahm
E. H. Woods
Eugene E. Hcge
x
H. E. Jewett
T. D. Scales
John T. Reynolds
x
W.
R. Cole
x
W. ¥• Crawfcrd
V. F. Huthsteiner
John T. Moore
W. R. Cobb
* W. A. Brown
x W. V. Bulleit
A. H. Eckles
W. P. Paxton
J. B. Hill
J. 0. Sanders
*
Frank D. Rash
Perry B. Gaines
** Phil E. Chappell
*
R. C. Gifford
(Advisory Council 2-1-U3)
G. 0. Booner
C. A. Schacht
E. J. O'Brien, Jr.
L. L. Persise
*
Wallace M. Davis
*
Roscoe Stone
H. L. Cooper
Arch C. Voris
Alvin A, Voit
*
John W. Taylor
Ira Wilcox
Smith D. Broadbent, Jr.
Noel Rush
Pierre McBride
M. C. Minor
Died while serving
Served on parent bank board
1928 - 19U5
Location
Name
Year
1917-192li
1917-1919
1917-192U
1917-1931
1917-192U)
1933-193U)
1919-1931
1>?5-1929
1925-1927
1925-1927
1925-1933
1925-1932
1928-1928
1928-1930
1927-1933
1930-193U
1931-1937
1931-1933
1931-1937
1933-1938
193U-193U
193U-1936
193U-1939
1931-1939
1935-191*1
1937-19U2
1938-19hO
1938-19U3
1939-19U5
1939-19U3
19#
Louisville, Ky.
Louisville, Ky.
Louisville, Ky.
Bowling Green, Ky.
Lucas, Ky.
Frankfort, Ky.
New Albany, Ind.
Boonville, Ind.
Greenville, Ky.
Louisville, Ky.
Louisville, Ky.
Tell City, Ind.
Louisville, Ky.
Louisville, Ky.
Bedford, Ind.
New Albany, Ind.
Hopkinsville, Ky.
Paducah, Ky.
Louisville, Ky.
Huntingburg, Ind.
Louisville, Ky.
Carrollton, Ky.
Hopkinsville, Ky.
Louisville, Ky.
Louisville, Ky.
Louisville, Ky.
Louisville,- Ky;.
Salem, Indiana
Louisville, Ky.
Hickman, Ky.
Henderson, Ky.
Bedford, Ind.
Louisville, Ky.
Louisville, Ky.
New Albany, Ind.
Cadiz, Kentucky
Louisville, Ky.
Louisville, Ky.
Danville, Ky.
* Resigned
•JHC- Resigned to serve on
parent bank board
vM^t^JUA
&nCt
PsLdc&tZrl^
JLiltiA,
ion
c^er^JiL^
ttuu
'A Cllf.
Uw«ccA
FEDERAL R E S E R V E BANK
OF
ST. L O U I S
July 24, 1928.
Dear Mr. Martin;
I enclose copy of letter received today from
Evansville in regard to your speaking engagement there on
August 2. I also enclose copy of the condensed daily
statement for July 23.
Mr. Attebery left last night for Memphis, but
will return in the morning. Mr. Novy was here all day today and seems to be feeling better.
Today I introduced Bill to the adding machine•
He is helping us verify the reports of condition and reports
of earnings as of June 3CU After that I am going to have
him get acquainted with the comptometer. In the morning he
is going to help our examiners, Hecht and Kroner, and the
State Examiner, John Meyer, in an examination of the Chippewa
Trust Company. He will help balance the savings ledgers and
sit in on appraisal of the loans and investments and the
Board Meeting. I am trying to give him as much experience
as I can. John Meyer is the son of A. C» F» Meyer of the
Lafayette-South Side Bank* He is a graduate of Yale and he
and Bill have been quite friendly.
It has been threatening to rain all day but it is
still hot.
Sincerely yours,
Mr. Wm. McC. Martin,
Half Moon Hotel,
Coney Island, N« Y*
JQFFERSOn
S&-
TWELFTH- BOULEVARD
at L O C U S T . . . S A I N T
LOUIS,MISSOURI
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RO/lJRS
•<*6^
/&$*
RFTIREMEIT uF PRESIDENT MARTII
President Martin ende I O M remarks inoidant to hit retireit at olona of Pabruary 26. 1941, undar prorialona of tha Fadaral
Reserve Retirement Syeteau
It was mentioned that tha condition of
tha bank, at raflaetad by tha favorable report of tha raeant examination, was a aouroa of aatiafaotion to all*
aV« smrtin hat served tha Institution tinea itt organisation.
Ha vat appointed a Claaa C direotcr. Chairman of tha Board
and Fadaral Reterva A/.ant on September S0 # 1914, beeame Governor on
January 16# 1929. and hat tarred tt Pretident tlnee March 1, 1956.
Appreciation of hit long and faithful terriee wat expressed,
and the best wishes of the Institution were extended to him*
*t M*j-*s. 2 6f / f V /
At the speakers' table
Honorary Members of
St Louis Chapter
W . F. GEPHAHT. P H . D..
Toasimaster
WM.jpL,
TOM
K. SMITH
FRANK N. H A I I
BYRON W .
MOSER
Chapter 0//:i iw/>JOHN
LAWRENCE
RALPH
(
SEILER.
F.
BRENNAN.
M
FOX,
President
1st Vice-Pres
2nd
HUGH S. HAU< K.
Vice-Pres.
Treasuret
EMM N ULLRK H. Executive
•
Secretary
Special (tuest
\VM
MrC.
MARTIN. )W
CHARTER M E M B E R . FIRST INSTRUCTOR.
MEMBER EDUCATIONAL COUNCIL, AND
HONORARY
MEMBER OF S T . LOUIS
CHAPTER.
AMERICAN
INSTITUTE OF
BANKING.
•
MEMBER. T H E BOARD OF REGENTS
TM.F GRADUATE SCHOOL OF BANKING
FEDERAL RESERVE BOARD
WASHINGTON
October 1 0 , 1914.
Sir:
P u r s u a n t t c a c t i r n taken by the Feeler..1 Reserve Bo^rd,
I am t r a n s m i t t i n g t c ycu as C
.r. :f the Boafd cf T i r e c t o r s
of 'the .Federal Heserve E
? t . L o u i s , under s e p a r a t e c o v e r ,
t e n t a t i v e by-laws and a t e n t a t i v e o r g a n i x a t i o r . s t a r t f o r e u b iOD *.
: r board cf d i r e c t o r s . 1
r o-ie ar.d n a t u r e of
t:.e by-laws and * e above r e n t i o n n d d o c ..ts.
I t I s r r o ; o s e d t: a t in the M r f u t u r e t h e r e s h a l l be a
meotin ir. "
to ~.o h i e J
l r - t o r e cf the s e v e r . i l
Fedor 1
i -ve banks e i l j ba i n v i t o
lend a soenaittee numbering not l e s s than
Lncl
Lnj
ibera of each
, . ; ^irectcr.^ . •
•• tc ' e n d . A l e t t e r of i n v i t a t i o n in
..e J o v e r n o r of the Board w i l l be
sent
r t k e , and - i l l .if ;cr4 • g e n e r a l e x p l a n a t i o n
of
scop« of the Beetinj . One
fce
of the -oeetin- w i l l
be ti.o i i e o u s e i o n and c r i t i c i s m cf
.-1 i and c...;rt vhioh . r e
now s e n t you. Pendi"
;
a eetin , therefore, a caruf u l study of t h e by-]
id.
Reepeetfull; ,
'( fOx
.ry.
;
Up, WiLli
'. Marti: ,
lii33o r i . . :•• A s s o c i a t i o n ,
St. L lis,
ri.
M
/:
,
~
'
««r;
'
.•A/
TREASURY DEPARTMENT
WASHINGTON
Octc b t r 26, 1*14,
.. j
v..
-•.
t.\i
f\,
*
I
•^v
rtij.:
I uobi.c to confin
I s e n t you t O v i ; , and
H
P*
. i
t i n t °f t h e D i r e c t o r s of t h e F e d e r a l
F< eerv<
i f >our d i s t r i c t t nd a d v i s e tiien th*.t a l l n e c e s s a r y
orj re
vj
a l r e a d y been c:nipliec: w i t h by t h e
L
, t h e J o & p t r o i i e r of t h e Currency
on or before Novexuber s i x t e e n , n i n e t e e n
,
ficeti
uthorisJJsf
such bt.nk t o
i s pree i
by s e c t i o n four of tl.e F e d e r a l
c t , ind t h e Seen
j of t i e Trt
rj w i l l , i n contornit i o n n i n e t e e n of t h e Act, formally announce t h e
t of t h e Feaerul Kest.rve Banks i n each of t h e Federal
- t
s i x t enth (XL-J of roveniber, n i n e t e e n );un. - u r t e » n . PI
, :c a s s u r e t h e D i r e c t o r s t h a t t i s
Depj
t w i l l £]t. - , extend tc 1
. -ery f a c i l i t y i r.u alX
ibl<
i s t a n c c in o^enin^ t h e banks on t h a t t i i t e , f.nd t l s o
• *. en of my vt.
t wit es and of ay eurnes t d e s i r e t o
i-ti t i t h them i n every p o c s - b i e manner t o r e n d e r t h i s grut<t
~
3»»
I
-'
toi» ,
Bank,
, : 'o.
TREASURY DEPARTMENT
WASHINGTON
::o member 9, 1914.
/
Sir:
The Comptroller of the Currency w i l l , ^'. V.JS
close of business on ITovenber 14, 1S14, execute
the c e r t i f i c a t e or charter rovided for In Section
4 of the Federal P.eserve Act authorizing your bank
to oonrnenoa business on t o aornlng of Hovember 16,
1914.
Accordingly, or. 1'ovo.uter 10, 1 shall oaks forma l announoex^ent of t.ie e - t ^ b l i s h . c n t of your
pursuant to t:je au^.'.ority vested ii. ...e by Section
19 of the Federal Aeserve Act, asd w i l l , on t h a t
d a t e , forroally si-jn. the announce :aent :o oe sent to
each rnenber bank in your d i s t r i c t .
In order that the number banks of the several
Federal Reserve D i s t r i c t s s h a l l each receive t h i s
notice at approximately t ; .e sane tir.iO, I its seudi:.
t o each Feder-1 ?keo rve Bank pri;.te I > ies of not i c e to number banks ..hi:;. . . i l l be sijueu. ..
. on
yoveober 16. Theoe notices are inclosed in envelopes
addressed to the several :^enber t anks and upon r e ceipt of tele^Tanhic advices that t.ie f o r ^ l notice
has been ^i^ned, you are requested to place in the
mail tA^e copies sent to you under separate cover.
Beepeetfully,
f.
c/et^ry of the TreasuryMr • f i l l i a m i:cC. Iiartln, Ch^ir.v^ji,
Board of D i r e c t o r s ,
Federal Reserve 3cjak,
S t . Louis, l.o.
/
,
R E C E I V E D AT
JTJNYUE 1 1 0 GOVT
^
'I
'
K WASHINGTON DC
m M<X MARTIN
'-S
FED t £ 8 AGT
ACCEPT VIY CORDIAL
8T LCUiS \IC
CONGRATULATIONS \JPOh THE OPENING OF THE
RESERVE BANK OF VOUR D I S T R I C T
<.
NOV 1 6
.VFECTIVg
AND MY SINCERE COMMENDATION UPON THE
Wd«R YOU HAVE DONE I N PREPARING THE BAWK. F 0 *
TIME ALLOWEI' FOR THE O P E N I N G , *
W I L L SERVE J.
COUNTRY ANP I
IK
THE
AM SURE THAT THE FEDERAL RESERVE
REAT ANI> B E N E F I C I E N T PURPOSE
All JURE THAT T H I S
BUSINESS
I N THE FUTURE OF'OUR
DEPARTMENT AND THE FEDERAL REii
BOA'^D MAY COUNT U»ON YOUR LOYAL COOPERATION
I N THE
IMPORTANT WORK AN*J
D U T I E 5 WHICH HAVE BEEN CONFIDED TO YOU#MY HEARTY GOOD WISH.-.3 FOR YOU«
SUCCESS
W G MCAPOO.
IS. H14.
Tour eoagratalatiaiui «#r^ r«««twM t h i s so ruing and th# g*od
e»fte4 «iimbl«4 u» t o bar* * M t : ftAispiftioui op«iUii£ of th#
3mnk oZ St# Loam*
You vn**j**txonaMy can oouat oa ay l o / a l
^iun and s m c a r l t y i n tha b e l i e f that tut federal R«*tr*» # / a t « i
w i l l bt of grtat b « n t f l t to our cotaxtry.
! • opoiMMii on vuao ihl* writing
and took care of ttaeh hu«lnt*a as v«i offurod ua«
^r^c'ioally
a l l of th«
S t . uojxt taakero vxoxtoo uo ir. por«on ano #jipr^«»M th«ir good v*ah»*
and quito a runbar of OJt-of*^otm ^amk<ira also o«r«
«a« tte£» Wai I in
:o a## u««
TNir WESTERN • W O N TELEGftAPI#€&IWPANY
> *« •: z-P * o n A r i r.
25,000 OFFICES JN AMERICA.
CABLE: SERVICE TO ALL THE WORLD
9CLVI.
' t
A T Coimefcial Biif. 514 3^ve St St Mis, «h '
K WASHINGTON DC MOV U
^
FEOCRAi «E3£«VE
1914
OF STtOUIS8TLOUI8 MO
T*
>
COMPTNMXER OF THE CURRENCY AT THE CLOSE OF SUS|<MJ88 ON NOVEMBER
FOURTEENTH HAVING CXECUTEO THE CERTIFICATE AUTHORIZING THE FEOERAL NE8ENVE
BANK OF STLCUia
TO COUMCNCE tittiftCttS I HAVE THIS M0RNINC 6ICNE0 THE
ANNOUNCEiCNT TO §E MAILED TO ALL MEM«E»t iANKS OF THE ESTABLISHMENT • # YOUR
*m
AND THIS WfLL BE YOUR AUTHORIH TO PLACE IN THE U A H 0 0 * t t 8 OF TME
ANNOUNCEMENT SENT YOU FOR THJ8 W R f O ^
mmmmmtt THE
ftF-.-r.-
-W(T!
THE WESTERN
vWm^ELEt&AffoC&tAPffllt
*-.r/£.HJCA
" C A « u : sr n ,V!CE TO ALL THjE
:-ir
Si
*' • <•..» N I
<|*, M*.
^
i.\,
•^
»••
•
r/ of
/
^
In
l to a l l *»«ot>»r;t6o mk«v of your a o t i M announcing th#
of St,
r*
./..>>'.„/
-
THE ST. LOUIS REPUBLIC.
SUNDAY
Morning,
MARCH 28, 1915.
Love and Chapin Visit Reserve District Quarters and Learn What Happens When the Farmer Borrows $200
and His Note Is Rediscounted •*. •'•
Geo.Bod* J«.
Federal Reserve Bank Is"A Bank of Banks"
BY ROLUk WELLS,
Governor of the Federal Reserve Bask of St. Louis.
OE many years a more wholesome banking method has been needed In the United state*. A new system is now in operation. It will have no effect
f f t on the
th rain
ain and
and the
the sunshine,
sunshine or
or the
the fertility
fertilit of the soil,
but it will, in the opinion of many, prore a havtoe of safety in time of unexpected trouble.
The Federal Reserve Bank of St. Louis, aa lntegfel part of the Federal Reserve System, has been in operation since the inauguration of the system, Novemberlfl* 1914.
The business of a commercial bank is chiefly with the business men; the business of the Federal Reserve
Bank is mainly with banks, called
her banks. Tne St. Louis Federal Reserve Bank, therefore, is "a bank
of bank^l; having 460 banks as
ckholders, located tn -a district embracing 146,474 square miles of territory. c£3crlng'a part of the States . lissouri, nitnels, Indlaaa, Kentucky, Tennessee, Mississippi and all of
Arkansas.
The Federal Reserve System is base* upoa the frtnclple Of co-operation, and it would be reasonable to
conclude that the centralized credit which the Federal Bessive Bank of St. Louis will afford, through its member banks, to the many diversified Interests In ita l a p s district, cannot help but prove beneficial.
The Federal Reserve Board, with ita Advisory Cbunell, is a central control over the 12 reserve banks, and
the authority to regulate the conservation and utilisation of their united assets already has brought forth an
easier financial atmosphere and repose.
j
F
BY ROBEKfV6 LUVE"
~
NYBODY who still believes in the old saying that there is nothing new
under the sun should go to the Boatmen's Bank building, accompany the elevator to the fourth floor and visit the Federal Reserve
Bank of St. Louis, which occupies temporary quarters there. It is a new
thing for a bank to be located upstairs. The bank itself is a new thing, and
there are eleven others of its kind in the United States, one in each of the
newly-created Federal reserve districts.
The St. Louis bank serves district No. 8. This district includes *h« <tn.-J
A
•.
*• i* - —
- -*r~
.
Tj
4
tire State of Arkansas, most of Missouri and considerable slices of Illinois, •
Indiana, Kentucky, Tennessee and Mississippi. The map on this page presents the district at a glance. The district ranks sixth in population, ninth
iB area and tenth in capital. It covers an area of 146,474 square miles, and
has a population of 6,726,611. Ita extreme length from north to south is 544
miles and its extreme width from east to west is 535 miles. The bank is
rebtfy to serve, through its member banks, any resident of this vast terriwhose
loans
theofFederal
reserve act.
board
nine Directors,
six of whom
. tory
Tbta
bank,business
with the
restare
of eligible
the dox-under
are
elected
by
the
member banks and
ait, was created by the passage of the
Owea-Olass bill last year, which was three appointed by the Federal Rean act "to provide for the establish- serve Board. William McC. Martin,
formerly vice president of the Missisment of Federal reserve banks, for sippi
Valley Trust Company, is chairfurnishing an elastic currency, afford- man of
the board and Federal Reserve
ing a means of redlacounting commer- Agent in active charge for the Fedcial paper and to establish a more ef- eral Reserve Board. Mr. Martin has
fective supervision of banking in the begun a thorough personal canvass of
United States, and for other pur- the district, beginning with Arkansas.
It is his purpose to visit points in each
poses."
The St. Louis' bank was opened for State in the district where meetings
business November 16 last. We now of bankers' associations are held, adare beginning to learn just what is dress the meetings and talk with inmeant by an "elastic curency." We dividual bankers, explaining the mohave discovered already that it is not dus operand! of the Federal Reserve
lust what papa said when Maybelle Bank.
iaaked Mm:
what is an elastic currency ?" The present capitalisation of the St.
k "T»Louis bank is $5,683,500. There are
tion With
460 member banks. AH but one of
these are national banks. The excepAdded.
tion is the Mercantile Trust Company,
iastil c currency, my dear," r kwhich Is a State bank. Every national
'
in the district is required to boPapa, "may be defined as
able toj
t'uat can be stretched to buy urne a stockholder in the Federal Re- accommodated thi ,H the St. Louis
two dollars' worth of goods, and If rve Bank. Each bank must subscribe blank. In the toll* <xg interview Mr. afford assistance on account of the
you are going to marry that young I for 6 per cent of its capital and sur- Martin goes over ti ft field thoroughly co-operation of. thf other banks in the
<tude who comes here every Sunday plus to the capital of the Federal and in plain language, which he who same large city. I
evening, you'd better see to it that his bank. One-sixth of the amount is pay- runs may read and understand, and Never Will B« Another i
money's made of rubber."
• able on call, one-sixth within three should read if he cares to learn his
The Federal Reserve Bank system Is months and one-sixth within six new financial opportunities under the Panic Like Tktt of 1907ft^s*
giving elasticity to our currency with- months. The remaining one-half is reformed currency system given to the "In District No. 8 the banks of a
out rubberizing the material of which subject to call. Thus, under the law nation by the present administration. greater part of Mswourt, the banks of
it is made. It is taking the dollar out of the nation, the Federal bank is cap- "Since the Federal Reserve Bank of Southern Illinois, Southern Indtana,
8t. Louis opened its doors for busi- Western Kentucky, Western Tennesof useless hoarding or timid hiding italized by its member banks.
ness," said Mr. Martin, "the territory see, Northern Mississippi and all of}
and putting it to useful service. It is Bankers Are Taking
of District No. 8. as well as the entire Arkansas, are Joined together, as it
"itifc^ag It easier for the man who
United States, has had a feeling of were, by stock ownership In the Fedneeds the dollar in carrying on hie To System Readily
business to get the dollar just when Chairman Martin reports that the financial stability that it did not enjoy eral Reserve Bank of 8t. Louis. In
, this bank they a*so keep their rehe needs it. Through the operation of bankers are taking to the new system previously.
this system it is believed that a panto readily. Those who were somewhat "The principles underlying the Fed- serves, and at the end of three years
such as the one which gave us violent offish at the start are being won over eral reserve system are neither unfa- all of their i seems will be kept part
visitation in 1907, Is rendered virtu- as they acquire an adequate working miliar nor untried. For years. In the in their own vaalis and part with the
larger centers, through the medium of Federal Reserve 3ank of St. Louis.
ally impossible. If that be true, then
clearing-houses, banks have co-oper- Whether the member bank Is largo or
the Federal Reserve Bank In St. Louis knowledge of the now* system.
Is aa institution vitally interesting to The Republic,
;i view to giv- ated with each other and have com- small, located in m city or in a village,
Avery man, woman and child in the ing the general public an intimate ac- bined their reserves so that the it will b*ve the itr—ath of the sysquaintance with the Federal reserve strength of all could be given to the tem beh'M It.
district.
Former Mayor Rolla Wells is the banking system, to the end that all smallest deserving bank. This advan» Bank is given
head of the St. Louis bank, enjoying | ha*y notions of rod tape may be dls- tage, however, was enjoyed by only "The ederal R<
t paper for its
"Be title of Governor. W. W. Hoxtonlslpated, requested Chairman Martin the larger banks in the large dUes, the ri| it to
his way assure
i Deputy Oove nor rod SeccsSary. The [to stale la plain terms what the sys* smaller oou-Qtry banks receiving bone membf. beaks,
-•eperty
fit only tsjMause their larger evrre- to sue v m«
letter is C. B. French. There Is a tern means and bow a citizen may
Sri
Finding Something New in Banks or
a SureWay to Avoid Financial Trouble--A Simple Tale About a Subject
You Always Thought Was Difficult
fne fact that they can always receive cash when they seed it.
tt is not too much to say that this
means that there will never be any!
more money panics like that of 1907
in this country- I do not mean to say
that the Federal reserve aei^will do
away with hard times, for they will;
be with us so Ions; as we have drouths,
floods, diseases and death, but it will'
do away with any unreasoning feari
that there is not enough money to take
care of *ny situation.
Prior to the opening of the Federal
Reserve Bank of St. Louis, a member
bank in District No. 8 was sometimes
afraid to make a business man a loan
for 90 days, or make a farmer a loan
for six months, because the bank could
not afford, as it were, to have its
money locked up for 90 days or six
months. Under the old system. Jim
Smith has come in and wanted to borrow $300 for 90 days, in order to buy
supplies for his general merchandise
store. The banker has said:
" 'Jim, we have the money, you always have been prompt in your credit obligations aac we would Ilk* to
lend it to you and can do it if you will
take it oa demand.'
"Of course, Jim could not afford to
be in a situation where he would have
to pay any minute he was called on,
the banker could not afford to take his
00-day note, and the consequence has
been that Jim Smith could not borrow
the money from his home bank to buy
his needed stock of goods, the bank
has lost a good rate of interest, say 6
per cent, on the loan, and the goods
have not been bought unless Jim has
gone to some big city, purchased on an
open account and had the city wholesaler carry him.
; "Under the present system, because
a loan Is for 90 days it will be no reason for the bank refusing the loan.
Under the old system, such a. loan
would have been equivalent to locking
up the money for 90 days. Under the
present system, the banker knows that
he can take the note of Jim Smith, indorse It, present it to the Federal Reserve Bank of St. Louis and get the
cash. He can do this whenever the necessities of the case demand.
"The Federal Reserve Bank of St.
Louis cannot rediscount a loan arising
out of a commercial transaction that
has a maturity at the time of rediscount or more than 90 days. However,
an exception is made of loans arising
out of agricultural operations or based
on live stock. Such loans can be made
for maturities not exceeding six
months.
"Let us trace a loan of $200 to George
Brown, farmer, from the time tt comes
into the country bank, through its offering for rediscount at the Federal
Reserve Bank, to its final payment.Let
us call the country bank the National
Bank of Prosperity.
How the Banker Act*
On Loan Application.
"It is, of course, taken for granted
that the loan Is made to the farmer,
not because he is a handsome gentleman or a first cousin of the banker,
but because he Is a thoroughly sound
credit risk. He will, doubtless, talk the
matter over with the banker when he
applies for the loan; will tell him
what he wants it for, and advise with
him as to the possibilities of the use
of the proceeds of the loan. If he is
trying to borrow too much, a good
banker will tell him so and suggest
the amount of money he is entitled
to in order to accomplish the object he
has in mind. The banker should know
all of the property owned by the
farmer and all of the debts for which
the farmer is liable. In brief, good
banking would require that he get a
statement from the farmer.
"The Federal Reserve Bank of St.
Louis has prepared a form of statement which is absolutely devoid of
technicalities and can be filled out by
any 16-year-old boy. It does not contain even such words as 'credit' and
'debit.' Under the heading 'Property
Owned' are included cash in bank and
OB hand, good accounts due the farmer, good notes en hand, live stock on
toad, term product* on band, grain.
cotton, hay, feed, etc.: farm
owned, other lands owned, vmtme of
buildings on farm and city real estate
owned, the total of which gives the
total property owned by the farmer.
Under the heading 'Debts Due' are Included accounts payable, notes payable, mortgage notes due by the farmer, and all other debts, the total of
which gives the total debts of the
farmer. Then there are certain questions asked on the statement In regard to the farm land, such as: Where
is the farm situated, description of
farm, total number of acres, acres under cultivation, acres unfit for -ttWfa**
tion. number of bales of cotton,
bushels of wheat, bushels of corn, the
land will produce per acre any season able year, and other crops? Is land
subject to, overflow? How long has
the farmer owned the land? Is any
part rented; how much and for what
rent? Distance from nearest town to
the farm? Distance from nearest railroad station to the farm? At what
price per acre have Improved farms In
the neighborhood sold during past
year? At what price per acre has
rough land in the neighborhood sold
in past year? Is there any mortgage
on the land? Is so, for what amount
and when payable? Is the title to the
land in the name of the farmer making the statement? For what Is the
land assessed for taxation? These are
all the facts asked for in the statement.
"If for any reason the bank's farmer
customer is so unreasonable that the
bank is afraid to ask him to make a
statement, the bank, of course, before
making the loan, will know in a general way the facts asked for by this
statement and can make a statement
about him.
How Prosperity Bank ' < *
Gets Note Rediscounted.
"The National Bank of Prosperity
having decided to grant the loan, the
fanner signs his note for>fGOO, ta#~
"bank discounts it and puts it In its
note case. If the note is to run six
months the bank has not tied up its
money for this length of time, because
it can turn the note into cash. In the
development of the bank's business, if
its reserve is approaching the limit
and it is afraid that it will run short
of cash, it takes this $200 note o.
George Brown out of its note case, U»
dorses it on the bark, 'Pay to the *>-•»
der of the Federal Reserve Bank or
St. Louis, protest waived. National
Bank of Prosperity, by John Doe,
president or cashier,' and then attaches the note to what is known as
an application for rediscount. This Is
nothing but a letter addressed to the
Federal Reserve Bank of St Louis.
which is all printed out, with but few
blank spaces to fill in. In this application, in the blank spaces provided,
the bank describes the maker of the
note as George Brown, indorser National Bank of Prosperity, amount
$200, maturity August 1, 1915, fill* u
the date to k* jtototned to the forwarding bank alto *bx> where payable.
This the bank stf^s. To thin application, th« bank at-aohes the note and
AL«O th« statement o#4he farmer. If
rl has been uaaW» to get a statement
of the fonuer.ja^P bank attaches a
statement madeV fx itself, gtflng tae
t facts JJ&* '*i;*'l it to make
"The National iank of Prosperity
then encloses the -ote, application and
statement in aa envelope and sends It
to the Federal Reserve Bank of St.
Louis. The letter arrives at the Reserve Bank, say at 9 o'clock in the
morning, is imq»«41ately opened, entered on our of** 'ng book and given
to the credit d^> -ftment The first
thing the credit »<*partment does is to
see whether we a*ve on file the bank's
authority to rediscount. This is nothing but a copy of the resolution of the
Doart of Direct*** of the National
Bank of Prosperity, giving the president, vice presW-eat or cashier the
right to rediscount P*per with this
bank.
«
We have draw* UP this form of authority to rediscount, and have sent a
copy to each of tf*S member banks of
district No. 8, aai * great majority of
them have signed- same and returned
it for our files. If the authority to
rediscount is in Mr hands, then the
credit department proceeds to go Into
its files to find out the condition of
the National Bapk of Prosperity, offering the loan, and then, on blanks
prepared for the purpose, to take the
figures given oo the statement attached to the note and find out what
are the quick assets and current liabilities of the maker of
the note. It wfc be kept dts"thrcuy in ral^ t&at there is a
marked differed between fixed assets and quick • ats. To determine
what constitute* ulck assets, these
arc broadly deft ^d to be: Articles
intended for sate in the customary
transactions of tM note maker's business and resultiu assets created by
their sale. Th«s| quick assets are
what the borrower chiefly relies on
promptly to meet his current liabilities.
Request* for Rediscount
Are Passed oi IQuickly.
"Current liabllltiLA are the debts of the
noteinaker contracted chiefly for the
things he expeots to sell and which he
must pay within a short time, as distinguished from debts maturing over a
period of years, lie must be prepared
to meet his e u n n t liabilities from
week to week Jer month to month,
whereas bite longtime debts he prepares to meet b£ years. Quick assets
in the financial Sjtternent of the farmer include cash, accounts receivable,
rotes receivable*, live stock and farm
products on baa .
"After the con* ition of the bank has
been ascertained and the statement of
, the maker of V i note has been analyzed.- H wmei »efore our Executive
Committee and te facts are stated to
tnai tonuuiiCeA This c6mm«tt#M\ realising that the farmers' statements
will sometimes-fail to show a satisfactory margin of quick assets, gives due
consideration to the value of farm
lands in localities where farms are
readily salable. If the offering \n acceptable the rediscount is authorized.
"It has been said by some, who were
not fully advised, that they could not
do business with this bank on account
of the red tapo that was necessary. I
hope it is clear from the above that
there Ms absolutely no red tape requtred by this bank in connection with
a loan. There H not one thing asked
for that good banking practice does
not demand. A. banker, wnether of the
ctty or country, cannot make a lo»n in
a satisfactory way unless he knows
about the borwwer. and this bank
only want* to kaow what he knows. If
there Is any red tape about the methods of the Federal Reserve Bank of
St Louis there is no one more anxious
to find It out than this bank. Whenever It can be shown that there Is any
red tape ra oo««oetion with the redlsoountlng of a !oan it unquestionably
will be eliminatsi.
"There is also oo delay te passing on
loans offered for rediscount. Not
once, but many times, we have had a
innr, \\vt> the or <• mentioned above offered by the *• atlonal Bank of Prosperity come if* bo malls) at 9 o'clock,
to tbrouaii th# ^awas of the credit department, be ipislWia to the KxrcuUve Committee, which meets at 10:30.
be passed on and the proceeds entered
to the offering bank's credit by 11:80
o'clock the same morning.
Bank Has 44 Employes
On Its Pay Rolls.
"In this wsy the rediscount of
George Brown comes Into the possession of the Federal Reserve Bank of
St Louis. Tharo It stays until 10 days
before the maturity of the note. In
this instance Id days before August 1.
and on July 82, unless the National
Bank of Prosperity has Instructed
that tt be istmasil to It sooner, the
note Is taken xrt of the discount department of the Federal Resents
Bank of St Lruts and returned to the
member bank* so that it will have ample time to present it for payment and
protest it to hfld Indorse™ if that becomes necessacr. On the day it is sent
out, it Is not charged to the account of
the National Baak of Prosperity. This
is not done until August 1. the maturity of the note. If the National Bank
of Prosperity wtthes to keep its deposit from batag depleted by the
charge of th«f note against it on the
books of the sjbdet** Reserve Bank, tt
can, of c o y aaad another piece of
fie/. reAjcfe HP *> *»* the proceed*
of the*a*C*sbfc~ ~^ be tM*v«d to !+s
credit ..
\
"When the .National Bank of Prosperity take* Jk* aote of a business
mac. It raajr be payable more than
90 days from dais, say four months.
A' four moat as' note of a business
man is not subject to rediscount by
us, but when tt has run one month
and has only w days to run from the
time it is c " >red to the Federal Reserve Baak >r rediscount, this bank
can take tt The samo way with a
farmer's note. When it is taken by
the baak It -may have nine or 12 or
even more sttafh* to run, but when
it has only "ix months to run from
the time it l.« offered to this bank it
can be rediscount*!.
"The Fed«i*al Renerve Bank of St.
Louis is as Usjproughly organized ai its
demands require, and is performing
all of the fmKJtton* required of it under the Fodoi*al reserve act. It is more
thoroughly developed than the reserve
bank of any other district, with the
exception of Kansas Ctty. ft has its
own force si id is not borrowing help
from any ©1 her back. It never did
this, except to a very limited extent
the first few days of its existence. On
its pay roll It has 44 employes. The
bank umraf ;jton»t ly can be of taa
greatest help to. it* members and.
through its member*, to the general
public. It is necessary, however, that
the -member banks oecome thoroughly familiar with the opportunities j
which the Federal Reserve Bank of'
St. Louis offers, S3 that they can take
advantage of them."
Federal Reserve Chief and His Hosts
WLLIAM MfcC.MMSTin. fcOLLfc VIQAS
HAMLIN TELLS AIM
OF RESERVE BANKS
Governor of Federal Board Telfs
Business Men's League They're
Not to Make Money.
MAY
REGULATE
DISCOUNTS
"St. Louis Member One of Greatest in United States/' Declares Official.
Tho new bucking aad currency* m*
tem created by the F«drnrt reserve act
ilstst fall is not, as many persona
bnt will
(ftrougL
I Tin imil >e imyfftltt tyoryencles, acIcordmg to Charles 8. HlWUnrGovernfor of the FedfrmJ Reserve Board,
[Washington. D. C., who arrived'in tfc
Louis yesterday.
Hamlin, who is on his way home
from a trip to California addressed
1 the Business Men's League of 8t Louis
Ut a special luncheon at the Planters
(Hotel.
! "What Is the function of the Federal
system?" said H^amlin. "There
been two schools of thought on
^_is
point.
One pictures the Federal
t
i Reserve Bank as only an emergency
bank, which might as well remain
closed most of the time, with cobwebs
on tho rtrsks. Another pictures It as
ordinary hank, which should compete
with members banks i<*d try to earn
money.
May Regulate Discount Rates.
"The truth is about midway between
these extremes. The Federal Reserve
Bank will relieve stringency by providing a place where sound commercial paper will be rediacounted, but the
bank should go forward and do its
best to prevent any emergency arising. As to the other view, the timemay come when the Federal Reserve
PanV: may have to d<» something which ,
looks like a regulation ef the dlacoim*rate.
"The Federal Reserve Dank will be
operated not only for tho benolit of
the member banks, but for the pf»<>»»'«
of tho TInifed States, too. ThH I
concoptldn of the Federal T\c
Hoard, and It was tho fundamental
Idea of "Congress, in enacting the new
There .IMC •.>
Digitized fornot
FRASER
(01 oL tb
• • V^
/ •
CHAfcLC S.
make their expenses. I believe
„
them do, but even If not one of them
made expenses It would not militate
against the worth of the new system.
No railroad aor other large business
could hope to earn expenses in the
first year of its existence.
m. Not Intended to Make Money.
(
"And the Federal reserve banks
were not organized to make money,
but to help the people of the United
States. Whether they make or lose
money is immaterial.
"While in the west, I prepared figures distributing the total cost of the
operation of the San Francisco bank
among the member banks of the reserve district. If the San Francisco
bank had not made expenses nor any '
part of them, but everything had been
charged to the member banks, their
profits would have been lowered by
one-fiftieth of one per cent.
"Sometimes you hear a comWatat
from a banker that his paper Is not
eligible for rediscount. Usually this is
a mistaken idea and he finds most ef
the notes In his portfolio are eligible
and wlll.be readily rediscounted by the
Federal Reserve Bank of his district.
"But if it Is true that he has no
eligible paper, then ho had better call
a meeting of his directors and re-establish the institution as a commercial
bank.
"We hope that every State bank and{
trust company doing a commercial
business will join the Federal rusenre
system. Tho Federal Reserve Board
will publish Its regulations soon, and.
we hope they will be so fair tbou-j
sands of State-chartered Institutions'
will decide to join.
'
<
Can't Prevent
"The board has power to prevent any
undue
expan^on
<*»f tv..»-»~y
in *jx^ i
United States. Xhe-^d^vldual mayii
speculator, the batok expaficl, trtjflf they11]
crfnot drag down wlthihera the bust- i
neWTJf*Tn*e nation."
ETDeglnnlhg his address, Gov. Ham-;
lln commented upon "the marvelousj1
growth of St. Louis in the last seven
or eight years," since he last washer*,}
and declared the St. (Louis Fed-eral Reserve Bank to be one of th&i
great Federal reserve banks of the <;
country.
|i
v. Hamlin, "and when Itolla Wells
accepted the post of governor we knew i
it was all that was necessary to makej
the St. liOuis Federal Reserve Bank]
one of the greatest In the United7
States. Mr. Wells didn't want the post,
but he Is a man of public spirit, and;
In patriotism he took up the work."! J'>',
In the afternoon Gov. Wells and*
Chairman Martin took him for an automobile ride, and late In the afternoon Gov. Wells was host at an in•ormal reception in the visitor's honor,
it the Log Cabin Club. Gov. Hamlin
alsq attended tho dinner of the Louis-i4
iana Purchase Exposition directors at 4
the Jefferson Memorial building lastj
night, departing for Washington atg
midnight.
1
This document contains internal or confidential information and has
been removed.
Author(s): Federal Reserve Bank of St. Louis; William McChesney Martin; Jennie Boyd
Title: Minutes of the First meeting of the Ten Year Club
Date: November 17, 1924
Page Numbers:
This document is protected by copyright and has been removed.
Author(s): Globe-Democrat Staff Writer
Article Title: The Federal Reserve Bank of St. Louis Is So Careful It Preserves Waste
Paper
Journal Title: The St. Louis Globe-Democrat magazine
Volume Number:
Date:
November 6, 1927
Page Numbers:
Issue Number:
8o, u.ity or the lost lette
Just po^lbly. ,„ r l M e t N o . „ o f
SOme cal, , hlH t h e machine age The
interior department of this great bank ,.
almost aa mechanistic. In one way of
speaking, as is the inside of an ocean liner
below decks. This awed observer counted
no less than forty-five different kinds of
batteries of machines used in transacting
the business of the bank—cot Including
the battery of six-shooters, either. A catalogue of these machines would read somewhat like the "cataloguey" passages in
Borne of the eminent Walt Whitman's
poems.
Consequently the complete list
will not be attempted.
erc are others. Why name them?
There are, of course, adding machines,
aud many or them. There arc listing-adding and combination typesetting machines; tabulating machines, check indorsing machines, envelope opening machines,
envelope sealing and stamp affixing machines, bookkeeping machines, calculating
machines, coupon cutting machines, currency canceling machines, currency counting machines, coin counting machine*.
sealing wax machines, sisrnopraphs for
signing checks In group, an autocall device, a master clock system for time
stamps, bond canceling machines, folding
machines, an air dryer machine, and—O
Efficiency'—a machine that scrubs the
floors.
A n d th
template them. Get deeply into your system the one outstanding conviction that
the Federal Reserve Bank of St. Louis is
a vast conglomerated aggregation of the
most modern of mechanical device* COC3P>
pletely co-ordinated for the protection of
the deposits of its more than 600 member
banlts in seven states and for the smooth
acceleration of the bankiag business of the
Eighth Federal Reserve District
But
please pause not there, for by n* means
all is said when that is said. Remains yet
the human element, the bank's officials
and its 250 emDloves.
Neither the employes nor the officials
are machines. They are the masters of
the machines. The machines, ergo, are
their servants. If the men higher up who
conceived and created this banking plant
bad been less human they might have taken it for granted that an employe is a
mere machine. But to the contrary, they
built the bank and are operating It under
the thesis that a bank employe Li considerably human, and the more human the
better for the business.
Thus it cam*
about that in this institution there ar«
unique features calculated to keep the employes in good physical condition, which
contributes toward conservation of their
mental fitness.
Every Precaution Taken
to Deaden Office Noise
Those who planned this building tools
cognizance of unnecessary noise and determined, so far as was practicable, to de»
away with it. Floors and ceilings throughout the bank attest the efficacy of noise*
reducing construction. It is easy to understand that the rubber tiles with which
the floors are surfaced must produce a less
noisy response to the human tread than
would tiles of cement or stone. But just
how can tne ceiling of a chamber be more
o
<
ss>e
or less of a silencer? Acoustical treatment is the explanation. The visible sur.
face of the ceiling is made of a perforated
"paper" which is very much more substantial than ordinary paper, of course. Above,
this is an air space of 14 inches, t)v-a
comes a hidden ceiling, t^at^d with a
felt-like material.
Enter any of the big workrooms in this,
hank, where machines of various kinti»
are clicking away—such aa typewriters,
tabulators or calculators. You will ie impressed at once by the comparative quiet
that prevails. The ceiling is
~
sponalble for this pleasant
some way it absorbs the noi
rubber-tiled floor helps along,
cers state that the general mol
employes is conserved quite
bythe elimination of the cl
cTJIhmon to ine average ${£
room.
Another factor in maint
creasing efficiency is the arr ,
the desks. Some of the huge re
large vacant spaces in the center or, if t
inner wall happens not to open upon a
court, along the inner wall. Wasted space flj
Not at all, according to the officials of
this institution. To the contrary, it i»~
space ot value in providing air for breathy
ing. But for working purposes it is of?
no usf. at all.
It has been determine*
through experiment that persons engagedN
in such work as this bank requires ar«1i
considerably more efficient if their desks ^
are place] comparatively close to windows^*
Consequently the rule here is that 30 feet&
from daylight, except, of course, in th«rbasement, is the desk limit. The carry-""!
ing put of this rule does not crowd th«J*
employes, for there was a surplus of roonafc
in the first place.
There are recreation features in th«L.
building which help to keep the-employes»'
fit. A bowling alley is one. Rest rooms?*;
ani provided for both men and womenj*
On the fourth floor is a cafeteria for offlSy
clals and employes, where meals at cosiy
are served. Tho bank has its own bakery^s
turning out all the bread required.
An assembly hall is another unusual a&N
Junct. A social organization of employes?
known as the Four-Four Club, uses thsC
hall at times. There Is also the Four-FouiT
Saving I,oan Club, which in four years
has built up a capitalization of $25,000,,
This was formed with a view to keeping**
employes out of the clutches of loan,
sharks, or getting them out if already in*
It is a son of little bank within a huge/
bank, in which employes may deposit for
saving purposes and from which they may
borrow money when needed. It should b«
unnecessary to say that the Saving Loan
Club is highly popular and that the cele«
brated Federal Reserve act has nothing}
whatever to do with its creation or operation.
It was under that act of Congress, passed
in the first administration of President
Woodrow Wilson, that the Federal Reserve
system was created. District No. 8 includes most of Missouri, the southern parts
of Illinois and Indiana, the western parts
of Kentucky and Tennessee, about half of
Mississippi and the whole of Arkansas.
Ths Federal Reserve Bank is not a bank
in the ordinary sense. It is a bank for
banks. Individuals cannot deposit or borrow funds. Only the member banks
throughout the district have those privileges. Although the Federal Reserve system has been in operation for a dozen,
years, it is said by some of the local officials that sor.e citizens still have the notion that tho Federal. Reserve Rank of St.
I/Ouis Is an crdinary banking institution.
Every now and then somebody enters the
building with a wad of currency or a
bunch of clucks and sustains a mild shock
when told that private accounts are not
handled.
The chi.-f officials for the Eighth District are William McC. Martin, chairman
of the board and Federal Reserve agent;
D. C. Biggs, governor; E. J. Novy, general
auditor; J. G. McOonkey, counsel and
secretary, J. W. White, cashier. There are>
branch hanks at Louisville, Memphis and
Little Rock.
This document contains internal or confidential information and has
been removed.
Author(s): William McChesney Martin
Title: Anniversary Dinner (Memorandum)
Date: October 24, 1939
Page Numbers:
@FedFRASER