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The Federal Reserve Bank
Of Atlanta
Sixth District
Franklin M. Garrett

-PREFACEThis account of the founding, development and progress of the
Federal Reserve Bank of Atlanta and its Branches was undertaken in
1962 at the request of its late President, Malcolm H. Bryan, and of
his successor, then First Vice President, now recently retired
President, Harold T. Patterson.
Superimposed upon full-time employment its preparation took
much longer than concentration upon it alone would ordinarily have
required. Since, however, a variety of activities are essential to
the well being of man, it often proved to be a welcome and by no
means unpleasant diversion.
It is hoped that the history will prove useful to the Bank and
to anyone having occasion to examine the background of what is,
indeed, one of Atlanta's most significant business, financial and
economic institutions.

Atlanta, Georgia
December 31, 1968

Franklin M. Garrett


Background and Organization


Chapter 1. Events Leading to the Concept of a Federal Reserve Banking System


Chapter 2. Organization of the Federal Reserve System.


Chapter 3. Organization of the Atlanta Bank, 1914



The World War I Period


Chapter 4. 1915


Chapter 5. 1916


Chapter 6. 1917


Chapter 7. 1918


Chapter 8. 1919



The Prosperous Twenties


Chapter 9.



Chapter 10.



Chapter 11.



Chapter 12.



Chapter 13.



Chapter 14.



Chapter 15.



Chapter 16.



Chapter 17.



Chapter 18.




The Troubled Thirties


Chapter 19.



Chapter 20.



Chapter 21.



Chapter 22.



Chapter 23.



Chapter 24.



Chapter 25.



Chapter 26.



Chapter 27.



Chapter 28.



The Forties, War and the Aftermath of War


Chapter 29.



Chapter 30.



Chapter 31.



Chapter 32.



Chapter 33.



Chapter 34.



Chapter 35.



Chapter 36.



Chapter 37.



Chapter 38.







Chapter 39.



Chapter 40.



Chapter 41.



Chapter 42.



Chapter 43.



Chapter 44.



Chapter 45.



Chapter 46.



Chapter 47.



Chapter 48.




The Bank Turns Fifty in New Quarters


Chapter 49.



Chapter 50.



Chapter 51.



Chapter 52.



Chapter 53.



Chapter 54.

Epilogue, 1965-1968


Background and Organization

Chapter 1
Events Leading to the Concept of a
Federal Reserve Banking System

Abraham Lincoln’s first political speech, delivered at New Salem, Illinois in
1832, was admirable for its brevity. He said:
“Friends and Fellow-Citizens:
I am plain Abe Lincoln. I have consented to become a candidate for the
legislature. My political principles are like the old woman’s dance - -short and sweet. I
believe in a United States Bank; I believe in a protective tariff; I believe in a system of
internal improvements, and I am against human slavery. If on that platform you can give
me your suffrages, I shall be much obliged. If not, no harm done, and I remain
respectfully yours,
Abe Lincoln.”1/

Candidate Lincoln’s belief in a United States Bank was not concurrently
shared by the man in the White House. Indeed, President Andrew Jackson was soon to
be instrumental in the demise of the Second Bank of the United States. Of the four
planks in Lincoln’s simply stated platform, the first was the last to become a permanent
reality and that long after the future president had served his day and generation.
Of the founding fathers, Alexander Hamilton realized more keenly than the


others the necessity of a strong central bank to restore American credit following the
Such a bank was needed to provide commerce and industry with working
capital, to direct banking policy, to lend to the governments and to serve as a fiscal
agent to the Federal government. The First Bank of the United States was intended as
both a commercial and a central bank. When it began operations in Philadelphia in
1791, under a Federal charter good for 20 years, there was less than half a dozen
banks in the United States--all located in Boston, New York, and Philadelphia.
From the start the Bank was feared and criticized as undemocratic. Since the
Constitution gave Congress no specific authority to found a bank, the action of
Congress in doing so was regarded as loose interpretation of the founding document to
benefit special interests. Hamilton himself was known for his distrust of the masses and
association with men of wealth. The Bank, with its eight branches, was a corporation
and in an era when a company worth $200,000 was looked upon as big business, the
$70,003,000 Bank seemed overpoweringly large. It held a third to half of all the specie
in the country and was assured a favored position in dealing with the government. It
soon began to dominate the rapidly growing state banks. This was perhaps its greatest
service to the natia1 and, ironically, the cause of its downfall.2/
As fiscal agent, the Bank was custodian of import duties and other tax funds.
It accumulated state bank notes, regularly presented them for redemption, and refused
to accept notes of non-specie-paying banks. This policy, inevitably, lessened the state
banks’ opportunities for profit, for they had to limit loans commensurate with the
retention of a safe supply of specie. The Bank thus kept them from over lending and


inflating the currency. All merits aside, however, and the fact that the Bank was a
complete financial success, availed not. Congress, by the slight margin of one vote in
each house, refused to renew its charter and the Bank ceased to exist in 1811.3/
Congress soon had cause to regret its action. The Bank was sadly missed
during the War of 1812. The war stimulated currency inflation. When the British
captured Washington in 1814, all but the New England banks suspended specie
payments. By 1816, the country was ready for a Second Bank of the United States. The
new Bank, chartered that year for 20 years, was modeled after the First Bank, but with a
capital of $35, 000, 000 and 20 branches.4/
The Second Bank, through its Southern and Western branches over loaned
and helped to precipitate the Panic of 1819. Its vigorous collecting policy ruined both
individuals and state banks and created some implacable enemies. During the 1820’s,
the Bank kept state banks from over lending and was criticized as a great monopoly.
During the presidency of Andrew Jackson, some of his political associates claimed that
the Bank discriminated against them in its lending policy.5/
The President was no friend of the Bank. Nicholas Biddle, its head, knew this
and feared Jackson could not be trusted to renew the Bank’s charter. Biddle, therefore,
agreed with Henry Clay to make this question a major issue in the presidential
campaign of 1832. Clay lost and the Bank was doomed. So also did young Abraham
Lincoln, running for the Illinois legislature that year, though his loss had no direct
bearing upon the future of the Bank.6/
After 1833, the Treasury deposited its tax moneys in favored state banks that
came to be known as “pet banks.” From then on the regulatory powers of the Second


Bank were practically nil. Indeed, the Banks, which had meanwhile taken out a
Pennsylvania charter, failed during the Panic of 1837. Congress did not renew its
From 1837 to 1862 the country got along with state banks, some of which
were good and some not. The state banks broke down during the Civil War and in 1863
Congress, largely at the urging of Treasury Secretary Salmon P. Chase, passed a
National Currency Act, which provided for a national banking system. Under this
arrangement local banks took national charters, issued notes secured by national
bonds, and carried on business under Federal supervision. 8/
This system, however, had four major defects. First, the supply of bank notes
was not elastic and was not susceptible to increase or decrease with the needs of
business. Bank notes had to be backed almost 100 percent by government bonds and
thus the supply of notes was keyed to the supply and price of bonds. Second, national
banks could lend little to farmers because the chief collateral of farmers was real estate.
Third, the method of collecting checks drawn on distant banks was costly and time
consuming. 9/
Fourth, and most serious, in time of panic or depression, banks in distress
had no recourse for help. Practically no bank, large or small, could pay off all its
depositers when faced with “a run.” Small banks kept some of their reserves in large
banks so as to draw interest. The latter, especially those in New York, loaned some of
these “on call” finds to stockbrokers, taking securities as collateral. Consequently, when


a financial crisis developed, and all too many did, small banks demanded their reserves,
large banks called their loans, call money rates rose sharply, speculators were forced to
dump their securities and panic followed.10/
After panics of varying severity in 1873, 1884, 1893, and 1907 had closed
hundred of banks and ruined countless individuals, Congress passed the AldrichVreeland Act of May 30, 1908, by which a National Monetary Commission was set up to
study foreign banking systems, American banking history, and to recommend necessary
bank reforms. A Federal Reserve Banking System was not many years away.11/



Chapter 1

Quoted, Paul M. Warburg, The Federal Reserve System. Its Origin
and Growth. (2 Vols. New York, 1930) II, 160-16 1. Hereafter cited as
Warburg, Federal Reserve System.


John S. Bassett, A Short History of the United States 1492-1920, (New York,
1923), 858;
Collier’s Encyclopedia, (20 vols., New York, 1257), 3, p. 76.


Bassett, A Short History of the United States, 858; Collier’s Encyclopedia, 3,
pp. 76-77.


Ibid, Bassett and Colliers.

















Chapter 2
Organization of the Federal Reserve System

From the studies conducted by the National Monetary Commission came, in
1911, the Republican-sponsored Aldrich 1/ plan, recommending the creation of a central
reserve bank by national charter with fifteen branches in as many districts. The stock of
the bank was to be owned by the banks themselves, and direction was left in the hands
of the directors chosen by the corporation.2/
The plan was not acceptable to the people at large. As Paul M. Warburg, the
noted banker, expressed it: “The view was generally held that centralization of banking
would inevitably result in one of two alternatives: either complete government control,
which meant politics in banking, or control by ‘Wall Street’, which meant banking in
politics. Abhorrence of both extremes had led to an almost fanatic conviction that the
only hope of keeping the country’s credit system independent was to be sought in
complete decentralization of banking.”3/
While the Aldrich bill failed to become law, it would nevertheless be a great
injustice to deny its author credit for the invaluable service he rendered by boldly cutting
loose from the antiquated principles on which American banking legislation had until
then been resting and in proposing a plan which was recognized as constituting so
great an advance that even its defeat made it inevitable that any substitute plan would
have to adopt many of its principles and essential features.4/
The Monetary Commission amended its plan in 1912 but its main features
remained the same. The amended plan was rejected by public opinion because it was
believed to be as monopolistic as the old central bank. But the work of the Commission


was important; for it showed the people what the problem was that confronted them.5/
Then came the presidential election of 1912. Both Republican candidate Taft
and Democratic candidate Wilson promised to reform the currency. Wilson won the
election and took office with definite ideas on the currency question. In fact, the
committee on banking and currency had made much progress in formulating a plan. As
soon as the Underwood tariff bill was out of the way, the House turned to this subject.6/
On June 23, 1913, President Wilson addressed the two houses of Congress on
currency reform and declared that there must be an adequate and elastic currency
under government control. He had previously had many conferences with Senator
Robert L. Owen 7/ and Representative Carter Glass, 8/ chairmen, respectively, of the
Senate and House Committees on Banking and Currency. A bill had been prepared,
known as the Owen-Glass Bill. It was introduced in each house on June 26.9/
The currency debate proved longer than the contest over the Underwood tariff,
but in the end the administration obtained most of what it asked for. It was in the Senate
that strongest objection was made. Debate produced two groups of opinion. One
represented those who distrusted large capitalists and wished to limit the power of the
banks to control the proposed reserve bank. The other was composed of men who felt
that the banks alone knew what kind of banking facilities the country should have. This
group wished to limit the power of the government in the matter. President Wilson stood
between these extremes.10/
The bill was carried through the House without material change but struck stormy
weather in the Senate. Indeed, it was not passed by that body until it was made a
subject of action by the democratic caucus, thus becoming a strictly party matter. It was


finally signed by the President on December 23, 1913, after the Congress had passed
into the regular session. On the final vote it received the support of 34 Republicans and
11 Progressives in the House and three Republicans and one Progressive in the
Senate, thus showing that it had lost something of its partisan character.11/
Shortly after signing the Federal Reserve Act on the afternoon of December 23,
President Wilson said: “We have slowly been coming to this time which has now,
happily, arrived when there is a common recognition of the things that it is undesirable
should be done in business, and the things it is desirable should be done.” He added
that the time had come to cease struggling over the limitations under which business
was conducted and adopt measures that would be just in themselves and establish
what he called “the constitution of peace” in industry.12/
On the same day, David F. Houston, 13/ Secretary of Agriculture, recorded in his
diary: “The impossible has happened. Today, Tuesday, December 23d, the currency
measure became a law. The President approved it a few minutes after six o’clock in the
afternoon. It was passed by a Congress dominated by the Democrats, two-thirds of
whom had been unsound on currency questions and a majority of whom can scarcely
be said to have understood what the measure meant and would accomplish. The
majority of the Republicans had also had an unenviable record on the currency. Bryan

and several other members of the Cabinet had supported free silver, as had Vice

President Marshall, the Speaker, Champ Clark, and many Democratic senators. The
measure itself was the result of the labors of many men, extending over a long period,
but its passage at this time in its present form was due to Woodrow Wilson, ably
supported by McAdoo 15/ Glass, and a few others.”16/


In commenting on the Houston diary entry just quoted, Banker Paul M. Warburg
“This refreshingly unbiased account by a loyal Democrat gives us a just
description of the origin of the Federal Reserve Act: it was, in truth, ‘the result of the
labors of many men, extending over a long period.’ Individuals and associations in all
parts of the country, businessmen and economists, stirred up by the disaster of 1907,
had struggled with the problem and, step by step, had worked their way towards a
better understanding of the great principles that would have to underlie monetary
reform. Had it not been for this pioneer work, the Democrats, when they came into
power, would never have been able to bring about the banking legislation which some
of them now claim as the exclusive achievement of their party…”17/
Certainly the text and substance of the Aldrich Bill was of invaluable aid to the
“framers” of the Federal Reserve Act.
The Federal Reserve System did not replace the National Banking System, it
was superimposed on it and sought to correct the older system’s chief faults. All
national banks had to join the Federal Reserve System; state banks might join if they
conformed to Federal Reserve requirements, though few joined at first. Member banks
provided the capital for the twelve Federal Reserve Banks by buying stock equal to 3
percent of their capital and surplus. The Federal Reserve Banks were thus privately
owned, although control and supervision at the top rested in government hands. The
whole system was headed by a Federal Reserve Board of seven, appointed by the
Prior to the opening of the Federal Reserve Banks on November 16, 1914, the


“Organization Committee, “ provided for in the Federal Reserve Act, underwent a period
of much travail and soul searching before completing its work. The “Committee”,
composed of the Secretary of the Treasury, the Secretary of Agriculture, aid the
Comptroller of the Currency had, among other responsibilities, the controversial chore
of determining the number of Federal Reserve District s (the Act specified 8 to 12), their
geographical extent and the site of the home banks in each district.19/
Some of the basic problems confronting the Committee with respect to
geography and location were set forth by Paul M. Warburg in “Testimony before the
Reserve Bank Organization Committee in January, 1914.20/
“In trying to divide the United States into eight Federal Reserve Districts, we
were meeting a peculiar problem. The little corner on the map embracing New York,
New England, and Pennsylvania would contain $800, 000,000 of national bank capital
and surplus, as compared to a total of the United States of $1, 700, 000, and if we draw
a line from north to south, ending in Kansas City, and a line from there to St. Louis to
the east, we find that this sector, which is less than a sixth of the area of the whole
United States, would contain $1,250,000, OOC as against the total of $1, 700,000.
“This shows clearly the difficulty we meet in organizing the remaining territory
outside of this sector, for in order to cover five-sixths of the entire territory of the United
States, there are left only $450, 000, 000 of national banking power. Of these, $80, 000,
000 would belong to California and about $30,000, 000 to Washington and Oregon, so
that for the whole remaining territory, namely twenty-six of the geographically largest
states, there remains only a national banking power of $340,000,000.
“Six percent of these $340, 000, 000 would produce $20, 000, 000 of Federal


Reserve capital, if fully paid, and these $20, 000, 000, out of $102, 000, 000 would have
to cover the two Virginias, the two Carolinas, Kentucky, Tennessee, Alabama, Georgia,
Florida, Mississippi, Louisiana, Arkansas, Oklahoma, part of Kansas, Texas, New
Mexico, Arizona, Colorado, Utah, Nevada, Idaho, Montana, Wyoming, Nebraska, and
North and South Dakota.
“This admits of several conclusions: First, that the financial preponderance of the
northeastern angle of the United States is such that no matter how the country will be
divided, it will have to rely for its financing largely upon the banking power of this section
of the country.
“Second, this being so, that the fluidity of credit which will follow the development
of discount markets and which this law is destined to bring about, must depend upon
the strength and efficient organization of this section, and that, consequently, any
attempt artificially to reduce this strength would of necessity weaken the entire structure.
“Third, that in constructing the Federal Reserve Banks, care should be taken that
the centers of each district are situated towards the eastern border of the western
districts, and rather toward the northern border of the southern districts, because
financially and commercially the direction must of necessity be towards the financial
center; and from an administrative point of view, it is important that these branches be
within the nearest possible reach of Washington. The distance to be covered by each
head of a Federal Reserve Bank or by the members of the Federal Reserve Board
should be reduced to a minimum as far as feasible, whereas members of the branches
lying further to the west or south would have to carry the burden of traveling a little
further east or north to the meetings of the Federal Reserve Banks. For clearings and


transfers it will be equally important that the letter travel in the right direction which, in
the majority of cases, will be to the east and north.”
Faced with these general questions and the even more urgent appeals of
numerous specific cities to be chosen as headquarters for a bank, the Organization
Committee had no easy time. In due course, however, the Committee divided the
country into twelve Federal Reserve District and designated in each a Federal Reserve
Boston was designated as the Federal Reserve city for district No. 1; New York
for district No. 2; Philadelphia for district No. 3; Cleveland for district No. 4; Richmond
for district No. 5; Atlanta for district No. 6; Chicago for district No. 7; St. Louis for district
No. 8; Minneapolis for district No. 9; Kansas City for district No. 10; Dallas for district
No. 11; San Francisco for district No. 12.21/
A Federal Reserve Bank was duly organized at each of these cities. On May 1820, 1914, all filed their certificates of organization and thereby became bodies corporate
with the rights and powers enumerated in section 4 of the Act. Their organization was
officially announced by the Secretary of the Treasury and on November 14, 1914, they
were authorized by the Comptroller of the Currency to commence business. Two days
later all did so.22/
The Act creating the Federal Reserve System provided that the System should
be headed by a Federal Reserve Board of seven, of whom the Secretary of the
Treasury and Comptroller of the Currency should be ex officio members. The other
members were subject to appointment by the President, with the approval of the


President Woodrow Wilson gave much thought to the composition of this Board.
Several individuals approached by him declined, for various reasons, to serve. Finally,
however, the first Reserve Board was constituted as follows:
William G. McAdoo, Secretary of the Treasury, Chairman, ex officio.
John Skelton Williams. Comptroller of the Currency, ex officio.
Charles S. Hamlin,23/ Governor (2 years).
Frederick A. Delano,24/ Vice Governor (6 years).
Paul. M. Warburg 25/

(4 years).

W.P.G. Harding 26/

(8 years).

A.C. Miller 27/

(10 years).

And so the Federal Reserve System, one of the great accomplishments of
the Wilson administration, was launched. It gave the country the liquidity it needed—
perhaps in retrospect too much liquidity- -and was a vast improvement over the ad hoc
credit pools of the senior J. P. Morgan and others of the New York banking fraternity. It
is notable, however, that private bankers played a large role in the Fed’s formation. First
proposed in embryo by Paul M. Warburg of Kohn Loeb, it received powerful support
from Morgan’s partner, Henry P. Davison, as well as Frank A. Vanderlip of Stillman’s
National City Bank. And Morgan himself, who died just nine months before the
creation of the new structure, would have hardly contested its desirability.28/ He would
have applauded the way in which it met the extraordinary demands so soon to be made
upon it by the cataclysm of Works War I.


Chapter 2

Named for Senator Nelson W. Aldrich (1841-19 15) of Rhode Island, appointed
by President Theodore Roosevelt in 1908 to the chairmanship of the National
Monetary Commission.


Bassett, Short History of the United States, 859.


Warburg, Federal Reserve System, I, 12.




Bassett, Short History of the United States, 859.


Robert Lathem Owen (1856-1947) U.S. Senator from Oklahoma, 1907-1925.


Carter Glass (1858-1946). Representative from Virginia, 1902-1918; Secretary of
the Treasury under President Woodrow Wilson, 1918- 1920; Senator from
Virginia, 1920-1946. It is interesting to note that both Owen and Glass were born
in Lynchburg, Virginia and that both lived to an advanced age, 89 and 88,


Bassett, Short History of the United States, 859.






Ibid., 860-61.


David F. Houston (1866-1940). Served as President Wilson’s Agriculture
Secretary, 19 13-20; Treasury Secretary, 1920-21, and subsequently as
chairman of both the Federal Reserve and Farm Loan Boards.


Win. J. Bryan (1860-1925), perenniel “free silver” candidate for president and
Wilson’s Secretary of ~7të, 19 13-1915.


Win. Gibbs McAdoo (1863-1941), Secretary of the Treasury and President
Wilson’s soon to be son-in-law.



Quoted, Warburg, Federal Reserve System, I, 129.


Federal Reserve System, I, 130.


Collier’s Encyclopedia, 3, p. 78.

19 /

Warburg, Federal Reserve System, I, 781.


Quoted, Ibid., 759-60


Warburg, Federal Reserve System, I, 783-84.


Ibid., 784. The capital, deposits, and total resources of the 12 banks, after one
year of business, on November 12, 1915, stood as follows:

Federal Reserve Bank of Capital
$ 5, 171,000
New York
St. Louis
Kansas City
San Francisco

$22,218,000 $28,615,000
181,710,000 196,544,000
$374,317,000 $446,192,000

*Includes government deposit of $5, 000, 000.

Charles Summer Hamlin (186 1-1938). Born in Boston, Massachusetts;
practiced law in Boston, 1886-1893 and 1898- 1913; Assistant Secretary of the
Treasury, U.S., 1893-97 and 1913-14; Governor Federal Reserve Board,
Washington, 19 14-1936; Special Counsel to Board of Governors


Frederick A. Delano (1863-1953). Born in Hong Kong of Massachusetts
parentage. Railway official, 1885-1914; Vice President C.B. & Q; President
Wheeling and Lake Erie; Wabash and Monon. Member Federal Reserve Board
for 6-year term and designated as Vice-Governor far 2 years. Resigned 1918 to
enter Army Transportation Corps.


Paul M. Warburg (1868- 1932); banker; born in Hamburg, Germany. member


Kohn Loeb & Co. Member Federal Reserve Board, 1914-19 18.

William P. Gould Harding (1864- 1930); banker, born Greene County, Alabama.
Graduated University of Alabama in 1880 at age 16--youngest full graduate in the
history of the University. Served as president First National Bank of Birmingham,
Alabama, 1902-19 14; member of Federal Reserve Board, Washington, D.C., 19
14-1922 and Governor Aug. 10, 1916. Governor Federal Reserve Bank of
Boston, beginning January 1, 1923.


Adolph Caspar Miller (1866-1953), economist; born San Francisco, California.
College professor and author of papers on finance, banking, etc. Assistant to the
Secretary of the Interior, Washington, 19 13-14; member Federal Reserve Board,
Washington, 19 14-1936.


John Chamberlain, “A History of American Business,” Part IX -“The Rise of the
Money Power,” Fortune Magazine, Jan. 1962, p. 122.


Chapter 3
Organization of the Atlanta Bank, 1914

Atlanta did not, merely as a matter of course, achieve the distinction of
headquarters city for the Sixth Federal Reserve District. That honor was secured after a
vigorous and effective effort by the Atlanta Chamber of Commerce, local bankers and
newspapers and representatives in Washington, notably Senator Hoke Smith.
The Federal Commission, as a matter of fact, rather leaned to a plan which
would have located all the banks north of the Ohio and Potomac Rivers. Indeed, with
Commissioner John Skelton Williams1/ opposed, such a recommendation was made to
President Wilson. Largely through the intervention of Senators Smith, of Georgia, and
Culberson, of Texas, the recommendation did not prevail. Even so, Atlanta faced a hard
The fight was launched in the city of Washington on the night of June 23, 1913.
That was the day President Wilson delivered to Congress his address on the currency
James R. Gray, editor of The Atlanta Journal, John K. Ottley, Vice President of
the Fourth National Bank of Atlanta, and Senator Hoke Smith were parties to a
conference which was held at the Senator ~s home on the night of the day the
President delivered his message.
At this conference a campaign was outlined, and before the night was over steps
had been taken to boost Atlanta’s chances for a regional bank.
The campaign was based on the belief of Senator Smith, Mr. Gray, and Mr.


Ottley that the southeastern section of the United States should constitute a Federal
Reserve district and that Atlanta, as the center of this section, should be selected as
headquarters far the Reserve Bank. No departure was ever made from this basic idea,
and throughout the struggle it furnished the ground work for all arguments that were
advanced in Atlanta’s interest.
Messrs. Gray and Ottley went to Washington on the morning of June 23. They
occupied seats in the gallery of the House of Representatives when the President
delivered his memorable address on the currency question. As the two Atlantans left the
gallery of the ball, with Woodrow Wilson’s concluding remarks ringing in their ears, they
felt assured that currency legislation would be enacted by Congress before the snow
“We must have a regional bank in Atlanta, “ remarked Mr. Ottley. The sentiment
was indorsed by Mr. Gray.
That night the editor and banker called at the home of Senator Hoke Smith for a
conference. They learned to their great satisfaction that the Senator was in entire
sympathy with the President’s desire for currency legislation, and that he felt as keenly
as they did about locating a regional bank in Atlanta.
As a result of the conference at the Senator’s home, Mr. Gray wired Major John
S. Cohen, Managing Editor of the Journal, and suggested the wisdom of favorable
action by the Atlanta bankers with reference to the President’s currency program. This
was the second move.
The next morning, June 24, a meeting of the Clearing House Association of
Atlanta was held, and the members of the Association were informed of the conclusions


reached by Mr. Gray, Mr. Ottley, and Senator Smith.
Two hours later a telegram came to Mr. Gray in Washington informing him that
the Clearing House bankers of Atlanta had adopted resolutions commending the
President’s message and his demand for currency legislation.
This was the first affirmative action taken by a bankers’ association in America.
The telegram and resolutions were presented to President Wilson by Mr. Gray, and the
President was so much pleased that he asked to keep the telegram.2/
Later in the summer of 1913, things began to hum in Atlanta. In early August,
Chamber of Commerce President Wilmer L. Moore3/ wrote to each of the banks and
trust companies of the city calling attention to the fact that when the new currency bill
was enacted by Congress several cities would compete for regional banks and urged
the importance of prompt action.
Early in September, Mr. Moore received a call from Dr. W. J. Blalock, President
of the Fulton National Bank, who agreed with him as to the importance of early efforts
upon behalf of Atlanta.
Mr. Moore called Dr. Blalock’s attention to the fact that Senator Smith and
Congressman William Schley Howard were then in the city and suggested the
advisability of a meeting of the Clearing House with these gentlemen present. Dr.
Blalock at once took the matter up with the officers of the Clearing House and a meeting
was arranged. Senator Smith explained the status of the currency bill and gave his idea
as to what would be necessary to secure one of the banks for Atlanta.
As a result of this conference, it was decided to appoint a joint committee,
consisting of three from the Clearing House and three from the Chamber of Commerce,


to take charge of the work. The committee, not formally organized until Christmas week,
was composed of J. K. Orr,4/ Chairman; W. G. Cooper, Secretary; R. F. Maddox,5/ J. K.
Ottley, W. J. Blalock, John W. Grant6/ and Joseph A. McCord.7/
Meanwhile, a great deal of statistical work was done by the Chamber of
Commerce and considerable information was collected by J. K. Ottley and Dr. Blalock.
The secretary of the Chamber of Commerce, W. G. Cooper, prepared in the fall an
elaborate brief, including a statistical statement worked out by the American Audit
Company, showing the population, cotton production, and the banking power of the
territory within 300 miles of Atlanta and New Orleans. This, and other information was
transmitted to Senator Smith, who presented it to the members of the organization
committee in December, which gave Atlanta the first presentation.8/
The pot was kept boiling. More facts were compiled. They showed that Atlanta’s
population increased from 89, 832 to 154, 839 in the decade from 1900 to 1910; that
152 passenger trains arrived and departed the city daily; and that more than half the
merchants in the southeastern states traded in Atlanta.9/
In early December, 1931, Atlanta banker Robert F. Maddox was sent to
Washington to look over the situation. While there he talked to Georgia Senator Hoke
Smith and Augustus Octavius Bacon.10/ He was assured that Treasury Secretary W. G.
McAdoo, a native Georgian,11/ favored establishing a Reserve Bank at Atlanta, but he
was also warned that the selection of the site would be made on the basis of merit and
that the bank would be located where it would be most convenient to the area it
Mr. Maddox revealed these facts publicly when interviewed by a reporter in New


York. During the interview, Mr. Maddox stressed many of the paints in Atlanta’s bid for
the bank. He set out that Atlanta bank clearings had increased 400 percent in the
previous ten years and called attention to Atlanta’s favorable geographic situation with
respect to the proposed Reserve Bank region.13/
While Mr. Maddox was in New York, William Randolph Hearst’s Atlanta
Georgian 14/ joined the fight for a bank in Atlanta with an editorial on December 4. Said
The Georgian:
“Atlanta, reliable reports from Washington say, stands an excellent chance of
being made the site for one of the regional banks which will be created under the new
currency system.
“Robert F. Maddox says that if there are twelve central banks, there is no doubt
that Atlanta will have one of them, and if the Senate decides to cut the number to eight,
still he is confident.
“The regional banks, crudely described, will be the great reservoirs of credit. The
banker in Augusta or Jacksonville who has supplied the solid merchants and factory
owners of the city with the funds they need to carry on business and can bring the notes
these gentlemen sign to Atlanta and sell them at the regional bank. The funds he gets in
this way, he can lend, of course, to more merchants and manufacturers--and the very
limited amount of currency circulating in the nation by this means will be sufficiently
elastic to supply all the needs of business, it is hoped.
“The cities which possess the regional banks will become the financial centers of
their entire sections. It is history that when a city holds the purse strings, soon it
dominates in all other lines. One of the things which has built New York is the fact that


New York always has held all the money- -and one of the principal objects of the
currency bill is to take some of this power away from New York.
“There is no doubt, then, that the regional bank will be a good thing for Atlanta,
and there should be no doubt that Atlanta deserves it.
“From Virginia south to the extreme tip of Florida, from the Atlantic coast west to
the Mississippi River, Atlanta’s influence is felt. Already it is the trade center of this rich
area, and in large degree that financial center, though New York always has and always
will dominate money until the currency bill operates.
“Geographically and economically, Atlanta deserves the bank.
“There is another reason.
“Joseph A. McCord and Robert F. Maddox are among the most able students of
the currency question. Mr. McCord long has been a member of the currency
commission. Mr. Maddox participated in the famous conference of bankers at Chicago
and was the Southern member chosen to present the bankers’ views to the Senate.
“The Senate was so keenly interested that the two hours’ time it allotted to hear
the bankers’ case was extended to several days.
“Whatever improvement is seen in the bill as compared to its original draft will be
due more to Mr. McCord and Mr. Maddox than to any other men in the South.
“Having assisted so materially in formulating the plan which is to revolutionize
the nation’s banking system, Atlanta should have all possible benefits from it.”15/
Later in the month, on December 26, The Atlanta Georgian reported that
Senator Hake Smith proposed to the Secretary of the Treasury that Atlanta should be
the regional reserve bank in the South. The recommendation was placed on file for


further consideration.
“Atlanta’s claim as a reserve city,” said Senator Smith, “should meet with instant
approval. It dominates the entire country along the eastern seaboard up to North
Carolina; west into Tennessee; and along the gulf to the West Alabama boundary line.
Its growing ocean trade with New England and with the South American countries
makes it a desirable locality for a regional reserve city.”16/
The following day, December 27, the Organization Committee announced that
hearings relative to the designation of Federal Reserve cities and districts would be
conducted during the period between January 10 and March 1, 1914, and that a hearing
would be held in Atlanta. Also came word that New Orleans was an important rival in
the battle for the Reserve Bank of the South. Whereupon the local Joint Committee of
the Chamber of Commerce and Clearing House Association stepped up its campaign to
get the bank for Atlanta.17/
Valuable aid was forthcoming from Haynes McFadden, Secretary of the Georgia
Bankers Association, who did yeoman service in securing from several hundred banks
in the Southeast an endorsement of Atlanta’s application. Publisher William Randolph
Hearst again rose to the occasion. The following editorial, e~itit1ed “The Metropolis of
the South Should Be A Federal Bank Center, “ appeared in all of the Hearst
newspapers from coast to coast:
“The struggle of the cities for selection as sites for the new regional banks grows
strenuous. New York, Chicago and San Francisco, being obviously and necessarily
assured that they will be made regional centers, can look judicially upon the hot rivalry
of cities which most earnestly compete for recognition.


“As the entire country is to be divided into not less than eight, nor more than
twelve, financial districts, with one Federal Reserve Bank in each district, Atlanta can
hardly fail of recognition among the first eight cities chosen. It is not only the metropolis
of the rapidly growing South, but in banking and industrial importance, it has no rival
between the Potomac River and the Gulf. It is the political and commercial capital of a
state which raises more cotton than any state east of Texas, only the prodigious area of
the latter state giving it first place. It is the commercial center of that part of the South
lying east of the Mississippi and north to the Ohio and Potomac Rivers. The population
tributary to it, the population which a regional bank located there must serve, may
reasonably be estimated at more than 14, 000, 000. It includes all the people of
Georgia, Florida, Alabama, North and South Carolina, and a great number of the
communities of Kentucky, Tennessee, and Mississippi.
“The city and the section which it serves are alike advancing rapidly in material
conditions, commercial and industrial prosperity. In 10 years the population of Atlanta
increased from 89, 832 to 154,839, the figure fixed by the national census of 1910. Its
present population is estimated 200, 000.
“The region tributary to Atlanta has increased in population no less rapidly than
the city. The census gives the percentage of increase for the decade in Georgia as 42.
4--a greater ratio of increase than shown by any Southern area, unless Oklahoma may
be regarded as being Southern,
“The bank clearings of Atlanta, which in 1893 were $60, 753, 911, rose, in 1913
to $725, 604, 192. Over the year 1912, they showed a gain of $33,662, 937,
“There is no better index to the state of a city’s business than its records of bank


clearings. It measures with exactitude and furnishes an accurate index to the volume of
the city’s business.
“According to the census of 1910, the four cities immediately preceding Atlanta
in population were Toledo, Columbus, Portland, and Denver.. The Atlanta bank
clearings last year were almost three times those of Toledo, marc, than twice those of
Columbus, and exceeded those of Portland by $720,000, 000, and of Denver by $250,
000, 000.
“Figures of that sort express to the mind accustomed to reading the significance
of bank clearings the real reason for the preeminence of Atlanta as a regional bank city.
“Georgraphically; Atlanta occupies a commanding position in the center of a rich
agricultural and industrial region, with no city of equal size or character to contest its
primacy. Commercially, it is pushing and progressive. Its people used to call it the
‘Chicago of the South’, but abandoned the comparison as quite inadequate. That
showed the Atlanta spirit of self-confidence and self-assertion, two very essential
qualities in city building.
“No other Southern city is so largely an agency headquarters for great
manufacturing firms of the North. That fact, in itself, justifies Atlanta’s claim to be given
the banking facilities offered under the new law.
“We have no doubt that the Atlantans themselves will press their cause
vigorously before the officials having the settlement of the matter in charge. The Hearst
newspapers can add nothing to the array of facts and figures they will have to present,
though they give them a degree of publicity worthy of them. But there can be no
argument to gainsay them.


“The whole plan of the regional banks presupposes that one should be placed in
the territory of which Atlanta is the center. There is no other city in that region even
remotely qualified to compete with Atlanta for the distinction or be able to offer anything
like similar advantages as a financial center.
“For these reasons, Atlanta is entitled to a regional bank and doubtless will get
The prophecy was destined to be fulfilled!
On January 19, 1914, which Atlanta observed as the 107th anniversary of the
birth of General Robert E. Lee, more. than 450 Georgia bankers gathered at the Capital
City Club as guests of the Atlanta Clearing House Association. They met to let it be
known that the bankers of the Empire State of the South stood united in their resolve to
secure the regional Reserve bank for Atlanta.
Meanwhile, the Organization Committee was holding meetings and hearings
around the country. On February 13, it held its Atlanta meeting and set up for hearings
in the Circuit Court room of the then new, and still handsome, Post Office and Federal
Building at Forsyth and Walton Streets. Treasury Secretary William G. McAdoo called
the meeting to order, stated the objectives of the meeting, and invited hearings.19/
J. K. Orr, President of the Red Seal Shoe Company, Chairman of the Joint
Committee, representing the Clearing House Association and the Chamber of
Commerce, conducted Atlanta’s case at the hearing.20/ Reported the Atlanta Journal
after the hearing:
“J. K. Ottley, Vice President of the Fourth National Bank,21/ spoke on the trend of
banking, following Chairman Orr’s introduction. Robert F. Maddox, Vice President of the


American National Bank, 22/ came next, discussing banking in the Southeast. Joseph A.
McCord, Vice President of the Third National Bank,23/ hammered further argument
home under his subject - ‘The Financing of the Crops’.
“Wilmer L. Moore submitted a brief by the Chamber of Commerce, compiled
under the direction of Secretary Walter 0. Cooper, that was one of the most
comprehensive documents of its character that had ever been drawn up about Atlanta.
“Other briefs on distinct phases of the subject in hand were prepared and filed by
A. P. Coles, Vice President of the Central Bank and Trust Corporation,24/ whose subject
was foreign exchange; Mell R. Wilkinson, President of the Chamber of Commerce, on
cotton seed products and commercial fertilizer; Clyde L. King, President of the Atlanta
Agricultural Works, on the manufacture of agricultural implements; Oscar Elsas, Vice
President of the Fulton Bag and Cotton Mills, on the manufacture of cotton goods; R. S.
Wessels, Manager of the Pittsburgh Plate Glass Company, on the manufacturers’
agents located in Atlanta; Milton Dargan, Manager of the Southern Department of the
Royal Insurance Company, on fire insurance; Major R. J. Guinn, general agent of the
New England Life Insurance Company, on life insurance; and Jacob W. Patterson,
President of the Patterson Commission Company, on livestock.
“These are the men whose formal arguments in behalf of Atlanta constituted the
major portion of this city’s case. But there was much work to be done after they had
“Senator Hoke Smith began it by addressing the Organization Committee at the
very end of its hearing, Saturday afternoon, February 14. Columbia, Savannah,
Chattanooga, and Birmingham- -all claimants for the same distinction Atlanta sought- -


had been heard. The hearing was over--except for Senator Smith’s summary.
“Those who heard the Senator that afternoon, or who read his speech afterward,
remember the argument as one of the most powerful presentations of any subject they
ever gave attention to. All of the Senator’s training as a lawyer, as a debater, as a
thinker upon broad governmental questions was brought into play in that address.”
The meeting ended about four o’clock, after which a banquet was held at the
Capital City Club in honor of the members of the Organization Committee. That
evening the Committee left the city for Washington. Then came a period of several
weeks anxious waiting.25/
The decision of the Organization Committee finally came on April 3, 1914. It
brought jubilation to some cities; disappointment to others. Wrote Ralph Smith in the
Atlanta Journal that afternoon:
“The decision of the Federal Reserve Organization Committee selecting Atlanta
and eleven other cities as banking centers of Federal Reserve districts as announced
last night seems to have met with general satisfaction. Secretary McAdoo and the other
members of the committee were flooded today with telegrams from all sections of the
country commending their work. The only outcroppings of soreness and disappointment
came from the cities of Washington, Baltimore, Cincinnati, and New Orleans. The first
two of those were common rivals against Richmond and the Washington papers today
in their news stories profess surprise that the capital of the nation must in future transact
its banking business through the former capital of the Confederacy.
“Cincinnati, Louisville, and Pittsburgh were the common rivals of Cleveland,
which was named as the center of the fourth district. New Orleans was the rival of both


Atlanta and Dallas, but the committee felt that the facts did not justify the establishment
of a bank in the Crescent City. Atlanta made a much stronger case, as did also Dallas
“The official announcement by the Organization Committee describes the Atlanta
district as follows:
‘District No. 6 - - The states of Alabama, Georgia and Florida, and all that part of
Tennessee located east of the western boundary of the following counties: Stewart,
Houston, Wayne, Hurnphreys and Perry; all that part of Mississippi located south of the
northern boundary of the following counties: Isaguena, Sharkey, Yazoo, Kemper,
Madison, Leake and Neshoba; and all of the southeastern part of Louisiana located east
of the western boundary of the following counties: Pointe Coupe, Iberville, Assumption
and Terrebonne, with the city of Atlanta, Georgia, as the location of the Federal Reserve
“The district contains thirty-seven national banks which have accepted the
provisions of the Federal Reserve Act. The capital stock of the Federal Reserve Bank of
Atlanta, on the basis of 6 percent of the total capital stock and surplus of the assenting
national banks in the district, will amount to $4, 641, 415; and if there be added 6
percent of the capital stock and surplus of the state banks and trusts companies which
have applied for membership up to April 1, 1914, the total capital stock will be $4, 702,
780. The area in square miles of the 6th district is 233, 860; the population 6,
Under the heading, “A Victory for Georgia and the Southeast,” The Atlanta
Journal editorialized on April 3:


“The selection of Atlanta as the location for a regional bank in the Southeast is a
matter of supreme significance to the city, the state and the section.
“It means that this part of the Union will receive the best possible service under
the new banking and currency system, that its agricultural and business interests will no
longer be dependent on remote quarters of finance but will have at their very center,
accessible at all times, the monetary resources they require.
“It means that Georgia will, attain financial importance equal to that she already
enjoys in industry and farm production, and that opportunities for enterprise and
development throughout the commonwealth will be greater than ever before.
“It means, moreover, that Atlanta is recognized by the national government as
the business center of the Southeast and the point from which all parts of the region can
be most conveniently reached. The prestige and influence that naturally accompany
such recognition are immeasurable. Atlanta looms out as one of twelve cities, chosen
after months of expert investigation, to administer the country’s currency and banking
affairs. In this important sphere of the nation’s economic life, it takes rank with Boston,
New York, and Philadelphia in the east, with Chicago, St. Louis, Kansas City,
Cleveland, and Minneapolis in the west, with San Francisco on the Pacific coast; and it
extends peculiarly cordial greeting to Richmond and Dallas in the South.
“If it be true that trade follows the flag, it is certainly true that interest and
confidence will follow the paths marked out by the Government selection of regional
banks. The fact that Atlanta has been chosen as one of these centers will appeal to
investors and homeseekers the country over, and will tell incalculably for the city’s
growth and development through years to come.


“Atlanta has won on the broad merits of its case, has won because it is the
commercial and financial center of a great territory which is plainly entitled to a Federal
Reserve district, it was presumed from the outset that this city would be selected as the
site of a regional bank. But so eager was the contest throughout the Union that the most
persistent and skillful efforts on the part of Atlanta’s and Georgia’s friends were
“Our sister cities in Georgia and neighboring states who supported us in this
great cause--the common cause of the Southeast--are due hearty thanks. The Atlanta
Clearing House Association, the Atlanta Chamber of Commerce, and the Georgia
Chamber of Commerce are likewise to be congratulated for the excellent work they did.
The local committee that presented Atlanta’s claims is due particular praise. But, .there
is one influence, one man to whom the city and the state are, peculiarly indebted- Senator Hoke Smith.
“From the day the currency bill was introduced to the final stages to the
organization committee’s work, Senator Smith has striven unceasingly in behalf of the
State. It was his resolution, introduced in the Democratic caucus of the Senate, that
fixed the number of regional banks at a maximum of twelve instead of the smaller
number originally proposed; the establishment of a bank in the Southeast was thus
made possible. It was his speech before the committee at its meeting in Atlanta and his
brief submitted subsequently at Washington that swept away such difficulties and
doubts as endangered Atlanta’s chance. Senator Smith has stood by the state on this
vital question issue, loyally and ably. For the splendid service he has rendered, he
merits and, we are sure, is accorded the cordial appreciation of every Georgian.”


The contemporary reaction and comment of a number of prominent Atlanta
businessmen and bankers is interesting.
“I think it is one of the grandest victories ever won for Atlanta, and one of the
most important events in the history of the Southeast,” said Colonel Robert J. Lowry,
President of the Lowry National Bank and of the Clearing House Association. “It is a
great thing- -a great thing.”26/
Said W. J. Blalock, President of the Fulton National:
“This bank will enable us of the southeast’ to finance our own needs. We can
make ourselves independent of New York for the first time in history. It is the biggest
thing for this section that has happened in a long time.27/
“It is the first thing in fifty years that gives the banks the assurance they can do
business on an even keel and not be brought into jeopardy at certain times of the year-especially at those times when money is needed for the crop movement. It makes
Atlanta the financial center of the southeast,” said Joseph A. McCord, Vice President of
the Third National Bank. 28/
“The wisdom of the Organization Committee in selecting Atlanta will be justified
by the promptness with which this city can serve the territory allotted to it,” said Robert
F. Maddox, Vice President of the American National Bank. “It is another evidence of
Atlanta’s growth and prosperity and rapid advancement among the important
commercial cities of the United States. None has advanced more in the past 20 years
than Atlanta. I believe the Reserve System will work out to the great satisfaction of the
people all over the country and to the great credit of Mr. Wilson’s administration.29/
“I’m mighty glad we won it,” said Captain J. W. English, President of the Fourth


National Bank. “And, I am ready to acknowledge our debt to Senator Smith. He was the
man behind the guns. All we could do was furnish him a little ammunition and let him
use it. He was on the job. This victory is worth a great deal to Atlanta. It will fix our
position as the financial center of this territory. Atlanta wanted it. Atlanta got it. 30/
“The designation of Atlanta is a matter of which all our citizens and friends
should feel proud indeed, “ said J. K. Ottley, Vice President of the Fourth National
Bank. “That puts us among the twelve financial centers of the United States from this
time on, and distinguishes us beyond further question as the commercial center of the
southeast ...”32/
“I think it is the greatest in Atlanta’s whole list of successes,” said Charles E.
Currier, President of the Atlanta National Bank. “It establishes our position among the
financial centers of the nation. The announcement will have an immediate effect. It will
increase our fame for one thing. General conditions are improving, irresistibly, even
without the regional bank. With it, they will grow better even more rapidly. It’s a great
thing for the country and for us.”
“We are to be congratulated not only on winning the regional bank but that
we have in this region a man as big as Hoke Smith to take care of our big interests as
he has taken care of them in this fight,” said Asa G. Candler, president of the Central
Bank & Trust Corporation and of The Coca-Cola Company. “We may expect this good
fortune to have a wonderful and early effect on our business affairs. This will come as
soon as the reserve board is named ... we work together, here in Atlanta. As long as we
do that we need not be surprised at any big thing that comes our way. For us to stand at
the head of such a city as New Orleans, which is a city of 2 tremendous commercial
interests is to occupy a position in which we should take much pride.”33/


Forrest Adair, of Forrest & George Adair (real estate), said that the winning
of the regional bank was a great thing for real estate and everything else. “The biggest
advertisement the city could have,” said Mr. Adair. “Two things got it for us -- our own
commanding advantages, and the intelligent cooperation of Senator Smith. When you
consider that Atlanta won over so many other cities larger than it, you realize what a
wonderful advantage of location and enterprise this city has.”34/
“Like Captain English said in his interview this morning, I consider the
regional bank the very best thing that Atlanta has ever gotten,” said M. Rich, of M. Rich
& Bros. Company, “The benefits will be unlimited. It gives us the prominence we sought
and deserved and I hope it will bring us nearer a new post office building, which we
need. I have lived in Atlanta 49 years and I am very proud that we should have forged
ahead, during that time, of the oldest cities surrounding us…”35/
Beaumont Davison, of Davison-Paxon-Stokes Company said: “I consider the
regional bank the most valuable thing that Atlanta could have possibly secured. It
establishes us as the financial and business center of the southeast, and one of the big
centers of the entire country…”36/
Each of the twelve Federal Reserve Banks was organized as a corporation
operated for public service. They differ essentially from privately managed banks in that
profits are not the object of their operations and in that their shareholders, the member
banks of the Federal Reserve System, do not have the proprietorship rights, powers,
and privileges that customarily belong to stockholders of privately managed
Each Federal Reserve Bank has nine directors. Three of them are known as
Class A directors, three as Class B directors, and three as Class C directors. Class A


and Class B directors are elected by member banks, one director of each class being
elected by small banks, one of each class by banks of medium size, and one of each
class by large banks.38/
The three Class A directors may be bankers. The three Class B directors
must be actively engaged in the district in commerce, agriculture, or some other
industrial pursuit, and must not be officers, directors or employees of any bank. The
three Class C directors are designated by the Board of Governors of the Federal
Reserve System. They must not be officers, directors, or employees or stockholders of
any banks. One of them is designated by the Board of Governors as Chairman of the
Reserve Bank’s board of directors and one as Deputy Chairman. The Chairman, by
statute, also serves as Federal Reserve Agent.39/
Under this arrangement businessmen and others who are not bankers
constitute a majority of the directors of each Federal Reserve Bank. The directors are
responsible for the conduct of the affairs of the Reserve Bank in the public interest,
subject to the supervision of the Board of Governors. 40/
During the summer of 1914 the member banks of the embryonic Federal
Reserve Bank of Atlanta elected the original Class A and Class B directors of the
institution. In the Class A category were Llewellyn P. Hillyer, of Macon, Georgia; Francis
W. Foote, of Hattiesburg, Mississippi. and Warren H. Toole. of Winder, Georgia. Those
named as Class B directors were Dr. P. H. Saunders, of New Orleans; J. A. McCrary, of
Decatur, Georgia, and W. H. Hartford, of Nashville, Tennessee.41/
These six men represented a varied business experience. Mr. Hillyer was
vice-president of the American National Bank at Macon, which he and associates had
organized in 1891. He was born near Rome, Georgia, during the Civil War, son of a
noted Baptist minister, S. C. Hullyer. He was active as an officer of both the State and
American Bankers Associations and was a director of the Central of Georgia Power


Company and Southern States Life Insurance Company. Francis W. Foote, a life-long
small-town banker, was born in Macon, Mississippi, in 1875 and began his career as a
runner for the Merchants and Farmers Bank of that place. In 1895 he moved to
Hattiesburg and for the past 18 years had been executive officer of the First National
Bank of Commerce. Warren H. Toole began his career as bookkeeper for a Macon,
Georgia, bank in the city of his birth. In 1896, the year William McKinley was elected
President on a “gold standard and protective tariff” platform, Toole went to Winder,
Georgia, as cashier of the Bank of Winder. Much later he became President of The
North Georgia Trust Company at Winder. He also had substantial mercantile and real
estate interests there.42/
Dr. P. H. Saunders originated in Hernando, Mississippi, graduated from
the State University near Oxford and became professor of Greek at his alma mater -hence his title “Doctor”, which clung to him through life. -Dr. Saunders remained on the
faculty until age 32 at which time he entered commercial life as President of the
Commercial Bank and Trust Company in Laurel, Mississippi. While retaining this office
he went to New Orleans about 1911 to head the Mortgage Securities Company. He was
also vice president of the Louisiana Abstract and Title Company and a director of the
New Orleans Casualty Company. Director J. A. McCrary organized the First National
Bank of Barnesville, Georgia, in 1902 and for 12 years acted as cashier and vicepresident. He was also interested in farming and stock raising. At the time of his election
to the Federal Reserve Board he was treasurer and bond manager of the J. B. McCrary
Company, and engineering and construction firm specializing in municipal public utilities
William H. Hartford, representing Tennessee on the Board, was born in
Noble County, Ohio, in 1860 and worked on his father’s farm until he was 20. Moving to
Tennessee he was appointed postmaster of Estill Springs by President Cleveland. Later


his varied career included the general sales managership of the Tennessee Milling
Company; warden at the new State Prison and Prison Commissioner for two years. Still
later he went to Chattanooga to take charge of several mining properties-. About 1909
he organized the Hartford Hosiery Mills. He was a director of the Tennessee Bank and
Trust Company of Nashville, and of the Farmer’s National Bank of Winchester.44/
During August 1914, as the lights of Europe went out for four years of war,
the Federal Reserve Board in Washington addressed itself to the appointment of Class
C directors for the 12 Reserve Banks. For Atlanta the Board chose Maximilian B.
Weltborn, president of the First National. Bank of Anniston, Alabama; Edward T. Brown,
a noted Atlanta barrister, and W. H. Kettig, banker and industrialist, of Birmingham,
It was largely due to the efforts of W. P. C. Harding of the Federal Reserve
Board and formerly president of the First National Bank of Birmingham, that his friend
Max Wellborn was induced to cast his lot with the Federal Reserve Bank of Atlanta -- an
institution which, for 15 years, benefited greatly from his sound financial mind and
energetic services.
Wellborn was then 52 46/ and had already made a distinguished record in
finance and industry in his adopted state of Alabama. In May 1914, the Anniston
Chamber of Commerce gave a luncheon at the Alabama Hotel honoring Mr. Harding
and Fairfax Harrison, president of the Southern Railway System. Max Wellborn was a
guest upon this occasion and was down for a speech. It was a good one -- the best he
had ever made, according to his friends.47/
A mutual friend, John LaGarde, took the two bankers, Wellborn and
Harding, home that evening. He dropped Wellborn at his home and took Harding home
to spend the night with him. Next day, after his guest had left, he called on Wellborn.


“Look here,” he said excitedly, “Harding wants you to succeed him at his
bank. He asked me to sound you out.”
Wellborn thought it over, and said he wasn’t interested. LaGarde was
surprised. “Don’t want to head the First National of Birmingham? The salary is $18,000
a year!”
But Wellborn was sure he didn’t want it. He knew all the people in Anniston
and Calhoun County, and about the credits and standing of the people. If he went to
Birmingham he’d have to start over.48/
In August Wellborn got a cryptic telegram from a friend in Washington,
saying, “Come to Washington at once.” It was awfully hot. He wired back, “What for?”
A long letter then arrived, explaining that W. P. C. Harding wanted him to
head the new Federal Reserve Bank in Atlanta as chairman of the board and Federal
Reserve Agent.
“It was like a clap of thunder out of a clear sky,” said Mr. Wellborn. “I was
stunned. I had never dreamed of such a thing; but this non-political offer, coming
without any solicitation from myself or any of my friends, was too flattering to set
Thus began M. B. Wellborn’s association with the Federal Reserve Bank of
The other two original Class C directors were widely known in their
respective fields. Edward Thomas Brown, also first counsel for the bank, was born at
Gainesville, Georgia, in 1859. After attending Davidson College he studied law under
Judge H. R. McCay of the Georgia Supreme Court. He was admitted to the bar in 1878
and practiced in Athens until the turn of the century. During this period he served
Solicitor General of the Western Judicial Circuit and Mayor of Athens. After moving to
Atlanta his practice was for the most part corporate and included such clients as the


Western & Atlantic Railroad50/ and American Telephone & Telegraph Company. As of
1914 Mr. Brown was senior member of the firm of Brown, Randolph, Parker & Scott.51/
William H. Kettig (1863-1939) was born in Louisville, Kentucky, and started
his business career as office boy for a mill supply house there. In 1886 he went to
Birmingham, Alabama, where he and Major Willis Milner organized the mill supply
house of Miller and Kettig. The firm was successful and in 1906, was purchased by
Chicago’s Crane Company. Mr. Kettig served as manager of the Birmingham Branch of
Crane for the next 15 years. He was active also in civic and military matters, serving as
a member of the Birmingham Board of Aldermen, president of the Birmingham Chamber
of Commerce, and of the Southern Club. During World War I he was active in Liberty
Loan campaigns. For four years Mr. Kettig served as Colonel of Engineers on the staff
of Governor B. B. Corner. Camp William H. Kettig was named in his honor.52/
The brand new Board of Directors of the Federal Reserve Bank of Atlanta
held its first official meeting on Monday, October 19, 1914. And since the group had no
home as yet, it assembled in the office of Colonel Edward T. Brown in the BrownRandolph Building, 56 Marietta Street.53/ Directors present were the Messrs. Wellborn,
Brown, Kettig, Saunders, Hartford, McCrary, Hillyer, Toole and Foote. Being first, the
minutes of the meeting, as recorded by Temporary Secretary Warren H. Toole, are
herewith quoted in full:
“Chairman Wellborn called the meeting to order.
“Upon motion, W. H. Toole was elected Temporary Secretary.
“Motion made that the Governor’s salary be fixed at the sum of $9,000 per
“Upon motion,. Mr. J. A. McCord was elected Governor of the Bank.
“Upon motion, Mr. Charles A. Lyerly54/ was elected a member of the


Advisory Council for one year.
“Upon motion, Messrs. Toole, Kettig, and Saunders were appointed a
committee to wait on Mr. McCord and see if he would accept the appointment of
Governor of the Bank at the salary specified. The committee reports Mr. McCord did
“Motion made and carried that the Board give Mr. McCord a reasonable time
to dispose of his holdings in the several banks with which he is connected.
“Motion made and carried that Captain Lyerly be notified by wire of his
election as a member of the Advisory Council.
“The Federal Reserve Board at Washington were wired that Directors
Brown, Hartford, Saunders, McCrary, Foote, Wellborn, Toole and Governor McCord
would attend the Conference of Directors in Washington.
“Motion made and carried that the Chairman of the Board and the Governor
of the Bank be authorized to go over the applications now in the hands of the Directors,
and determine the number of people that we will probably need, and to recommend to
the Board such applications as they believe meritorious for our further consideration.
“Motion made and carried that the Chairman appoint a Director to represent
Mr. Foote in selecting term of office of Class A Directors. The Chairman appointed Dr.
Saunders to represent Mr. Foote.
“The following are the terms of office of Directors of Class A, B, and C


W. H. Toole

3 years

F. W. Foote

2 years

L. P. Hi].lyer

1 year

P. H. Saunders

3 years

W. H. Hartford

2 years



J. A. McCrary

1 year

M. B. Wellborn

3 years

W. H. Kettig

2 years

E. T. Brown

1 year

“Motion made and carried that Colonel E. T. Brown be elected Counsel for
the Bank, compensation to be determined later.
“Upon motion the Board adjourned to look at the several locations offered to
the Bank.”
W. H. Toole,

N. B. Wellborn,

The newly elected Governor of the Bank, Joseph Alexander McCord, was
qualified by long banking experience and a varied business career for high position. Yet,
like so many men, born in the South during the years just before the Civil War his early
life was marked by poverty and limited opportunity. But young McCord made the most
of what was available. After jobs as a tin shop tinker and butcher’s understudy at $5 per
month, he began clerking in various retail stores in Conyers. Next followed a stint as
deputy clerk of the Rockdale County Superior Court. At 26 he moved to Carrollton,
Georgia, and from 1883 to 1889 operated a general merchandise and farmer’s supply
business. Two years of corporate experience followed as chief claim and voucher clerk
in the traffic manager’s office of the N. C. & St. L. Railroad in Atlanta. Then, just prior to
the hard financial times known as the “Panic of 1893” Mr. McCord entered the business
in which he was to gain lasting distinction -- banking. This began by his election, in
November 1892, to the position of assistant cashier, Atlanta Trust & Banking
Company.55/ The following year he advanced to cashier. 56/
In January 1896 Joseph A. McCord helped to organize and became first cashier of a
new Atlanta bank, the Third National.57/ Since 1907 he had been vice-president of this
institution. His activity in Connection with getting the Sixth District Federal Reserve


Bank for Atlanta has been touched upon. In addition he had long been a leader in
bankers’ association affairs. In 1905 he was appointed by the president of the American
Bankers Association to the Federal Legislative Committee of the Association. From the
Committee evolved the Currency Commission of the American Bankers Association. Mr.
McCord was a member until his election as Governor of the Federal Reserve Bank of
Atlanta. He was also a member of the Executive Council of ABA until his election as
During the interval of nearly a month between the first meeting on October
19 and the opening of the Atlanta Bank on November 16, the newly constituted Board of
Directors held three meetings, one in Washington, D. C., and two in Colonel E. T.
Brown’s office. Business transacted was fundamental to the organization of the Bank.59/
At the Washington meeting Chairman Wellborn and Governor McCord were
appointed a committee to secure information as to quarters and to report to the
Directors on October 30. On the occasion of the latter meeting and before consideration
of the quarters question, the Board approved what was probably the first “expense
account” item in the Bank’s history: “Motion made and carried that the Bank reimburse
Mr. Brown for the two luncheons which he tendered the Board, and which were so much
enjoyed and appreciated.”60/
The Board, having made two trips to inspect quarters offered in various
buildings, then began its deliberation upon that subject. A proposition from John W.
Grant for the third or fourth floor of the Third National Bank Building, at $400.00 per
month, was turned down.61/ Next to be eliminated from consideration was an offer of
space in the Temple Court Building62/ which included three month’s free rent in lieu of
the Bank fixing up the office. Space in the brand new Healey Building was offered but
the fact that no vault was available disqualified it. Two other buildings were under
consideration, the recently opened Hurt Building and the somewhat older Atlanta


National Bank Building.63/ The following motions concerning these buildings are quoted
directly from the Minutes:64/
“Motion made by Mr. McCrary that we offer for the Hurt Quarters $6,500.00
for the first year, with option for the second year at $8,000.00 per annum, and the third
year at $9,000.00 per annum.
“Motion was amended by Mr. Brown that we offer for the Atlanta National
Bank Building $4,000.00 for the first year, with the privilege of two additional years at
$5,000.00 per annum. The vote was taken upon the amendment and same was lost.
Vote was taken upon original motion which prevailed.
“Motion made by W. H. Toole that we rent the space in the Hurt Building, as
indicated to us by Mr. Hurt, for one year at $6,500.00 per annum, said rental to be paid
monthly. Motion prevailed.
“Motion made and carried that the motion of W. H. Toole be made
Two weeks later the Bank opened, with properly restrained fanfare, on the
ground floor of the Hurt Building.
Meanwhile other organizational matters demanded attention. The Board
meeting of October 31, held in Colonel E. T. Brown’s office, was largely devoted to
personnel and by-laws.
A cormnittee appointed to suggest a staff of officers and employees
submitted the following report, which was adopted:
“The offices of Chairman of the Board of Directors and Vice-Chairman,
are filled by appointment by the Federal Reserve Board, and their compensation is so
“We suggest the following officers and other employees, and compensation:

Office previously filled.

Deputy Governor,

Honorary, to be paid only when
on duty, then the same salary as
is paid the Governor; no
allowance for expenses.


$3,000.00 to $4,000.00

Asst. Secretary-Treasurer,

Previously filled.65/


$2,000.00 to $2,400.00

Credit Man,


Chief Clerk,

Do not fill.

Discount Clerk,



Do not fill.

One General Bookkeeper,

Not to exceed $1,800.00

One Ordinary Bookkeeper





One Statement Clerk

“ “



General Utility Man,

Do not fill.

Secretary to Governor, and
Chairman of the Board,

Not to exceed $1,800.00

One Stenographer,

Not to exceed $1,000.00

One Messenger,

“ “



One Porter,

“ “



One Mail Clerk,

Do not fill.

“Chief Clerk: We recommend leaving the place open for the present, as we
think for a while the Auditor or some officer can direct this work.
“Tellers: We think for a while the Asst. Secretary-Treasurer, who will be
custodian of the cash and securities, can act as paying teller, and some other employee


can do the work of receiving teller, if the custodian of the cash cannot, so act.
“General Utility Man: Such a person will be needed in time, but the expense
can be deferred for the present, we think.
“Mail Clerk: Such an employee will be necessary in time, but we think for the
present this work can be done by other officers or employees.
Respectfully submitted,
F. W. Foote
M. B. Wellborn
Jos. A. McCord.”66/
Having ascertained the approximate need, personnelwise, of the new Bank,
the Board then got down to specifics on certain positions. The Chairman was authorized
to negotiate with Giles L. Wilson, of Jacksonville, Florida, relative to his acceptance of
the Deputy Governorship as an honorary position. The employment of Frank S. Patton,
of Jonesboro, Tennessee, was. authorized as General Bookkeeper at $1,800.00 per
year, others authorized for employment were R. H. Hiemphill, of Hattiesburg,
Mississippi, as Credit Man, at $2,000.00; P. II. Kitties, of Sylvania, Georgia, as Auditor,
at $2,400.00; W. S, Graves, of Rome, as Discount Clerk at $1,800.00, and Joseph M.
Slattery, of Washington, D. C., Deputy Secretary, at $1,800.00. The Chairman and
Governor were authorized to employ a stenographer at not exceeding $1,000.00; the
officers a messenger at not exceeding $600.00 and such other small help as may be
needed. Following which Dr. Saunders moved “that the Governor notify those elected to
fill positions in the Bank, that they are elected with the understanding that their services
must be satisfactory, and in case their services are not satisfactory, or we feel that we
do not need their services, that they can be disposed of without notice.” A personnel
policy, less cavalier in nature, was to develop later.67/


A precedent, however, which could easily have gotten out of hand, was
stopped short before the meeting was ‘over. A Mr. Carter, who was an applicant for a
position in the Bank, was permitted by the Board to come before it and make a
statement regarding his qualifications. A motion by Dr. Saunders was quickly passed
that no more applicants be permitted to appear in person before the Board.68/
Other matters basic to proper organization were taken up at the same
meeting. Compensation of Directors was placed at $25.00 per day for attendance at
meetings and $10.00 per day while in transit to and from meetings. Directors W. H.
Toole and Dr. Saunders were elected members of the Executive Committee for three
months; temporary bonds were authorized for officers and employees, and use of the
American Bankers’ Association Telegraph Code was decided upon until the Federal
Reserve Board should furnish one to be used by all the Banks. The Governor was
authorized to arrange with the Third National Bank69/ for temporary vaults for the
reception of money now being paid in on the capital stock of the Bank and the reserve
that would come in later. A set of by-laws was adopted and the meeting closed after a
motion by Mr. Kettig “that we extend Mr. Brown our thanks for the use of his office, and
the pleasant entertainment he has furnished us throughout our session.” Motion was
carried by unanimous rising vote.70/
At 9 o’clock a.m. on Wednesday, November 16, 1914, the Board of
Directors assembled officially for the first time in the Bank’s new quarters in the Hurt
Building. Prior to the opening ceremonies, the Board, all of whom were present,
transacted some necessary business.
W. H. Toole was elected Secretary of the Bank with the sole duty of keeping
the minutes of the Board; Cites L. Wilson was elected Deputy Governor and was
personllay presented to the Board, and J. B. Pike, of New Orleans, was appointed
Cashier at $3,600.00 per year. It was voted that the entire force of the Bank be bonded


by the United States Fidelity & Guaranty Company of Baltimore; Directors Toole and
McCrary were appointed to receive the combination in the vault, and Mr. McCord was
authorized to employ a man for two or three weeks to assist Mr. Bell in the “counting
and handling of money until the present rush is over.”71/
It was moved by Director Foote that telegrams be sent, announcing the
opening of the Bank, to the Federal Reserve Board, the other eleven Reserve Banks, to
the President of the United States, to the Secretary of the Treasury and to the
Comptroller of the Currency. Director Foote and Governor McCord were thereupon
asked to retire from the meeting and formulate proper telegrams.72/
The telegrams, all signed by “Joseph A. McCord, Governor,” reflected a
happy and auspicious occasion. To the Reserve Banks in Boston, New York,
Philadelphia, Cleveland, Richmond, Chicago, St. Louis, Minneapolis, Kansas City,
Dallas and San Francisco, which opened simultaneously went the following brief
message: “Federal Reserve Bank Atlanta extends its greetings.” To the Federal
Reserve Board, Charles S. Hamlin, Governor: “Federal Reserve Bank Atlanta opened
auspiciously and places itself at the services of your Honorable Body.”73/
To President Woodrow Wilson at the White House went the following:
“The Atlanta Federal Reserve Bank opened this morning for business. The
Board and officers of this your former home, especially desire you to know that they are
in sympathetic accord with the purposes of the new Currency Act, and will do everything
within their power to make it a success. The Country is to be congratulated upon having
a President who had the courage and foresight to give the people this wonderful
financial reform.”74/
To Treasury Secretary William C. McAdoo:
“Acting upon your authority the Federal Reserve Bank of Atlanta
opened for business at 9 a.m. today with great promise. Governor, Chairman of Board


and Directors of Bank desire to express hearty appreciation of your diligence and the
unusual ability which has marked your course in bringing this great reserve system into
a satisfactory form of existence. All pledge their loyal support and await your further
To John Skelton Williams, Comptroller of the Currency:
“Federal Reserve Bank of Atlanta opened for business with confidence.
Officers and Directors earnestly look to you for guidance and help. Place themselves at
your command.”
And to Honorable W.F.G. Harding, member Federal Reserve Board and
warm friend of Chairman 14. B. Wellborn, the following:
“Federal Reserve Bank Atlanta opened for business. Officers and Directors
present their compliments and congratulations to you, our neighbor,76/ friend and
associate, and wish you continued benedictions of success and public confidence.”77/
Secretary McAdoo responded with two messages. First, as a matter of
business, the following, addressed to the Bank:
“The Comptroller of the Currency at the close of business of November
fourteenth having executed the certificate authorizing the Federal Reserve Bank of
Atlanta to commence business, I have this morning signed the announcement to be
mailed to all member banks of the establishment of your Bank, and this will be your
authority to place in the mail copies of the announcement sent you for this purpose.
Then, in less formal vein and addressed to Governor McCord:
“Please accept my cordial congratulations upon the opening of the Federal
Reserve Bank of your District and my sincere commendation upon the effective work
you have done in preparing the Bank for business in the short time allowed for the
opening. I am sure that the Federal Reserve Bank will serve a great and beneficent


purpose in the future of our Country, and I am sure that this Department and the
Federal Reserve Board may count upon your loyal cooperation in the important work
and duties which have been confided to you.. My hearty good wishes for your
Other messages of good cheer were received from John Shelton Williams,
C. S. Hamlin, W.P.G. Harding and the Governors of all the other Reserve Banks.79/
In reporting the opening of the new bank the Atlanta Journal said:80/
“The Federal Reserve Bank of Atlanta opened its doors for regular business
at 9 o’clock Monday morning in its quarters in the Hurt Building. A telegram from
Secretary of the Treasury McAdoo authorized the opening ...
“The bank began operations with $4,000,000 in gold, representing the first
installment of the reduction of the reserves of the member banks, 318 in all, of the six
states in the Sixth District.
“The Third National Bank of Atlanta was the first bank of the system to make
its reserve. Other reserve deposits were received all during the morning.
“No paper was rediscounted Monday morning, although the bank was ready
for this work.
“At 2 o’clock the directors were guests of the Atlanta Clearing House
Association at a luncheon at the Capital City Club, and on Tuesday evening at 6:30
o’clock they will be guests of the Atlanta Credit Men’s Association at the Chamber of
Commerce Café…
“The Atlanta banks alone released $2,200,000.00 of reserves, which,
through the new system, will be used in rediscounting commercial, industrial and
agricultural paper.
“The capital of $780,000.00 in gold and gold certificates was transferred
Monday from the vault of the Third National Bank to the vault of the Federal Reserve


Bank in the Hurt Building …...
“The official and working force of the bank when it began business was as
“Governor, Joseph A. McCord, of Atlanta.
“Assistant Cashier, Milton W. Bell, of New Orleans.
“Discount Clerk, W. S. Graves, of Rome, Georgia.
“Auditor, P. R. Kittle, of Sylvania.
“Manager of credit bureau, R. H. Hemphill, of Hattiesburg, Miss.
“General bookkeeper, H. E. Dunlap, of Gadsden, Ala.
“Bookkeeper, .J. B. Tutwiler, of Atlanta.
“Secretary to Chairman N. B. Wellborn, Joseph N. Flattery, of Anniston, Ala.
“Stenographer, Mill L. V. Davidson, of Atlanta.
“It is expected that other bookkeepers and clerks will be elected as soon as
they are needed.
“Many telegrams of congratulation were sent to and from the bank Monday
A contemporary article described the Bank’s quarters in glowing style:81/
“The room was originally equipped for the Continental Trust Company,
organized by Joel Hurt and associates. Owing, however, to the adaptability of the room
to the needs of the Reserve Bank, the officers of Continental Trust patriotically agreed
to relinquish their home and seek quarters elsewhere.
“The quarters were designed by Thomas Bruce Boyd, bank specialist, of
New York, who also designed the new homes of Banker’s Trust Company, Guaranty
Trust Company and J. P. Morgan & Company, of that city.
“The architecture is based on the Italian style, modified to conform to
present day requirements of utility and to harmonize in beauty with the rest of the Hurt


Building. The columns, pilasters, counter screen, balustrade and wainscoting of the
banking room are of the finest Tavemelle Claire mable, a product imported from Italy
and noted for its restful color, beauty and great durability.
“The main banking room is 25 feet high, panelled off by well-designed and
chastely decorated beams, and then sub-divided into smaller panels with very slight
projections ... Three sides of the room are perforated with large decorative windows and
in this respect it became one of the best lighted and ventilated banking rooms in the
“The vaults, which are among the best constructed in the United States,
form another desirable feature of the regional bank’s home. They are large and
conveniently arranged and were installed by C. W. Freeman, Southern Manager of the
Mosler Safe Company.
“M. B. Wellborn, Chairman of the Board of Directors of the Atlanta Federal
Reserve Bank, gave out an interview while in Atlanta recently in which he stated that the
quarters of the Atlanta bank are the handsomest of any of the twelve banks in the
Just prior to the official opening of the Bank, on November 16, a matter of
vital importance to the conduct of its business was given attention. Chairman Wellborn
discussed with Governor McCord the matter of a discount rate, and wired the Federal
Reserve Board at Washington, naming a rate of 5%. This was based on the idea that
the Atlant~a Bank would receive a deposit from the Secretary of the Treasury of
$75,000,000.00 in gold. The Board at Washington named a rate of 6% for paper
maturing in 30 days and less, and 6½% for maturities beyond 30 days.82/
This rate did not attract much business to the new Bank. Indeed, in early
December 1914 Senator Hoke Smith, a prime mover in securing the Bank for Atlanta,
wrote a letter in which he expressed disappointment at the rate and the amount of


business done by the Bank. Whereupon, after appropriate Board action Chairman N. B.
Wellborn wired the Federal Reserve Board in Washington:
“I am requested to send you this message:
“Board of Directors after conferring with a number of member banks and
after full discussion, has fixed discount rate four and one-half for thirty days and five per
cent other maturities. We request that you confirm same and advise by wire. Good
banks this district offered money New York at less than five per cent and we have
practically no demand for funds at present rates. Practically no thirty day paper offered
and in our judgment four and one-half rate would be little used. Imperative in our
judgment that we be placed in position to do some business. No danger could befall
reasonable action of this kind as district has abundant resources and rate can be raised
if necessary to protect reserves. Member banks want to do business here and we think
it important that they commence. They need the training badly to prepare them for
proper future relations with this bank and their customers.”83/
Business headed upward and the Executive Committee, which held its first
meeting on November 17, 1914, soon found itself busy passing upon notes offered for
Cotton mill paper was recognized early as an important factor in the Sixth
Federal Reserve District. Washington Board member W.P.G. Harding wrote desiring an
expression from the Atlanta Bank relative to this class of paper. The matter was
discussed by the Board at some length, and while no definite action was taken, it was
the concensus of opinion that these papers should be handled on their merits when
presented to the Executive Committee.85/
Another matter of import calling for action was the adoption of a schedule of
allowances for collecting checks. In that connection the following Board resolution was
adopted on December 11.


“Resolved that the Directors of the Federal Reserve Bank of Atlanta,
believing that the cost to the interior banks of remittances for checks drawn on them, is
considerable, recommend that to cover this cost, there be paid to member banks in all
towns of five thousand inhabitants and under, the sum of one dollar and twenty five
cents per thousand for remittances, and that there be paid to member banks in all towns
and cities of more than five thousand and not more than thirty thousand inhabitants, the
sum of one dollar per thousand for remittances, and that these charges for collection be
paid by the bank or banks forwarding the checks for credit and collection. The Directors
likewise recommend that member banks in cities above thirty thousand inhabitants,
remit for checks drawn on them at par.”86/
Other matters involving procedure were resolved in late 1914. An “order of
business” for Board meetings was set up as follows:
Reading of minutes of previous meeting.
Report of the Governor.
Report of the Executive Committee.
Reports of other committees.
Unfinished business.
New business.
At the same meeting, on December 11, it was decided that the Governor
would furnish the Directors, at each monthly meeting, a classified statement of the
expenses of the Bank. Also that a weekly statement of the condition of the Bank ~e sent
each one of the Directors weekly.88/
Coincidentally Colonel E. T. Brown explained to the Directors that while he


was in Washington awhile back, the question of attorneyship and directorship was
discussed with him by the Federal Reserve Board. It was decided that there might be
some conflict in the dual service to the Bank. Therefore Colonel Brown; desiring to
relieve the situation, resigned as attorney. The resignation was accepted and, on motion
of Dr. Saunders, seconded by Mr. Toole, Mollins N. Randolph was elected Attorney for
the Bank.89/
Before the year was out several security measures were adopted by
the Bank. A one million dollar burglary policy was taken out with the Fidelity & Deposit
Company of Maryland; and A.D.T. alarm system was installed; a night watchman was
employed, and the placement of revolvers in teller’s cages was authorized.90/
An invitation to join the Atlanta Clearing House was accepted on November
17, and overtures from the national banks in New Orleans and the Chamber of
Commerce of Birmingham for branch banks in those two cities were discussed at some
length on December 11.91/
It was more by coincidence than design that the Atlanta Federal Reserve
Bank had its inception in an interesting and significant year in the city’s history. The
population was approaching 200,000. James G. Woodward, a political landmark in
Atlanta for a generation, occupied the Mayor’s office in the City Hall, which then stood
on the present site of the Fulton National Bank Building at Marietta and Forsyth Streets.
Nathaniel E. Harris of Macon, the last Confederate veteran to hold the job, was elected
Governor of Georgia. Asa G. Candler, founder of The Coca-Cola Company, gave an
initial gift of one million dollars, which enabled Emory College of Oxford, Georgia, to
become Emory University in Atlanta.
The Druid Hills Baptist Church, one of Atlanta’s largest, was organized. The
present Fulton County Court House on Pryor Street was opened and the Y.M.C.A.
Building on Luckie Street was erected. The Ford Motor Company built an assembly


plant on Ponce de Leon Avenue; Walker and Nelson Streets, two of Atlanta’s oldest
residential avenues were rapidly giving over to business, and Paces Ferry Road was
becoming a byword for elegant homes.
On the “cloak-and-dagger” front, the Leo Frank case was at midpoint
between the murder of Mary Phagan and the lynching of Leo M. Frank. And the Nelms
sisters of a prominent West End family disappeared in the direction of the West Coast
and were never seen in Atlanta again. Atlanta gained stature as a convention city during
the year by playing host to a National Shriner’s Convention, one of the most colorful
events in the city’s history.92/
When the Federal Reserve opened in Atlanta, the city was already the
financial capital of the Southeast. And while branch banking was years in the future,
Atlantans had a choice of seventeen banks, some large, some small, with which to do
business.93/ As Sixth District Federal Reserve headquarters the financial status of “The
Gate City of the South” was substantially enhanced.



Chapter 3

John Skelton Williams (1865 - 1926), born in Powhatan County, Virginia. An
organizer and president Seaboard Air Line Ry. System, 1899 - 1904; organizer
and officer of various banlcs, trust
companies and industrial institutions. Became first assistant Secretary of the
Treasury, March, 1913; Comptroller of the Currency, 1914.


Ralph Smith, “Fight Launched Last June in Washington”, Atlanta Journal, April 3,
1914, p. 10.


Also President Southern States Life Insurance Co.


President J. K. Orr Shoe Co.


Vice-President American National Bank.


Vice-President Third National Bank.


Vice-President Third National Bank.


Atlanta Journal, Apr. 3, 1914, p. 8.


Dianna Goforth, “How the Fed Came to be in Atlanta”. The 6-F Messenger, March,


Who died Feb. 14, 1914 before final victory for Atlanta was assured.


Born in Cobb County near Marietta.


Goforth, “How the Fed Came to be in Atlanta.!’




Discontinued in 1939.


Quoted, Goforth, “How the Fed Came to be in Atlanta.”


Quoted, Ibid.


Goforth, “How the Fed Came to be in Atlanta.”


Atlanta Georgian, Jan. 14, 1914. Quoted, Goforth, “How the Fed Came to be in



Goforth, “How the Fed Dame to be in Atlanta.”


Atlanta Journal, Apr. 3, 1914


Since 1929, a component of the First National Bank of Atlanta.


Merged with Atlanta National Bank, 1916.


Consolidated with Citizens and Southern, 1919.


Merged with Citizens and Southern, 1922.


Goforth, “How the Fed Came to be in Atlanta.”


Atlanta Journal, Apr. 3, 1914.






















The Federal Reserve System. Purposes and Functions,




Ibid., 70; The office of Chairman and Federal Reserve Agent was specifically

stated in the


original Federal Reserve Act. The title “Governor” was not

mentioned in the law. The framers of the Federal Reserve Act apparently intended that
the Chairmen appointed by the Federal Reserve Board would be the principal executive
officer as well as the official representative of the Federal Reserve Board. The directors


appointed the Governor who, in practice, became the active head of the Bank.

The Federal Reserve System. Purposes and Functions, 70.


Southern Banker, Sept. 1914, p. 11.


Ibid., 24 — 32.






Ibid., Oct. 1914, pp. 22, 23.


Born in Lewisville, Ark., Jan. 22, 1962, son of Maximilian and Ema Julia Dent


Linton C. Hopkins, Biography of Maximilian Bethune Wellborn, Atlanta, 1960, p.




Ibid., 74.


Owned by the State of Georgia and now operated by the L.&N.R.R.


Composed of Mr. Brown, Rollins N. Randolph, a direct descendent of Thomas
Jefferson and now buried in the Jefferson family cemetery at Monticello; Robert S.
Parker, subsequently General Counsel and President of the Bank and Hugh M.


Biographical Records of the Bank.


Present site of Western Union Building, erected in 1919 and originally called
Transportation Building.


Charles A. Lyerly (1847 - 1925), member Federal Advisory Council, Federal
Reserve Bank of Atlanta, 1914 - 1919, was born at Enterprise,
Miss. His early business career was devoted to general merchandising and
wholesale dry goods. Later, during the. 188O’s he organized the First National
Bank of Jackson (Miss.) and the Chattanooga National Bank. Served as president


of the latter for many years both before and after the bank was absorbed by the
First National Bank of Chattanooga. Was a director of numerous companies and
owner of one of the largest peach orchards in the area.

Then located at 34 East Alabama Street. W. A. Remphill, president; Hugh J.
Inman, vice-president; Alonzo Richardson, cashier.


Southern Banker, Nov. 1914, p. 33; Biographical records of the Bank.


Consolidated with the Citizens & Southern in 1919.


Biographical records of the Bank.


Minutes. Board of Directors, No. 1, pp. 2 - 9. Hereafter cited as Minutes. Directors.


Ibid., 3.


Then one of Atlanta’s newest and finest buildings. Erected 1911 and now known
as Atlanta Federal Savings and Loan Building.


Now the site of the Jefferson Hotel, ‘southwest corner Alabama and Pryor Streets.
The Temple Court, one of Atlanta’s older office buildings, was erected in 1883 and
was long a focal point for law offices. During its first decade the building housed
the ill-fated Gate City National Bank.


The Atlanta National, originally Century Building, at Whitehall and Alabama
streets, was built in 1903.


Minutes. Directors, Oct. 30, 1914.


Filled at same meeting by election of M. W. Bell, of New Orleans, at $2500.00 per


Minutes. Directors, 1, p. 7.
Minutes, Directors, 1, pp. 6, 8, 9.


Ibid., 4.


The Third National Bank was then located at 26 Marietta Street, present site of


the Atlanta Federal Savings and Loan Association.

Minutes. Directors, 1, pp. 6, 7, 9. The original By-Laws of the Bank follow as a
matter of historical record:
SECTION 1, Quorum - A majority of the Directors shall constitute a quorum for
the transaction of business, but less than a quorum may adjourn from time to time
until a quorum is in attendance. SECTION 2, Vacancies - As soon as practicable
after the occurrence of any vacancy in the membership of the Board, the
Chairman of the Board shall take such steps as may be necessary to cause such
vacancy to be filled in the manner provided by law.

SECTION 3, Meetings — There shall be a regular meeting of the Board every 2nd
Thursday at one o’clock P.M., or if that day be a holiday, on the first preceding
business clay. The Chairman of the Board may call a special meeting of any time,
and shall do so upon the written request of any three directors or of the Governor.
Notice of regular and special meetings my be given by mail or telegraph. If given
by mail, such notice shall be mailed at least three days before the date of the
meeting. If given by telegraph, such notice shall be dispatched at least one day
before the date of the meeting. Notice of any meeting may be dispensed with, if
each of the Directors shall in writing waive such notice.

SECTION 4, Powers - The business of this Bank shall be conducted under
the supervision and control of its Board of Directors, subject to the supervision
vested by law in the Federal Reserve Board. The Board of Directors shall appoint
the officers and fix their compensation.


The Board may appoint legal counsel for the Bank, define his duties and fix
his compensation.
SECTION 5, Special Committees - Special business of the Bank may be
referred from time to time to special committees, which shall exercise such
powers as the Board may delegate to them.
SECTION 6, Order of Business - The Board may from time to time make such
regulations as to order of business as may seem to it desirable.
SECTION I, How Constituted. - There shall be an executive committee of the Governor,
the Federal Reserve Agent, and one or more Directors chosen from Classes A, B or C;
the member or members of the committee chosen by the Board shall serve during the
pleasure of the Board, or for terms fixed by it. Not less than three members of the
committee shall constitute a quorum for the transaction of business, and action by the
committee shall be upon the vote of a majority of those present at any meeting of the
The committee shall have the power to fix the time and place of holding
regular or special meetings and the method of giving notice thereof.
The Executive Committee shall be four in number and the term of service for
Committee members shall be three months with rotation.
Minutes of all meetings of the Executive Committee shall be kept by the
Secretary, and such minutes or digests thereof shall be submitted to the members of
the Board of Directors at its next succeeding meeting. Such minutes shall be read t& the
meeting if required by any member of the Board.
SECTION 2, Powers. - Subject to the supervision of the Board of Directors, as set forth


in Article I, Section 4, the Executive Committee shall have the following powers:


To pass upon all commercial paper submitted for discount.


To initiate and conduct open market transactions.


To recommend to the Board of Directors from time to time changes in the
discount rate.


To buy and sell securities.


To apply for and provide for the security of such Federal Reserve notes as
may, in the judgment of the Committee or of the Board be necessary for the
general requirements of the Bank.


To employ or to delegate to officers of the Bank authority to employ clerks
and other subordinates and to define their duties and fix their


To approve bonds furnished by the officers and employees of the bank and
to provide for their custody.


In general, to conduct the business of the Bank, subject to the supervision
and control of the Board of Directors.

SECTION I. - The Board of Directors shall appoint a Governor, a Deputy Governor, a
Secretary, and a Cashier, and shall have power to appoint such other officers as the
Board may from time to time determine to be necessary and appropriate for the conduct
of the business of the Bank. The offices of Deputy Governor, Secretary and Cashier, or
any two of them, may be held by one person, in the discretion of the Board. The officers
chosen by the Board shall hold office during the pleasure of the Board.
SECTION 2. — Federal Reserve Agent. The Federal Reserve Agent, as Chairman of


the Board, shall preside at meetings thereof. Copies of all reports and statements made
to the Federal Reserve Board, shall be filed with the Federal Reserve Agent.
SECTION 3. - Deputy Federal Reserve Agent. In the absence or disability of the
Federal Reserve Agent, his powers shall be exercised and his duties performed by the
Deputy Federal Reserve Agent, who may perform such other services as shall be
prescribed by the Board of Directors not inconsistent with his duties as provided by law.
SECTION 4. .‘ The Governor. Subject to the supervision of the Board of Directors, the
Governor shall have general charge and control of the business and affairs of the Bank,
and he shall be the Chairman of the Executive Committee. He shall have power to
make any and all transfers of securities or other property of the Bank which may be
authorized to be sold or transferred by the Executive Committee or by the Board. The
Governor shall have power to prescribe the duties
of all subordinate officers and agents of the Bank, where such duties are not specifically
prescribed by law or by the Board of Directors or by the By-Laws. The Governor may
suspend or remove any employee of the Bank.
SECTION 5. - The Deputy Governor. - In case of the absence or disability of the
Governor, his powers shall be exercised and his duties discharged by the Deputy
Governor, and in case of the absence or disability~ of the Deputy Governor, the Board
shall appoint one of the other Directors Governor pro tern. The duties of the Deputy
Governor shall otherwise be such as may be prescribed by the Board of Directors or by
the Governor. In case the Board shall deem that the business of the Bank requires the
appointment of one or more Assistant Deputy Governors, it shall have authority to
appoint such Assistant Deputy Governor or Governors and shall prescribe and define
his or their duties.
SECTION 6. The Secretary.- The Secretary shall keep the minutes of all meetings of
the Board and of all committees thereof. He shall have custody of the seal of the Bank,


with power to affix same to certificates of stock of the Bank, and by authority of the
Board or the Executive Committee to such other instruments as may from time to time
be required. The Board of Directors may, in. the absence or disability of the Secretary,
or upon other occasion where in the discretion of the Board greater convenience can be
attained, appoint a Secretary pro tern or empower one or more officers to affix the seal
of the Dank to certificates of stock or other instruments. The Secretary shall perform
such other duties as may from time to time be prescribed by the Board of Directors, the
Executive Couunittee or the Governor.
SECTION 7. The Cashier. - The Cashier and at least one other officer designated by
the Board of Directors, ahall have the joint custody of all moneys, investments, and
securities of the Bank, subject to such rules as the Board may adopt for their safety. He
shall perform such other duties as may be assigned to him from time to time by the
Executive Committee, the Board of Directors, or the Governor.
SECTION 1, Signature. - All certificates of stock, or of payment of or on account of
stock subscriptions, shall be signed by the Governor or a Deputy Governor and the
Secretary or Cashier, or such other officers as may be prescribed by the Board, and
such certificates shall bear the corporate seal.
SECTION 1, Business Hours - The Bank shall open for business from nine o’clock to
two o’clock on each day except Sundays or days or parts of days established as legal
ARTICLE VI. - Amendments.
These By-Laws may be amended at any regular meeting of the Board by a majority vote


of the entire Board: Provided, That a copy of such amendment shall have been
delivered to each member at least ten days prior to such meeting.


Minutes. Directors, 1, pp. 10 — 14.


Ibid., 10.








Until lately President, The First National Bank of Birmingham.


Minutes., Directors, 1, p. 11.


Ibid , 11.


Ibid., 11 — 13.


Nov. 16, 1914.


Southern Banker, Nov. 1914, pp. 35 — 36.


Minutes. Directors, 1, p. 16.


Ibid., 17.


Executive Committee Minutes, Nov. 17, 1914, et. seg. Hereafter cited as Ex. Coin.


Minutes., Directors, 1, p. 17.


Ibid., 19.


Ibid.., 18.




Ibid.., 19. Rollins N. Randolph (1872 - 1938), a law partner of Ccl. Brown, was
born in Albemerle
County, Virginia, a direct descendent of Thomas Jefferson. Re was admitted to
the Georgia bar in 1896 and throughout his career enjoyed an extensive corporate
practice. Rendered much civic and public service. Served as President for life of


the Stone Mountain Memorial Association and was author of the Congressional
act directing five million Stone Mountain ‘memorial coins. Received Distinguished
Service certificate from Atlanta Chamber of Commerce for services rendered City
of Atlanta. Is buried in Jefferson family cemetery at Monticello..

Ex. Corn. Mm., Dec. 19, 29, 1914.


Minutes. Directors, 1, pp. 15, 19.


Franklin M. Garrett, Atlanta and Environs, 3 vole., New York, 1954, II, 631 — 655.


According to the Atlanta City Directory for 1915, issued Dec. 15,1914, the
seventeen.banks were: American National Bank, W. L. Peel, President. Atlanta
Banking & Savings Co., George Winship, President. Atlanta National Bank,
Charles E. Currier, President. Atlanta State Saving Bank (Negro), J. 0. Ross,
President. Atlanta Trust Co., W. J. Morrison, President. Central Bank & Trust
Corp., Asa G. Candler, President. Colonial Trust Co., 3. S. Slicer, President. East
Atlanta Bank, E. A. Minor, P;esident. Farmers & Traders Bank, W. D. Manley,
President. Fourth National Bank, James W. English, President. Pulton National
Bank, W. 3. Blalock, President. Germania Savings Bank, 3. G. St. Aznatid,
President. Lowry National Bank, Robert 3. Lowry, President. Merchants &
Mechanics Banking & Loan Co., B. M. Grant, President. Security State Bank, 3. S.
Slicer, President. Third National Bank, Frank Hawkins,)President. Trust Company
of Georgia, Ernest Woodruff, President. West End Bank, 3. S. Sewell, President.


Chapter 4

The first full year of operations for the Federal Reserve Bank of Atlanta
coincided with the first full year of World War I and with all of the business and
economic dislocations occasioned by the latter. Chairman N. B. Wellborn pointed out
many of these problems and traced the progress of the bank to the end of 1915 in his
“First Annual Report to the Federal Reserve Board.” As a contemporary document of
historical significance it is herewith quoted in full:
“As Chairman of the Board of Directors and Federal Reserve Agent since the
opening of the bank, on November 16, 1914, my entire time has been devoted to the
duties of my office. I have been assisted in the general routine work of the office by Mr.
Joe M. Slattery, Assistant to the Federal Reserve Agent.
“In addition to receiving collateral incident to the issuance of Federal Reserve
notes, work is occasioned by deposits of gold to reduce liability for outstanding
circulation; and on account of the large amount of agricultural paper handled, with
cotton receipts attached, there is a daily transaction in substitution of collateral,
necessitated by the sales of cotton and withdrawal of cotton receipts pledged.
“The total note issue of our bank up to this date, December 31, 1915,
amounts to $18,950,000.00, and by comparison with the issue of other Federal Reserve
Banks, it is second in amount, and stands first in amount, taking into consideration the
proportion of our capital stock to that of other Federal Reserve Banks. This
proportionately large issue of our bank is due to the fact that a great deal of currency is

required for use in moving the. cotton crop, which currency prior to the establishment of
the Federal Reserve Bank was obtained by the member banks from reserve cities. Our
bank being within a short distance of each member bank, the difference in the cost of
shipping, either by mail or express, constitutes quite a saving in expense and also a
great convenience, since the banks are able to get the currency in much less time.
“Against the issue of Federal Reserve notes I am holding $4,751,245.69 in
collateral, being commercial paper rediscounted by the member banks with the Federal
Reserve Bank of Atlanta. In addition to this collateral the Federal Reserve Board holds
to the credit of the Federal Reserve Agent at Atlanta $14,200,000.00 in gold transferred
from the Gold Settlement fund.
“At the organization of the bank, owing to the depression throughout the
United States due to the European War, business within the Sixth Federal Reserve
District was almost paralyzed; the cotton crop was in process of marketing,1/ and
Europe, no longer a purchaser, had previously absorbed more than one-half of this
product. The banks and merchants were, of course, unable to make their usual
collections, and business was in a chaotic state. The decision of the Federal Reserve
Board to have the Federal Reserve Banks open for business on November 16, 1914,
greatly restored confidence, so that by the time the Federal Reserve Bank of Atlanta
opened, the member banks did not find it necessary to offer us rediscounts to any great
extent. In addition thereto, the member banks in our district had obtained AldrichVreeland emergency currency to the extent of $22,000,000.00, and had taken
advantage of the lower rates offered by the banks in the large financial centers, as the
result of the establishment of the Federal Reserve System.
“The physical organization of the Federal Reserve Bank was similar to that

of any other pioneer movement, and consisted simply in working out the details as they
presented themselves. The $22,000,000.00 of Aldrich-Vreeland currency obtained by
the member banks of this district had served to tide over the credit necessities of the
district for several months prior to the opening of our bank. The difficulties experienced
in the early operation of the Federal Reserve Bank were due largely to lack of a
thorough knowledge of the intent and meaning of the Federal Reserve Act and of the
class of paper eligible for rediscount. The solution of these problems involved much
correspondence with the member banks. Another question involved was the difficulty in
obtaining uniform warehouse receipts and insurance sufficiently specific to identify the
product pledged. This problem has been practically solved.
“At points of concentration where the movement of cotton is too rapid to
permit of the deposit of receipts with this bank, custodians have been appointed, under
adequate bond, to hold and exchange the securities supporting paper rediscounted with
this bank. The prevailing system of loans to cotton merchants on demand paper gave
rise to the necessity of rebating on paper withdrawn before maturity, in order to allow
the unhampered sale of the commodity previously pledged.
“The effect of the work of the Federal Reserve Bank has been to reduce the
rates of rediscount; to give the member banks the assurance of a place of rediscount at
reasonable rates, and the knowledge that they could obtain currency when needed. It
has stabilized the value of the commodities of the district; the quality of loans by
member banks is much improved; bankers are requiring better paper -- paper that will
be liquidated at maturity -- with a view to eligibility at the Federal Reserve Bank.
“Of the member banks in the district 49 are borrowing from their
correspondents and have not applied for rediscount with this bank. To those banks I
addressed the following letter:
‘In analyzing the credit needs and condition of member banks in


this district we notice from your last report of condition to the Comptroller that you are
using outside funds.
‘Inasmuch as you have never availed yourselves of the rediscount facilities
of the Federal Reserve Bank of Atlanta, we are anxious to ascertain if there be any
specific reason for your not allowing this institution to serve you in this capacity.
‘We are desirous of having the thorough cooperation of the member banks,
and would be glad to have a frank expression from you along this line.’
“With one exception, nearly all of the banks to whom the above letter was
addressed express no dissatisfaction with the Federal Reserve Bank. Some state they
prefer to borrow money in New York, as heretofore, believing it involves less trouble,
while others say they can obtain a lower rate in New York than they can with us, the one
exception stating that the Federal Reserve Bank should, in their opinion, accept paper
of any character when offered by a member bank.
“A complete set of by-laws was adopted by our Board of Directors at its first
meeting.2/ By referring to the powers and duties of the Executive Committee, it will be
noted that the management or administration of the bank is largely left with this
committee. The said committee is composed of the Governor, who is chairman of the
committee, the Federal Reserve Agent, and one director. The directors serve in monthly
rotation, being selected by the Board of directors at its regular monthly meetings. Thus
the Governor of the bank and the Federal Reserve Agent are in continuous service on
this committee. This plan works admirably, and the whole committee is in thorough
touch with the workings of the bank. The Executive Committee meets daily for the
consideration of all discounts offered by member banks. When the director serving on
the committee lives some distance out of town and is unable to attend the daily
meetings of the Executive Committee, he usually selects a director who lives in Atlanta,
or very close by, to act in his stead.
“The official staff of the bank is composed of the following:
Secretary (acts only at Board meetings)

25 per month

Deputy secretary

Receives a salary of
$2,400 per annum as
Assistant to the Federal
Reserve Agent.



Assistant cashier


Manager credit bureau




Discount clerk


“The discount clerk has a staff of clerks with salaries ranging from $480 to
$1,200 per annum.
“Including this staff of clerks and officers, the total number of employees is
27. Our bank having to handle so large a number of rediscounts, the force is constantly
at work, frequently into the night, during the autumn and winter seasons.
“When it is necessary for the Federal Reserve Agent in Atlanta to be absent
from the city a week or more, he so advises the deputy Federal Reserve Agent, in
writing, requesting him to serve in the interim as Federal Reserve Agent. For such
service he is allowed the same compensation, per diem, as that received by the Federal
Reserve Agent.
“Other than this, the deputy Federal Reserve Agent in Atlanta has no
specific duties, and receives no compensation, except the duties and compensation of a
regular director, serving as a member of the Board of Directors and as a member of the
Executive Committee.


“At the time of the organization of this bank a deputy governor was
elected to serve without compensation, but in view of the ruling of the Federal
Reserve Board as to the ineligibility of member bank officials serving as deputy
governor of this bank, our Board of Directors, at their meeting on June 11, 1915, in
accepting the resignation of the deputy governor (Cues L. Wilson), voted not to select
a deputy governor (an active deputy governor being unnecessary); and further voted
that the director serving on the Executive Committee, each month, be designated
governor pro ternpore and to act as governor during the absence of the governor of
the bank. For such services, as governor, he receives the same compensation
allowed the governor.
“The Board of Directors meet once a month, and during the first year of
the board’s existence it was found necessary to remain In session two consecutive
days at each meeting; but beginning with the second year a session of one day’s
duration has been found sufficient. While the Class A and Class B directors are in
closer touch with the viewpoint and affairs of the member banks, the Class C
directors are no less attentive to the welfare of the banking interests of the district,’
and, their positions being appointive, probably act with a little more independence
than the other directors.
“In the early days of the operation of our bank it was feared that some
difficulty would be experienced in handling the rediscounts offered by member banks
-- a fear relieved by experience. The Executive Committee, in handling the offerings

of constantly borrowing banks, are as considerate of them as is consistent with safety
and prudence; but notes are frequently returned for various reasons, the most
prominent of which are:



A too distant maturity.

III. Continued renewal.

Poor mercantile ratings, or other unfavorable information.


A too liberal line of credit extended to customer.

“The Federal Reserve Bank of Atlanta has, since its opening, discounted
22,252 pieces of paper amounting to $35,013,287.67.. This large volume of discounts
necessarily requires close and steady work, as our Executive Committee examines
carefully each day the condition of the borrowing banks, and each piece of paper
offered for rediscount; also the volume of the member bank’s transactions with the
Federal Reserve Bank of Atlanta, including the average balance maintained, date of the
first offering, maximum accommodation extended, date of liquidation, if any, maximum
accommodation subsequently extended, amount outstanding, proportion of paper
secured by collateral, and pending maturities.
“This bank has not deemed it wise, except at its New Orleans Branch, to
engage in open market operations to any great extent, as we have had, at all times, a
fairly full line of discounts, this being, in our opinion, the primary object of the law - - to
first accommodate the member banks in extending to them rediscounting privileges. It is
our intention, however, to go into the open market for business whenever our loanable
funds are idle, in order to take care of current expenses and make our own rates
effective when it becomes necessary.


“The division of work in this bank between the Governor and the Federal
Reserve Agent is rather evenly balanced, both giving their entire time to the business of
the institution. While it is generally understood that the operation of the bank is under
the management of the Governor, still, in practice, this is not exclusively true. The bylaws of the bank provide, under article 2, section 2, paragraph H, that to the Executive
Committee is delegated the power ‘in general to conduct the business of the bank,
subject to supervision and control of the board of directors.’ As chairman of the board of
directors, I am necessarily a regular member of the executive committee and am,
therefore, called upon to participate in the joint management of the bank. These duties,
in addition to the correspondence with the Federal Reserve Board, and having custody
of the Federal Reserve notes and collateral deposited with me to secure the issuance
thereof, add largely to the contemplated duties of the Federal Reserve Agent. The
duties of the Federal Reserve Agent at Atlanta have been further increased by the
establishment of the branch in New Orleans. Relations existing between the Governor
and Federal Reserve Agent are most pleasant and agreeable.
“In recommending that permission be granted to applying member banks to
act as trustee, executor, administrator, and registrar of stocks and bonds, we have
adopted the plan of presenting such applications to the Board of Directors at its regular
monthly meetings. As Chairman of the Board of Directors, I obtain as a preliminary all
the information available from the chief bank examiner for the district and other sources
and present same t& the Board of Directors with the application. If acted upon favorably,
the application is forwarded to your Board, accompanied by such information as we


have obtained with the recommendation that it be granted.3/
“Our bank has earnestly endeavored to cooperate with the Federal Reserve
Board in putting into effect the voluntary clearing system proposed by your Board, but
the result has not been satisfactory.
“The system was inaugurated on April 10, 1915, membership was voluntary,
and items were received only from those banks which agreed to permit their accounts to
be charged with checks on themselves, subject to final payment. The system began
operation with 67 members, 15 joining later, and 9 withdrawing, leaving a present
membership of 73, of which 21 are located in reserve cities.
“The number of items handled daily has averaged 440, of which 207 have
been on banks in the district outside of Atlanta, 204 on banks in Atlanta, and 29 on
banks in other Federal Reserve districts. The principal objections raised by the member
banks are: (1) They cannot anticipate the drawings, hence the difficulty of maintaining
their reserves when checks are charged to their accounts; (2) They object to giving up
exchange charges, which it has been their custom to make; (3) Owing to the limited
number of points covered, none being outside the district other than Federal Reserve
cities, the volume of items they send in for credit must, of necessity, be small; (4) Since
the Federal Reserve Banks will not accept their checks on nonmember banks, which
are in the majority in this district, balances must be maintained with reserve
correspondents, in order to have such items collected.
“The effect of the system has not been to reduce exchange charges, either
by the banks themselves or by the two country clearing houses in the district, Atlanta
and Nashville. The charges in this district run from $1.50 to $2.00 per $1,000, the
average being $1.63 per $1,000 for the entire district.


“The Federal Reserve Bank of Atlanta receives from its members, at par,
subject to deferred credit, exchange on points outside of the district. It also makes
transfers, by mail, outside of the district without cost, and pays checks on itself coming
from other districts, without charge, provided the volume of exchange deposited by any
member bank during the current month equals the amount of the transfers made for that
bank and incoming checks from other Federal Reserve Banks. The charge on the
difference, if any, is based on the cost of shipping currency to the gold fund to cover,
provided such shipments have to be made. We have not endeavored to make a profit
on our exchange transactions, believing we should give this service to our members
without cost, provided we can do so without loss to ourselves.
“A canvass of the attitude of the State bankers toward the Federal Reserve
System develops the fact that while every thoughtful State banker fully realizes that the
system to which he has in no way contributed has been indirectly of great benefit to his
institution, he is hesitant about joining a system of which his ideas are more or less
vague. He is familiar with the limitations of the State laws under which he operates, but
unfamiliar with the National bank and Federal Reserve Acts and in many cases
exagerates the extent of their requirements. The State banks are accustomed to
transact business at fixed rates of interest and are not in sympathy with any movement
which may tend to decrease their profits through changes in interest rates, and, further,
it will no doubt be difficult to engage the attention of the majority of State bankers so
long as the period of easy money continues.
“At the time of the inauguration of the Federal Reserve System the general


business conditions of the district were undergoing a most demoralizing depression,
and especially was this true in agricultural lines. The South had produced the largest
cotton crop in its history and a correspondingly small grain crop, the cotton exchanges
were closed, exports cut off, causing a depreciation in value until the market price was
below the cost of production and trade in our main staple almost at a standstill.
“The establishment of the Federal Reserve Bank and its public
announcement that it intended to lend all the assistance within its power to aid the
producers was the strongest factor in dispelling the gloom and doubt. In this work the
Federal Reserve Bank had the hearty cooperation of the member banks of the district.
“The unusual conditions caused a holding back of the 1914 crop and the
marketing of it in the late winter and spring of 1914-15, thereby necessitating the most
rigid economy, especially among the agricultural element of our population. Such
conditions brought most forcefully to the mind of the Southern farmer the imperative
need of crop diversification, with the result that the 1915 crops showed an increase of
approximately 70,000,000 bushels in corn, wheat and oats, with an increase in the rice
crop of approximately 5,000,000 bushels, with more cattle and hogs than any previous
season, and for the first time the cotton crop of the South may be classed to some
extent as a ‘surplus-money crop.’ The decrease of approximately 5,000,000 bales in the
1915 crop and the establishment of a 3 per cent commodity rate to member banks for
money loaned to the farmers at 6 per cent were the strong elements in causing and
maintaining the favorable prices of cotton, and the commodity rate has been especially,
effective in the holding and marketing of the crop.
“The tobacco growers of both Tennessee and Florida were compelled to
carry over a greater proportion of their 1914 crop on account of difficulty in delivery and
high ocean rates, and to the producers of this commodity the Federal Reserve Bank has
rendered valuable aid in assisting them to hold their crop for a more favorable market.


“The iron industry has received a strong impetus within the past few months
and the movement in this and kindred industries is stronger than for several years past.
Activity is general throughout the district, covering a multiplicity of lines, and business
conditions appear exceedingly bright.
The policy of the board of directors of this bank was not favorable to the
establisment of branch banks until we had thoroughly developed the business of the
parent bank. In view of the commercial importance of New Orleans and its distance
from Atlanta (approximately 500 miles) the board of directors decided to recommend to
the Federal Reserve Board the establishment of a branch at New Orleans, to be known
as the New Orleans Branch of the Federal Reserve Bank of Atlanta.
“The branch bank was opened for business on September 10, 1915. Its
territory comprises that part of the Sixth District in the states of Louisiana and
Mississippi, and the banks in the Counties of Mobile and Baldwin, Alabama. The
expenses of the branch bank at New Orleans for the first year’s operation are
guaranteed by the member banks in the City of New Orleans.
“A duplicate of the accounting system of the Atlanta bank is used in the New
Orleans branch, and the auditor of the Federal Reserve Bank of Atlanta and the
examiners for the Federal Reserve Board make periodical examinations of its accounts.
Daily reports are made to the Federal Reserve Bank of Atlanta, with copies to the
Federal Reserve Board. On Friday of each week the statements of the branch are
telegraphed to Atlanta and incorporated in the weekly statement of the Federal Reserve
Bank of Atlanta.
“As Federal Reserve Agent, I appointed a ‘representative of the Federal
Reserve Agent at New Orleans,’ to represent me in transactions involving the issuance


of Federal Reserve notes, which action was approved by the Board of Directors of the
New Orleans branch and the Federal Reserve Board.
“Upon my request to the Board, the Comptroller of the Currency deposits
Federal Reserve notes with the Assistant United States Treasurer at New Orleans,
subject to the order of the Comptroller of the Currency. Upon notice from my
representative at New Orleans that collateral has been deposited, an order for Federal
Reserve notes is forwarded to the Federal Reserve Board and transmitted to the
Assistant United States Treasurer at New Orleans, who delivers the Federal Reserve
notes to the manager of the New Orleans branch. My representative handles only the
collateral and records incident to the transactions.4/
“The ability of the Federal Reserve Bank and of the southern banking
organizations to move the cotton crop and to properly finance the preparation of cattle
for the market has demonstrated that the long anticipated relief from seasonal financial
pressure has been realized. The great progress in diversification of crops for the past
two seasons clearly indicates the willing response to broadening effort, this response
being limited only by the great need of an adequate supply of capital to prepare for and
finance the improvements necessary to profitably grow and market crops which have
heretofore been grown to a limited extent only.
“Iron and steel industries have no lack of funds for current needs, including
the movement of their products and to finance reasonable extensions and
improvements. The navel-stores industry has suffered severely for the whole season for
lack of necessary funds. This is a peculiar industry in that the greater part of operating
capital is expended in labor; therefore, while the result can be accurately forecast, this
expenditure is not represented by tangible assets which can be made the basis for


financial negotiations. The industry is’ sadly in need of some kind of coalition and
organization that would tend to stabilize prices and promote confidence in financial
circles. The rapidly diminishing area adaptable to the production of these articles and
the increasing foreign and domestic normal demand indicate that this industry should be
conserved if this country is to receive the returns to which it is entitled from what has
been and is still a natural and valuable asset.
“The lumber industry is in better financial position, and for the immediate
future appears to be in a fair condition so far as the sale of the product is concerned, but
has suffered severely for a period running back to the depression of 1907, during which
time billions of feet of valuable timber have been manufactured and sold without profit.
Any comprehensive plan of conserving the wealth of our national resources should by
all means include some feasible plan of finance which would enable manufacturers to
keep their timber supply inactive during periods of slack demand and low prices, rather
than to follow the present system of exhausting this valuable asset to cover carrying
charges. The prominent distinction between such industries and agriculture and mining
is that agricultural products are produced seasonally, and new mineral deposits are
constantly discovered, adding to the already tremendous known quanity of that known
source of wealth, with the fair assurance that yet undiscovered mines will place the
probability of exhaustion far remote; while on the other hand the timber area is known,
the amount fairly accurately determined, and the end of an important industry forseen.5/
All of which clearly points to the necessity of careful study of the wasting of this
resource through press of necessity occasioned by lack of capital and credit.
“The immediate and crying need of the district is financial encouragement
for new enterprises. Money is plentiful for established demand, but any attempt to
promote new activity or even to re-establish lines of effort which have been idle through
the past depressions meets with little or no encouragement. Although everywhere are


seen the essentials of prosperity, there appears to be a strong undercurrent of
uneasiness and disbelief in its solidity or permanency. Under these conditions
substantial progress, is, of course, impossible. What stimulus is necessary to a
resumption of normal and progressive enterprise is not apparent unless it be the
allaying of uncertainty regarding the outcome of the European war and of an
unanalyzed yet ever present fear of the remote possibility that our own Nation may
become involved therein.
“A resume of the earnings of the national banks of this district presents a
most interesting subject which the general public has had little opportunity to examine
and about which an almost universal mistaken idea exists. That the net earnings of the
banks of the district fall short of the returns accruing to other lines employing a similar
capital and energy has of course, been well known to those whose life work has been
along this line of activity. But in the mind of the general public there exists an impression
so greatly of variance with the facts that a wide publicity and a clearer understanding of
the comparatively meager profits realized would no doubt do much to create a closer
and more sympathetic relation between the banks of the district and their customers.
Moreover, in view of the fundamental and sweeping changes in our financial structure
contemplated and effected by the Federal Reserve Act, a clearer and more appreciative
general understanding of the difficulties attendant upon the operations of the banking
business is highly desirable, if not almost essential, to the purpose of securing the full
measure of cooperation necessary to effect the broad and salutary reforms for which
this system was designed.
“The following tabulated analysis of earnings is arranged in groups
according to invested capital (i.e., capital, surplus and undivided profits):
Invested Capital
Net Earnings


Less, than $50,000

per cent


$50,000 to $100,000



$100,000 to $200,000



$200,000 to $300,000



$300,000 to $500,000



$500,000 to$1,000,000



Over $1,000,000



“I might add, in conclusion, that the policy of the bank has been to issue as
many Federal Reserve notes as possible - and to put up gold with the Federal Reserve
Agent to reduce outstanding liability. In this manner the Federal Reserve Bank has been
able to accumulate gold, which the officers of the bank believe is the correct policy to
pursue. It is thought highly desirable that ultimately our bank have on hand only gold
and gold certificates and put Federal Reserve notes out for circulation into the channels
of commerce.
Respectfully submitted,
Chairman of the Board and Federal Reserve
Atlanta, Ga
Dec ember 31, 1915.”
A number of matters came up during the Banks first full year of business not
specifically touched upon by Chairman Wellborn in his formal report. Some illustrate the
growing pains of a new organization; others the birth and development of policy.
The expense accounts of directors, most of whom lived at a distance from
Atlanta became, almost immediately, a bone of some contention with the Federal
Reserve Board in Washington. On January 15, 1915 the Atlanta Board adopted the


following schedule:

“3¢ per mile for railroad fare
$1.00 for each meal,
$2.50 hotel room per day,
Actual Pullman car fare,
$2.00 each day for incidental expenses”6/
This conservative schedule apparently inspired some criticism from
Washington, for on April 29 it was amended to include, in addition to regular directors’
fees, actual expenses only, viz:
“Railroad fare,
Pullman car fare,
‘Hotel bills,
Actual expenses only.”7/
The following day the Board, on motion of Director Ketting, passed the
following rather caustic motion on the subject:
“That the Chairman of the Board reply to the criticism of the
Federal Reserve Board regarding the expense of the director; and that in his reply he
should include a copy of the resolution passed by the directors at our meeting in
January, which provided a schedule of expense in detail, which schedule has been
used by the directors since the passage of the. resolution. The Chairman is also
requested to furnish the Federal Reserve Board with a schedule of the various directors
and their residences It is further desired that the Chairman make it very plain to the
Federal Reserve Board that it is the purpose of our directors to have their approval of
our charges, and we are anxious that the same be consistent and satisfactory, and if
these expense charges are not satisfactory to the Federal Reserve Board, that they


advise us and we will make them in accordance with their wishes.8/
A couple of weeks later, on May 14, a final appeal on the subject was made:
“To the Honorable Federal Reserve Board, Washington, D. C. Sirs:
WHEREAS: The Board of Directors of this Bank desire to conform their expenses
to the judgment and pleasure of your honorable body; and,
WHEREAS: It is our feeling that you will approve charges that do not exceed the
actual outlay of Directors in attending meetings; and
WHEREAS: The Directors know by experience that their expenses average one
dollar per meal or more, and that their incidentals in various ways are
at least two dollars per day, and hotel room two dollars and fifty cents
per day; the Directors necessarily by virtue of their positions and the
exposure in connection therewith being at more than mere ordinary
expense; and,
WHEREAS: The Board desires to avoid, if possible, the inconvenience and
difficulty of keeping itemized expense accounts;
THEREFORE: Be it Resolved, that we respectfully request your honorable body to
approve the following schedule of expenses:
Actual railroad fare paid.
Actual Pullman fare paid.
Hotel room when necessary, $2.50 per day.
Meals $1.00 each.
Incidentals $2.00 per day.
RESOLVED: Further, that we respectfully request you to take into consideration
the fact that the several Directors occupy more than ordinary
positions in their communities, and that by virtue of their relations with
member banks, that they are more or less in the continuous service


of the System to a substantial degree; thereby having some
consequent continuing expense in connection therewith, all of which
makes it a matter of moment that the expenses of attending board
meetings be at least paid in full.”9/
The logic and reasonableness of this appeal was not lost upon the Board in
Washington. It was approved by letter dated June 1.10/
During its first year the Atlanta Federal Reserve was faced with various
problems concerning member banks. In February, the First National Bank and
Clarksville National Bank of Clarksville, Tennessee and the Peoples National Bank and
Springfield National Bank of Springfield, Tennessee, filed a petition with the Federal
Reserve Board at Washington seeking to be removed from the Sixth District to the
Eighth District at St. Louis.
Governor McCord and Director Hartford were authorized to go to Nashville
and to meet with officials of the banks concerned in an effort to adjust any differences or
objections the Tennessee banks had to remaining in the Sixth District, The diplomatic
efforts of the Atlanta officials were successful and the petition to transfer was
During the summer of 1915 the Atlanta Federal Reserve Bank experienced
the first bank failure in its district when the Third National Bank of Fitzgerald (Ga.)
became insolvent, was liquidated and reorganized. The Federal Reserve Bank agreed
to discount the paper of the re-organized bank to the extent of $50,000 to $55;000, in
addition to the paper already discounted and held by the Reserve Bank. It was
understood and agreed that as these capital loans were paid in, the demand for
discounts in the Atlanta Reserve Bank should be correspondingly decreased.12/
As Chairman Wellborn pointed out in his first annual report to Washington,
State banks continued to be very slow in joining the Federal Reserve System. In a


gesture of encouragement to these banks, the Directors of the Atlanta Bank passed the
following resolution on September 10, 1915:
“WHEREAS: The time now seems to be opportune for a large number of state banks in
this District to join the Federal Reserve System; and,
“WHEREAS: Many inquiries are being received through the mails, and many of the
officers of state banks are from time to time calling at this Bank, and asking various
questions regarding the System and their entering the same;
“THEREFORE BE IT RESOLVED: That the Chairman of this Board appoint a Director,
or Directors, to visit state banks in this District where such visitation may have been
requested by said banks, that they might be informed fully in regard to being admitted
into the System, and the operations and functions of this Bank; and,
“BE IT FURTHER RESOLVED: That the Chairman be authorized to appoint some one
to draft a suitable letter to send selected state banks in the District, which would in effect
state that this Bank would be glad to send some representative to meet with such
Bank’s boards of directors by special invitation and appointment; it being the purpose of
this letter to convey all necessary information to the state banks of our willingness to
inform them, yet at the same time preserving the dignity of this institution.”13/
But, as the Chairman pointed out, “it remained difficult to engage the
attention of the majority of state bankers so long as the period of easy money

During July 1915 certain banking interests in Atlanta, spearheaded by John
K. Ottley14/ and A. P. Coles15/ proposed to organize a district clearing house
independent of the Federal Reserve Bank.
The directors of the latter rebutted the proposal in the following policy


defining language:
“...We think it would be unwise for this Bank to lend itself to outside
undertakings, and if we embark in the proposition with them, we fear it would not only
displease many of the shareholders of this institution, but might also injure the bank
“We therefore suggest the following reply to (Messrs. Ottley and Coles):
“The Directors of the Federal Reserve Bank after carefully considering the
proposed plan, have decided that it would be injudicious for this institution to lend itself
to same. It is doubtful if the law allows sufficient latitude for such an undertaking on the
part of this institution, and we also doubt the wisdom of associating ourselves with it on
account of the great division of sentiment existing among the member banks on the
question of clearing. Clearing is a function provided for in the Federal Reserve Act, and
in our opinion; if the best interests of the System at any time demands clearing, the
Federal Reserve Board will take action to that end, and provide all needed facilities of
that character within the system itself.
“0ur Board appreciates the interest you gentlemen have manifested in this
subject, and we are glad to have had the privilege of talking the matter over with you;
and we will appreciate your approaches at any time on all subjects looking to the
betterment of banking conditions in this District.
“We suggest further that the Chairman of this Board send a copy of his
communication to Hon. W. P. G. Harding, Member of the Federal Reserve Board, in
view of the fact that this subject has been discussed with him, and in view of the further
fact that Messrs Ottley and Coles brought the-matter to our attention through the
suggestion of Mr. Harding.

W. H. Toole
J. A. McCrary
F. W. Foote.”16/


As the 1915 harvest season approached the Secretary of the Treasury had
the Treasurer of the United States deposit five million dollars in gold in the Atlanta
Reserve Bank to aid in financing the crops. At the same time a commodity rate of three
percent was approved. It was based on staple agricultural products, properly
warehoused and insured, with an interest rate to borrowers not to exceed six percent,
including interest, discount and commissions.17/
The subject of “discounts” formed the inspiration for the following Board
action on October 15, 1915:
“WHEREAS:- It is the sense of this Board, that in order to have
conservative banking within our District, we deem it necessary that each member bank
‘clean-up’ with this Bank occasionally, and to this end it is;
RESOLVED: -That it is the desire of this Board that the member banks be requested to
pay off their discounts at least once a year. This requirement, however, is not intended
to apply to rediscounts known as ‘Commodity Paper, or ‘Trade
The resolution was passed with the understanding that the giving of such
notice to member banks, to “clean-up,” should be left to the discretion of the Governor
and Chairman.18/
On August 13, 1915 the Georgia Legislature passed “An Act to provide for
the prompt payment of the public school teachers of the State by authorizing the
issuance of the Governor’s warrants and sale of the same; and for other purposes.”
Bank Governor Joseph A. McCord reported to his Board on October 14, that
the day before he and Colonel E. T. Brown visited Governor Nathaniel E. Harris at the
Capitol and discussed the probability of the Reserve Bank purchasing such warrants up
to $1,000,000 at the rate of 3% per annum. The Chairman and Deputy Chairman of the
Board of Directors acquiesced in the proposal with the understanding that the Federal
Reserve Bank of Atlanta. could only invest to the amount of 5% of the amount of


deposits of its member banks, the balance to be placed with other Federal
Reserve Banks, through the Federal Reserve Bank of Atlanta.19/
Shades of Jesse James! In mid-July 1915 a Louisville & Nashville train was
held up between Montgomery and New Orleans on which occasion the Sixth District
Federal Reserve Bank suffered a loss of $25,000. An insurance wrangle followed.
When the Bank first opened, the mail insurance of currency was sought by
nearly all of the agents in Atlanta. Haas & McIntyre, representing the St. Paul Fire
&Marine Insurance Company submitted the lowest rates in a general way, though on
some points other companies offered a lower rate. On the voluntary suggestion of
Leopold Haas, of Haas & McIntyre, the Bank agreed to give that firm the coverage
because its general policy was lower and Mr. Haas’ agreement to give the Bank the
benefit of lower rates it might have from other sources.
The agreement worked satisfactorily until the train robbery. The insurance
carrier paid the loss promptly but immediately submitted a new rate schedule, which, in
some instances represented an increase to the Bank of over 100%. St. Paul Fire &
Marine claimed that it had an annual contract with the bank. The bank protested and
brought forth what it regarded as a very insulting letter to Assistant Cashier H. W. Bell
from the president of the insurance company.
In early November a conference was held in the Bank between Mr. Moore,
of the insurance company and Governor McCord and Messrs. Pike and Bell of the
Bank. The language used by Mr. Moore on that occasion was derogatory to the
character of the Governor and his associates to such an extent that all relations
between the Bank and St. Paul Fire & Marine were broken off. The insurance was
subsequently placed with Lloyds of London.20/
During February 1915 P. R. Kitties, original Auditor of the Bank, resigned.
W. S. Graves was elected to the position. At the same time Ward Albertson was elected


Discount Clerk on a temporary basis.21/ Born in 1872, Mr. Albertson was destined to
spend the remainder of his life with the Bank. At his death, on May 16, 1933, he held
the position of Assistant Federal Reserve Agent.22/
On April 30, a policy relative to salary increases was established by the
following motion, which prevailed: “That no salaries be increased of any of the
employees of this Bank, by the officers, without first submitting the proposed increase to
the directors for their approval; such submissal to be made by the Governor of the
Even before its first year of business had passed into history the Bank
began to feel the pinch of inadequate space. The matter was discussed in March 1915
but during the following month was deferred.24/ However, in July, the Governor reported
that additional safes and lock boxes, owned by the Mosler Safe Company and formerly
in the Third National Bank, had been purchased.25/
At its meeting on December 9, 1915, the Board of Directors was addressed
by Captain Charles A. Lyerly, a member of the Bank’s Advisory extended his
congratulations, expressed pleasure relative to the present condition and management
of the Bank, and stated, that in his judgment, “it was about all that could be desired or
The statement of the Bank’s operations, including the New Orleans branch,
issued by Governor Joseph A. McCord on January 3, 1916, supported Captain Lyerly’s
optimism. It revealed that to December 31, 1915, the Bank earned $236,460.37; had
expenses of $153,927.98, and produced a net profit of $82,532.39.27/
Chapter 4.

For an account of .measures taken locally to ease the cotton situation see Garrett,


Atlanta and Evirons, II, 638-641.

See footnote 70, Chapter 3.


At its meeting on April 29, 1915, the Board of the Atlanta bank passed the following
motion by Mr. Kettig: “That we cooperate with the national banks in this district in
removing any restrictions regarding national banks acting as trustee, administrator,
registrar, etc.”


The City of New Orleans, it will be recalled, had been a serious contender for the
Sixth District bank itself and almost as soon as Atlanta was designated as the Site,
began agitating for a branch. At its first 1915 meeting, Jan. 14, the Atlanta Board
passed the following resolution:
“That for the purpose of facilitating and developing the export and import business
of this District, that this Board recommend to the Federal Reserve Board the
establishment of a Branch of this Bank in the city of New Orleans, La., at the
earliest time practicable, accepting the New Orleans Bankers’ offer of the expense
of the Branch for a period of twelve months.” On March 12 a suggested outline for
a New Orleans Branch was spread upon the Minutes of the Atlanta Bank. On July
9 Messrs. Sol Wexler and J. H. Fulton, of New Orleans were elected Class “A”
Directors and W. J. Davis, of Jackson, Miss., as a Class “B” Director of the branch
bank to be opened in New Orleans. On Aug. 16 Marcus Walker was elected Class
“B” Director of the New Orleans Branch and was designated Manager, at a salary
of $400 per month. The Branch was opened on Sept. 10 and a month later,
reporting to the Atlanta Board on Oct. 14, Director F. N. Foote, after a visit to New
Orleans, reported: “that the quarters are very much improved and now present a
very good appearance; that the officers and force seem to be well organized and to
have the business of the Branch Bank well in hand.”


Modern methods of forrestry conservation had yet to be developed.



Minutes, Directors, 1, p. 2


Ibid., 34


Ibid., 36


Ibid., 40

10. Ibid., 45
11. Ibid., 25, 28.
12. Ibid., 46
13. Ibid., 56-57.
14. Vice-President Fourth National Bank.
15. Vice-President Central Bank & Trust Corpn.
16. Minutes, Directors, 1, p. 49.

Ibid., 54


Ibid., 61


Ibid., 59


Ibid., 63-64


Ibid., 26


Biographical records of the Bank.


Minutes, Directors, 1, p. 26.


Ibid., 32, 34


Ibid., 49


Ibid., 67

27. First Annual Report, Federal Reserve Bank of Atlanta, 1915.


Chapter 5.

President Woodrow Wilson, champion of the Federal Reserve System,
stood for re-election in 1916 against Charles Evans Hughes and won by a slim margin.
The popular vote stood 9,128,837 to 8,536,380 and the electoral vote 277 to 254.
During the year, on the national financial front Congress passed the Anti-Trust
Interlocking Directorates Act, a Federal Farm Loan Act and a New Revenue Act which
doubled the normal rate of income tax for both individuals and corporations. On
September 25 the New York Stock Exchange set a record with sales of shares
representing $2,192,300. A-month later the commodity market soared with wheat at
$1.68 3/4 against $1.03 1/8 the previous year; corn, $ .82¼ against $ .58 and cotton in
New York at $ .17 a pound.1
In Atlanta, on November 2, the Atlanta National Bank, the city’s oldest,
became also its largest. This was brought about by a merger of the Atlanta National and
the American National Bank, the latter a successor to the old Maddox-Rucker Banking
Company. Total deposits of the merged bank, which retained the Atlanta National title,
came to $15,000,000. In commenting on the merger Colonel William L. Peel, president
of the American National, said:
“…The new financial conditions which have developed in the United States
during the past few years have demonstrated the importance of handling business on a
large scale…”2
The Atlanta Federal Reserve Bank was out for business too in 1916. On
March 9 Director McCrary offered a resolution which authorized the Executive.
Committee “to designate any official (of the Bank) to Visit different sections of the
District, with a view to increasing the business and efficiency of the Bank, at such times


as they may deem advisable.”3
As the Bank’s personnel gained experience certain procedures were
simplified so as to make for a smoother operation. In January the attention of the
Executive Committee was called to the amount of work necessitated by the crediting of
rebates on loans. It appeared that from 15 to 20 entries were necessary to put the
rebates on the books.
After some discussion a resolution was adopted making the minimum
rebate on loans up to $200., 50¢ on each transaction, were payment was made before
maturity. If the amount of interest to be returned was less than 50~, no rebate shall be
given. On loans over $200, the minimum amount of rebate shall be $1.00. If the interest
due does not amount to $1.00, no rebate shall be made.4
Another situation which required a clear-cut policy in early 1916 was that of
paying earnings to withdrawing banks. The matter was settled by the following motion
put by Director Foote on February 10:
“That member banks withdrawing from the System be paid the value of their
stock, as shown by the books of this bank, less the unearned discount, and less such
losses as the Executive Committee may estimate the bank has sustained at such time
of withdrawl.”5
During the summer of 1916 a crisis arose in Jacksonville, Florida in
connection with the Heard National Bank. Chairman M. B. Wellborn was called to
Washington in July to confer with Comptroller Williams, the chief examiner of the Sixth
District; W. P. C. Harding, of the Federal Reserve Board; President Heard, of the bank,
and several of his directors.
The upshot of the matter was that the Heard National Bank was in a very
deplorable condition,” with losses on bad loans alone amounting to $700,000 or
$800,000. A change in management was recommended. To this end Mr. Heard was


retained as President on a temporary basis and J. B. Pike, cashier of the Atlanta
Federal, was placed in charge as Vice—President. The conditional resignation of Mr.
Pike was accepted by the Board. He went to Jacksonville and Assistant Cashier M. W.
Bell was named cashier until January 1, 1917.6
Later in the year the Directors of the Atlanta Federal received a light slap on
the wrist from the astute W. P. C. Harding. He called their attention to certain
transactions with the Central Bank and Trust Corporation7 involving the purchase of
trade acceptances and banker’s acceptances carrying with them certain liens or bills of
sale or chattel mortgages on certain cotton oil mills, products, etc., which latter class of
paper, Governor Harding stated, did not come within the ruling of the Board. Governor
McCord assured Governor Harding that this class of paper would not be bought from
the Central Bank in the future.8
The first of the Sixth District’s branch banks, New Orleans, was) by the
spring of 1916, after seven months of operation, doing well. Director F W. Foote had
reported in October 1915 that “the business of the Bank is well in hand.” Director
Saunders, following on inspection in April 1916, made a cheerful prophecy, “The outlook
for the New Orleans Branch,” said Dr. Saunders, “is much brighter than at any prior
A couple of deaths in the official family at New Orleans occurred in the
summer of 1916 in the persons of Director W. J. Davis and Cashier Dunn. The latter
position was filled in July by the election of Sterling Armstrong. The directorship was
left vacant until August, at which time H. B. Lightcap, of Jackson, Mississippi, was
elected as a Class “B” Director.10 Earlier in the year Director Sol Wexler, of the New
Orleans Branch resigned and had been replaced by J. E. Bouden, Jr.11
A number of matters concerning personnel, some of which set precident,
were acted upon in 1916. In January a motion was adopted that salary increases would


henceforth be considered only at the January meeting. Governor Joseph A. McCord
was re-elected at $9,000 per year and effective October 1, Chairman Wellborn’ s salary
was increased from $7,500 to $9,000 by the Federal Reserve Board in Washington.12
Effective July 1 Auditor W. S. Graves was made Assistant Cashier
and Manager Transit Department; Ward Albertson was moved up from Discount Clerk
to Auditor, and W. Patterson was made Discount Clerk. No salary increases were
involved.13 Credit Bureau Manager Robert H. Hemphill resigned in November. J. A.
Cranberry was named to the post in January 1917.14
While the United States did not become a fighting participant in World War I
until April 1917, trouble was afoot south of the border in Mexico. Reserves were ordered
into service in 1916. In August the case of former employee Leon Savell, then in the U.
S. Army, came before the Board. After some discussion it was decided to grant Savell a
leave of absence on account of military duties and that his salary be continued until
January 1, 1917 less the $16 per month he received as a soldier.15
In March Watchman David Davidson registered a request with the Executive
Committee that his hours be rearranged so as to allow him to attend church on Sunday.
He complained that his present hours precluded either morning or evening attendance.
The Committee agreed that if Mr. Davidson would ring in at 10:30 on Sunday mornings
he could then have until 2 PM to attend services. Even so, the Committee thought the
action unwise as it would, in the Committee’s words, “give six hours time without any
watchman in the bank, and if this became known to yeggmen, they would so arrange to
work in the six hours.”16
Throughout its second full year of operations the business of the Federal
Reserve Bank of Atlanta remained good and earnings satisfactory. On December 30 a
dividend of $70,941.30 was declared.17
A commendable Christmas spirit prevailed that month also, when, on the


l4th the Board of Directors adopted a motion that “we give each of the employees
$10.00 as additional compensation except the Governor, the Chairman, the Attorney,
and the Secretary, subject to the approval of the Federal Reserve Board, to be paid on
Christmas eve.”18
Nineteen sixteen was especially significant in the history of the Federal
Reserve Bank of Atlanta in that a choice site for a permanent home was secured.
Almost from the day the Bank opened in the Hurt Building, space became a problem
and, while the Bank’s lease was extended in October 1916 for one year after November
1, 1917,19 steps had already been taken to purchase a building lot.
In April a committee of two, composed of Directors Hillyer and McCrary was
appointed for the purpose of investigating locations.20 Fortunately the Bank’s need
coincided in point of time with the availability. of a prime location.
The First Presbyterian Church of Atlanta had occupied a site on the
northwest side of Marietta Street near Spring and almost opposite Cone Street since
1852. The original frame sanctuary had been replaced in 1878 by a much more
imposing Gothic brick structure. It, in turn, was outgrown by 1915, in which year
construction of the present house of worship at Peachtree and Sixteenth Streets was
begun. The building and lot on Marietta Street were for sale. As of 1916 the property
was flanked on the South by the old Austell Mansion, originally built by Reuben Cone
and still occupied by the widow of General Alfred Austell. To the North was the
realatively tall building, still standing and then occupied by John Silvey & Company,
wholesale dry goods.21
Director J. A. McCrary, one of the two committeemen appointed earlier to
find a building site, was authorized to negotiate for the purchase of the church property.
His correspondence with Judge William T. Newman,22 Chairman of the church
committee and with Paul S. Vose, a member of that committee, sums up the


October 13, 1916
“Mr. Paul S. Vose,
Dear Sir:

I am authorized by the Federal Reserve Bank Board of Directors, to offer

through you $100,000 when you deliver an approved deed to the Church and lot located
on the South side of Marietta St., known as the First Presbyterian Church.
Yours very truly
(Signed) J. A. McCrary, Committeeman”
“Mr. J. A. McCrary, Federal Reserve Bank Atlanta, Ga.
Dear Sir: I am authorized by the Board of Trustees of the First Presbyterian Church to
state to you, in response to your offer above, that we will sell the property named for
one hundred and two thousand five hundred dollars ($102,500.00) cash, and will give
you 24 hours within which to notify us of your acceptance or rejection of this offer.
Very truly yours
(Signed) Win. T. Newman, Chairman”
Since the Bank was actually willing to go as high as $110,000, Judge
Newman got a quick reply.
Oct. 14, 1916,
11:25 A.M.
“Judge Win. T. Newman, Chairman, Board of Trustees, First Presbyterian Church,
Atlanta, Ga.
Dear Sir: The written offer of the Board of Trustees of the First Presbyterian Church
of Atlanta, Ga., submitted through you, as Chairman of the Board of Trustees, to
Messrs. J. A. Mccrary and L. P. Hillyer, directors of the Federal Reserve Bank of
Atlanta, being a committee appointed to negotiate with your Board of Trustees; to sell
the property on Marietta Street -known as the First Presbyterian Church property - for
the sum of one hundred and two thousand and five hundred dollars ($102,500); is


hereby accepted, subject to our approval of the title to the property, and we hereby pay
you as Chairman of said Board of Trustees, the sum Of one hundred ($100.00) dollars
to bind this sale.
Respect fully (L. P. Hillyer, by J. A. McCrary,
(Director Federal Reserve Bank of


(J. A. McCrary

(Director Federal Reserve Bank of Atlanta.
M. B. Wellborn,
Chairman -Board of Directors
Jos. A. McCord,
Governor and Chairman Executive Committee
E. T. Brown
Member Executive Committee
Received One hundred ($100.00) dollars in part payment in acceptance of
the within sale.

Win. T. Newman,
Chairman - Board of Trustees;
First Presbyterian Church of Atlanta

Paul L. Fleming, Secy.”23
The Federal Reserve Bank of Atlanta had a building site.


Chapter 5.

Helen Rex Keller, The Dictionary of Dates, 2 vols., New York, 1934, II, 292-294.


Garrett, Atlanta and Evirons, II, 686.


Minutes, Directors, I, 74.


Minutes, Executive Committee, Jan. 25, 1916.


Minutes, Directors, I, 71.


Ibid., 89-90.


The Candler bank.


Minutes, Directors, I, 97.


Ibid., 78


Ibid., 87, 91.


Ibid, 69.


Ibid., 69, 93.


Ibid., 85.


Ibid., 97, 102.


Ibid., 90.


Minutes, Executive Committee, March 31, 1916.


Ibid., Dec. 30, 1916. The Second Annual Report, covering the year 1916, is
missing from the Bank’s files.


Minutes, Directors, I, 100


Ibid., 96.


Ibid, 78.



Garrett, Atlanta and Evirons, I, 347, 948; II, 759.


Judge Win. T. Newman, was a colorful and useful Atlanta citizen. He was
born in Knoxville, Tennessee, lost his right arm as a Confederate soldier
at the Battle of Jonesboro in 1864 and settled in Atlanta in 1866. After
a practicing law for 20 years he was appointed by President Cleveland in
1886, United States Judge for the Northern District of Georgia and served
the office for 34 years. He died in 1920.


Minutes, Executive Committee, Oct. 14, 1916.



Nineteen seventeen was one of those crucial years in history, the events of
which profoundly and permanently affected the lives of individuals and the operations of
business and government.
On April 6 the United States became a fighting participant in World War I by
declaration of war against Germany. On the 24th Congress passed the Liberty Bonds
Act which authorized issuance of bonds for national defense - $5 billion at 3½%. and an
issue of short term notes of $2 billion, of which $3 billion were to be invested in bonds
for the Allies. The first loan under this Act was made the following day - $200,000,000 to
Great Britain. It was followed during the remainder of the year by substantial loans to
Italy, France, Russia, and Serbia.1
In May the Chicago Board of Trade suspended trading in May wheat, that
commodity having reached an all-time high of $3.25 per bushel. Other exchanges
followed Suit. During the same month Secretary of the Treasury. McAdoo announced
the First Liberty Loan of $2 billion in 3½% convertible gold bonds.2
Mid June saw cotton reach 27 cents per pound on the New York Cotton
Exchange, highest since 1871. At the same time Congress passed the War
Appropriatior Act which carried $3,281,904,541.60 for Army and Navy war expenses. A
week later, on June 21, the Federal Reserve Act was amended, establishement of
branches authorized and regulations set up for admissions of state banks and trust
companies, accounts, etc.3
In late September the Second Liberty Loan Act authorized the Secretary of
the Treasury to borrow by certificates of indebtedness from $2 billion to $4 billion, and
War Saving Certificates were authorized under this Act, on October 1, the second


Liberty Loan was offered, $3 billion at 4% to run for 25 years. Two days later Congress
passed a New War Revenue Act which provided for an increased income tax individual
incomes, graduated excess on sale December 3, and on the 31st U. S. railroads were
placed under government control.4
On the local front the wealthy founder of the Coca-Cola Company, Asa G.
Candler, took office as Mayor. On May 21, clear and windy, Atlanta experienced its
greatest conflagration since General Sherman left the city on his “march to the sea.”
Two thousand homes and buildings were destroyed in the northeast section along
Jackson Street and North Boulevard. Fortunately there were no casualties. The
Peachtree Arcade was erected and production of the “Hanson Six” Atlanta’s only
“native” automobile was begun. Following the declaration of war on April 6, local army,
navy and marine recruiting offides were jammed with eager applicants anxious to get
into uniforms. Ft. McPherson began to take on new life, and September 5 Camp
Gordon out Peachtree Road of Chamblee opened its gates to the first of thousands of
citizen soldiers.5
The Federal Reserve Bank of Atlanta began the year on January 11, by reelecting the following slate of executive officers:
Joseph A. McCord, Governor
M. W. Bell, Cahier
W. S. Graves, Assistant Cashier
W. H. Toole, Secretary
J. M. Slattery, Deputy, Secretary.
Hollins N. Randolph continued as General Counsel and M. W. Wellborn as
Board Chairman and Federal Reserve Agent. A general schedule of salary increases
was put into effect and, subject to approval of the Federal Reserve Board, that of the
Governor was increased to $10,000.6
Captain Charles A. Lyerly was unanimously elected as member of the

Advisory Council of the Bank for 1917, and the following Directors were named for the
New Orleans Branch:
J. E. Bouden, Jr., Class “A” Director

B. Lightcap,

Frank Roberts ,
Marcus Walker,


Mr. Walker was designated as Manager at a salary of $450 per month.7
As the year progressed number of key personnel changes took place and
several actions affecting personnel were taken by the Board.
Assistant Cashier W. S. Graves resigned in April as did Director Dr. P. H.
Saunders. Mr. Graves left to accept a position with the Pioneer Bank at West Palm
Beach, Florida. His position was not filled pending the return of James B. Pike, who, it
will be remembered, had been “loaned” to assist in the reorganization of the Heard
National Bank in Jacksonville, Florida. Dr. Saunders’ resignation as director of the
Atlanta Bank was accepted with regret. He continued to serve the New Orleans Branch
as a director for another month.8
At the June Board meeting Chairman Wellborn reported the election
of Edgar B. Stern to fill Director Saunders unexpired term.9 Mr. Stern, a prominent
young New Orleans business man, was born in that city in 1886. He had served as
president of the New Orleans Association of Commerce during 1915. At the time of his
election to the Atlanta Federal Reserve Board he was Treasurer, Lehman, Stern and
Company, Ltd., of New Orleans.10
In Mid-September, at the suggestion of Chairman Wellborn, G. A. Hagan, of
Anniston, Alabama, was employed as Assistant Auditor. October brought several
changes. Warren H. Toole, an origiual Class “A” Director, who served also as Secretary


to the Board, resigned both positions on the 11th. Joseph M. Slattery, since August,
Assistant Federal Reserve Agent assumed the additional responsibility of Secretary to
the Board. manager of the Transit Department and the employment of an assistant
manager for the New Orleans Branch, at $3,600 per annum, was authorized.11
The Board vacancy created by Mr. Toole’s resignation was filled, on
December 14, by the election of Peter R. Kitties, of Sylvania, Georgia. Mr. Kitties was
born in 1879, attendedScreven County schools, Orangeburg Collegiate Institute and
Mercer University. He had a varied business career as auditor, merchant and banker
and was President of the National Bank of Sylvania at the time of his election to the
Atlanta Federal Reserve Board. He had previously served the Bank as Auditor from
Nov. 16, 1914 to February 12, 1915. Mr. Kitties continued to serve as a Class “A”
Director until his death on January 18, 1926.12
In addition to personnel changes, the subject of salaries and compensation
continued throughout 1917 to be a live topic of Board discussion and action. Certainly
Chairman Wellborn must have been gratified by receipt of a letter dated March 12 from
W. P. G. Harding informing him that the Federal Reserve Board had increased his
salary to $10,000 per annum.13 The increase, however, still left the Chairman shy the
$8,000 more he could have been making had he accepted the presidency of the First
National Bank of Birmingham rather than the Federal Reserve appointment in 1914.14
In December the salary or retainer of General Counsel H. N. Randolph was increased
from $600 to $900 per year.15
Meanwhile the salary situation as it affected employees earning less than
$100 per month was receiving attention. At the July meeting it was voted to recommend
to the Federal Reserve Board that salaries of all employees receiving less than $100


per month be given a 10 percent increase as a bonus and not a permanent increase, to
be effective July 1, 1917. A total of 39 employees, earning from $35 to $90 per month
were affected.16
It was felt, however,that a better defined salary policy for the Salaries, was
appointed, composed of Directors Hillyer, Hartford and Foote.17
The Committee’s report, dated December 14, 1917, forms and interesting
commentary on the Bank’s early compensation policy and is herewith quoted in full:
December 14, 1817
“Board of Directors of the
Federal Reserve Bank of Atlanta:
“Your Committee, appointed to investigate and make recommendations relative to the
salaries of employees of this bank, (not officers) beg leave to report as follows:
“We talked with some of the officers, heads of departments and employees o f the bank,
and after this investigation and a full discussion of the matter, your committee find it
impossible to make satisfactory detailed recommendations.
“We find some instances where some clerks deserve more consideration than other
clerks doing the same class of work. We find that some are indifferent, and the opinion
is expressed that it is immaterial whether they remain with the bank or not. Some have
been with the institution a greater length of time than others and deserve a difference in
consideration for loyalty and tenure of employment.
“The force is large, numbering 132, and there are many conflicting elements in fixing
“The work is divided in divisions, and in our judgment the conforming of salaries of one
division to another should be left to the officers of the bank.
One tantalizing question encountered is that of the bonus being paid to certain
employees. It appears that the bank is operating under a rule whereby certain


employees are paid a 10 percent additional compensation, increase seems to be
merited, whereas in other cases no increase in compensation is warrented. The rule is
applied without reference to merit or tenure of employment. it has caused considerable
agitation and some dissatisfaction in the institution and it seems to us that this bonus
system is wholly undesirable and should be abolished as of January 1, 1918.
“We think it is thoroughly in line for the bank to pay its employees a bonus, based upon
equitable division, when the prosperity of the bank justifies it, but only under such
“Our recommendation, therefore, regarding the paying of a bonus would be that if a
bonus is warrented, the officers of the bank make recommendations to the Board of
Directors at the December meeting of each year; and that the Board take such action as
the earnings of the institution shall justify. The bank should not obligate itself to pay any
employee a bonus.
“Our recommendations regarding the establishment and adjustment of salaries, is as
“We think it too cumbersome and unscientific to refer such matters to the Board of
Directors. We further think it would be detrimental to the welfare of the institution for
these matters to be handled in such a manner. We think the force should at all times be
employed according to merit, and that employees should be impressed with the fact that
their compensation will be based on the character of their services, and that the heads
of their division and the officers of the bank are the proper judges of services rendered.
We feel that any other system would prove prejudicial to that enterprise, initiative and
courtesy which is necessary for the well being of the institution and the development of
“Your Committee, therefore, begs to recommend that salaries of employees for the
present and in the future be left to the Executive Committee for final adjustment.



Respectfully submitted”
L. P. Hillyer, Chairman
F. W. Foote
W. H. Hartford.18

At the same meeting, and following the submission of the above report the
Board voted to present each employee of the Federal Reserve Bank of Atlanta at
Christmas with the sum of $10, as an honorarium.
The Bank’s construction project went forward during 1917 and on the site of
Atlanta’s first store20 a classic building began to rise. It started with a resolution by
Colonel E. T. Brown at the January Board meeting, “that we erect a building on the lotpurchased by the Bank on Marietta Street, Atlanta, at a total cost not to exceed
$200,000, upon and with the approval of the Federal Reserve Board.”21 Approval
almost by return mail, though a ceiling of $175,000 was placed on cost. Reserve Board
Governor W. P. G. Harding’s interesting letter on the subject follows:22
copy of letter from the FEDERAL RESERVE BOARD, WASHINGTON, dated January
22, 1917
“Mr. M. B. Wellborn, Chairman of the Boards
Federal Reserve Bank, Atlanta, Ga.
Dear Sir:
Your Deputy Chairman, Colonel E. T. Brown, called on the members
of the Board a few days ago and presented plans for your proposed building and vault,
and stated that the directors of the Federal Reserve Bank of Atlanta would appreciate a
prompt ratification of the action taken and proposed to be taken by your Board.

The subject was referred to the Board’s committee on operation of the
Federal Reserve Bank of Atlanta and at the meeting of the Board this morning the
report of the committee was adopted. I accordingly wired you as follows, which I now
Board will interpose no objection to expenditure not exceeding one
hundred seventy-five thousand dollars for bank building, vault and equipment, provided
five percent of cost of improvements be charged off as amortization annually for ten
years. Letter follows.
It is proper to state that, while the Board probably would not have
favored the purchase of the lot if it has been consulted in advance, it is willing, in view
of the fact that the lot has been purchased, to take the position that it will interpose no
objection to the expenditure of a certain sum by the Federal Reserve Bank of Atlanta
for a bank building and vault substantially along the lines indicated from which we
understand the improvements, including the vault, would cost:
with glazed terra cotta face


with Indiana Linestone face.........$l65,000
with marble face.………………..$l80,000
The Board believes that this cost might be reduced without modifying
the lines of the building by cutting out florid decorations, while fully maintaining the
dignity, proportions and general style of the building, and suggested that it might be well
for your architect to inspect the quarters recently fitted up for the Federal Reserve Bank
of New York in the Equitable Building, in which space has been economized to a
marked degree. The lobby as proposed in your plans is larger than that of the New York
Bank and it seems to the Board that it is really larger than need be and valuable space
wasted thereby. The sound-proof features of the typewriting rooms in the New York

bank are well worth considering, as they seem to add to the comfort and efficiency of
those employed therein.
Therefore, after a careful consideration of the plans submitted, the
committee on operations has recommended to the Board, and the Board has agreed,
that no objection be made to the expenditure by the Federal Reserve Bank of Atlanta of
not more than $175,000. for building, vault and equipment complete, with the
understanding that the Federal Reserve Bank of Atlanta shall amortize at least 5% per
annum for a period of ten years of the total cost of the improvements.
It will be apparent to the officers and directors of the Federal Reserve
Bank of Atlanta that the interest on the cost of the building, taxes and the amortization
charge as suggested, will amount to more than the rent hitherto paid. The committee
has therefore suggested, and the Board agrees, that every effort should be made before
final contracts are let, to secure the applications for member. ship of some of your more
important state banks. In the brief presented by Atlanta before the organization
committee it was argued that many of the large state banks in Georgia would at once
come into the system, but so far not one of them has. The argument has been made
more recently that if the Federal Reserve Bank of Atlanta occupied its own dignified
bank building, state banks would thereby be attracted and apply for membership.
The Board is of the opinion that now is the time, be fore it is made
known publicly that the directors and officers of the Federal Reserve Bank of Atlanta
have committed themselves to this large expenditure, to put every pressure upon
prominent state banks to apply for membership rather than to take chances of their
making such application after it becomes definitely known that the building is to be

Yours very truly,
(Signed) W.P.G. HARDING,

On March 8, the Building Committee was authorized to employ an architect,
a local man, if possible, to prepare plans for the bank building, vaults and equipment
and, that the architect “be instructed to furnish plan of building to cost not to exceed
$170,000 on basis of material and labor in normal times, preceeding war.”23
At its July meeting the Board authorized Chairman Wellborn to employ
Atlanta Architect A. Ten Eych Brown24 as supervising architect in connection with
construction of the bank vault on a basis of 5 percent commission on total cost - 3
percent to be paid on beginning of work and the balance on completion and
It will be remembered that in April and September, 1917, the First and
Second Liberty Loan Acts were passe by Congress in order to meet expenditure for
national defense.
At its May meeting the Directors of the Federal Reserve Bank of Atlanta took
note in the form of a resolution:
“Resolved that the Executive Committee of the Federal Reserve Bank of
Atlanta and the New Orleans Branch . . . in their respective territories be authorized in
conformity and in compliance with the regulations of the Secretary of the Treasury, to
arrange for deposits of public moneys arising from the sale of bonds, in such banks as
are authorized by law; and to receive as security for said deposits the same class of
securities as those received by the Treasury Department for the security of deposit of
public moneys.”26
A month later the Directors voted that the Bank purchase $25,000 Liberty
Loan Bonds for purpose of resale to employees and others, such resales to be subject
to the approval of the Executive Committee.27
Further action on the subject was taken in August when a Liberty Loan

Committee was set up composed of Mr. Wellborn as Chairman and Directors McCord
and Toole as members. This committee was charged with full responsibility for the
Liberty Loan bond department.28
During its early years of operation it was necessary for the Bank to take a
firm stand on certain matters and thus establish policy. One such matter was that of
deficient reserves on the part of certain member banks. After a report on the subject by
Governor McCord at the April meeting, Director McCrary moved that “we refund all
penalties charged up to March 1st, and that the Governor be authorized to make it plain
to the offending banks that these amounts were rebated because it was the first
offense, but that it would in no wise be observed in the future.”29
The organization of the Bank was streamlined in December by the
organization of a Fiscal Agent Department embracing the Bond Issue Division, the
Securities Division, the Conversion Division and the War Savings and Thrift Stamp
Division. Assistant Cashier M. W. Bell was named Manager of the new Department.30
The By-Laws were changed in some respects during 1917. A November
amendment provided for changing the title of the office of “Governor” to that of
“President” and that of “Deputy-Governor” to “Vice President.”31
At the same time Section 3, of Article 3, relative to the duties of the Assistant
Federal Reserve Agent, was amended to provide that he should function in the absence
of the Federal Reserve Agent and perform such other duties as may be prescribed by
the Board of Directors.32
The other 1917 By-Law change was made in December and changed that
part of Section .3 pertaining to “Meetings,” to read: “There shall be a regular meeting of
the Board every second Friday of each month, at 1 P.M., or if that day be a holiday, on
the first preceding full business day.33
As the Board of Directors finished its routine business on December 14,

1917, Governor W. P. G. Harding, of the Federal Reserve Board in Washington
appeared and joined in a discussion concerning a report by Federal Reserve Board
“He called especial attention to the necessity of a thorough and competent
organization, and stated that while he appreciated the fact that the Federal Reserve
Bank of Atlanta, in its early stages, on account of smaller revenues, had practiced very
rigid economy, he now felt that this feature could be figured secondarily, and that
service to our member banks, and not economy should be the current slogan.
“He called the Board’s attention to the new By-Laws governing branch
banks,34 and the advantages to be had by their adoption .
“Governor Harding also impressed upon the Board the necessity of adopting
some remedy to reduce the ‘float’ of the Federal Reserve Bank of Atlanta, and stated
that it might be well to extend the deferred credit to three or more days. He also called
the attention of the Board to the report of the examiners, wherein it stated that the Credit
Department was not in a satisfactory condition . . . Governor Harding said the law was
plain, especially in regard to securing proper credit statements from member banks, and
that the regulations must be enforced, and that the Federal Reserve Bank of Atlanta
should not endeavor to popularize the institution by waiving the rules or regulations in
this or other respects.”35
Governor McCord’s narrative report covering 1917 operations of the Bank
qualifies as an interesting chapter of its early history.
“Atlanta, Ga., January 10th,
To the Board of Directors and Member Banks,
Sixth Federal Reserve Bank
Dear Sirs:


We herewith submit to you the Third Annual Report of the Federal Reserve
Bank of Atlanta, covering the operations of the Bank from January 1, 1917 to December
31, .1917 . .
“'On June 30, 1917, we paid a dividend for six months due to the
shareholders from July 1, 1916 to December 31, 1916. On December 31, 1917, we paid
a dividend for twelve months on all stock in this bank up to and inclusive of that date,
thus paying to our shareholders or member banks, the dividends due them up to date.
The profits arising in the bank during its operation for the year justified the payment of
these cumulative dividends. In addition thereto we wrote off the depreciation of furniture
and fixtures, paid all the expenses of operations, cost of printing and issuing Federal
Reserve notes, and set aside a reserve for depreciation in addition thereto of
$24,909.00. After paying these dividends and setting aside these funds, there remained
$80,000 of net profits for the year’s operations, and under the law under which we
operate one-half of this is set aside to our surplus account, being $40,000, and the other
half is paid into the Treasury of the United States as franchise tax to the United States
“'We are glad to be able to make this statement, considering the fact that our
government has been at war with the Imperial Government of Germany since April of
last year. During this time there has been floated two issues of government bonds, and
this bank, both at the home office in Atlanta and the branch at New Orleans are highly
pleased with the results obtained in this district in the way of subscriptions to said loans;
and believe that the prosperous conditions that surround us at the present time and the
immediate outlook for the future will justify a larger subscription to the anticipated loan
that is near at hand.
“During the present year we have been of service to nearly all classes of
banks. We have handled the farmer’s loans, loans of the stock raiser, we have taken


care of the agricultural interests and the manufacturers’ interests, and then as these
.crops float to the center, it has been our pleasure to take care of the commercial
interests coming to us from the larger banks in the centers. We have also been of
service of currency to handle the needs of the trade for the marketing of the crops and
the handling of business conditions.
“The reserve position of the bank has been kept sufficiently strong to meet
any reasonable emergency, and in addition thereto we have issued sufficient Reserve
notes and possibly one of the largest issues of any of the twelve Federal Reserve
Banks. These notes are largely secured by gold; in fact three-fourths of the issue is
covered by actual gold in the hands of the Government, and the sale of the products
from this section of the country brings to us exchange which is converted into gold
reserve in the financial centers, relieving us of the outstanding liability on reserve notes,
and creates a bulwark of strength in case there should come an immediate demand for
credit in this district.
“We desire to express to our member banks our appreciation of their
cooperation, and extend our best wishes for the coming year.
Respectfully submitted,
The Federal Reserve Bank of Atlanta thus entered the second year of
American involvement in World War I in a prosperous condition and with bright hopes
for the future.

Chapter 6.


Keller, The Dictionary of Dates, II, 294-302.



3. Ibid.
4. Ibid.
5. Garrett, Atlanta and Environs, II, 697-720.
6. Minutes, Directors, I, 101-102.
7. Ibid., 102
8. Minutes. Directors, I, 109, 114; biographical records of the Bank.
9. Minutes. Directors, I, 113.
10. Who’s Who in America, Vol. 31, 1960-61
11. Minutes, Directors, I, 122, 124, 128, 129, 140.
12. Ibid., 140; biographical records of the Bank.
13. Minutes, Directors, I, 109.
14. Hopkins, M. B. Wellborn, 73.
15. Minutes, Directors, I, 140.
16. Ibid., 118.
17. Ibid., 133.
18. Ibid., 138-139.
19. Ibid., 140.
20. The small general store of Johnson & Thrasher, opened in 1839 to serve the
railroad builders.
21. Minutes, Directors, I, 103.
22. Copy in Minutes Directors, I, between pages 104 and 105.
23. Minutes, Directors, I, 107.
24. Anthony Ten Eyck Brown, noted Atlanta architect, was born in Albany, N.Y., in 1878.
Came to Atlanta in 1905. Designed many notable local buildings including the Fulton
County Court House, Peachtree Arcade, the old Criterion Theater, and the new Post
Office at Forsyth, Hunter and. Spring Streets.
25. Minutes. Directors, I, 114.
26. Ibid., 112.
27. Ibid., 115.
28. Ibid., 122.
29. Ibid., 109.
30. Ibid., 137.
31. Ibid., 135. Apparently this amendment did not take effect since the titles Governor
and Deputy Governor prevailed until 1935.
32. Minutes, Directors, I, 135.
33. Ibid., 138
34. Referring to June 21, 1917 amendment to Federal Reserve Act.
35. Minutes, Directors, I, 140-141.


Chapter 7
As World War I reached its crescendo and then its end in 1918, the Country
shifted to a spartan economy. With tight restrictions on food and fuel there were
“meatless days” and “lightless days.” Sugar was rationed. Auto riding east of the
Mississippi River, except for necessity, was discontinued and embargoes were placed
upon rail freight shipments.1
In late March the Secretary of the Treasury announced the Third Liberty
Loan, $3 billion at 47.. The Fourth Liberty Loan was announced in July, and the Fifth in
September. Meanwhile, in April, Congress created the War Finance Corporation, with
capital stock of $500,000,000 and power to issue $3 billion in bonds, authorized to lend
to banks to cover loans made to assist war industries, and to persons and corporations
engaged in business necessary to prosecution of war. W. P. G. Harding, of the Federal
Reserve Board, was nominated manager of the newly created corporation.2
During the spring and early summer of 1918 airplane mail service between
Washington and New York and between New York, Boston and Montreal, was
commenced. The Director-General of the railroads authorized 182 lines to expend
$938,000,000 during the rest of the year for repairs, equipment and improvements.3
On November 9 Herbert Hoover was directed by President Wilson to go to
Europe and represent the United States in food relief organization. Two days later the
Armistice was signed ending the war. Two million American soldiers were then in
France. In early December Carter Glass, of Virginia, was appointed Secretary of the
Here at home, in mid-February, the banks comprising the Atlanta Clearing
House Association instituted a service charge of 50~ per month for handling checking


accounts of persons and firms with average monthly balances of less than $50. The
street cars skip-stopped in order to conserve power; horses ceased to be a factor in the
fire department and a Georgia State Department of Archives and History was created.5
Building operations went forward with the completion of the Transportation
(Western Union) Building, the Cecil (Atlantan) Hotel, and Southern Railway’s Peachtree
Station. In May Navy Secretary Josephus Daniels, introduced by Governor Hugh M.
Dorsey, delivered a patriotic address, while in the Fall a severe epidemic of Spanish
influenza caused many premature deaths, particularly among soldiers at Camp Gordon
near the city. The signing of the Armistice on November 11 was greeted with
unrestrained joy and the victory parade next day was one of Atlanta’s most colorful.6
General business and banking conditions during 1918, as seen by Bank
Governor Joseph A. McCord, were described in his Annual Report for the year in the
following language:
“Except for the construction of a number of large shipbuilding plants, the
year did not record any new industrial enterprises, although there has been a vast
enlargement of operations in old industries, especially in the iron, steel and coal fields.
The most marked activity has been in the Birmingham manufactoring district and in the
shipbuilding plants at New Orleans, Mobile, Jacksonville, Savannah, Brunswick, and
practically every seaport town. In plants at these places there appears to be no
lessening of activity since the signing of the armistice. War demands enlivened the
lumber market, and with the opening of the sea traffic this trade as well as that in naval
stores, has been taken on new life.
“Owing to the great yields and high prices for nearly all crops the producer
finds himself in a strong financial condition. The cotton yields were larger than in 1917,
and during the early picking season the prevalence of satisfactory prices enabled the
disposal of such an amount of the crop as sufficed to liquidate pressing obligations, the


producers, however, depending on their better financial condition and improved food
situation to enable them to carry their surplus crop for better prices. The end of the year
finds prices lower than in the early season and the cotton holding movement largely in
force. Cotton buyers are experiencing some difficulty in purchasing the staple at the
prevailing prices, which are deemed to be too close to the cost of production. The banks
have shown a general willingness to assist the farmer in carrying his cotton, though the
producer has not found it necessary to borrow in great volume.
“Generally speaking, almost every line of business was handicapped during
the year by a shortage of labor. The wages paid and the rules practiced with reference
to compensation and overtime have somewhat demoralized labor for normal conditions.
With the increase in progress in army demobilization there will be some relief, but with
little or no immigration expected for some years, labor conditions are viewed as
extremely uncertain.
“Little or no engineering or construction work was carried on after the United
States into the war, even minor repairs and additions being largely restricted to
“There has been great diversification of farming operations, and practically
all industrial plants show increased capacity and output and are in better position to
supply the foreign trade. Shipping has begun to open up and there will be a gradual
movement of raw materials, especially cotton, with larger demand and better prices.
“Collections were reported unusually good during almost the entire year,
with monthly increases in bank clearings, railroad and post-office receipts.
“Interest rates for loans prevailing in financial centers in this district have
increased somewhat. Rates for several years past have ranged from 5 to 6 per cent, but
during the latter half of 1918 were advanced to 6½ and 7 per cent. These rates have
advanced notwithstanding the increase in bank deposits...”


On January 25, 1918 the following officers of the Federal Reserve Bank of
Atlanta were elected for the year:
Joseph A. McCord,


J. B. Pike,


M. W. Bell,

Assistant Cashier

W. B. Roper,

Assistant Cashier

W. R. Patterson,

Assistant Cashier

Ward Albertson,


G. A. Hagan,

Assistant Auditor.7

At the same time a letter was read to the Board from H. Parker Willis,
Secretary, Federal Reserve Board, informing M. B. Wellborn that he was elected a
Director of the Atlanta Bank for three years from January 1, 1918 and redesignated
Chairman and Federal Reserve Agent for one year from same date.8
Captain Charles A. Lyerly, of Chattanooga was re-elected a member of the
Advisory Board to represent the Sixth Federal Reserve District.9
Other changes affecting officers and Board members of the Atlanta
Bank took place during the year. In August Director Edgar B. Stern resigned to accept
an appointment as a Captin in the Ordnance Department of the United States Army.10
Mr. Stern’s seat was not officially filled until December 13, 1918, at which time the
Messrs. John K. Ottley of Atlanta and James E. Zunts, of New Orleans, were elected.
At the same time J. A. McCrary, of Decatur, was re-elected a Class B Director.”
The Board meeting of December 13, 1918 was also the last attended by L.
P. Hillyer as a Class A Director, his term having expired. Director W. H. Kettig rose to
the occasion. In an eloquent and fitting speech, and upon behalf of the entire Board, he


presented Mr. Hillyer with a beautiful loving cup. among the many compliments paid Mr.
Hillyer by the speaker was praise for constant attendance. Since his election as an
original director at the time the Bank was organized he had never missed a Board
meeting. Both Governor McCord and Chairman Wellborn paid feeling tribute to their
retiring associate.12
The two new Directors, J. K. Ottley and J. E. Zunts, were noted in the fields
of banking, business and the law. Mr. Ottley, vice-president, but soon to be elected
president (1919) of Atlanta’s Fourth National Bank, was born at Columbus, Mississippi
in 1868. Following youthful banking experience in St. Louis and Greenwood,
Mississippi, he came to Atlanta in 1890 as assistant cashier of the American Trust &
Banking Company, a Fourth National predecessor. By 1896 he had become cashier of
the Fourth and ten years later one of its two vice-presidents. Mr. Zunts was also a
native Mississippian, having been born at Canton in 1860. He was a Yale and Tulane
Law School graduate; had practiced his profession in both New Orleans and
Birmingham and was an officer and director of several insurance and industrial
At the September Board meeting the chairman read a letter from Paul M.
Warbury of New York, who recently resigned as a member of the Federal Reserve
Board. Long a key figure in the movement leading to the establishment of the Federal
Reserve System, Mr. Warbury had written to express to members of the local Board his
feeling of appreciation for their friendship and loyal spirit during his tenure.14
In November J. B. Pike was elected Deputy Governor of the Atlanta Bank at
a salary of $7500. There was some opposition to his election by Board members, some
of whom thought the postion should go to a Group-2 or Group-3 banker. Indeed a tie
vote was had. Chairman Wellborn broke the tie in favor of Mr. Pike.15
December produced a number of official changes. In addition to the election


of Messrs. Ottley and Zunts to the Board, previously noted, Milton W. Bell was
promoted from Assistant Cashier to Cashier. Warren H. Toole, a former Director, was
designated as Manager, Fiscal Agent Department. Then, only two months after his
election as Deputy Governor, J. B. Pike resigned, effective December 31, to accept a
position with the National City Bank of New York.16
The general situation as to personnel was somewhat chaotic during 1918.
The war called 23 employees to the colors. With numerous Army camps in the 6th
district and a large volume of Government work under way, many employees were lured
away by higher pay, thus handicapping the Bank’s operations .seriously. After the
Armistice was signed on November 11, however, a number of old clerks returned to
their positions and clerical service began to improve rapidly.17
The war year of 1918 saw much activity insofar as branch banks were
concerned. Two were put into operation, one was authorized, others were considered,
and the already established New Orleans branch had a busy year.
In January the following were elected Directors of the New Orleans Branch:
Frank Roberts,

Lake Charles, La.

J. E. Bouden, Jr.,

New Orleans, La.

H. B. Lightcap,

Jackson, Miss.

John J. Gannon,

New Orleans, La.

Marcus Walker was re-elected Manager for the year. At the same time the
Federal Reserve Board authorized the employment of an Assistant Manager for New
Orleans at $3600 per year. After some discussion among Board members and by a vote
of three to two, Joseph L. Campbell, Cashier of the Tennessee Hermitage National
Bank of Nashville, was elected to the position. In May William H. Black was appointed
cashier at New Orleans, while in September the salary of Manager Walker was upped
to $7500. In November Assistant Manager J. L. Campbell resigned and was made


Assistant Cashier in Atlanta in charge of the Discount and Credit Departments. William
H. Black succeeded to the New Orleans Assistant Managership and was succeeded as
Cashier by Lewis Buckner.18
Serious discussions relative to the advantages of establishing branch banks
at Birmingham, Nashville and Jacksonville got under way at the March 1918 Board
meeting. Delegations of bankers from both Birmingham and Nashville appeared with
Oscar Wells as the spokesman for Birmingham and T. D. Webb for Nashville.
Jacksonville’s application was in the form of a telegram signed by seven of that city’s
banks. At the April meeting a strong delegation from Jacksonville appeared by invitation
and, through Spokesman Cues Wilson, made a strong case for their city.19
Action taken during 1918 relative to branch banks is set forth in the Annual
Report for that year in the following language:20
“In addition to the branch already in operation at New Orleans, a branch of
the Federal Reserve Bank of Atlanta was established at Birmingham, Ala., on August 1,
1918. Mr. A. E. Walker, formerly State bank superintendent of Alabama, was elected
manager, and Mr. J. B. Cobbs was appointed assistant Federal Reserve agent. The
entire clerical force consists of 15 employees, including the officers. The following
members compose the board of directors of the branch: Messrs. W. H. Kettig, chairman;
Oscar Wells, T. 0. smith; W. W. Crawford and John H. Frye, all of Birmingham.
“As of the same date a branch was established at Jacksonville, Florida. Mr.
Ceo. R. DeSaussure, prominent for many years in banking circles in that city, was
elected manager, and Ceo. R. Martin was appointed assistant Federal Reserve Agent.
The entire clerical force consists of 16 employees, including officers. The branch board
of directors is composed of Messrs. John C. Cooper, chairman; Edward W. Lane, B. H.
Barnett, Giles L. Wilson, Fulton Saussy, all of Jacksonville.
“These branches are operated under the limited form of by-laws in force at


Pittsburgh and Cincinnati, providing for a daily settlement plan for the parent bank. All
accounts with member banks in the zone covered by the branches are kept by the
parent bank, the branches reporting to it by private wire daily both their immediate and
deferred entries and the parent bank carrying the ‘float.’ The plan in operation has
proven generally satisfactory to both the member banks in the branch zone and to the
parent bank.”
Quarters for the Birmingham branch were leased in the Jefferson County
Bank Building21 at $4800 per annum. The Jacksonville branch found sanctuary in
leased space in the Atlantic National Bank Building.22
Early branch office operations are epitomized in the following recollections
of Henry Fraser, a pioneer employee of the Birmingham branch:
Functions of the Branch
“...At the time the writer was first employed, the Branch’s services were
limited to the handling of currency and coin, clearings, check collections and noncash
collections. There were no provisions for safekeeping or special custody of securities for
member banks, nor was a stock of unissued U. S. Government securities maintained.
“Member bank reserve accounts and all accounting functions were kept at
the Head Office, with entries being wired in during the day. A transcript of the day’s
work was mailed to the Head Office each night.
Vaults and Equipment
“Since the currency vault was small, frequently unassorted one dollar bills
were simply stacked on the floor, just inside the door of that vault.
“There was no coin vault per Be. The safe deposit box vault was used for
this purpose and coin was stacked on the floor around the inside perimeter of the vault.
If the begs were not stacked properly, or if they were stacked too high, they would
sometime topple over, thus commingling bags of various denominations.
“Shipments of unfit currency to the Treasury were cancelled one strap at a


time. The cancelling was done by placing the one strap of currency in a rectangular pan
with a- long handle that had part of the bottom removed to allow the punching and
cutting blades to go through the strap and pan. The power switch to the machine would
be turned on, then the pan would be inserted and a trip lever would be pressed which
caused the punches and blade to descend at the same time. On the ascent the pan
would be withdrawn and the operation repeated with another strap. This meant that on a
shipment of say $196,000 in ones the pan had to be inserted in the machine 1960
“As there was no armored car service at that time, incoming and outgoing
currency and coin shipments were transported the distance of seven blocks to the Post
Office in a two-door Ford sedan owned by the assistant teller; he was paid a monthly
rental for the use of his car.
Security Measures
“Security measures for the protection of money and securities as we know
them today were almost non-existent. Only two persons served as guards, and one of
them was the night guard.
“During the day when currency shipments were received from or dispatched
at the post office, the day guard always accompanied the assistant teller on those trips.
During these periods and the time when the day guard was at lunch, there was no
guard on the premises. The door opening into the aisle behind the cages was always
unlocked and so was the cage door at the entrance to , the money department.
“Except for upper and lower combinations on the vault doors, dual controls
on currency and coin were not in effect then. When an order for currency was received,
the teller typed the shipping advice, withdrew the money from the vault, and placed it in
a large cage shared by the assistant teller and two assorters. The assistant teller alone
packaged the money for shipment. Also he opened the incoming shipments with no one
else present, and had sole custody of the coin vault, where he verified incoming coin

shipments when not engaged in other duties.
The feasibility of an agency of the Federal Reserve Bank of Savannah was
brought forcefully to the Board’s attention at its November meeting by Mills B. Lane,23
representing the Savannah Clearing House Association. He emphasized the sizeable
export business at Georgia’s leading seaport and the large and sudden demands for
money at certain seasons of the year. Mr. Lane stated that they would be satisfied with
moderate quarters and that local banks would furnish vault space for the two or three
million dollars of Federal Reserve notes he suggested be kept in Savannah.
The Board resolved that an Agency be established at Savannah, provided
that satisfactory facilities be obtained and that operating expenses not exceed $5000
per year. 24 The Agency was not actually established until 1919.
War engendered matters received their full share of attention on the part of
the Atlanta Bank during 1918. Indeed, in mid-1917 at a dinner of the Presidents’ Club at
the Piedmont Hotel, plans were laid to make Atlanta a $10,000,000 stockholder of the
government through Liberty Bond subscriptions. The job of selling bonds throughout the
six-state Atlanta Federal Reserve District was placed under the direction of Board
Chairman Wellborn and a Liberty Loan central committee consisting of William C.
Wardlaw, Chairman; Mell R. Wilkinson, J. Epps Brown, Frederick J. Paxon, Ivan Allen,
St. Elmo Massengale and W. H. Toole, of Winder, Georgia.25
Apparently the Messrs. Wardlaw and Massengale devoted most of their
time to the effort, for on June 14, 1918 the Atlanta Reserve Board adopted the following
“WHEREAS, the flotation of the first, second and third Liberty loans, it has been
necessary to appeal to certain citizens in the Sixth Federal Reserve District to devote
their time and talents to this great patriotic work, and
WHEREAS, Mr. W. C. Wardlaw and Mr. St. Elmo Massengale accepted the


appointment conferred upon them by Mr. M. B. Wellborn, Chairman of the Liberty Loan
Coimnittee for the Sixth Federal Reserve District, and have devoted almost their entire
time to this work;
BE IT RESOLVED, that the Board of Directors of the Federal Reserve Bank of Atlanta
express their hearty approval and sincere appreciation of their unselfish and patriotic
service rendered this institution in conducting The Liberty Loan campaigns,
BE IT FURTHER RESOLVED, that a copy of these resolutions be forwarded to those
gentlemen, who have so earnestly and faithfully served us.”26
Governor McCord, in reporting on the Bank’s activities in connection with
Liberty Loans, War-Savings Certificates and the War Finance Corporation during 1918,
“The flotation of the Liberty loans met with large success in this district.
Many of the best and most conservative bankers felt fearful of the result of the second
loan, but when the time arrived to offer it a largely increased number of subscribers was
found. The third Liberty loan was taken by a number of purchasers, probably 200 per
cent larger than the second loan, and the fourth loan showed a corresponding
“The sale of war-savings and thrift stamps has been the occasion of a
campaign of education. In the future stamps will probably be purchased as a mode of
general saving. A total of $13,390,829.69 in stamps were sold in the sixth district during
“Necessary machinery was provided for the handling of business incident to
the War Finance Corporation, and a considerable amount of correspondence and
literature found its way from the Federal Reserve Bank to the banks of the district. The
need for such loans was not, however, as great in the sixth district as anticipated, and
only one loan was made to a bank during the year. This was promptly liquidated at


Chairman M. B. Wellborn felt very strongly on the Liberty Bond question.
Indeed, The Atlanta Journal quoted him as telling the Atlanta Rotary Club that “the
citizen who fails to purchase bonds, according to his means, is as much a slacker as the
young man who shirks his military duty.”28
Another matter about which Chairman Wellborn had strong feelings at this
time was the failure of state banks to come into Reserve System in substantial
numbers. Starting with only one state bank as a member in 1914, the Atlanta district
listed two in 1915, four in 1916, 18 in 1917, 54 in 1918 and 64 in 1919. This apathy
disturbed the Chairman, who believed that the state banks would virtually defeat the
purpose of the Federal Reserve, destroying its power to act as a cushion in times of
panic, unless they joined in great numbers. His speeches and statements during the
1917 - 1920 period are especially significant when viewed in the light of subsequent
events like the depression of 1920 --21, which he foresaw and the failure of a Georgia
chain of state banks in 1926 which he did not foresee.29
In June 1918 Chairman Wellborn discussed at length a proposed drive for
state bank membership. He told his fellow Board members that the drive would
commence about July 1. While results were modest, gain over previous years was
In summing up the state bank situation at the end of the year Governor
McCord wrote:
“The 54 state banks now members of the Federal Reserve System in this
district have had an opportunity to test the practical value of membership and are
distinctly satisfied with the result.
“In proportion to their number they have as liberally availed themselves &f
the privileges of membership as have the national banks. This is evidenced by the


volume of discounts offered by them...
“By materially reducing their reserves they have increased their loaning
power and are able better and more satisfactorily to serve the business interests of their
respective communities. This means more business and more earning power for them
and their stockholders and they have not been slow to avail themselves of the full
advantage of doing more business and doing it with perfect safety.”31
On September 26, 1918 Congress amended the Federal Reserve Act by
giving the Board discretion in grouping of member banks; changed the manner of the
election of directors, and authorized issue of Federal reserve notes in denominations of
$500, $1000, $5,000 and $10,000, the largest heretofore having been $100.32
As to the Atlanta Bank’s activity during 1918 in connection with Federal
Reserve notes and Federal Reserve bank notes, Governor McCord reported:
“The issue of Federal Reserve notes has been an important feature of the
year~5 operations, due in large measure to the increased pay rolls and high cost of
commodities. The statement of December 31, 1918 shows $196,240,000 ‘Federal
Reserve notes received from the Comptroller of the Currency,~ with ‘Federal Reserve
notes outstanding’ in amount, $123,620,285, as compared with $66,867,420 ‘Federal
Reserve notes outstanding,’ on December 31, 1917, or an increase of $56,752,865.
“The power of issuing bond-secured currency is conferred upon the Federal
Reserve Banks by the act as originally drawn, but it was not found necessary or
desirable to resort to any large exercise of this power until this year. Accordingly,
Federal Reserve bank notes were, not issued by the majority of the Federal Reserve
Banks until June. On the 10th day of that month the first bank notes of the Atlanta bank
were issued.”33
Throughout the first nine months of 1918 work went forward on the bank’s
new home on Marietta Street. In March the Board approved installation of a Lamson


Pneumatic Tube System at a cost not to exceed $6500.34
That autumn, as the leaves began to turn and the Senate rejected the
Woman Suffrage Amendment to the Federal Constitution, the Federal Reserve Bank of
Atlanta forsook the second floor of the Hurt Building in favor of 104 Marietta Street and
the new edifice a building for more than a year under the supervision of Architect A. Ten
Eyck Brown.
In citing the event Governor McCord wrote:
“On October 1 the Federal Reserve Bank of Atlanta moved into its
permanent home on Marietta Street. The building is a two-story structure, with
commodious basement, being of reinforced concrete, with granite exterior, fireproof,
and of thoroughly modern construction. While the new quarters are adequate for the
bank proper at present, additional space will have to be provided in the near future, as
the business of the institution is rapidly increasing and it is now necessary to operate
the fiscal agent department in a nearby building.35 Plans for the new building were
drawn and excavation began in the late spring of 1917, and the growth of the institution
has been more rapid than was anticipated. The building cost approximately $150,000
and the vaults $33,000.36
A few details remained. On November 8 the Secretary of the Board called
the members attention to the fact that there was need of the employment of a maid to
be in charge of the ladies room. He also stated that a number of the employees brought
their lunch and offered the suggestion that the Bank purchase a large percolator and
furnish coffee, sugar and milk in order that the employees might have hot coffee with
their lunch.
This idea struck the Board members favorably and they voted to instruct the
Secretary “to proceed to make such arrangements and purchase such equipment as
would be necessary to equip such a lunch room and rest room for the employees. The


maid referred to, to have charge of the lunch room as well as the ladies’ room.”37
At the same meeting Chairman Wellborn called the Board’s attention to the
need of enlarging the garage and building a porte-cochere over the right side entrance
to the Bank. Action on this matter was postponed to the following year.38
Rapid growth of a relatively new banking operation in a wartime economy
naturally resulted in some loose routine and less than perfect situations as epitomized in
the following paragraph from the Board Meeting Minutes of Dec. 13, 1918:
“Upon invitation of the Chairman, Mr. John A. Will, Chief of the Federal
Reserve Bank examiners, now conducting an examination of this institution, appeared
before the Board. Mr. Will stated that he was very much disappointed at the conditions
prevailing in certain departments of the Bank, especially the Discount and Credit
Departments, and certain matters in the Fiscal Agent’s Department. He stated he
wished to assure the Board that his remarks were in the way of ‘constructive criticism’
for the good of the bank and the service. He stated further that the bank had never had
a thorough systematic organization. Mr. McCord was present at the meeting and stated
that the bank had experienced a great many difficulties through the loss of men going to
war, and again on account of the influenza epidemic, and a continual change of
employees. The Board thanked Mr. Will for his report and assured him that the matters
referred to would be promptly corrected. He was requested to confer with the secretary;
they to work out a more systematic plan of organization for operation of the Bank.39
Systematic operation or not, 1918 earnings of the Federal Reserve Bank
were fine. For the six-month period ending June 30 they stood at 34 7/10 per cent, or
$511,250.40 Net earnings for the Atlanta Bank and Branches for the full year came to
$1,652,787.98 as compared with $315,104.00 for 1917.41
A full six per cent dividend was declared upon the capital stock of the
Federal Reserve Bank of Atlanta as of December 31, 1918, while a year-end bonus of

10 per cent was voted to each employee.42
All in all. It was a good year. Governor McCord, in summing up, said:
“The year 1918 has been the most momentous in the financial history of this
district. Sudden demands occasioned by war conditions brought about rapid changes in
financial and commercial activities. The financing of Government requirements and the
war-savings campaigns brought the Federal Reserve Bank of Atlanta to the front in
such a way that even that portion of the general public not actively engaged in business
now fully realizes the worth of the Federal Reserve System.43



Chapter 7

Keller, Dictionary of Dates, 303 - 310.








Garrett, Atlanta and Environs, II, 727 - 749.




Minutes, Directors, I, 142.






Ibid., 188.
Ibid., 189.
Biographical Records of the Bank; Atlanta City Directories, 1890 - 1919.


Minutes, Directors, I, 173.
Ibid., 183 - 184.


Ibid., 185; The 6-F Journal, Dec. 1921, p. 6.


Annual Report, 1918, p. 19.
Minutes, Directors, I, 142, 143, 156, 175, 179, 183.


Ibid., .148, .153.


Now known as the Corner Building.
Minutes, Directors, I, 166, 168.


Father of Mills B. Lane, Jr., present (1964) President of the Citizens & Southern


National Bank.
Minutes, Directors, I, 181.


Garrett, Atlanta and Environs, II, 716 - 717. As of 1918, Mr. Wardlaw was
secretary-treasurer Robinson-Humphrey-Wardlaw Co.; Mr. Wilkinson, president,
Ashcraft-Wilkinson Co.; Mr. Brown, first vice-president, Sou. Bell Tel. & Tel. Co.;

Mr. Paxon, secretarytreas. Davison-Paxon-Stokes Co.; Mr. Allen, sec. & treas.
Fielder & Allen Co.; and Mr. Massengale, president, Massengale Advertising

Minutes. Directors, I, 159 — 160.


Annual Report, 1918, pp. 14 - 15.


Hopkins, M. B. Wellborn, 79.




Minutes, Directors, I, 160.


Annual Report, 1918, p. 12.


Keller, Dictionary of Dates, II, 310.
Annual Report, 1918, p. 16.


Minutes, Directors, I, 149.


Third floor, Rhodes Bldg., 78 Marietta St.


Annual Report, 1918, pp. 20 — 21.


Minutes. Directors, I, 183.




Ibid., 185.
Ibid., 166.


Annual Report, 1918 ,p. 25.


Minutes. Directors, I, 187, 188.
Annual Report, 1918, p. 5.


Chapter 8
The war to end all wars and make the world safe for democracy had ended.
President Woodrow Wilson began his losing fight for a League of Nations and suffered
the stroke from which he never fully recovered.
In early January Herbert Hoover was appointed head of an international
relief organization to minister to liberated and enemy countries. Three days later former
president Theodore Roosevelt died at home in Oyster Bay, N. Y. The Grand Canyon
National Park in Arizona was created in February and in mid-March the American
Legion was informally organized in Paris, France.
During April the Fifth (victory) Loan was announced by the Secretary of the
Treasury and Frank W. Woolworth, originator of the five and ten cent store died. July 1
saw the public debt at an all time high of $25,482,034,418. On the glorious fourth Jack
Dempsey won the heavyweight boxing crown from Jess Willard at Toledo, and on the
last day of the month the telephone and telegraph systems were returned to private
ownership. On the same day a committee was appointed by the Cabinet to investigate
the high cost of living, which incidentally, had advanced more than 80% since 1914. It
was to rise another 5.87. between July and December 1919.
The year saw the death of two builders of the country’s steel industry-Andrew Carnegie in August and Henry Clay Frick in December. High society was
enlivened in November by a visit to this country of the then young and very eligible
Prince of Wales.1
During the last four months of 1919 the Federal Reserve Act was amended
three times. On September 17 to allow banks to invest in stock of corporations engaged
in financing exports; on October 2 to provide that national banks might lend to the extent
of 25% of their capital and surplus instead of 107. on shipping documents, warehouse


receipts, etc., based on cotton and livestock under certain specified conditions; and, on
December 24, to allow organization of corporations to extend credit in Europe to
stimulate export trade.2
On the local front James L. Key began his first term as mayor of Atlanta. A
consumate politician, he was destined to serve several intermittent terms ably, including
most of the depression years of the 30’s. The Victory Loan exceeded its Local quota of
$11,000,000 by $350,000 under the leadership of Forrest Adair and the untiring efforts
of the Atlanta Chamber of Commerce.3
While national suffrage for women did not come to pass until 1920, Atlanta
women received the franchise locally in 1919. On April 6 the new sanctuary of the First
Presbyterian Church of Peachtree and Sixteenth streets was dedicated. Its historic and
longtime Marietta Street, location had become the site of the Federal Reserve Bank of
Atlanta. In the early fall one of the largest commercial transactions in Atlanta’s history
and one of the largest in the entire South, before or since, was consummated when the
Coca-Cola Company was purchased from the Candler interests on September 12. The
sale, representing a consideration of $25,000,000 was spearheaded by the Trust
Company of Georgia. The Company was reorganized under a Delaware charter and its
stock was made available to the general public at an initial price of $40 per share.4
That the Federal Reserve Bank of Atlanta had a lively post-war year during
1919 is indicated by the opening paragraphs of the Chairman’s
Fifth Annual Report:
“In many respects the year 1919 has been more remarkable than any preceding
year. The operations of the Federal Reserve Bank of Atlanta during the period of
readjustment since the Armistice and for the year 1919 have been more active than
during the war period of 1918. The expansion in all lines has made heavy demands on
the banking interests, which, in part, have been met by the increased deposits of banks,


while it has been left for the Federal Reserve Bank of Atlanta to make up the deficiency,
resulting in increased loans to and rediscounts for member banks over the amounts
held during the latter months of 1918 and the early months of 1919.
“The increase in government secured obligations ~s due partially to the flotation
of the Victory Loan and partially to a general demand for commercial, industrial and
agricultural purposes, the banks using their Government collateral for these purposes in
order to secure the lower rate of discount. The demand from the member banks for
other classes of discounts is attributed to business expansion and higher prices rather
than to a speculative demand, which so far has been observed, is negligible throughout
the district.
“During the month of December there was considerable liquidation by the
members of this district, resulting in increased reserves for the Federal Reserve Bank of
Atlanta, and placing it in a position to rediscount for other Federal Reserve Banks.
“The increase of nearly every item on the balance sheet for 1919 is an indication
of the increasing use by member banks of the facilities offered by the Federal Reserve
Bank of Atlanta...”5
During the Directors’ meeting of January 10, 1919, M. B. Wellborn was
redesignated as Chairman and Federal Reserve Agent, J. M. S]Lattery as Assistant
Federal Reserve Agent and Joseph A. McCord as Governor. At the same time 14. W.
Bell was elected Cashier and W. B. Roper, J. L. Campbell, W. R. Patterson, R. A. Sims
and Creed Taylor, Assistant Cashiers. Ward Albertson continued as General Auditor
and Captain Charles A. Lyerly began his last year as a member of the Advisory Council
for the Sixth Federal Reserve District.6
The year was soon to see some significant changes in the directorate and
official family of the bank.
From the time the Bank opened in 1914, the official relationship between


Chairman Wellborn and Governor McCord had not been altogether smooth. It was
characterized, in fact, by considerable maneuvering for position.
The office of Chairman and Federal Reserve Agent was specifically stated in
the original Federal Reserve Act. The title “Governor” was not mentioned in the law. The
framers of the Federal Reserve Act apparently intended that the Chairman, appointed
by the Federal Reserve Board would be the principal executive officer as well as the
official representative of the Federal Reserve Board. The directors appointed the
Governor who, in practice, became the active head of the Bank.
The Chairman, under the original system, was (a) Federal Reserve Agent,
and (b) Representative of the Federal Reserve Board. In order to carry out these duties,
he had jurisdiction over the following departments: Note Issues, Reports, Member Bank
Relations, Bank Examination and Auditing. He was also responsible for presenting a
monthly report to the Federal Reserve Board on general business conditions in the
The Governor, according to the Bank’s By-Laws, had general charge and
control of the business and affairs of the Bank, in addition to being Chairman of the
Board’s Executive Committee. He prescribed duties for all subordinate officers and
could suspend or fire employees.
The Governor’s salary at 10 of the 12 Reserve Banks was higher than the
Chairman’s. At Richmond and Kansas City they were equal. In Atlanta, in 1915, the
Governor got $9000 and the Chairman $7500.8
M. B. Wellborn had served the Bank as Chairman since its opening. In
addition to being an experienced and able banker he was ambitious and a man of
strong character. As the years passed he realized that the chief office was going to be
Governor rather than Chairman. In this realization he was influenced by Governor
Benjamin Stron~ of the Federal Reserve Bank of New York. Paul N. Warbury


characterized Governor Strong as “the prototype of splendid men who, with utter
disregard of self, give their lives and souls to the task of making our Federal Reserve
System an efficiently and harmoniously functioning organization...”9
As a matter of fact the circumstances under which Mr. Wellborn agreed to
come with the Bank in 1914 were such as to lead him to the conclusion that he was
slated for the key post. It is not surprising, therefore, that he and Governor McCord were
often sparring for position. There was no open enmity. Mr. McCorcl was a few years
older and, having started life in a humble station and risen to high business position his
ambition was not a fire. He was a mellow, friendly man and soft-hearted to the extend of
being easily moved to tears.
In addition to his close friendship with the influential W. P. G. Harding of the
Federal Reserve Board, Mr. Wellborn had more friends and allies on the Atlanta Board
and thus more influence with the group.10
The upshot of the matter was that effective March 1, 1919 the Messrs.
McCord and Wellborn swapped jobs. The machinery was set in motion at the Directors’
Meeting of February 14 at which time Mr. McCord tendered his resignation as Governor
and Mr. Wellborn his as Chairman and Federal Reserve Agent. They were immediately
designated Chairman and Governor respectively, effective March 1.”
W. P. G. Harding was present at the meeting and remarked, to quote the
Minutes, “that he wished to emphatically state that the Governor is the recognized head
of the Federal Reserve banks; for the reason that the Federal Reserve Board did not
wish to assume any of the responsibilities of the operation and management of any
Federal Reserve Bank, through their Federal Reserve Agent.”12
Following Mr. Harding’s remarks short talks were made by all of the
Directors pledging their most loyal and hearty support of the incoming Governor and
expressing their pleasure at Governor Harding’s presence.13


At the same meeting Louis C. Adelson was appointed Deputy. Governor of
the Bank at $7500 per annum. The appointment was strongly recommended by Mr.
Wellborn. J. M. Slattery was elected secretary of the “ Bank at $5000 per annum and
was continued as secretary to the Board of Directors.14
The new Deputy Governor, Mr. Adelson, was born in New York City in 1888
and moved shortly afterward to Birmingham, Alabama, where he resided until August
1914. He was connected with the First National Bank of Birmingham from 1905 to 1914,
at which time he went to Washington as Secretary to W. P. G. Harding, an original
Federal Reserve Board member. He remained with Mr. Harding until July, 1915 when
he was appointed Federal Reserve Examiner. This was followed in November, 1917 by
an appointment as Assistant Director of the Division of Foreign Exchange of the Federal
Reserve Board. In May, 1918 he was appointed Assistant Secretary and Assistant Chief
of Division of Examination, Federal Reserve Board, in which capacity he served until
elected Deputy-Governor, Atlanta.15
As the year progressed other official changes were made in the Atlanta
Bank. H. P. Coniff, Assistant Auditor, was elected Assistant Cashier and assigned to the
Fiscal Agency Department. At the same time, March 14, Creed Taylor was made
General Auditor, at $4000 per annum, and Ward Albertson, Assistant Federal Reserve
Agent at the same salary.16
Director John K. Ottley was designated Governor pro tempin April, to serve
in the absence of both the Governor and the Deputy Governor. James E. Zunts
resigned from the New Orleans branch board in June and from the Atlanta board in
November. He was succeeded by Leon C. Simon of New Orleans.17
Mr. Simon, a wholesale hat merchant, was born in 1876. He served as
President of the New Orleans Progressive Union .and as first President of the New
Orleans Association of Commerce which succeeded it. He was the organizer of a


movement to create a College of Commerce and Business Administration as part of
Tulane University and director of the first board of guarantors of this college. As Director
for the Gulf states, he served the Chamber of Commerce of the United States until
The Birmingham Branch Directorate for 1919. was comprised of T. 0. Smith,
W. W. Crawford, John H. Frye, W. H. Kettig and Oscar Wells. A. E. Walker was reelected Manager.18
The Jacksonville Board comprised Edward W. Lane, Brian H. Barnett, Giles
L. Wilson, John C. Cooper and Fulton Saussey. George R. DeSaussure was re-elected
New Orleans began the year with Frank Roberts, of Lake Charles, La.; J. E.
Bowden, Jr., New Orleans; H. B.Lightcap, Jackson, Mississippi; James P. Butler, Jr.,
vice J. J. Grannon, resigned; James E. Zunts, New Orleans; A. P. Bush, Mobile, and P.
H. Saunders, New Orleans. Marcus Walker was re-elected Manager.20 During the year
some changes took place on this Board. James E. Zunts, as previously noted, tendered
his resignation in June. Mr. Butler resigned in August. They were succeeded by L. 14.
Pool and R. S. Hecht, the latter, President of the Hibernia National Bank.21
The scope of operation of the Federal Reserve Bank of Atlanta was
considerably enhanced during 1919 by the establishment of an Agency22 at Savannah,
Georgia, and a Branch in Nashville, Tennessee.
The Savannah Agency, opened on February 5, was in large measure, a
tribute to the importance of that city as a port for the export and import of goods. During
January Chairman Wellborn, Governor McCord and Directors Kittles and McCrary: as a
committee, made a trip to Savannah to consult with local bankers. The Savannah banks
agreed to furnish offices in the Merchants National Bank Building rent free and to
absorb any expense over $5000 per annum in connection with the Agency. The latter


agreement was waived by action of the Atlanta Board in December.23 R. J. Taylor,
formerly connected with banks at Savannah and afterwards cashier of a bank in nearby
Guyton, Georgia, was appointed manager of the new Agency, and R. N. Groover, also
formerly of Savannah banks, was named assistant manager. As originally established
the functions of the Agency were limited to the furnishing of currency to Savannah
member banks, receipt of currency and deposit from Savannah member banks, and the
holding of collateral pledged as security to bills offered to and under rediscount with the
parent bank.24
The opening of a Branch in the City of Nashville was a result of much study
by the Atlanta Bank Board and long-standing pressure on the part of member banks in
Nashville. The new facility opened on October 21 in the Fourth &First Bank Building
under the direction of Bradley Curry,25 manager, Joseph B. McNamara, Cashier, and
W. T. Tyler, Assistant Federal Reserve Agent.26
The original Board of Directors for Nashville was comprised of W. H.
Hartford, Chairman; Paul 14.. Davis, James E. Caldwell and E. A. Lindsey, all of
Nashville, and T. A. Embry, of Winchester, Tennessee. By the end of the year the
Branch had 23 employees in addition to the officers. Its assigned territory comprised
that part of the State of Tennessee located in the Sixth FederAl .Reserve District, with
the exception of the City of Chattanooga. The plan of operation was identical to that of
the Birmingham and Jacksonville Branches, the accounts of all member banks in its
zone being carried on the books of the parent bank, and all entries relating to
transactions consummated being handled promptly over private telegraph wires.27
Incidentally there had been much discussion during the Fall of 1919 relative
to the opening of an Agency in Chattanooga. The matter was urged largely by the
Clearing House of that city. It was decided, however, not advisable to establish such an
agency since the close proximity of Chattanooga to Atlanta made service from the


parent bank entirely feasible.28
A number of matters concerning policy and other important aspects of
branch operations were resolved during the year. In February permanent quarters were
secured for the Jacksonville Branch under a ten-year lease in the Heard National Bank
In June the New Orleans Branch purchased the Commercial National Bank
Building in the square bounded by Carondelet, Common, Baronne and Canal Streets for
~236,25O. The building was then leased to the Commercial National Bank for a period
ending July 1, 1920 at a rental of 5% of the purchase price per annum. Meanwhile the
Branch was authorized to move from the Hibernia Bank Building to the building
occupied by the United States Trust and Savings Bank.30
Though the above transaction in New Orleans had the full approval of the
Atlanta Bank Board, a contrary policy was adopted in December in connection with the
Jacksonville Branch. The Directors of that Branch appointed a committee to investigate
the purchase of a lot upon which to erect a building. This action inspired the following
resolution, introducted by Colonel Edward T. Brown:
“RESOLVED, That the Directors of the Jacksonville Branch Bank be notified
that it is not the policy of the Parent Bank to approve the purchase of lots or the erection
of buildings for any of the Branch Banks or Agencies, and
“BE IT FURTHER RESOLVED, That the said Directors of the Jacksonville
Branch Bank be requested not to consider the purchase of any lot or building, but to
consider only the renting of proper quarters for said Branch Bank, and
BE IT FURTHER RESOLVED, That a copy of these resolutions be sent to
all Branch Banks and Agencies.”31
The Directors themselves became the subject of several of their own actions
during the year. In January an organization chart for operations of the Atlanta Bank was


adopted and copies sent to proper officers. In February the By-Laws were amended so
as to provide for regular Board meetings the second Friday of each month at 10 o’clock,
a.m. An expense account schedule for Directors was voted in April providing for hotel
bill, $3.50; meals, $3.75, and incidentals, $2.00 per day. At the same meeting the
Atlanta Board members heartily approved a communication from Governor Harding, the
gist of which was “that no Director of a Federal Reserve Bank or Branch shall permit a
reference to his connection with the Bank to be used for the purpose of aiding or
promoting his private business connections.”32
Employee amenities were not overlooked in 1919. In March former Director
W. H. Toole appeared before the Board as representative of the Federal Reserve Bank
Club of Atlanta. He stated the aims and hopes of the organization and asked that the
Board vote the Club $1,000 and allow all protest fees and money from the sale of waste
paper to go into the Club fund. The Board, upon motion of Mr. Ottley, voted to donate
the cash requested but declined to allocate protest fees or funds from sale
of waste paper. It was the opinion of the Board that all money so accruing should be a
part of the Bank funds.33 In November the Board approved an expenditure of $250
per month by the Club for the publication of a magazine, the same to be of an
educational nature and for distribution to Club members and member banks.34
The matter of overtime work was settled by an enunciation of policy at the
June meeting of the Board. In connection with proposed overtime of the Jacksonville
Branch, the Board said: “The Federal Reserve Bank of Atlanta is opposed to the being preferable to employ a sufficient force to do the work within
reasonable hours.”35
As the year closed, however, the Board took cognizance of a steady
increase in the cost of living during 1919 and voted a general salary increase for officers
and employees of both the Atlanta Bank and all Branches.36

As already noted, the Bank had no sooner occupied its new home on
Marriette Street in 1918 than growing pains were felt. The ambitious building plans of
1917 had proven less than adequate for even two years of growth.
Indeed, before 1918 was out discussions were had relative to the building of
a porte cochere at the side entrance and enlargement of the garage. The matter was
postponed to 1919 and came up at the January 10 Board meeting. It was decided that it
would probably be only a short time before present quarters would be crowded and that
a broader plan--an extension of the building would be feasible. A committee consisting
of Directors McCrary, Ottley and Foote was appointed with instructions to study the
matter and report at the next meeting.37
It was not until June that the committee was able to make a comprehensive
report. Plans, as drawn by Architect A. Ten Eych Brown, provided for an additional story
on the present building, containing new directors’ room, committee rooms, space for
auditors, files, etc. Also a three-story and basement building in the rear with space for
currency, transit, fiscal and discount departments, files, rest room, cafe, etc.
Construction called for reinforced concrete frame and floors with fireproof windows. A
new elevator and garage were provided. Cost, including Mr. Brown’s fee came to
slightly over $2OO,OOO. A contract was let on June 27, 1919, though the “annex,” as it
was called, was not completed 38 until the summer of 1920.38
The operation of the Bank and its Branches during 1919 produced a splendid
earnings record. Total resources at the close of business, December 31, 1919 stood at
$76,447,455.27, a 37% increase compared with 1918. Practically all items on the
statement of condition showed an increase.39
Gross earnings from the principal sources of revenue for 1919 were up 92%,
or $2,122,942.71 over 1918, while total expenses increased only 52%, or $331,946.
After deducting all expenses, dividend payments and amounts authorized by the


Federal Reserve Board to be reserved, $3,185,000 was carried to surplus fund--an
increase of $1,715,000, or 116% over the previous year.40
Membership in the Federal Reserve Bank of Atlanta fluctuated somewhat
during 1919. As the year began National bank membership was 372. During the year 13
new National banks came in and 22 withdrew by liquidation, resulting in a net loss of
nine. Of the 13 additions, eight were new banks and five were state banks converted
into National banks. The decrease of 22 National bank members was accounted for by
one liquidation, one absorbed by another National bank, eight absorbed by State banks
and 12 succeeded by State banks.41
During the year a special effort was made to increase state bank membership.
Cashier N. W. Bell devoted considerable time making personal calls for that purpose
throughout the District. Results were modest. Mr. Bell report cited two primary reasons
why state banks did not come in with more alacrity--loss of interest on balances and on
account of exchange.42
Even so, the year produced a net gain in state bank membership. As 1918 ended
there were. 54 State banks and Trust company members. During 1919 there were 16
additions to membership and six withdrawals for a net increase of 10. Fifteen of the
State bank admissions were new members and one was the result of two State bank
members consolidating. Besides the two banks reported as a consolidation, one was
absorbed by a National bank and three withdrew from membership.
Chairman McCord, reporting further on the subject of membership said:
“Practically all of the largest State banks and Trust companies in the District are
now members, there being only one bank in the District with a capital and surplus of
$1,000,000 or more that is not a member. There seems to be an increasing disposition
on the part of other banks to apply, and it is expected that the membership will be
considerably increased during the ensuing year. There were no failures among the


membership of the Federal Reserve Bank of Atlanta during l919.43
It was noted early in this chapter that the Federal Reserve Act was amended on
October 2 so as to permit national banks more leeway in making loans- -from 10% to
25%. of their capital and surplus--under certain conditions.
The Atlanta Bank went on record in favor of this legislation by resolution
dated June 13:
“Whereas National Banks frequently complain that the present statute fixing
10 per cent of capital and surplus as the maximum amount that can be loaned to one
individual, firm or corporation causes them great inconvenience, and seriously militates
against their best interests, and the: best interests of their communities, in the matter of
handling the cotton crops, and
Whereas, it has been shown that State banks with which they are in competition enjoy
much larger privileges in this regard, being permitted to loan 25 per cent of capital and
surplus on cotton, and
Whereas, this question involves the public welfare, and
Whereas, the large increase in the value of agricultural products accentuates the
importance of this question;
Therefore, Be it Resolved that we call attention of the Federal Reserve Board to these
facts and conditions, and suggest that they in their discretion take steps to cause
suitable legislation to be enacted that will enlarge the powers of National Banks to make
loans on readily marketable staple .“44
The various functions of the Bank moved along briskly during 1919. Discount
operations were very active, with more than 200 out of 427 member banks in the District
having paper under discount at all times. Trade Acceptances were generally used
throughout the District, their use becoming broader as business interest recognized the
advantage of securing acceptances in settlement of shipments, instead of opening bank


accounts and giving future dating.45
The close of the-year found the Bank’s reserve position strong, enabling it to
comfortably care for the essential needs of its own member banks, as well as to give aid
to other sections of the country, if necessary.46
Fiscal Agency operations of the Bank, though reduced in total volume as
compared with 1918, due primarily to the partial cessation of government financing by
the flotation of bonds, coincident with. the demobilization of the army and navy and
conversion to peace were, nevertheless, large in total volume. They showed
unmistakenly that the banks and the people of the Sixth Federal Reserve District stood
squarely behind the government in supporting its program for raising funds necessary to
meet the obligations incurred in the prosecution of the war.47
The average circulation of Federal Reserve Notes during 1919 had been greatly
in excess of any previous year, due primarily to business expansion, high prices, high
wages, and larger a3notmts of till and pocket money.48
The subject of “par clearing” came up for warm discussion during the December
11 Board meeting. While the Federal Reserve Act provided for “par clearing and most
Federal Reserve Banks had made rapid strides toward putting their districts upon a par
basis, the Atlanta Bank had not kept pace. Some of the local Directors declared
themselves in favor of par clearing, others not. Since, however, sentiment in favor had
been strongly urged at a recent conference of Federal Reserve Agents and Governors,
the following resolution was unanimously passed:
“BE IT RESOLVED: That the Board of Directors of the Federal Reserve Bank of
Atlanta does hereby instruct the officers of the Bank to adopt such plans and incur any
necessary expense in order to effectively arrange for the par clearance of checks and
drafts drawn upon present non-par remitting banks payable upon presentation, received
upon deposit by the Federal Reserve Bank of Atlanta.”49


As the year ended Chairman McCord, in commenting generally on business
and banking conditions, said:
“The month of December brings to a close a year of remarkable commercial
&activity and expansion in the District. The transition from a war footing to a peace
basis, while it has been marked, has taken place with comparatively little disturbance.
There was some uncertainty in the early months of the year occasioned by the
cancellation of Government contracts and orders, but the attention of business was at
once turned to the general trade, and for several months now manufacturing plants and
jobbers have experienced difficulty in filling orders as rapidly as received...
“While peace has not been officially declared, there has been a good foreign
demand for our raw and manufactured products, as well as foodstuffs, until more
recently when the decline in foreign exchange has had the effect of somewhat curtailing
this demand. Nevertheless, it has had the effect of reducing our supplies and
correspondingly increased prices with the result that very few articles have escaped the
general rise in prices...
“Bank clearings at the principal cities of the District have consistently shown
increases from month to month over those for the same periods of 1918, and collection
conditions have been reported as good throughout the year...
“It is undoubtedly true that the average individual has had more money this
year than ever before, arid while savings deposits have increased, the individual has
spent money unrestrainedly, and for more expensive things, than ever before. The
business in automobiles, jewelry, fine furs and expensive clothing exceeds that of any
previous year...
“There has been a continuous and strong demand for money, both for
investment and regular pursuits, with a slight easing off the latter part of the year. In
some instances those banks in the District which have had a surplus of funds have kept


them employed by the purchase of open market paper. There has apparently been no
tendency to increase rates of discount throughout the District, but, if anything, there is
more of a disposition to reduce rates. As a whole, however, throughout the year they
have remained practically normal.”50
In lighter vein are the recollectiOn of retired Vice President V. K. Bowman,
who, writing in 1963, remembered 1919 as a young clerk in. the Bank:
“At the close of World War I clerical help was nearly impossible to obtain or
retain. As a consequence we started work at 8:30 a.m., and rushed to finish the day’s
work in. time to catch the last street car of the evening. P. L. T. Beavers was in charge
of the Discount Department at that time and it was my responsibility to see that the
rediscounts were properly typed on the ‘flimzies’ and on the large sheets making, up the
permanent discount records. Normally the notes were not delivered to the typing unit
until around 4 p.m., and it was rush, rush, rush to get the work completed, checked,
balanced and filed.
“You had a wonderful feeling all during 1919 when you could pause, grab
your hat and run down the street to a ‘hash joint,’ located on the original site of the
Pulton National Bank building51 to get a big lunch for 25 or 30 cents around 4 p.m. A
sandwich or apple around 8 or 9 o’clock was your last meal for the day.
“Reminded again and again by the bank management of the statement of
Federal Reserve Board member, Col. James,52 of the state of the economy, particularly
in the South, as more money was leaving the State of Arkansas each year for the
purchase of automobiles than the total value of its cotton and rice crops...”
As the World War I decade ended the role played by the Federal Reserve
System during the period can be briefly summarized.
When the Reserve banks opened their doors in 1914, in make-shift quarters,
war had begun in Europe but had not yet become the World War with the United States


as a participant. During the intervening period, before the United States declared war,
organization problems were dominant and the necessity for determination of national
credit or monetary policies did not seem to be pressing. The reduction of statutory bank
requirements had eased the credit situation. But with this Government’s declaration of
war in 1917 came the first great problem of Treasury financing confronted by the
System. It was met by liberal discounting for member banks and preferential treatment
of Government securities. Coercial banks were enabled not only to make substantial
loans on Government securities, but also to accumulate large investments of their own.
Senator Carter Glass expressed the opinion “that the World War could not have been
financed but for the Federal Reserve Act.”53
On the other hand, the resulting creation of a greatly increased supply of
money together with consumer demands brought about inflationary developments.
Credit expansion was rapid, prices doubled, and gold reserves decreased. Government
expenditures did not decline immediately. The Treasury needed to float additional
securities, and it was opposed for the time being to credit restraints by the Federal
Reserve System. In 1919 the System warned member banks against the consequences
of such developments and, in accordance with traditional central banking practice,
discount rates were raised to exercise some restraint upon the increasing demands for
credit which, however, continued until mid-1920 when prices collapsed, particularly for
agricultural products. An investigation was launched by Congress, and the Commission
created for this purpose decided as one of its conclusions that the Federal Reserve
Board and the Reserve banks were not responsible for the deflation.54


Chapter 8


Keller, Dictionary of Dates, II, 310 - 318.


Ibid., 317 .— 318.


Garrett, Atlanta and Environs, II, 755 - 774.




Fifth Annual Report of the Federal Reserve Bank of Atlanta, 8. Hereafter cited as
Annual Report, 1919.


Ibid., 21; Minutes. Directors, I, 191, 194.


Circulated also to member banks, it was the seed that evolved into the present
(Monthly Review).


Memorandum, May 21, 1963, Basil A Wapensky to Harold T. Patterson, defining
duties, etc. of Chairman and Governor.


Warbur, The Federal Reserve System, I, viii.


Statement of a retired officer of the Bank to Franklin M. Garrett, March 31, 1964.


Minutes. Directors, I, 200.






Ibid., 201.


The 6-F Journal, March 1923, p. 6.


Minutes. Directors, I, 203, 205.


Ibid., 208, 220, 244; Annual Report, 1919, p. 21.


Minutes. Directors, 192.







Ibid., 198, 222, 227.


An Agency differs from a Branch in that it has no Board of Directors and is under

the Immediate control of a manager and assistant manager.
23. Annual Report, 1919, p. 20; Minutes.Directors, I, 192, 252.

Annual Report, 1919, p. 20.


Mr. Curry, prior to army service in World War I, had been an officer of the Fourth


and First National Bank of Nashville.
Annual Report, 1919, pp. 20 - 21; Minutes. Directors, I, 199, 210,
219, 237, 239.


Annual Report, 1919, p. 21.


Minutes. Directors, I, 233, 236, 240, 242j, 247.
Ibid., 196.
Ibid., 206, 213, 217, 222, 234.
Ibid., 247.
1., 191, 198, 208, 210.


Ibid., 204. 34. 244 Vol., of The 6-F Journal, bears date of Dec. 1921
Ibid., 220.


249, 252.


Ibid., 191.


Ibid., 191, 202, 207, 216; The 6-F Journal, Dec. 1921, p. 7.


Annual Report, 1919, p. 9.


Ibid., 10.


Ibid., 13.
Minutes. Directors, I, 205, 208, 214, 217.


Annual Report, 1919, p. 13.


Minutes. Directors, I, 219.



Annual Report, 1919, pp. 10 - 11.
Ibid., 12.
Ibid., 13.
Ibid., 17 — 18.
Minutes. Directors, I, 245.


Annual Report, 1919, pp. 24 — 26.


In 1919 there were three restaurants, including a Chulds’ on the south side of
Marietta Street between Peachtree and Broad and between the then Fourth
National and Third National Bank Buildings.


Referring to George Roosa James, merchant-and manufacturer of Memphis,

53. “The Fed’s First Half Century,” Banking, Dec. 1963, pp. 43 — 44.
54. Ibid., , 44.


The Prosperous Twenties
Chapter 9
The decade in American history usually associated with unbridled high
finance, a volatile stock market, bootlegging and gangsterism began with a total U.S.
population of 105,710,620. In 1920 New York, Chicago, Philadelphia, Detroit and
Cleveland ranked in that order as the country’s five largest cities.
During January return of the American Expeditionary Forces from Europe
was completed to the plaintive sound of “Nobody Knows How Dry I am,” the Volstead,
or Prohibition Act, having bec9me law on the sixteenth. In March the railroads were
returned to private ownership, while the first transcontinental air mail flight, New York to
San Francisco, took from July 29 to August 8. Later in August the Woman’s Suffrage
amendment to the Constitution of the United States was adopted.
On September 16, at the noon hour, a bomb exploded in Wall Street
opposite the offices of J.P. Morgan and Company, killing 35 and injuring 130 persons.
On November 2 Warren G. Harding and Calvin Coolidge were elected President and
Vice President, defeating James M. Cox and Franklin. D. Roosevelt by 404 to 127,
electoral votes. Later that month a significant change in the living habits of Americans
was presaged when the Westinghouse Electric Company broadcast the first regular
evening radio program.1
In Washington Congress amended the Federal Reserve Act as to discount
rates on April 13 and on May 26 amended the Farm Loan Act as to bonds.2
Atlanta began the decade with an official population of 200,616. James L.
Key was re-elected mayor over two opponents. A City Planning Commission, long
needed, was set up in October, 1920, and the site of the old Henry Banks home, just

north of the Grand Theater was adorned with the handsome Howard Theater, the city’s
most palatial motion picture house.3
The second post-war year was indeed a time of trial and tribulation for the
nation and its Federal Reserve banking system. Sixth District Chairman Joseph A.
McCord, prefatory to his Annual Report for 1920, explained some of the factors which
made it so. He wrote:
“Probably never in the history of this country has its financial structure been
so severely tried as during 1920, certainly the Federal Reserve System has received a
most severe test, and successfully performed the functions for which it was inaugurated.
“During the early months of the year prices continued high and there was a
growing disposition on the part of the buying public to purchase more conservatively.
This together with the increasing production brought about a restraining influence on the
advancing prices, with the result that prices began to show evidence of declining in the
early summer, and at the end of the year there was a considerably lower level.
“It must be remembered that during 1919 the demobilization of those in the
country’s service was taking place, but the larger number were still consumers, and it
was not until the early part of 1920 that a large majority became producers. With
production increased and the export demand limited, the price of farm products declined
rapidly. This was particularly noticeable in cotton, with a prevailing price of
approximately 39-1/4 cents on the New York market December 31, 1919, as compared
with 14-3/4 cents on December 31, 1920.
“Ordinarily the cotton crop throughout the district is largely marketed in the
fall months. During the 1920 season only a small part of the cotton had been marketed
up to the close of the year on a declining and very inactive market. One of the causes of
the decline in the price of cotton was the carrying over of about four million bales of low
grade cotton which could not be manufactured in this country. The early part of the year,


textile manufacturers were running on two and three shifts, and in this the seeming
consumption of cotton was continuous and regular. However, when the price began to
decline, commission merchants with large stocks of cotton goods began to throw them
on the market; this, in turn, absorbed the orders that otherwise would naturally have
been received by the mills. This condition of affairs placed the mills in the position of not
having their quota of orders and forced a slowing up of production, hence, they were not
in the market for the present crop of cotton. Stocks of cotton goods are now fast
disappearing and the mills are opening up, and raw cotton is coming more in demand.
“This same condition was reflected to a more or less extent in commodities
and products other than cotton.4
In describing the panic of 1920 and the events leading up to it Governor M.
B. Wellborn was more succinct:
“During the war, a ban was placed on all business enterprises which were
not involved, directly or indirectly, in the prosecution of the war. The public was
admonished and to invest in Liberty Bonds . . A short while after the armistice the public
which had denied itself many luxuries during the war, turned around; and, as the
reaction always exceeds extended effort in any direction, there commenced a period
marked by the exercise of an imprudent and unusual extravagance. Money was easily
made, and was therefore easily spent. Those who had prospered on war contracts felt
no restraint, and bought to the fullest extent. A situation was thus brought about in
which an abnormal demand ran ahead of the supply; and naturally prices rose to
unprecedented figures.”5
Indeed the Governor was unusually articulate upon the subject of personal
extravagance and directed heavy fire against what he called the “pleasure automobile.”
On May 19 he declared that the resources of the bank should not be used to finance the
purchase of strictly pleasure automobiles. He thus aroused the ire of auto dealers in all


parts of the country.
The New Orleans Item quoted city in May, 1920: “When it comes to pleasure
automobile heads the list.” him as saying in a speech in that non-essentials, I consider
the list.” The paper reacted with a two-column “answer” from one of the New Orleans
auto men, who said: to take your family out for a recreation, take cars do not run to the
scenery you would like Tell Mr. Wellborn where it is and he will ride and come back and
tell you all about it.”6
How the Bank itself fared during the crisis of 1920 will be described later in
this chapter.
Meanwhile, as in every year, changes in the official family of the Bank
occurred during 1920.
At the Directors’ Meeting of December 12, 1919, Frank W. Foote, an original
Board member declined to stand for re-election. The Board members, through Colonel
Edward T. Brown, expressed regret at Mr. Foote’s retirement and presented him with a
beautiful loving cup to commemorate his service.7
Mr. Foote’s successor as a Class A, Group 2 Director for a three-year term
was Oscar Newton, then serving as president of the Jackson (Mississippi) State
National Bank. The new Director and future Governor of the Bank was born at Crystal
Springs, Mississippi in 1877 and, after attendance at Southwestern Presbyterian
University at Clarksville, Tennessee, entered the banking business as clerk and
assistant cashier of the Mutual Bank, Crystal Springs in 1895. Before moving to
Jackson in 1910, he saw long service as cashier of the Brookhaven (Mississippi) Bank

& Trust Company. As a public spirited citizen of Jackson he functioned as Chairman of
Liberty Loan campaigns during World War I; served as Chairman of the Jackson Board


of Education and President of the Chamber of Commerce.8
Captain Charles A. Lylerly, of Chattanooga, Tennessee, had served the
Bank since its founding as a member of its Advisory Council. He retired at the end of
1919 and was succeeded by Oscar Wells, President of the First National Bank of
Birmingham, Alabama.9
The following were elected as officers of the parent Bank and Branches for
M. B. Wellborn, Governor
L. C. Adelson, Deputy Governor
J. M. Slattery, Secretary
M. W. Bell, Cashier
R. A. Sims, Assistant Cashier
W. R. Patterson, Assistant Cashier
W. B. Roper, Assistant Cashier
J. L. Campbell, Assistant Cashier
H. F. Conniff, Assistant Cashier
Creed Taylor, General Auditor
Rollins H. Randolph, General Counsel
Joseph A. McCord continued as Chairman and Federal Reserve
New Orleans
W. H. Black, Assistant Manager
M. F. Harlan, Cashier Jacksonville
G. R. DeSaussure, Manager
W. G. Wilson, Cashier Birmingham
A. E. Walker, Manager
W. C. Sterrett, Cashier Nashville
Bradley Currey, Manager
J. B. McNamara, Cashier


Savannah Agency
R. J. Taylor, Manager
R. N. Groover, Assistant Manager10
On January 6, 1920, Marcus Walker was re-elected Manager and a Director
of the New Orleans Branch. Other Directors for the branch banks, elected at the same
time, were:
P. H. Saunders, A. P. Bush and F. W. Foote for New Orleans; W.


Kettig and Oscar Wells for Birmingham; John C. Cooper and Fulton Saussy for
Jacksonville, and W. H. Hartford and Paul M. Davis for Nashville.11
At mid-year Bradley Currey resigned as Manager, Nashville
Branch to accept a position with a New York bank. On July 9 J.B. McNamara was
elected to the Nashville post and Joel S. Fort was elevated to cashier.12
During the latter half of the year the Board of Directors authorized the Governor
to appoint three officers as a Managing Committee, to be responsible for the planning
and general conduct of the interior operation of the bank. Messrs. Creed Taylor, L. C.
Adelson andJ. M. Slattery were named as members of this committee. At the December
meeting of the Board the office of a second Deputy Governor was created, and resulted
in the election of J. L. Campbell. J. B. Tutwiler was elected Assistant Cashier to
succeed Mr. Campbell.13
A number of developments took place within the Bank during 1920
which affected directors, officers and employees.
The Executive Committee became the subject of an Amendment to
Section 1, Article 2 of the By-Laws by which it was provided that the Committee
should consist of the Governor, Deputy-Governor, Federal Reserve Agent and two
directors, to be elected at the monthly meeting of the Board of Directors and to

serve until the following meeting of the Board. It was also provided that not less
than three members should constitute a quorum and that a majority vote of those
present should prevail.14
A new schedule of allowable expenses for Directors and committee
members traveling on Bank business was adopted in June and provided for:
Hotel Bill
$5.00 per day
2.00 per meal
3.00 per
Actual railroad and Pullman fare15
At the same time an “added compensation” or “bonus” committee of the
Board reported favorably on the payment of a bonus on June 30. Divided into three
“classes,” the bonus was based on annual earnings: Annual salary $1500 or less,
25 percent; $1500 and not over $3000, 20 percent; and $3000 and not over $6000,
15 percent.16
Earlier in the year the salary of Joseph A. McCord, Chairman and Federal
Reserve Agent, was increased from $10,000 to $12,000 annually.17
During the summer of 1920 construction of the annex, for which a contract
had been let in June 1919, was completed. The new space more than doubled the
original floor area. Since the amount of business handled by the Bank increased
markedly during the. year it was found necessary to increase the number of
employees from 386 to 446.18
The matters of fire insurance and retention of records occupied the stage
briefly during 1920. Governor Wellborn expressed himself on the former subject on
July 9:

“On several ocassions the officers of the Bank have had up for discussion
the question of fire insurance on the building, furniture and fixtures, and also the matter
of liability insurance on account of machinery used by certain departments, and to cover


the elevator recently installed. The rate of fire insurance is 18 cents per hundred, which
I understand is the lowest rate made in the city of Atlanta, with the exception of the Hurt
Building, which was formerly occupied by us. In connection with the elevator, this will be
used by the public as well as the employees. While I do not believe there is very great
danger of the employees being seriously hurt in connection with the cutting and
cancelling machine, I would like for the Board to take up for determination the matter of
fire insurance and liability insurance in connection with the elevator.”19
In any growing business records get out of hand if not selectively
destroyed at intervals. The Bank, confronted with the problem, in September 1920,
sounded out the Federal Reserve Board and received the following from Governor W.
P. G. Harding:
“The Board has considered your letter of the 11th, instant, asking what
records of your bank might be destroyed and for what period they should be held. It is
the Board’s view that all records should be preserved, even if it is necessary to provide
additional space for their safekeeping for an indefinite length of time, except the carbons
of remittance letters, to and from banks, statements to which have been reconciled. The
Board sees no occasion for holding records of this kind and believes you could safely
adopt the policy of destroying such documents after you have held them three months,
provided there is no question that the statements have been reconciled.”20
As Chairman McCord wrote, the country’s financial structure was indeed
sorely tried during the post-war financial panic of 1920. The Federal Reserve System
weathered the storm and insofar as the Atlanta Bank was concerned its resources were
strained to the utmost.
In mid-May, on the threshold of the worst of the storm, the Board issued a
press statement. It read:
“The Board did not authorize any increase in rates at this meeting, and its


deliberations were principally devoted to discussing plans for the future.
“There is a great deal of financial strain throughout the country. Fortunately,
however, the public is beginning to recognize this fact, which is encouraging. It would be
an error and an injustice to the public to fail to admit the seriousness of the situation.
The condition is due to inflation, high prices, lack of production, extravagance and
congestion of traffic.
“We are, not alone in our problems. This is a world condition, and it is
therefore more serious as other nations are not in a position to invest in this country’.
The remedy is deflation, personal economy, larger production and a public opinion
sufficiently strong to relieve the crippled traffié conditions.
“The numerous strikes that have afflicted the country and tied up ports and
railroads have contributed immensely to making present conditions. Deflation cannot be
accomplished except through liquidation, and liquidation cannot be effected unless
transportation facilities are adequate. Personal economy will hurry liquidation and it
would provide much needed capital.
“The power of economy is shown by the fact that an average of 10 cents each
day for one year saved by every citizen, and deposited in the banks, would increase our
liquid capital $4,000,000,000, which would liquidate all the rediscounts in the Federal
Reserve System, and provide $1,OOO,OOO,OOO for financing Europe. Personal
economy would revive our lost thriftfulness and increase production. Diligence of effort,
almost a lost art, must return to life.
“We cannot point out too strongly the utter failure of the individual to assume
personal responsibility. If every citizen would put his own house in order, good business
will continue and the people would remain prosperous. Complete individual reform
would achieve all things needed.”21
The situation was destined to deteriorate before it improved. Cotton dropped


from 40 cents a pound to nine cents in 60 days in the late summer of 1920.22
“It was plain, psychological panic,” said J.R. Morgan. Cashier of the bank of
Union Springs, Alabama, when the panic struck. “All we country bankers could do was
endorse notes and send them to the Federal Reserve. Governor Wellborn met every
ligitimate demand. He had taken the position before the panic hit that the banks were
over-extended, but when it did strike he said the shock would have to be cushioned,
and he let the banks have the money necessary to see them through. For two years he
had been warning the country, but when the crash came he didn’t even stop to holler ‘I
told you so;’ he just jumped in and put the fire out. It was his coverage and foresight that
stopped that terrible panic. For its duration it was the worst we ever, had, though it only
lasted six to eight months. Governor Wellborn broke it by throwing the whole resources
of the Federal Reserve behind the banks of the south.”23
The Atlanta banks did indeed throw everything into the fight. Governor
Wellborn not only tried to save the banks and the bankers, but the depositors. He knew
how a bank failure could wreck a country town. Almost every member bank in the
district was driven to the precipice, but not one went over. Figures tell part of the story:
early in 1920 the Atlanta bank’s loans to its members aggregated $88,052,000; by
November 1, these loans had reached $182,258,000, and all this was from a Federal
Reserve Bank with a paid-in capital and surplus of only $11,000,000.24
Governor Wellborn put it across by demanding and getting the full support of
other Federal Reserve banks, often over the protests of these banks and even of the
Reserve Board itself. He called his bank a financial hospital, and he believed in helping
the cripples.25
The situation as a whole and particularly as it related to interbank
rediscounting gave rise to a spirited and informative exchange of letters between
Governor Harding, of the Reserve Board and Governor Wellborn of the Atlanta Bank


from December 3 to December 23, 1920.26
Harding to Wellborn, December 3, 1920:
“The Board, in reviewing the interbank rediscount situation, notices the
increased restlessness of the Cleveland Federal Reserve Bank, to whom the bulk of
your rediscounts are due. The Board agrees with the Cleveland bank that it ought not to
be required to lend an amount over $35,000,000 to a Federal Reserve Bank having a
paid-in capital and surplus of only $11,000,000. . .
Wellborn to Harding, at Washington, December 9:
“I… note that your board has reviewed the interbank rediscount situation,
and has noted the increased restlessness of the Cleveland Bank…I also note that. the
Board probably will not view with favor the continued borrowing of this Atlanta bank.
“I wish to advise that the Atlanta Bank is not a borrowing bank by choice, but
from a necessity which has been created by almost unprecedented conditions in this
section. In the winter and spring of 1920, the labor, supplies, fertilizer, farm implements,
and every other element entering into agriculture and manufacture were at the highest
peak; and every effort was made by Government propaganda to encourage and
stimulate the largest production in every line; these repeated urgings by the government
officials were followed by the farmers and manufacturers of our District. They may have
not produced wisely, but perhaps too well.
’Through circumstances over which this section had no control, the money
crops were produced at unprecedented high cost, and upon a basis which contemplated
the making of prices commensurate with the cost of production. At the very time the
crop began to move, the most disastrious and radical slump began; within 90 days the
great money crop of this District dropped 65 percent, and other staple commodities
declined in the same or greater proportion. No section or country could stand the full
unmitigated shock of such a disaster without ruin. This Bank has conceived its plain


purpose and duty to stand between the country and financial disaster to the full extent of
business prudence and ligitimate banking. This section is fundamentally strong and
sound enough to react from the present situation if temporarily aided financially, in order
that the full force of the shock may be mitigated.
“I submit, if this bank had failed to stand as a buffer between the business of
this section and disaster, it would not only have failed in its duty, but it would have
permitted a situation to develop which would have seriously affected all other sections
of the country and every other reserve bank. To carry the load under these emergency
conditions, which may continue a short time longer, of course meant borrowing and
“The commerce of all the states is too closely knit together to permit the
confining of the results of financial upheaval to any one particular state or group of
states. The Cleveland District itself counts thin section one of its principal markets…
“In the present crisis, it seems to me it is not a time for individual reserve
banks which are rediscounting for other reserve banks, to attempt to impose upon the
borrowing bank onerous conditions. If the Cleveland Bank is ‘restless’ on account of the
credit which it has in the past, and must almost of necessity in the near future (on
account of its high reserve position) extend to Atlanta, the Cleveland Bank simply takes
a rather narrow and personal view of the situation.
“If called upon to lend to other Federal Reserve Banks, upon occasions of
impelling necessity and great emergency, the Federal Reserve Bank of Cleveland
should not become restless under such a necessity. The responsibility of such interbank transactions resting upon the Board, the Federal Reserve Bank of Atlanta involves
the cooperation of the Board in the efforts of this Bank to preserve and protect the
business situation within this District. . . We feel we have protected the situation in the
Sixth Federal Reserve District. We confidently believe that disaster will be averted by


what we have done. In the carrying out of the purpose of the Federal Reserve Act, we
have been forced to draw on the resources of other Federal Reserve Banks, and
rediscounts have been, in my opinion, in strict line with the Act .
“The Federal Reserve Banks are now like an army on the line of battle, and
when the commanding general (The Federal Reserve Board) orders reinforcements
from one end of the line to another, there should not be any hesitancy or unwillingness
in obeying such orders.
“With regard to your statement that your Board has an inclination to allow
the Atlanta Bank to show a depreciation, I do not question that your Board has a legal
right to do this; but it is a responsibility that rests upon your Board, and in these perilous
times I hardly think your Board would care to assume such a fearful risk. The mere
publication of our actual reserve .position might possibly have the effect of causing the
failure of numerous banks - not only in this District, but in others as well - and bring on a
panic of great magnitude.
“I have the honor to report that we have had a steady but small liquidation
and a decline in our loans since the first of this month, and today our loans and
discounts show a decline of over four million since the first of December. Instead of
being on the increase, the tendency is the other way, which is very encouraging to us.
Harding to Wellborn, December 15:
“Receipt is acknowledged of your letter of the 9th instant, in which you give
in detail the reasons for the present overloaned condition of the Federal Reserve Bank
of Atlanta. In this letter, you do not express any opinion as to when your bank will be
able to pay off its rediscounts without falling below its legal minimum reserve, and on
the other hand you assume that it will be necessary for other Federal Reserve Banks to
extend your bank accomodations for an indefinite period .
“This Board is of the opinion that your present experience should convince


you that your lending policy has been rather too lenient and that in some cases credit
was granted in such large amounts to banks when no emergency existed as to impair
your ability to make loans out of your own resources when a real emergency did arise.
The Board would suggest that you refrain as a rule from issuing circular letters to be
sent to banks generally throughout your district and that you adopt the policy of writing
personal letters to those banks whose discount lines with you are too large . . . and that
you might indicate the particular loans ‘which you desire to have paid in full or in part .
“The Board notes the objections you raise against paying off your
rediscounts entirely and operating at the present time on reserves below the legal
requirement, and it is disposed, therefore, to use its influence with other Federal reserve
banks having a larger reserve to continue to have them assist you in bearing your
burdens, provided you will meet their reasonable requirements as to character of paper
and security, and will make consistent efforts to improve your own position by inducing
extended banks to reduce their lines with you in an orderly way.
Wellborn to Harding,, December 23:
“…You say we have been too lenient in granting credits. I feel sure if your
board was on the ground and saw the daily workings of our bank, that you would not
take this view, and I venture to make the statement that not in any other District has any
Executive Committee been more careful and discriminating in the individual paper that
has been accepted for rediscount. We have, since the early part of this year, firm control
of credits, but in doing so we have not lost sight of the necessary demands that we had
to take care of…”
“Your Board, it seems to me, is laboring under an error in thinking that it is
our policy ‘to carry loans indefinitely for member banks until cotton reaches a price that
is satisfactory to the producers.” You must remember that only about 60 days have
elapsed since the bulk of the notes fell due, and our policy is merely to give them


reasonable time to find a market in these disturbed times, in order to keep them from
‘dumping’ their products on the market at one time. To do otherwise at this critical time
would force a disaster upon our agricultural and business interests that might perhaps
have the effect of bringing on a state of panic and bankruptcy.”
And so Governor Wellborn took his stand. Fortunately conditions gradually
eased. By April, 1921, the Atlanta Bank had paid in full all of its borrowings from the
Cleveland and other Federal Reserve bank. This was accomplished without undue
pressure on member banks, allowing liquidation to be done gradually.27
A view of the cotton crisis from the national standpoint is contained in a
statement by Congressman Hatton W. Sumners, of Texas, showing that the effect of
Governor Wellborn’ s work and the actions of the Atlanta Federal Reserve Bank were
not limited to the south:28
“This situation In the United States in the late fall of 1920 was very
different from what it appeared to be on the surface. Outwardly, this country seemed
prosperous, but there were already upon the business horizon clouds which were to
develop rapidly in the months to come…
“It soon became apparent to me that, unless something was done to save
the situation, the purchasing power of the south would be absolutely paralyzed. If this
happened, it was obvious that the effect would be nationewide.
“Congress agreed that the cotton situation had become a national
problem, and appointed a Commission of Agricultural Inquiry. I was made chairman of
the Committee on Cotton.
“My first move was to go to Atlanta; where I called upon Governor M. B.
Wellborn of the Federal Reserve Bank, and discussed fully with him the situation. I shall
never forget the pleasure I experienced in finding that here was another man who was
awake to the peril of conditions, and was prepared to do everything in his power to avert


what we both believed would have been the greatest financial panic in the history of the
United States.
“I want to emphasize here that the public was blissfully unaware of the
threatened danger, and that there was a strong disposition to regard the warnings
as/calamity howlings of agitators. The importance of having the support and influence of
Governor Wellborn in the fight to awaken the national consciousness cannot be
overstated. To get back to our conversation on that day, we agreed that the only way to
save the situation was the rescue of the cotton farmer of the south. Governor Wellborn
agreed with me that it was a time for the most drastic measures, and asserted that the
Federal Reserve Bank of Atlanta would stand behind the cotton crop of 1921, that without regard to money already owed the Reserve Bank - paper offered them for
rediscount by a member bank which was secured by cotton would be accepted. It was
further agreed that member banks ‘which held cotton-secured paper should not only not
be pressed to collect this paper, but actually urged to hold it as long as possible.
“On returning to Washington, I laid my views before a special meeting which
was attended by the governors of the Federal Reserve Banks of New York, Atlanta,
Dallas, Richmond, Kansas City and St. Louis, as well as the members of the Federal
Reserve Beard and director of the War Finance Corporation .
“There were two opinions represented at this meeting, one to the effect that
the time and conditions called for the exercise of conservatism, the other - of which I
was the spokesman - maintaining that the situation was desperate and demanding that
the doors be thrown wide open to the cotton producers in the way of the most liberal
credits possible. Governor Wellborn backed up my position whole-heartedly, and stated
in substance that he was willing to pledge the support of the Federal Reserve Bank of
Atlanta to save the situation in the south. The Atlanta bank agreed to accept all cotton
paper offered for rediscount without charging such loans against the ordinary credit


lines of member banks, and to join with the other Reserve Banks in making an appeal to
the people to tell them that cotton was a good buy, and that for the cotton crop to be
deliberately sacrificed at forced sales would be a monstrous thing for the nation to allow
. . . After a long discussion, the conference agreed with these views and sanctioned the
attitude of the Atlanta bank. This was the final act which reversed the psychological
attitude of the world in regard to cotton.
“I regard Governor ,Wellborn’s attitude at this trying time as of tremendous
importance in swaying the sense of the meeting toward the proper position. If the
conference had come to any other conclusion, it is my sincere belief that no power on
earth could have saved the United States from the greatest financial crash in its history.”
The branches, particularly New Orleans, Jacksonville and the Savannah
Agency likewise had a relatively hectic year in 1920.
“At the July Board meeting, on motion of Director J. K. Ottley, it was voted
that it was the consensus of opinion of the Atlanta Directors “that it is very important that
the managers of the various branches be kept in close touch with the policy of the
parent bank, especially the New Orleans Branch, and that it is deemed advisable that
the Governor of the Bank invite the Managers of the Branches to attend the meetings of
the Executive Committee as often as he deems proper.” Also that they be available for
Board meetings in the event matters concerning their particular branches are
The New Orleans Branch, only one delegated with the same powers as the
Atlanta Bank, except for capital stock and open market transactions, was called upon to
function to a higher degree than ever before. Indeed, Governor Wellborn, in a
discussion at the May Board meeting, laid particular emphasis on the fact that the New
Orleans Branch had used up more than the reserves of the entire district. He went on to
say that while the New Orleans loans were confined largely to commodities, the lines


should be reduced in a way not to bring detriment to the section. He suggested that a
way to do this was to cut out everything pertaining to non-essentials, and referred to the
speech he had made the previous day relative to banks discouraging the financing of
pleasure automobiles.30
Director Saunders, of that branch, pointed out that the burden had largely
been on New Orleans because of the fact that it was a port; that other points shipped
commodities there to be exported, which necessarily forced their financing at New
During the year the total of rediscounts made for and advances made to
member banks located within the New Orleans zone was approximately
“It was also during this busy year that steps were taken to improve and
enlarge the physical quarters at New Orleans. In mid-summer an architect was engaged
to submit plans and estimates on proposed changes, including larger vaults, in the bank
building recently purchased for use of the branch.33
The problem at Jacksonville was faulty management and came to light as
the result of a report by the General Auditor. The Manager plead lack of sufficient help,
but was assured that he could employ such help as ‘was necessary. He was allowed a
two months vacation beginning June 10 and Assistant Cashier W. B. Roper, of Atlanta
was put in temporary charge. Apparently the weak point was in the cashier’s office. W.
G. Wilson resigned the office and was replaced by F. M. Sheffield, Assistant Auditor of
the Atlanta Bank on October 1.

at Savannah made an insistent plea for a reduction in

the margin on cotton from 20 percent to 10 percent. The plea was denied by the
Executive Committee, which voted that the Bank would continue to require 20 percent,
but that insofar as Savannah banks were concerned 5 percent of the amount could be


covered by paper eligible for rediscounts.35
In addition to large amounts of cotton paper, the Reserve Banks, in 1920
carried an abnormal amount of meat packers’ paper. In commenting on that situation
Governor Harding stated that “Federal Reserve Banks were carrying approximately
$32,000,000 of this class of paper and that the Federal Reserve Bank of Atlanta was
carrying about the limit of its share.” He said further “that the large borrowings of the
packing concerns was probably due to the fact that they were making large sales
abroad and that in view of the depreciation of foreign exchange, they were unable to
convert their balances until a more. favorable time.”36
While the Rural Electrification Administration was 15 years in the future and,
in 1920, less than 200,000 farms were connected with electric power lines, the need for
farm electric service was not lost upon Governor Wellborn. In a report to the Board on
July 9, 1920, he wrote:
“High wages and better living conditions are attracting many farmers to the
cities until the point has been reached that the situation is alarming to those who wish to
see increased farm production. In view of this situation and in order to encourage better
and more attractive living conditions on the farm, I have recently obtained a favorable
ruling from the Federal Reserve Board with regard to the eligibility of paper given for
Farm Electric Lighting Systems.37
The short lived post-war panic by no means dulled the earning capacity of
the Sixth District Federal Reserve Bank. True, total resources showed a decrease of
approximately $5,000,000 from 1919, due almost entirely to the decrease in reserve
deposits of member banks. But net earnings almost doubled from $3,443,784.62 to
$6,090,990.23. National bank membership increased from 363 to 375 and State Bank
and Trust Company members increased from 64 to 87 over 1919.38
Before leaving the first year of the so-called “roaring twenties” it might be


interesting to relate an incident, which while not looming large in the overall history of
the Bank, did cause temporary consternation in the summer heat of late July. On the
29th $5000 turned up missing.
That day the automobile truck assigned to the collection of balances from
local member banks made its rounds in charge of

, a clerk in the currency

, a watchman and a Negro driver, hell were provided with side-

arms. The sum of $50,000 was collected from the
and $10,000 from the

, all in currency. The money was put into an

unlocked pouch and, upon return to the Federal Reserve Bank building, was delivered
to Teller

. He, in turn, delivered it to

, a clerk in the money

sorting room. Up to this point no one had verified the contents of the pouch. Neither did
just then. He closed his cage and went to lunch.
After lunch, upon checking,
did not immediately report it, thinking

discovered a shortage of $5000. He
had been in error in stating the amount

to be $60,000. Later, however, he did report the matter to Mr. Sims, who in turn
reported it to Cashier M. W. Bell.
Thereupon matters began to hum. All currency in the money division was
reverified and inquiry was made at the

banks. All to no avail. The

bond company was notified; a Pinkerton detective questioned employees who might
have had access to the funds.

were demoted to

non-money handling jobs.

Governor Harding, of the Federal Reserve Board commented rather acidly
that he was not particularly surprised when he read of the system used to collect
clearing house balances. Indeed he couldn’t understand why the Atlanta Bank should
have to send around to collect money from member banks. The Governor was assured


by Director J. K. Ottley that the Executive Committee had met to consider that very point
and that a subcommittee had been appointed to confer with the clearing house to the
end that collection would not be necessary.39
The matter rocked along. Then, on October 8, Governor Wellborn reported
to the Board:
‘With reference to the $5000 loss reported to your Board sometime ago, I
am glad to report that the Bonding Company has fixed the shortage as a theft by
driving our truck that day. It appears that through careless handling,
the package containing $5000 dropped in the truck and after the bags had been

found and retained the package.”40

Chapter 9

Keller, Dictionary of Dates, II, 318-322


Ibid., 323 .



Garrett, Atlanta and Environs, II, 775, 777-778


Annual Report4.i.920, 7-8

5.Hopkins, M. B. -.Wellborn, 84-85

Ibid., 87

7.Minutes Directors, I, 253

Ibid., 251; Who Was Who in America, I, 895

9.Ibid., 255; Who Was Who in America, III, 903

Minutes. flirectors, I, 250-251
Ibid., 256-257
Ibid., 291


Annual Report, .1920, p. 23


Minutes. Directors, I, 266
Ibid., 283
Ibid., 256


Ibid., 283; Annual Report, 1920, p. .24.; The G -F Journal, Dc. 192i ,p .7
Minutes. Directors, I, 287
Ibid., 311
Ibid., 279
Hopkins, M. B. Wellborn, 87
Quoted, Ibid., 88


Hopkins, M. B. Wellborn, 88



Nineteen twenty one has not been recorded in the annals of American
economic history as. prosperous. However, before the horns and bells sounded on New
Years eve, heralding the advent of 1922, the acute but relatively short lived post World
War I depression had about it run its course.
Chairman Joseph A. McCord summed up the situation briefly when he
“A review of the activities of the Federal Reserve Bank of Atlanta for 1921
emphasizes more fully the stabilizing effect the Federal Reserve System has had on
business conditions generally.. The severe strain. sustained by the financial. structure of
the country during 1920 was continued to a considerable extent until the latter months
of 1921, when credit conditions became somewhat easier.
“When the year was ushered in, there prevailed a feeling of anxiety and
uncertainty as to what it would bring forth. Many economic adjustment necessary to
normalcy were effected, and the year closed under more favorable conditions, with
business generally in a stronger financial position. Stocks had been reduced, prices had
declined, liqudations had been effected, and bank holdings of discounts reduced,
particularly in commercial centers, although not so marked in agricultural districts.
Profits were small and determined losses charged off, so that final figures for the year
represented more nearly their true value.
“United States securities had advanced in price, and there was a tone of
strength to stocks and other bonds. Many hard and tedious transition processes took
place during the year, which contributed to the economic readjustment of the country.1
The readjustment process did indeed have its trials and tribulations. During


the first half of 1921 wage cuts were announced by American Woolen, Bethlehem Steel,
United States Steel, the Standard Oil Company and the meat packers. Labor strikes
were numerous. President Wilson vetoed a Resolution of Congress. to revive the War
Finance Corporation, but a joint Resolution, overrode the veto and revived the
Corporation for the relief of depression in agricultural sections. At midyear a Budget Act
provided for a national budget and an independent audit of government accounts. A
Budget Bureau was established in the Treasury Department, with Charles Gates Dawes
as first Director. Later in the year the Veteran’s Bureau was created and a Revenue Act
abolished war taxes on many items.2
Warren G. Harding and Calvin Coolidge were inaugurated President and
Vice President. on March 4. Among cabinet members soon thereafter named were
Charles Evans Hughes, Secretary of State; Andrew W. Mellon, Treasury, and Herbert
Hoover, Commerce. Later in the year William Howard Taft was appointed Chief Justice,
and General John J. Pershing, Chief of Staff. In early August the incomparable Italian
tenor Enrico Caruso died in Naples and, on November 11, third anniversary of the
signing of the Armistice, ending World War I, occurred the burial of the unknown soldier
at Arlington National Cemetery in Virginia.3
Atlanta received visits during the year from both the Harding’s and the
Coolidge’s. Vice President Elect Coolidge and his brunette wife were guests of the city
at the Georgian Terrace Hotel in late January, while President and Mrs. Harding came
in late October in response to an invitation exctended by a committee headed by
Chamber of Commerce President Lee Ashcraft.
The most successful municipal achievement of 1921 in Atlanta was the
passage of a bond issue in the amount of $8,850,000. During the next few years the
proceeds were spent for new public schools, sewer improvements and extensions,
additions to the waterworks and the erection of the Spring Street Viaduct. The bond


issue necessitated an increase in the tax rate from $1.25 to $1.50 per $100. But the
citizens got their money’s worth.4
Changes in the official family of the Bank were not numerous during 1921.
H. F. Conniff, Assistant Cashier in the Fiscal Agent Department, resigned on September
26 to accept the vice-presidency of the First National Bank of Sparta, Georgia. On
September 1, W. C. McLarin, Jr., of the parent bank and later to loom large in its affairs,
was elected Cashier of the Jacksonville Branch to succeed F. M. Sheffield, resigned..
Indeed, the affairs of the Jacksonville Branch had not been in the best of order for
sometime due to loose supervision. Manager C. R. DeSaussure was granted a leave of
absence from July to September to visit the grave of his son in France - a war casualty.
J. M. Slattery, Secretary of the parent bank filled the Jacksonville managership during
this interim.5
Colonel Edward T. Brown, formerly of Atlanta, then of Washington,
announced his resignation as a Class C Director, to become effective January 1, 1922.
Colonel Brown, a noted lawyer, was one of the original directors of the Bank and had
rendered valuable and useful service. He was succeeded as a Class C Director for a
three year term by Lindsey Hopkins,6 a prominent Atlanta financier. J. K. Ottley and J.
A. McCrary, Class A and B DirectOrs respectively, met no opposition and were
unanimously re-elected to three year terms, expiring in 1924. Edward W. Lane,
President of the Atlantic National Bank, Jacksonville, Florida, served as a member of
the Federal Advisory Council during the year.7
Colonel Brown, incidentally, was paid a feeling tribute at his last Board
meeting on December 10. Governor Wellborn, on behalf of the Board, presented a
handsome loving cup, to which Colonel Brown responded in a short but appropriate
speech. The cup was inscribed:
“Presented to Colonel Edward T. Brown,
By the Board of Directors of the Federal Reserve Bank of Atlanta


1914 — 1921
In Recognition of his Faithful and Efficient Service,
In the Organization and Development of the Federal Reserve Bank
of Atlanta
As an Expression of the Affection and Esteem of his Associates,
the Members of the Board ofDirectors.”8
During the early part of 1921 an original, though retired Director died. He
was Llewellyn P. Hillyer, a noted banker of Macon. Suitable resolutions upon his death
and to his memory were adopted by the Board on April 8.9
A couple of other official appointments were made during the year. Joseph
L. Campbell, formerly Assistant Manager of the New Orleans Branch and Assistant
Cashier of the Atlanta Bank, was named Deputy Governor on January 1. He was a
native of Nashville, Tennessee and secured his early banking experience in that city.10
On December 7 Director W. H. Kettig was named Deputy Chairman of the Board, to
serve during the ensuing year.11
On February 18, 1921, the first conference of Governors and Chairmen of
the Board of the Federal Reserve Banks of Cleveland, Richmond and Atlanta, was held
in Atlanta. Those present were Caldwell Hardy and Governor Seay, of Richmond; J. B.
Williams and Governor Fancher, of Cleveland, and D. C. Wills of the Federal Reserve
Board. A general discussion relative to rates, the inter-district relation thereto and other
matters of mutual interest was had.12
Hectic though the economy was in 1921, the business of the Federal
Reserve Bank was brisk and earnings, though somewhat less, held firm. The gross for
1921 was $7,406,652 against $7,476,431 for 1920. Expenses for 1921 were
approximately $195,000 in excess of those for 1920. Net earnings available for
dividends, surplus and franchise tax for 1921 stood at $5,496,218 compared to
$6,010,324 for the preceding year. Of this sum $245,862 was paid out as dividends.13
Activity in discount operations for 1921 were fully as marked as during 1920,


although liquidation was shown by many member banks. Out of a total of 515 member
banks, 444 had paper under rediscount at sometime during the year, with a peak being
reached in September and December.14
Rediscounting with other Federal Reserve Banks, a subject of much
controversy during 1920, reached a peak in January 1921, in the amount of
$29,083,000, as against $48,856,000 in October, 1920. During five months of 1921, no
rediscounting was done with other Federal Reserve Banks.15
National bank membership increased in 1921 from 375 to 386, a fraction
less than the gain for 1920. State bank and trust company membership, however, broke
all previous records - 87 to 129. The total number of member banks at the close of the
year stood at 515, representing a net increase in the capital stock during the year of
A matter of considerable import to the Atlanta Federal Reserve Bank was
the so-called “par clearance case.” It occupied the attention of management and
particularly of General Counsel throughout the year 1921 and both before and after.
The case, to which newspapers referred as an “insurrection” against the
Federal Reserve Bank, had its inception in January 1920 and centered in Georgia and
Alabama. Its gist was a protest against the Federal Reserve’s insistence on ~
collections” of checks — that is, collection without the service fee which some banks
customarily charged.
A Cordele, Georgia bank went to court to restrain the Federal Reserve from
putting its par clearance order into effect. The Federal District Court threw the case out,
this action being argued through the Circuit Court of Appeals and finally the United
States Supreme Court. In the Supreme Court the banks charged that officials of the
Federal Reserve Bank of Atlanta, “acting in concert with reserve banks in other
districts,” had joined in a conspiracy to force small banks throughout Georgia to become


members of the Federal Reserve System.
In May 1921 the Supreme Court sent the case back to the trial judge for
retrial on its merits, though the high court did uphold the Federal Reserve’s contention
that United States District Courts have jurisdiction but denied the motion to dismiss the
plaintiff’s complaint.
The district judge’s decision, two years later, was again in favor of the
Federal Reserve and again the case went to the Supreme Court. The latter reversed the
lower courts and decided against the Federal Reserve. Representing the Federal
Reserve in this litigation were Rollins N. Randolph of Atlanta, General Counsel for the
Bank, and John W. Davis, of New York, noted corporation lawyer and, in 1924,
Democratic candidate for the presidency of the United States.
Even the Federal court decisions did not end the thorny case. In June 1923,
the Federal Reserve Board took a final step of reprisal when it prohibited all Federal
Reserve Banks from handling checks drawn on the banks which refused to cooperate.
This action had the desired effect.17
The matter of how far the Federal Reserve should go as a custodian of
securities came up for discussion and decision in the autumn of 1921. Governor
Wellborn set forth his views at some length. Leaning toward a liberal custodial policy, he
summed up:
“Inasmuch as the Federal Reserve Banks are quasi-public institutions, and
should endeavor to render the best service possible, not only to member banks, but
to.the public in general, I believe that it should be done, if it can be accomplished
without incurring any unusual expense. It is therefore my belief that the Federal Reserve
Bank of Atlanta could accept for safe-keeping, Government obligations offered to it by
its member banks, and could also accept from non-member state banks who are on our
par list, such securities as we received from our member banks.


Upon motion of Director John K. Ottley it was unanimously voted that the
Federal Reserve Bank of Atlanta and Branches, issue safe-keeping receipts only to
member banks and non-member banks on the par list.18
Branch bank operations continued at a lively clip during 1921. The New
Orleans Branch, with a maximum membership in its zone of 54 banks, extended a total
amount of accommodation to them of $531,847,403; Birmingham, with 76 member
banks, extended $75,421,320; Jacksonville, with 72, extended $110,391,000, and
Nashville, with 86, extended $389,947,000.19
The Savannah Agency, though limited in the scope of its operations,
continued to function in a manner that facilitiated the transactions between the member
banks located in Savannah and the parent bank in Atlanta. Its existence, and the
knowledge that it had an ample stock of currency to care for emergency demands, was
no doubt a source of relief to member banks when the closing of some small institutions
might have been the predicate for serious disturbances.20 The manager of the
Savannah Agency since its organization, R. J. Taylor, was granted a leave of absence
on November 19, 1921 to enable him to accept a position with the War Finance
With the exception of Savannah, all of the Branches came up for new
quarters’ consideration during 1921, inspired, of course, by continued growth and
In New Orleans, where the branch employed 96 persons, it was decided to
raze the building then owned, at Common and Carondelet Streets, and to erect, on the
same site, an entirely new four-story and basement building. An offer by the CanalCommercial Trust and Savings Bank was accepted, whereby the latter agreed to
remove the present building down to the foundations and to purchase all materials,
vaults, fixtures, etc., paying therefor the sum of $37,500.21


Branch directors at Jacksonville recommended the purchase of a 60 x 105
foot lot on the north side of Adams Street between Laura and Hogan Streets for
$90,000. The recommendation was concurred in by the Atlanta Board but was not
approved by the Federal Reserve Board in Washington. Reasons for the disapproval
were significant. Governor Harding, in his letter to Chairman McCord, said: “It the Board
does not feel certain by any means that all your branches will be continued permanently
The Board aleo objected to the $90,000 price for “a bare lot.” While it was pointed out
that the land was located in “the business center of Jacksonville,” the Board rebutted by
saying, “there is no necessity for locating your Branch in Jacksonville in the center of
the best business district . . . a block or two away would answer all practical
Later in the year approval was secured to pay $45,000 for a lot at the
southwest corner of Hogan and Church Streets in Jacksonville, measuring 53 x 90 feet.
Even so, the Board did not commit itself to the immediate approval of a building on this
Nashville posed less of a problem. Reported Governor Wellborn in July:
“The Federal Reserve Board has approved the purchase of the lot and
building on Third Avenue, in Nashville, next to the Stahlman Building, known as the
Keith’ building for $85,000, providing the vaults as already therein are in good shape
and are of such construction as will serve the purposes of the Federal Reserve Bank. In
this connection, I had the Mosler Safe Company send one of their representatives to
Nashville on June 3Oth to inspect and submit a report as to whether these vaults were
in such condition as would suit our needs. He reports that with the strengthening by
means of iron beams and making the walls twelve inches thicher with concrete, they
could be made entirely serviceable.”24
A proposal for Birmingham, like that in Jacksonville, drew fire from the


Federal Reserve Board in Washington. Both the Atlanta and Birmingham Board voted to
purchase a lot, 100 x 100 feet at the northwest corner of Eighteenth Street and Fifth
Avenue for $69,000. After which Governor Harding wrote to Governor McCord:
“…I will state that the Board has not yet approved the purchase of this lot. In
view of the favorable lease which the branch bank has on the quarters in the Jefferson
County Bank Building, and the long time the lease yet has to run, I doubt very much
whether the Board will approve at any time in the future of an expenditure for the
purchase of a lot in Birmingham.”25
Meanwhile the original building of 1918 and the annex thereto, completed in
1920, had become inadequate to accommodate the growth of the business and the
increasing number of employees in Atlanta. Fortunately space was available
immediately to the east.
The Austell mansion at 92 Marietta Street, wherein the Atlanta National
Bank was organized in 1865, had only been intermittently occupied since the death of
Mrs. Alfred Austell in 1917. The land on which it stood, three-fourth of. an acre, was
sold by Sidney Root and Edward W. Marshall, of the ante-béllum Atlanta firm of Beach
& Root, to General Alfred Austell on March 17, 1864 for $5000.00.
On February 28, 1921, the heirs of Alfred Austell sold to the Federal
Reserve Bank of Atlanta a part of this property, fronting 90 feet on Marietta Street and
running back 202.3 feet to the Seaboard Air Line Railroad for $180,000.00. Soon
thereafter, the Bank, at a contract price of $977,417.49, plus excavation and extras,
began the construction of a substantial addition. It consisted in the main of a three story
and basement building, plus a partial sub-basement on the eastern side and at the rear
of the new portion, the latter for dead files and for boiler and coal rooms. The entire
addition was carried out on the same floor levels and in the same architectoral style as
the original building and annex.26


In reporting on the progress of the building program at the year’s end,
Chairman McCord wrote:
“Work on the new addition has progressed steadily since July 12th, under
the direction of Architech A. Ten Eyck Brown, and the Building Committee headed by
Director J. A. McCrary.27 After careful consideration of the bids received, Gude and
Company were awarded the contract as General Contractor.
“The structural part of the building has already been practically completed,
but there are many details which must wait until the installation of the vaults, upon which
work has just been begun. It is expected that the entire building will be finished easily
before the date set in the contract, namely, October 1, 1922.
“As the completed building will have frontage of approximately 158 feet, it
has been found possible to achieve a dignified elevation, with ample lighting facilities
and entrances; furthermore, on account of the fact that the building sets back about 11
feet of the lot line on each side and that there is a street in the rear, the structure is
assured of ample permanent light and ventilation throughout.
“The construction of the original building and the addition now under way is
reinforced concrete throughout,, with enveloping walls of face brick and marble, backed
up with hollow tile to give a warm building in winter and a cool building in summer, by
means of the air spaces which this type of construction affords. Tile floors are used in
the toilets; marble floors in the public lobbies and corridors, and wood floors in working
spaces, with a finished cement floor in the sub-basement, garage and boiler room. Most
of the doors are of metal, as are such items as balustrades, though some are of marble,
having been so constructed with the idea of using durable materials in order to keep
down the cost of maintenance. There are practically no painted surfaces, except the
walls and ceilings of working spaces and officers quarters.
“The exterior of the building is to be handsome and dignified -practically a


continuation of the original, with certain changes which in the completed design will
make a distinct improvement on the original, at the same time re-using all of the old
materials, such as marble columns, cornices, bolts, ashler, etc.
“Owing to the fact of the work having been done in sections on the original
building, the vault was first located at the rear of the structure in the center, and was
enlarged at the time of building the annex, by the insertion of a vault of the same size
below the first, and on the basement level, for coin storage.
“In laying out the vault system, with a view to the future development of
the bank, it was decided to locate the new vault in the center of the entire basement, on
the basement level, and with dimensions approximating 30 x 60 feet. This vault is being
constructed in accordance with the improved methods demonstrated at recent tests last
year at Washington, and this year at Sandy Hook, held by the Consulting Architect of
the Federal Reserve Board. The construction of the main door and of the emergency
door will involve the application of these improved principles.”28
Matters relating to personnel and the general well-being thereof, had
adequate attention during 1921. In reporting on the operation of the “Federal Reserve
Bank Club,” Chairman McCord wrote:
“The Club had, on the whole, a very satisfactory year. Perhaps e
outstanding accomplishment was the launching of a very creditable magazine, which
has been called ‘The 6-F Journal.’ The first issue, under the editorship of Mr. Ward
Albertson, Assistant Federal Reserve Agent, met with pronounced approval and
“Another noteworthy action was the giving of $250 from the Club treasury,
and a like amount from the Birmingham, Jacksonville and Nashville Branch Clubs,
toward the support of the Employee’s Benefit Fund at the New Orleans Branch, which is
unable on account of legal restrictions to maintain such a fund for itself. Besides this

initial gift, each of the other Branches as well as the parent bank is to contribute $25
monthly toward the upkeep of the New Orleans Club.
“The Welfare Committee continued its good work throughout the year.
“Many social functions were held with something more than the. usual
attractiveness and success. There was an elaborate dinner dance for the new officers
on March 17th; the annual picnic on June 3rd, and other feature dances at Holloween
and Christmas, interspaced with the regular semi-monthly entertaiments.”29
The picnic, incidentally, was held at Marietta and featured a horseshoe
pitching contest between Governor Wellborn and Chairman McCord. Wrote John R.
Marsh in the Atlanta Georgian:30
“Governor Wellborn was rather nervous when he arrived at Marietta
because he was scheduled for a battle with his associate, Joseph A. McCord, for the
banker’s championship in horseshoe pitching. The two contenders squared away just
before noon with a big crowd at the ringside. Joe Slattery was accused by Mr. McCord’s
seconds of using the hypnotic eye on their battler and he was ordered to stand a safe
distance away. The first round was even and after several more the decision was still in
doubt, both men standing punishment well. They finished the match all square and
neither could win in the extra rounds, so they decided to pitch one horseshoe apiece for
the championship. Governor Wellborn’s fell a fraction of an inch closer than Mr.
McCord’s and he was given the decision.”
Additional compensation in the form of a bonus was paid to all employees,
on the basis of annual earnings, June 30 and December 20, 1921.31 Employee .morale
was further enhanced in October when the Board of Directors voted unaminously to
approve a Pension Plan.32 Another boon to the staff was the cafeteria. During 1921 the
price of monthly meal tickets was reduced from $6 to $5 per person.33
It was at this stage of the Bank’s history that the advisability of establishing


a library was first discussed. Governor Wellborn reported in May that he had received
several letters on the subject from Miss Ella May Thornton, Assistant State Librarian. He
pointed out that the Bank then had no room for a library but that the matter might be
considered in connection with the new addition.34
Economically, 1921 was a transition year between post-World War I
depression and the prosperous mid-twenties which lay ahead.
The banking situation in the Sixth District, as it existed during the critical
period of the transition was described by Governor Wellborn in a report to the Board of
the Atlanta Bank on December 10, 1921:
“If it were possible for your Board to sit with our Executive Committee each
day, witnessing its deliberations and workings in every detail, I venture to say that you
would be astounded to learn of the very serious condition of a large number of our
member banks.
“As you know, the decline in deposits has been general, but possibly as
many as twenty five or thirty have shown that they are experiencing the most severe
effect of the present depression, their deposits having declined more than fifty percent,
and, in extreme cases, sixty to seventy five percent. Their decline in deposits has been
in much larger proportion than their collection of bills receivable. This has been due I
think almost entirely to the great and rapid fall in prices of agricultural products in this
section; and to the added aggravation of the devastation wrought by the boll weevil.
Those banks having deposit balances have checked upon them unceasingly, in order to
continue carrying some of their two years’ production, and investments made during the
era of prosperity; and as a response to the importunities of friends for personal loans of
funds which they too, needed to supply them with the necessities of life, while
endeavoring to hold on to their visible assets, until the time was reached when their
disposal would cause the least sacrifice.


“Last year’s cotton and rice crops which were produced at a good deal
higher cost than they can bring in the present market, still remain unsold to a large
extent. The sugar section is confronted with the competition of very low-priced foreign
sugars, and therefore their production cannot be marketed without loss.
“The daily problem which our Executive Committee must meet, is that of
properly taking care of those of our member banks which are in straightened condition.
Many of these banks have been very heavy borrowers through the year; and, while this
season of the year would naturally demand that there be curtailment, deposit declines
are in larger volume than collections. To preemptorily decline the increased
accommodiation, would perhaps so cripple the functioning of the applicant that it would
have to close. Some of these extended banks will draw checks or send advices of credit
for cash letters, without sufficient balances or provision to cover. Such cases must be
very carefully handled, as the declination of checks, or advice to the endorsers of the
non-receipt of their remittance for their items would soon percolate back to the
community in which the bank is located, and perhaps be attended with serious
consequences. The reports of examination of such banks are watched very closely, and
the paper they offer for rediscount is scrutinized to the last degree.
“We are in almost daily touch with the officers of those institutions, laying
particular stress in those cases where the officers and directors, by the concentration of
their own lines, are impeding the proper functioning of their own institutions. I feel that it
is the duty of our Committee to sustain and back up to the furtherest point possible, our
member banks, by accepting their paper for rediscount where it is reasonable to do so,
taking into consideration the declaims and demands of other member banks, and the
general effect in the particular community, should we decline to go further.
“As so many non-member state banks have failed we feel that if a national
bank or a state bank which is a member, should fail in an important section, it might


bring on very serious results for our agricultural member banks and their communities.
The responsibility of our work can well be cornpared to the task of guiding a ship along
a tortuous and perilous course, with submerged obstructions continually in the offing.
On the one hand, we are confronted with the danger of extending so much aid to a
member bank that, if it failed, we should incur a very considerable loss.
“On the other hand, if we go to a great length and save a member bank so
that it can, in time, work out of its difficulties, I feel that we would be accomplishing what
was intended in the establishment of the Federal Reserve System. It is our fundamental
duty to take care of extremes and emergencies, and while the responsibilities are
exceedingly heavy, still I believe that we should show the proper nerve and fortitude,
and go as far as is possible in saving any member bank which is in difficulty.”35
Governor Wellborn pacticed what he preached. Many years later Paul M.
Davis, President of the American National Bank of Nashville, in commenting upon this
facet of Wellborn’s character, said:
“Governor Wellborn did a great job at a time when the Federal Reserve
System was new and had no precedent by which to go, and he had the vision and guts
to fill the job admirably... To my mind he had a fine understanding of what the Federal
Reserve System was really intended to do and did his part. In other words, he read
between the lines.”36



Annual Report, 1921, p.7.


Keller, Dictionary of Dates, II, 323-328.




Garrett, Atlanta and Environs, II, 779-782.


Annual Report, 1921, p.p. 22-23; Minutes, Directors, II, 375, 420, 441.


Lindsey Hopkins, the new Director, was born near Reidsville, N • C., in 1879. He
was a pioneer in the sales development of motor cars in the Southeast and was
an early flying enthusiast. He settled in Atlanta in 1910 and subsequently became
a director of several corporations, including the Coca-Cola Company, American
Hide & Leather Company, Sperry Corporation, and North American Aviation. He
died in 1937.


Annual Report, 1921, p. 23; Minutes, Directors, II, 455.


Minutes, Directors, II, 461. In March, 1921, Col. Brown presented to the bank a
table, long in his office, at which the first meeting and all preliminary meetings of
the Board of Directors were held prior to the inauguration of the Federal Reserve
System. The Board accepted the gift with thanks and appreciation.


Minutes, Directors, II, 361.


The 6-F Journal, March, 1923, p.7


Minutes. Directors, II, 456.


Ibid., 353


Annual Report, 1921, p.3


Ibid., 10




Ibid., 15-16.



Minutes, Directors, II, 376, 386: Hopkins, M. B. Wellborn, 83-84.


Minutes. Directors, II, 440, 442.


Annual Report, 1921, pp. 17-18.


Ibid., 18.


Minutes, Directors, II, 387, 396, 407, 431.


Ibid.~ 385-386, 408.


Ibid., 442, 449.


Ibid., 408.


Ibid., 416-17, 427.


Ibid., 342-43, 352-53, 363, 370, 374-75, 398, 404-5, 414; Correspondence
between L. C. Adelson, Acting Governor and A. B. Trowbridge, Consulting
Architect, Oct. 24, 1921; “The Romance of Atlanta Realty,” Atlanta Chamber of
Commerce, 1921.


Other members of the committee were Directoes J. K. Ottley, W. H. Kettig,
Governor Wellborn, and Chairman McCord.


Annual Report, 1921, pp. 21-22


Ibid., 23.


Quoted in Hopkins, M. B. Wellborn, 102-103. Marsh was subsequently married to
Margaret Mitchell, author of “Gone with the Winds”


Minutes, Directors, II, 408, 457.’


Ibid., 445.


Ibid., 390.


Ibid., 378.


Ibid., 454-455.


Hopkins, 14. B. Wellborn, 99-100.



During 1922 the country reached a degree of financial stabilization it had not
known for several years. The last advance of money under the Liberty Loan Acts was
made on May 29 - $717,834 to Czechoslovakia. Twenty million dollars were
appropriated by Congress for the relief of starvation in Russia, while at the end of the
year the public debt stood at just under $23,000,000. Meanwhile, in June, the Federal
Reserve Act was amended to provide for agricultural representation on the Federal
Reserve Board and the powers of the War Finance Corporation to make loans for
agricultural purposes were extended to June 30, 1923.1
A notable bank consolidation took place in Atlanta in September, 1922,
when Asa C. Candler’s Central Bank and Trust Company was absorbed by the Citizens
and Southern National Bank.2
The radio age, a new era of communication opened locally on March 16
when the Atlanta Journal’s station WSB began operations. The adjoining County of
DeKalb celebrated its centennial during the year and the Town of Decatur became
officially the City of Decatur. Women came to the fore politically with the election, in
September, of Miss Bessie Kempton, of Atlanta, to the State Legislature. Two months
later Mrs. Rebecca Latimer Felton was appointed to the United States Senate to fill the
unexpired term of Thomas E. Watson, deceased. Both the election of Miss Kempton
and the appointment of Mrs. Felton represented firsts for their sex.3
Governor Wellborn’s thoughts on the economic situation at the beginning of
1922 were expressed to the press as the year started:
“The business outlook for the coming year is a great deal brighter than it
was at this time last year. In my opinion, we have passed through the severest part of a


depression, which has been not only section-wide or nation-wide, but which has
profoundly affected the entire world.
“Business concerns generally have had opportunity to adjust themselves to
changed conditions, as manifested chiefly in a lower level of prices. The textile industry,
whose condition touches this district more vitally, in all probability, than that of any other
industry, shows a considerable improvement. There are many mills now running on full
time, whereas, a year ago most of these mills were shut down entirely and still others
were being operated on a half time basis.
“The farming outlook, so far as the production of cotton is concerned, is in a
very uncertain state, on account of the depredation of the boll weevil and the probable
extension of that insects activities over a larger area during the next twelve months. It
has, however, been demonstrated on many occasions that we receive about as many
dollars for a small crop as for a larger one. Consequently, decreased production does
not necessarily mean a financial loss for the farmer.
“The credit situation in this district is far sounder than it was last December.
Commercial and industrial concerns will have little difficulty in securing funds at a
reasonable rate of interest with which to finance their operations.
“The banking business, generally speaking, is on a sound basis throughout
this District; and many banks which have been compelled to rediscount with the Federal
Reserve Bank, in order to take care of their local situations, have entirely wiped out their
indebtedness to us, and are now in a sufficiently strong position to meet in a satisfactory
manner the requirements of their customers for the coming year.”4
Though the economic situation did indeed look better in early 1922,
repercussions of the cotton panic of 1920-1921 were still being felt. Governor
Wellborn’s work in helping to halt the panic was acclaimed by the banking fraternity.
The public, however, began to hear rumors that the Federal Reserve, by. curtailing


credits for luxury buying, had brought on the crisis.5
Governor Wellborn rose to the defense of the Federal Reserve System,
and, in Washington, Senator Carter Glass was preparing one of the great speeches of
his career in behalf of the financial system which he helped create. Yet the muttering
continued and an investigation was demanded.6
Defending the operation of the Reserve System Glass cited salaries and
other expenses in comparison with expenses of private banks:
“The governor of the Federal Reserve Bank of Atlanta gets $18,000,” he
said. The president of one member bank at Atlanta gets $20,000; another $17,500. The
vice-president of one bank there gets $18,000. The salary account of the Atlanta
Federal Reserve Bank averages very much less than the salary account of the
individual member banks.”7
In answering another charge, the Seantor went on to say:
“…The Federal Reserve Board, it is charged, loaned its own members
$18,000,000, which vast sum it is suggested they used to gamble in cotton after
deliberately using their official powers to depress the price for their own profit. Perhaps
there are cotton pickers on plantations of the South who may be deceived by such
trumpery, but surely there is no member of the Senate who does not understand how
absolutely preposterous these accusations are.
“No Federal Reserve Bank in the system can loan any individual or
corporation in the United States a penny... These banks are banks of banks and do
business only with banks... “8
The Congressional Committee appointed to study the handling of
agricultural credits by the Federal Reserve Banks was composed of three Representatives and two Senators, with Senator E. D. Smith of South Carolina as the
Chairman. The Atlanta hearings were held January 26-27, 1922 in the Senate Chamber


of the State Capitol. Governor Wellborn was called to appear and was asked many
questions about his policy during the panic, all of which he readily answered. The
following account is by Robert E. Harvey,9 of Atlanta, who was present at the hearing:
“The Governor had finished his statement to the Committee, and, after a
great many questions had been asked him by the members, he was excused. Senator
Smith left his seat, followed the Governor into the outside corridor of the Senate
Chamber, and said: ‘Governor Wellborn, I have listened with great interest to your
testimony on the subject of Farm Credits; and, although I have never met you before, I
have known you for a long time through your public utterances, and have wished -for
this opportunity to meet you personally, and state to you, face to face, that in all of these
trying times the country has been through, a clear note of sound common sense has
rung through it all from the Governor of the Federal Reserve Bank of Atlanta. You have
handled the agricultural situation with a sympathetic and understanding policy, and your
direction of the Federal Reserve Bank of the Sixth District has been frequently
discussed in Washington in the most favorable manner. If the other banks in the System
had pursued your policies, there would have been no occasion for these hearings...”10
The official family of the parent bank and branches, elected in
December, 1921 to serve during 1922, was composed as follows:”
M. B. Wellborn,


L. C. Adelson,

Deputy Governor

J. L. Campbell,

Deputy Governor

M. W. Bell,


J. M. Slattery,
Creed Taylor,
W. R. Patterson,

General Auditor
Assistant Cashier


W. B. Roper,

Assistant Cashier

R. A. Sims,

Assistant Cashier

J. B. Tutwiler,

Assistant Cashier

Savannah Agency
R. N. Groover,
D. E. Avery,

Acting Manager
Acting Assistant Manager

A. E. Walker,


W. C. Sterrett,


C. R. DeSaussure,


W. S. McLarin, Jr.,


J. B. McNamara,


J. B. Fort, Jr.,


New Orleans
Marcus Walker,


W. H. Black,
James A. Walker,

Assistant Manager

F. C. Vasterling,

Assistant Cashier

M. F. Harlan,

Assistant Cashier

Joseph A. McCord continued as Chairman and Federal Reserve Agent and


Hollins N. Randolph as General Counsel.
Not many changes occurred during the year. Julian B. Tutwiler, Assistant
Cashier, in charge of the discount and credit departments of the parent bank, resigned
in September to accept the vice-presidency of the Miami National Bank, Miami, Florida.
W. B. Roper, Assistant Cashier, was assigned the immediate supervision of Mr.
Tutwiler’s two departments, in addition to the accounting department, already under his
C. R. Tidwell, Assistant Federal Reserve Agent in charge of the department
of bank examinations, resigned effective December 31 to become vice-president of the
Bank of Orange and Trust Company, Orlando, Florida. W. S. Johns, Assistant Federal
Reserve Agent and Auditor of the New Orleans Branch, was transferred to Atlanta to
succeed Mr. Tidwell. At the same time, Lawson Brown, Assistant Auditor, Atlanta, was
appointed to Mr. John’s position in New Orleans and P. J. Prosser, Jr., was elected
Assistant Cashier of that branch.13
Edward W. Lane was re-elected as a member of the Federal Advisory
Council for the year.14 In April it was voted to employ Counsel for the New Orleans
Branch and in May Ralph J. Schwartz, of the firm of Morris and Schwartz was
The feasibility of creating the post of Assistant General Counsel of the Atlanta bank and
the election of R. S. Parker thereto was discussed in November and December but the
matter was postponed to 1923.16
In all probability no individual had a greater influence upon the operations
and policies of the Federal Reserve System during its formative and early years than
did William P. C. Harding, the Alabama banker who became an original member of the
Federal Reserve Board in Washington and its governor in 1916. He frequently attended
Directors meetings of the Alabama bank. His last, as a member of the Washington


Board, was on May 12, 1922, which meeting was held in Birmingham. On this occasion
he was given the privilege of the floor. His remarks, as recorded in the Minutes, follow:
“He stated he had always taken not only an official, but a great personal
interest in the affairs of the Federal Reserve Bank of Atlanta. He spoke of the
possibilities of the Sixth District and paid high tribute to the directors and officers of the
Federal Reserve Bank of Atlanta, stating that they had not only shown ability to make
large loans, but further ability to get their money back. He stated that we had a smaller
percentage of outstanding loans than any other of the Federal Reserve Banks in the
agricultural section, and that in the matter of ‘lame duck’ banks in our District, the bank
was in better shape than in any agricultural district and further that in two Federal
Reserve Districts, over 80% of their loans were to over extended banks.
“He also spoke of the demands of member banks that they be paid interest
on their reserves, but that this was ill-advised as it might put the Federal Reserve Banks
in competition with Member Banks. He stated, however, that he understood
Congressman Appleby of New Jersey had prepared a bill looking to a further return to
member banks than that now provided by law. He was of the-opinion that there would
always be lean years in the Federal Reserve System, and good years, and that there
was no cause for undue alarm when earnings were not large. And that while banks
might temporarily have too many employees that there should not be any necessity for
large reductions of force, but that clerks resigning or dismissed should not be replaced
until the necessity demanded.”17
Mr. Harding resigned from the Federal Reserve Board on August 9, 192218
upon which occasion he sent the following telegram to Chairman McCord:
“McCord, Atlanta
My official connection with the Board terminates tonight. I shall always look


back with pride and pleasure upon my association with the System. Greatly appreciate
the cordial cooperation I have always received from your officers and directors. Warm
regards to all connected with your bank and best wishes for future welfare of the
system, the bank and its personnel. President has redesignated Mr. Edmund Platt as
Vice-Governor. As such he will act as Governor until a Governor is designated.”19
Chairman McCord, on behalf of the officers and directors of the Atlanta
bank replied appropriately to Governor Harding’s message.20
Among problems of the year was that of accommodation to country banks,
touched upon by Mr. Harding in his references above to “lame duck” banks. In reporting
to the Board in February, Governor Wellborn addressed himself to the same problem:
“I fully realize and appreciate the troubles of a great many of our country
member banks, particularly those banks located in small towns which are supported
mainly by agriculture. They are unable to take up their paper with us, and we find it
necessary to continue to rediscount for them, not because they are making many loans
at the present time, but because their deposits have materially declined without any
consistent liquidation in the matter of their loans.
“The whole organization of our government, from the President down, is
taking a lively and sympathetic interest in the welfare of the farmer, both in the South
and in the West. There is not only a disposition to assist them with the financial
machinery at hand, but there is a desire on the part of the President, the Federal
Reserve Board, and Congress to afford the farmers, through the Federal Reserve
Banks, every reasonable credit facility. The Executive Committee of our bank is fully
cognizant of the situation, and we are doing all in our power to help matters in this
district. We are extending credit very freely to the farmers and it seems to me that if we
have erred at all, it has been rather on the side of liberality than of restriction.”21
Another current problem of 1922 was focused upon by Governor Wellborn


in a report to the Board of Directors in May:
“We are still confronted with a serious situation in handling a number of
member banks which are already over extended, but which from time to time, are
pressing us for additional accommodations. Their credit on the outside is evidently
impaired, and they are necessarily depending upon our Bank entirely for their support.
We scrutinize very carefully every paper offered by these banks and conduct an active
correspondence with them. Also, we frequently have officers of these institutions come
to confer with us regarding their situation; and we discuss in detail with these officers
the lines of indebtedness which are due them, Of course we are averse to extending
these banks additional accommodation, for we are well aware that in some cases their
capital have been impaired, and that they have sustained other probable losses which
have not yet been ascertained. It is a difficult situation, both for the banks and for
ourselves, but we are doing our very best to tide them over;. and unless we grant the
additional accommodation requested by them, they would be unable to maintain any
reserve with us, and, in some cases,. failure might be brought about.”22
A difficult situation indeed. Of the banks described by Governor Wellborn,
most were in small and medium sized towns. Five were in Alabama, one in Florida,
sixteen in Georgia, and two each in Louisiana and Tennessee.23
It was probably inevitable that financial institutions of lesser magnitude
should attempt to capitalize on the Federal Reserve name and connotation of strength.
The first such instance to engage the attention of the Atlanta bank was “The Federal
Reserve Loan Company,” of Gainesville, Florida. Chairman McCord, after considerable
correspondence with this firm, secured just a modification to “Florida Reserve Loan
Company” and finally to “Florida Loan Company.”24
On the building construction front 1922 was a busy year for the Sixth District
Federal Reserve Bank - in Atlanta, New Orleans, Nashville and Jacksonville new


buildings or additions to buildings were the order of the day. Only in Birmingham, where
leased quarters in the Jefferson County Bank Building were well suited to needs of the
branch, was earth unturned.
It was expected that the addition to the Atlanta building, began during 1921.
on the site of the former Austell home would be completed by the end of 1922. However
delays in receiving shipments of materials due to railroad strikes, with a resultant
reduction in the work force of the contractor slowed progress considerably. A January
1923 target date for cornpletion was predicted.25
In New Orleans a contract was let on April 22 to George J. Glover in the
amount of $706,393.00 for the erection of a four story and basement building at the
corner of Carondelet and Common Streets. Completion was contemplated in 365 days,
with a penalty for delay and a premium for completion earlier, both on a per diem
A banking home for the Nashville Branch was completed on Third Avenue,
North, in December 1922. A three-story structure with basement, it had an imposing
front and was well suited to the requirements of the business. The branch moved to the
new building on December 21 from its old quarters in the Fourth and First National Bank
Building, which it had occupied since opening. Total investment in the new building was
In December 1.922 a contract was let for the erection of a two-story banking
house suited to the requirements of the Jacksonville Branch. Estimated cost to
complete the building, located at Hogan and Church Streets, was $191,690.08.28
Extra embellishment for the Atlanta bank, both Directors Room and new
building, were provided for during 1922. In April the directors voted to invite Governor
Wellborn and Chairman McCord to have suitable portraits of themselves prepared for
placement in the Directors’ Room.29 In October Governor Wellborn suggested to the


Board that some mural decoration might be in order for the new building. He observed
that a painting of the signing of the Federal Reserve Act, showing those in attendance,
including former Director E. T. Brown, would be an appropriate subject. Chairman
McCord, in somewhat more epic vein, suggested a depiction of the agricultural and
industrial activities of the Sixth District.30
After considerable discussion of the latter project Atlanta Artist Wilbur G.
Kurtz was commissioned to execute a painting eight feet long and five and a half feet
wide for a fee of $2,500. Its title: “President Wilson signing the Federal Reserve Act in
December, 1913.”31
Matters concerning personnel came up for consideration during 1922 as they
had in preceding years. In January a general salary policy was nailed down. It provided
that all salary matters whatsoever, including employments, transfers, resignations and
dismissals both for the parent bank and branches, should be handled by the Managing
Committee and brought to the attention of the Special Salary Committee, each month,
for review and final action and to be reported monthly to the Board of Directors. The
policy provided further that salary increases should be held in check so as not to be out
of line with similar salaries paid by financial institutions in Atlanta and other parts of the
District, keeping in mind that a just salary should be paid for work performed.
Conservatism was to be the order of the day in fixing salaries.33
Conservatism, however, did not preclude recognition of merit. The
Jacksonville Branch had been a perennial problem, management-wise. In 1.921W. S.
McLarin, Jr. was sent from the parent bank on a trial basis to be Cashier at Jacksonville
at a salary of $2,400 per year. His salary was increased to $3,000 on January 1, 1922.
At the September Board meeting, following, Governor Wellborn, in commenting on
McLarin, said: “I am glad to say he has made a success, and I feel that his salary


should now be increased commensurate with the duties and importance of his position.
I therefore recommend that his salary be fixed at $3,600 dating from July 1, 1922.”34 It
was. W. S. McLarin, Jr. was to go far with the bank.
A Christmas bonus was paid in 1922, though, like salary matters, it was
marked by conservatism. At the December 8 meeting of the Board, upon the
recommendation of Governor Wellborn, Directly Ottley offered a motion that the Bank,
as a Christmas remembrance, give to each employee receiving a salary of $1,000 or
less per annum, the sum of $10.00, and the sum of $5.00 be, given to all. employees
receiving a salary of over $1,000, not exceeding $4,000. This gift to apply only to
employees and not including officers. Directors Simon and Kettig were in favor of giving
all employees $10.00 but the motion as put by Director Ottley prevailed.35
Throughout the year much discussion was had as to the feasibility, and
particularly the desirability, of setting up a “Member Banks Relations Department.” In
January a committee composed of Directors Newton, McCrary, Ottley, and Kettig was
appointed to make a report on the subject. In December it was finally decided that such
a department should be created, though the details of its organization were deferred
until the following year.36 At the same meeting it was voted to authorize the Branch
banks to join the Chambers of Commerce in their respective cities.37
The unsettled business climate which prevailed during the immediate post
war period had largely given way to a more stable economy during 1922. Conditions
generally were described by Chairman McCord in his Annual Report for the year. He
“Business conditions during 1922 have shown a steady improvement and
although foreign trade has been at a low ebb, the close of the year found the Sixth
Federal Reserve District in a more stabilized and in many respects, in a more
satisfactory position than at any time since the outbreak of the World War. The


uneasiness on the part of the public, which commenced in 1920 and continued for the
most part through 1921, has given way to a more settled and confident feeling and
except for the railroad and a few unimportant strikes in the District, there have been few
disturbing influences.
“The reserve city banks and those in financial centers have shown a healthy
improvement, and a general improvement has been made by the banks located in
agricultural sections, although it has not been so marked as in the larger city banks.
“There has been a reaction in the downward trend of prices, and the returns
for agricultural products have been much more satisfactory than for the preceding year.
The advanced price of cotton, with a larger yield than last year (although much below
the ten year average) has aided the farmers materially, except in restricted areas where
the boll weevil has practically destroyed the crop for three successive years.
“In most lines of the wholesale trade there has been a steady upward trend,
and the increase is also apparent in comparing the same months’ business with that of
the preceding year. Reports indicate that the retail trade generally is buying for
immediate needs, and is not inclined to increase stocks. The reports of department
stores do not show the same ratio of increase in sales as is shown by the several lines
of wholesale trade. This, however, can be attributed to some extent to the late fall and
winter, which if anything was milder than last year.
“The industrial plants, especially textile, iron and steel, have’ been more
active than for many months past, and production has shown a steady increase.
“To sum up the situation, it is believed that with conditions at home and
abroad still unsettled, recovery in the Sixth Federal Reserve District during 1922 has
been on the whole satisfactory, if not remarkable.”38
A more stabilized economy brought with it less activity for the Federal
Reserve Bank and reduced earnings. Indeed, 1922 was what Governor Wellborn


referred to as a “lean year.”
Gross earnings for the year were $2,352,736 which represented only 31.7%
of the $7,406,652 earned in 1921. The decrease was a reflection of the rapid decline in
earning assets during the early months of the year to the low and fairly even level which
prevailed for the remaining months. Expenses for the year were $1,293,053, a reduction
of $287,532 from 1921. The principal items showing a decrease were officers’ and
clerks’ salaries, printing and stationery, cost of Federal Reserve Currency, and tax on
Federal Reserve Bank note circulation. Net earnings far 1922 came to $1,059,683, a
decrease of 82% from 1921’s $5,826,069.39
At year’s end membership stood at 543, an increase of 28 during the year.
Of the new member banks, ten were National and 18 were State banks.40
On the lighter side the Bank’s magazine, The 6-F Journal, under the heading
“Personals,” offered the following comment relative to certain officers and employees:
“Whoever Heard Of:
Governor Wellborn pulling down the shades in the lunch-room?
Mr. McCord smiling at anybody?
Mr. Adelson smoking a black pipe?
Mr. Campbell War Financeing anything?
Mr. Bell saying ‘Doggoneit?
Mr. Slattery pulling down his vest?
Mr. Roper opening a window to ‘let in a little fresh air?’
Mr. Patterson signing anything?
Mr. Sims kidding the giils?
Mr. Albertson saying ‘Ah-h-h?
Mr. Taylor laughing very loudly at anything?
Mr. Tutwiier playing the ‘Song of India’ on the Victrola during lunch?
The Registered Mail Shipping Department being able to find Shep


when they wanted him?
Mr. Camp getting enough heat up to the Auditing Department?
John Bach not being too busy to wait on you, when you needed
Mr. Johns carrying the baby around - just for the exercise?
The Editorial Staff getting the Magazine Out on time?”41




Keller, Dictionary of Dates, II, 329, 331-332.


Garrett, Atlanta and Environs, II, 495; Minutes. Directors, II, 561.


Garrett, Atlanta and Environs, II, 789-792.


Minutes, Directors, II, 465.


Hopkins, M. B. Wellborn, 103.




Quoted, lbid, 105.


Quoted, Ibid, 107.


At the time Mr. Harvey was Secretary Agricultural Loan Agency of the War
Finance Corporation, in Atlanta.


Quoted, Hopkins, M. B. Wellborn, 107-108.


Minutes, Directors, II, 459.


Annual Report, 1922, p. 27.


Ibid., 27-28.


Minutes. Directors, 11,484.


Ibid 500, 506.


Ibid., 569, 585.


Ibid 511-512. The Bank had a relatively lean year in 1922.


He became Governor of the Federal Reserve Bank of Boston on January 1
1923 and died April 7, 1930.


Minutes, Directors, II, 539-540.


Ibid., 540.


Ibid., 480-481.


Ibid., 507.




Ibid 511, 528, 541.



Ibid., 565; Annual Report, 1922, p.28.


Minutes, Directors, II, 509-510; Annual Report, 1922, pp. 28-29.


Annual Report, 1922, p.


Ibid., 29


Minutes, Directors, II, 501


Ibid., 560


Ibid., 560, 567, 581


Ibid., 467


Ibid., 479-480


Ibid., 547


Ibid., 584


Ibid., 462, 464, 582


Ibid., 584


Annual Report, 1922, pp.


Ibid., 14


Ibid., 24


The 6-F Journal, March, 1922, p


The world became smaller in 1923. In mid-January the first transatlantic
radio message was transmitted between New York and London. In March a world
aeroplane speed record was set at 236.5 miles per hour. A few months later this was
upped to 266.6 simultaneously. Robert A. Millican was awarded the Nobel prize for
physics as the man who first isolated and measured the electron.1
An exodus of Negroes from the South to Northern cities was also taking
place. From Georgia alone 32,000 departed, representing 13% of its farm labor.2
On March 4 Congress enacted the Agricultural Credits Act which
authourized the creation of 12 Intermediate Credit Banks, each with a capital of
$5,000,000, subscribed by the Government, and authorized to make loans, not only on
land, but on farmers crops, live stock, personal notes and equipment.3
Headline of the year was, of course, the unexpected death of President
Warren C. Harding in San Francisco. after an illness of a week. The day following,
August 3, Vice President Calvin Coolidge took the oath of office as President, at
Plymouth, Vermont.4
During its August meeting, on the 10th, the Board of Directors of the Federal
Reserve Bank of Atlanta took note. Chairman McGord called attention to the great loss
the country had sustained and stated that -the day had been proclaimed one of sorrow
and mourning. Director McCrary moved that a recess of one hour be taken in memory
of the departed President, which motion was seconded by Director Simon and
unanimously carried.5
As the year was closing in December, President Coolidge delivered his first
annual message. He declared- in favor of adherence to Permanent Court, the tax
reduction plan of Treasury Secretary Andrew Mellon, coal control, and prohibition


endorsement. He opposed a soldier bonus and cancellation of Allied war debts.6
Eleven months before, Governor Wellborn, in his January report
to the Board, summing up the economic situation as the year began, wrote:
“On the whole it may be said that there is growing confidence on the part of
the business public. That conditions are being righted, although in some lines slowly;
and the attitude of business men generally at the present time, lacks the element of
doubt and uncertainty which was so widely prevalent at this time a year ago. Some
apprehension is felt, of course, over unsettled conditions in Europe, particularly over the
Allied disagreement on the reparations question and the French invasion of German
towns to enforce their demands. But it is hoped that the conservative policy advocated
by Premier Bonar Law of Great Britain and Secretary Hughes of the United States will,
in the end, prevail. An amicable settlement of the reparations question would
undoubtedly be reflected in a quickening of foreign trade and a consequent
improvement in business conditions in this country.7
The official family of the Bank remained much the same during 1923 as in
1922. Though, inevitably, some changes took place.
The firm of Randolph and Parker, composed of H. N. Randolph and R. S.
Parker, was named General Counsel succeeding H. N. Randolph, individually.
Compensation was increased from $2,500 to $3,500 per annum.8 Mr. Parker was
destined to play an increasingly important role in the affairs of the Bank as the years
went by. J. B. Tutwiler was elected Assistant Cashier in December. He was placed in
charge of the Failed Bank Division and special visitation to member banks in an
extended condition.9 Captain W. H. Hartford, an original director of the Bank was forced
to miss his first meeting on November 9, 1923. Illness prevented his attendance.10
Aside from some changes made as the result of the establishment of an
agency in Cuba, which will be noted later, the branches came in for few official changes.


In January Bion H. Barnett resigned as a Jacksonville Branch Director and
was succeeded by Courts P. Kendall, Vice President of the Barnett National Bank. H. B.
Lightcap had resigned as a New Orleans director as of the first of the year. On January
12 the following Branch Directors were named:
New Orleans, P. H. Saunders, A. P. Bush and F. W. Foote; Jacksonville,
John C. Cooper and Fulton Saussy; Birmingham, W. H. Kettig and Oscar Wells;
Nashville, W. H. Hartford and Paul M. Davis.11
M. F. Harlan was elected Assistant Cashier at New Orleans in January, and
P. J. Prosser resigned as Assistant Cashier at the same branch in June.12
A number of policy matters concerning personnel were considered and acted
upon during 1923. In March a letter from the newly organized Atlanta Junior Chamber of
Commerce, soliciting ten members from the Bank was replied to in the negative, the
“officers of the Bank being not in favor of the expenditure.”13 In June, upon
recommendation of Governor Wellborn, the maximum amount of coverage under the
Bank’s group insurance policy was increased from $3,000 to $5,000.14
A plan for uniform vacations was adopted in November which provided one
month for senior officers - Governor, Deputy Governor and Cashier of parent bank - and
three weeks for all other officers. For employees the plan provided “one day (exclusive
of Sundays) for each month in the employ of the bank preceding the period designated
for vacations; except that no vacation will be allowed until six months’ service has been
completed. Vacation periods not to be cumulative for more than twelve days (exclusive
of Sundays) and not to be granted prior to April 1 nor later than September 15, without
special authority from the Managing Committee.”15
During the same month the Board took up for consideration a recommendation of the Governor regarding an appropriation for educational purposes in
connection with the American Instiatute of Banking. It was voted that employees of the


Bank be allowed to enroll for courses in the local chapter of the A.I.B., at Bank expense
provided that they attended regularly. Otherwise they would be required to refund the
amount paid for them.16
Officers and employees who may have looked forward to the usual extra
year-end compensation in 1923 were disappointed. On November 28 the following letter
was received from the Federal Reserve Board in Washington:
“By direction of the Federal Reserve Board, I have to advise you of the
following resolution adopted by the Board, and to request that you bring this letter to the
attention of your directors and officers of your bank:
“BE IT RESOLVED, That all Federal Reserve Banks be notified that no
bonus or extra compensation payments of any character will be approved by the
Federal Reserve Board, and that the Federal Reserve Board is of the opinion that the
proper method of compensating its own employees and the employees of the Federal
Reserve Banks is by payment to them at regular intervals - weekly, semi-monthly, or
monthly - of the full amount earned by them on the basis of their fixed annual
Yours very truly,

Walter L. Eddy, Secretary.”17

The feasibility of an agency of the Federal Reserve Bank in Havana, Cuba,
had been carefully considered for some time. In 1923 such an agency became a reality.
Historically, banking in Cuba had been faced with many problems since the
days of Spanish rule. Shortly before Cuba gained its independence in 1898, the Bank of
Spain, which had operated in Cuba for years, repudiated its issue of peseta notes. After
cuba gained its independence the Banco Nacional de Cuba was organized and issued
bank notes whièh were later also repudiated.18


As a result of this experience the people of Cuba were apprehensive and
had very little faith or confidence in financial institutions. After branches of American
banks were established and United States currency was made legal tender, an
appreciable degree of confidence was restored. But again in 1920 and 1921 a
disastrous depression hit Cuba resulting in the temporary closing of all and the
permanent closing of some banks. This situation destroyed almost completely the
confidence in banks which had been restored.19
At the time the agencies of the Federal Reserve Banks were established,
confidence in banks in Cuba was still at low ebb. It was felt, however, by the Cuban
government and Havana banks that announcement of establishment of the Havana
agencies with adequate cash reserves to enable the banks to meet emergencies would
have a salutary effect on public opinion toward banks. This assumption proved to be
The first Board action in connection with an agency in Havana took place on
June 16, 1921. At that meeting Chairman McCord spoke of the advantages of an
agency at Havana. Whereupon the Board voted to adopt the following resolution
introduced by Director McCrary:
“RESOLVED, That the Governor and Federal Reserve Agent are appointed
a Committee to investigate the feasibility and desirability of the establishment of an
Agency of this Bank at Havana, Cuba; said Committee to take up the matter with the
Federal Reserve Board and make a report at the next meeting.”21
From that point on investigations and studies were made in connection with
the issue though the Board Minutes for 1922 indicate little action. In early 1923
Chairman McCord and Governor Wellborn made a trip to Washington in connection with
the proposed agency. Then, at the Board meeting of May 8, 1923, Governor Wellborn
let loose a bombshell when he reported:


“Under date of April 25, I received a letter from Acting Governor Platt of the
Federal Reserve Board, advising that the Federal Reserve Bank of Boston had made
application for permission to establish an agency in Cuba, and inviting participation of
the New York, Philadelphia, and Atlanta Reserve Banks in the hearing scheduled to
take place Monday, April 30. Chairman McCord and I attended this conference, and
endeavored to place before the Board the attitude of the Atlanta Bank. We called
attention to the resolution adopted by your Board in August, 1921, suggesting that,
should such an agency be contemplated, the Board give due consideration to the claims
and interests of the Atlanta Bank, whose facilities for handling Cuban business were, for
geogtaphical reasons, superior to those of any other Reserve Bank. We also drew the
attention of the Board to the fact that in 1920, this bank began furnishing, through the
Jacksonville Branch, its notes in Cuba, and that the amount of our notes now in
circulation there approximate forty million dollars.22
At the same meeting Governor Wellborn elaborated:
“Another hearing was called for May 7, at which Deputy Governor Adelson
and Director Ottley were present. Also, at our suggestion, several of our leading
member bankers attended and urged the claims of the Sixth Federal Reserve District to
the proposed agency. Mr. Mills B. Lane, President of the Citizens and Southern Bank,
Savannah; Mr. J. S. Reese, President of the Citizens and Peoples National Bank,
Pensacola, Florida; Charles A. Faircloth, President of the National City Bank, Tampa,
Florida; C. M. Kendall, Vice President of the Barnett National Bank of Jacksonville,
Florida; J. T. Howell, Vice President of the American National Bank at Nashville,
Tennessee; and C. M. Trarmmell, Comptroller of the same institution, were present with
our delegation. President Mitchell of the National City Bank of New York attended and
took a position favorable to our Bank. No definite decision was reached.23
At the conclusion of Governor Wellborn’s remarks the Board discussed the


proposed Havana Agency thoroughly, all members expressing themselves strongly to
the effect that such an agency should by rights be under the supervision of the Federal
Reserve Bank of Atlanta. A forceful and detailed resolution, introduced by Director
Simon and seconded by Director McCrary, was adopted and forwarded to the Federal
Reserve Board in Washington.24
The resolution set forth four principal reasons why the Atlanta Bank should
be given the agency. Briefly, they were: (a) Geographically nearer. Jacksonville 602
miles from Havana vs. 1,875 from Boston, thus saving two days in the handling of
currency. (b) Congress by special act, recently authorized the Atlanta bank to build a
$400,000 building for its Jacksonville Branch in order that adequate facilities might be
close at hand to work with a Cuban agency. Otherwise a $250,000 building, as originally
planned, would have been adequate. (c) That from any logical standpoint an agency in
Cuba ought to be established by and through the Federal Reserve Bank of Atlanta’
rather than by and through any other of the Federal Reserve Banks. (d) That the
organization committee in establishing boundaries for Federal Reserve Bank territories
must have taken into account the proximity of Atlanta to Cuba and that to deny the
‘Atlanta Bank the right to the Cuban agency would upset normal territorial boundaries
and inject an undesirable element of competition into the Federal Reserve System.25
Meanwhile the press jumped into the fray. Wrote Linton C. Hopkins in his
Biography of M. B. Wellborn:27
“Newspaper accounts of the contest, which came to a head in the spring of
1923, made it look like a minor Civil War between the southeast and the New England
states. The Atlanta bank at that time was already furnishing Cuba with its currency $40,000,000 worth - and its application to establish an agency in Havana had been
before the Federal Reserve Board for two years. When the Boston bank stepped into
the picture by applying for the agency, loyal southern newspapers, clearing houses and


other financial and civic agencies jumped to the aid of the Atlanta bank and asserted
that the north was trying to steal the south’s thunder. The Atlanta Constitution
developed the theme that ‘certain astute financiers in New York are using Boston as a
catspaw to prevent the Atlanta district from obtaining the consideration to which it is
properly entitled.’ Jealousy of the south’s growing financial importance was seen as the
motive: ‘The growing commercial and industrial importance of Georgia and other states
in that Federal Reserve region is such as to cause eastern magnates to fear for their
future unquestioned supremacy.
“At the hearings before the Federal Reserve Board said the Constitution’s
Washington correspondent, ‘Governor Harding26 tried to make it appear that Havana
was financially nearer to Boston than to Atlanta.’
“Governor Crissinger, the Ohio man who had been appointed to Governor
Harding’s post on the Federal Reserve Board, opposed his predecessor in the Cuban
contest. A ‘compromise’ that looked like a victory for Boston was finally reached, for a
Constitution dispatch dated June 27 announced:
‘The Federal Reserve Board late today granted the application of the Boston
Federal Reserve Bank to establish an agency in Cuba. At the same time the Board
allowed the Atlanta Reserve Bank the same privileges in order to compromise
differences which had arisen as a result of protests from the Atlanta bank against the
Boston application.
The Constitution was right. On June 27, 1923 the Federal Reserve Board
adopted a resolution authorizing each bank to establish an agency in Cuba and to
perform the following primary functions:
1. To buy from, or sell to, the Republic of Cuba or any bank institution doing
business in Havana, Cuba, cable transfers of funds to or from any banking institution
located in any city in the United States where there is located a Federal Reserve Bank


or Branch of a Federal Reserve Bank, charging therefor a commission at the rate of
$1.00 per $1,000;
2. To pay out Federal Reserve notes or other currency of the United States
in such denominations as may be demanded in payment of cable transfers of funds to
Havana, the kinds of currency paid out to be discretionary with the Agency;
3. To accept any and all kinds and denominations of United States currency,
including Federal Reserve notes, in payment for cable transfers of funds to the United
While the two agencies were in operation, number 1 above was applicable
exclusively to the Boston Agency and numbers 2 and 3 to the Atlanta Agency.28
Although the agencies were authorized to deal with any banking institution
doing business in Havana, transactions were actually confined almost exclusively to the
nine clearing house banks which at the opening of business on September 1, 1923,
were as follows:
The National City Bank of New York
The Chase National Bank of New York
The First National Bank of Boston
The Royal Bank of Canada
The Canadian Bank of Commerce
The Bank of Nova Scotia
Banco del Comercio
Banco Commercial de Cuba
N. Gelats and Company
The National City Bank of New York and the Royal Bank of Canada each
had around 30 branches located in Havana and points throughout the island. The other


Canadian and American banks each had several branches located within the city limits
of Havana. Currency payments and receipts in connection with cable transfers of funds
were handled directly with the head office only of the banks having branches. Currency
deliveries and receipts for the branch banks were carried Out by the head office of the
bank in Havana. The Agency had no direct dealings with any of the branches of the
Havana banks.29
Prior to the opening of the agencies the Havana banks had maintained in
their vaults unusually heavy cash reserves to be in position to meet emergencies. The
establishment of the Federal Reserve Agencies greatly facilitated the transfer of funds
to and from Havana, and as a result, during the first few weeks of operation the Havana
banks materially reduced their cash reserves by transfer of large sums to the United
For years there had been no means of disposing of unfit or mutilated
currency except by shipment to the United States. Therefore, because of the expense
involved the banks had refrained from making frequent shipments, and as a result the
United States currency in circulation in Cuba was very dirty and in extremely unfit
condition. Consequently, during the early months of operation of the Havana Agency
currency received in payment of transfers was practically 100% unfit and mutilated.
Many counterfeit notes had circulated in Cuba for years without being noticed, but after
about a year of operation of the Agency a large number of the counterfeits were
detected by the Agency personnel and removed from circulation. Since all payments to
banks were made with new or fit Federal Reserve notes and practically all receipts from
banks were in unfit or mutilated currency, the improvement of circulated notes was soon
very noticeable. The improvement in the notes of circulation was not only beneficial to
the banks but to the public at large and was the subject of many favorable comments.31
The Havana Agency of the Federal Reserve Bank of Atlanta was originally


housed in the National City Bank of New York Building on Cuba Street. The location
was considered ideal as it was within four blocks of all the Havanna banks and directly
across the street from the Cuban Treasury Building. Working quarters for the Agency
were provided on the second floor and vault space on the ground floor in the main vault
of the National City Bank. The Agency operated at this location until May, 1925.32
When the Agency was authorized by the Federal Reserve Board, the Board
of Directors of the Atlanta Bank named Deputy Governor Louis C. Adelson and
Secretary Joseph M. Slattery of the Atlanta Bank, as Co-Managers of the Agency. Mr.
Slattery, as Manager, proceeded to Havana with L. L. Magruder of the Atlanta Money
Department and Misses Mittie LaHatte and Stella Hamrick, currency sorters from the
Atlanta Bank, to set up the initial operation. In December, 1923, H. C. Frazer, from the
Atlanta Money Department was sent to Havana to join the Agency staff as clerk.33
In his Annual Report for 1923 Chairman McCord, in commenting on the new
Havana Agency, wrote:
“On September 1, 1923 an agency was opened in Havana, Cuba, by authority
and under regulations and conditions of the Federal Reserve Board. The United States
government, by virtue of the Plott Amendment, has entered into relations with the
Cuban government which it does not have with any other country, especially in matters
of finance and currency. The currency of the United States having been made legal
tender in Cuba, the Federal Reserve Board deemed the establishment of an agency at
Havana desirable as means of stabilizing banking conditions and furnishing an
adequate supply of clean currency. Authority was therefore granted to the Federal
Reserve Bank of Atlanta and the Federal Reserve Bank of Boston for the establishment
of agencies in Havana, and the functions of these two agencies were prescribed by the
Federal Reserve Board, and do not in any way conflict with each other or perform the


same operations.”34
During the four months the Havana Agency was open for business in 1923,
receipts and shipments of currency amounted to $32,732,000.35
The Atlanta of 1923, with Lawyer Walter A. Sims in the Mayor’s chair at
Marietta and Forsyth Streets, echoed to the sound of saw, hammer, drill and steam
shovel. It was a year of unprecedented building operations. Much of this activity
centered around the Marietta and Spring Street intersection. The Spring Street viaduct,
a long-range effort to ease the problem of cross-town traffic, was completed in
December. The Glenn Building, the £01 Marietta Street Building and the Bona Allen
Building, all nearby were under way. Further to the north Morningside and Brookwood
Hills were being developed, while two blocks south of the Bank, Rich’s new department
store was taking shape at Broad and Alabama.36
Meanwhile, the building program of the Atlanta Bank, though behind
schedule, moved forward. In January 1923, Governor Wellborn reported:
“The new addition to our building is now completed to the extent that our
officers are enabled to occupy quarters therein. The old building is being remodeled to
conform to the plan of the new, which work will probably be completed within the next
two or three months.”37
In May, the following action was taken:
“Chairman McCrary, of the Building Committee having reported the Atlanta
building would be completely finished by the July meeting of the Board. Upon motion by
Director McCrary, it was voted that at the regular July meeting, a formal opening should
be had and that the members of the Federal Reserve Board, the Advisory Council, and
all Directors of the Branch Banks be invited to attend the opening and the meeting of
the Board.”38
During the course of the Board meeting on July 20, Director McCrary,


Chairman of the Building Committee, reported the completion of the building, with the
exception of some minor details, and the final settlement of accounts. In that connection
the Board voted to adopt the following resolution:
“WHEREAS, the Bank building of the Federal Reserve Bank of Atlanta was
built under the direct supervision of the Building Committee, composed of Mr. J. A.
MàCrary, Chairman, Mr. M. B. Wellborn, Governor, Mr. Joseph A McCord, Chairman of
the Board, and Messrs, J. K. Ottley and W. H. Kettig, Directors, and
WHEREAS, The said building has been completed and was yesterday
opened to the general public and to the visiting bankers, and
WHEREAS, The building and its equipment have been highly complimented
by the public and visiting bankers and members of the Federal Reserve Board, who
were present at the opening.
BE IT RESOLVED, by the Board of Directors of the Federal Reserve Bank of
Atlanta that the magnificent building was erected within the appropriation and at some
saving due largely to the efforts and deep interest taken by each and every member of
the Building Committee, and the Board of Directors does extend to the Building
Committee their heartfelt congratulations upon the completion of the building, and upon
the beautiful design and excellent workmanship.”39
In his Annual Report, on the same subject, Chairman McCord wrote:
“On July 19 the banking house of the Federal Reserve Bank of Atlanta was
opened with impressive ceremonies, on which occasion Messrs. E. B. Cunningham and
George R. James, members of the Federal Reserve Board, were present, and a
representative number of officers of member banks of the district. The original building
was completed in 1918, but increase in volume of business since that time made it
necessary to provide additional space, and accordingly, two additions have been made,
the last being completed just prior to the opening on July 19. The building is


commodious and of substantial design, and will adequately provide for the future growth
and development of the bank’s business. The book value of the building, including land,
at the close of the year was $1,444,757.16, after the charge off for depreciation, which
has been deducted yearly since the original building was completed.”40
Forty years were to elapse before the Atlanta Bank became the subject of
another major building program.
Space was provided in the new building for certain amenities and
conveniences not feasible in more limited quarters. The Chief National Bank Examiner
for the District was invited to occupy the building along with his staff41 and, after proper
application to Atlanta Postmaster E. K. Large, a contract Post Office was set up on the
premises. The latter, authorized on August 4, was a great time-saver in the handling of
both ordinary and registered mail. Indeed, it provided for direct handling of mail from
trains to the bank building.42
In June portraits of Governor Wellborn and of Chairman McCord were
completed, accepted and authorized to be hung in the Directors’ Room. The Wellborn
painting was done by Miss Kate Edwards,43 of Atlanta and the McCord portrait by
Charles F. Naegele, of Cobb County, both well-known and able artists. At its request,
the paintings were paid for by the Federal Reserve Bank Club, composed of employees
of the Bank.44
In September the Governor reported modest progress in connection with a
library. He wrote:
“We have begun to lay the foundation for a library in Our bank for the use of
employees and, up to date, we have spent $489.90. This we believe will be very
beneficial to our employees, inculcating in them the profitable habit of reading and
adding to their store of information. I cannot see the necessity of the bank maintaining
the extra expense of employing a librarian, for a person occupying this position would


have but very little to do each day. I would therefore recommend that the books be kept
in cases under lock and key, and we can designate either officers, chief clerks or
secretaries to have charge of the library, and to dispense the books upon receipt from
those who desire to take the books home to read and to specially look after our books
and keep them in proper shape.45
Atlanta was not the only site for Sixth District building activities during 1923.
The banking house of the New Orleans Branch was completed during the
summer and was formally opened on October 12, at which time the Board of Directors
of the parent bank held its regular monthly meeting in that city. Among others present
were George R. James, of the Federal Reserve Board and a number of officers of
member banks located in the New Orleans zone. The building was built under the
supervision of a Building Committee composed of R. S. Hecht, Chairman, Leon C.
Simon and Marcus Walker. It was designed in the office of New Orleans Architect
Rathborne DeBuys and was constructed by George J. Glover. It consisted of four
stories and basement; was of classic design thoroughly equipped and suited to the
needs of the branch and its future growth. Total cost was approximately
The Nashville Branch moved into its new building December 21, 1922, but
the building was not formally opened until May 11, 1923. The regular monthly meeting
of the Parent Bank Board was held in Nashville that month so that the members might
be present at the opening ceremonies. The building was built under the supervision of
Captain W. H. Hartford, of the Atlanta Board and Chairman of the Nashville Branch
Board. It was a three-story structure of imposing appearance, admirably adapted to the
requirements of the branch.47
Construction of a banking house for- Jacksonville was commenced in
December, 1922 and continued throughout 1923. Branches at Birmingham, Savannah


and Havana continued in leased quarters.48
Shortly before the new Atlanta building was completed, the matter of a fair
tax assessment came up. Reported Governor Wellborn on June 7:
“The City assessors of Atlanta fixed the assessment on our bank property,
that is, building, vaults and land, at one million dollars. I thought this too high, and,
together with General Counsel Randolph and Deputy Governor Adelson, had a
conference with the assessors on May 22. After considerable discussion and argument,
the assessment was reduced to $654,000.00. This amount, I believe, is a fair
assessment, in view of the fact that our building is not adapted to mercantile or general
office purposes; and, if placed on the market, would not bring an amount at all
commensurate with its cost of construction. It is, in short, designed solely to fulfill the
function of a Federal Reserve Bank.”49
Two matters concerning operating policy came up for special consideration
during 1923. They involved extended country member banks and non-cash collections.
On November 7, in a report to the Board on the first subject, Governor Wellborn wrote:
“One of the most important problems confronting us at the present time is
that of dealing with those of our country member banks which became seriously
extended during the depression of 1920-1921, and have spent the time since then in
trying to work out of their difficulties back into a normal state. As a rule, such institutions
have been borrowing heavily and continuously from us in order to meet their current
obligations and continue in business. From our point of view, it is difficult to refuse the
additional accommodation to a bank, even though it is already borrowing far in excess
of its capital and surplus, when we know that to do so means, in all probability, to force
that bank into the hands of a receiver.
“1 want particularly to call your attention to the fact that, in dealing with banks
that are in bad condition, a Federal Reserve Bank occupies a different position from a


commercial bank dealing with debtor institutions, in that the Reserve Banks are not
organized for the purpose of making profits. Their earnings up to 6 per cent go to their
member banks, and above that amount, to the Government. Therefore, we feel that we
are not called upon to press a weak bank too far and force collection as a commercial
bank would undoubtedly do. Any losses that we may sustain by assisting these banks
are fully provided for by our earnings without any detriment to the Federal Reserve
Bank. Our aid has been instrumental in saving many of these banks, which are now in
good healthy condition and serving their communities well. I believe that we all
recognize that the relations between a Federal Reserve Bank and a member are closer,
and that more mutual interests exist than between a city bank and its country
customers, in that a Federal Reserve Bank feels a heavier obligation to do all it.can for
a member, not alone to protect it, but in a broader sense, to look out for the welfare of
the community in which the bank is located.
“I am merely making these observations because some might be inclined to
think that judged by the standards of ordinary commercial banking, we have been a little
too liberal in extending credit in doubtful cases which may result in our sustaining
certain losses. If we had been running our bank on a purely commercial basis, I am sure
that our management would have cut off some of our member banks instead of going a
step further, and trying to preserve them so that they could be useful to their
communities. If it were not for the rights and privileges of member banks under the law,
we would feel inclined to discount for certain of them only in small amounts, and for
some others not at all. But we feel it our duty to care for them so long as hope for them
exists. In this matter, we have uniformly shown a sympathetic spirit, and I am sure that


the public in the communities where these banks are situated, appreciate our
helpfulness to their local banks.
“The policies, as outlined above, which the Federal Reserve Bank of Atlanta
has been pursuing from the beginning should have the effect of arousing in the public
mind a full realization that it is to their interest to discriminate between members and
nonmembers, and give preference to a bank that is a member of the Federal Reserve
System. 50
On the subject of noncash collections, the Governor, in a report to the Board
on December 7, wrote:
“Your Board has been on record for the past five or six years as being
opposed to our bank’s handling noncash collections. I believe that, in considering this
question, we should be careful to bear in mind that the Federal Reserve System should
be conducted as intended by its creators, and all unnecessary expenses eliminated. In
this connection, I may say that, at the recent conference of Governors and Federal
Reserve Agents with the Board at Washington, I took occasion to state my views on this
whole subject. These are substantially reiterated in what follows:
“There are several reasons why I consider the handling of noncash items for
collection through the Federal Reserve Banks undesirable. In the first place, such action
puts the Reserve Bank in direct competition with its member banks. Secondly, it
deprives member banks of a legitimate source of revenue, and it is a further
discrimination against them in that it affects particularly, member banks which are
located in Reserve cities and Federal Reserve Branch Bank cities. Thirdly, it involves a
heavy expense upon the Federal Reserve Banks to take care of such business. The


Committee of Efficiency and Economy of the Federal Reserve Board has submitted
figures showing that it now costs the Federal Reserve System annually over a miLI.ion
dollars to collect these noncash items; and the Committee
further estimates, taking into consideration the rate at which this business is growing,
that in a few years it will cost the Federal Reserve System in the neighborhood of eight
million dollars annually.
“It was never contemplated that a Federal Reserve Bank should enter into
relations with the general public, but should confine its activities to its member banks.
Our experience has been that the public is inclined to resent the handling of such items
by the Federal Reserve Banks, because we are compelled to require certified checks
before we deliver the drafts, and this is very annoying to those upon whom the drafts
are drawn. In short, I think it would be a very wise move to drop this practice as a
function of the Federal Reserve Banks.” 51
The Atlanta Board had previously placed itself on record as opposed to the
handling of noncash items and, following Governor Wellborn’s remarks, it voted again to
recommend the discontinuance of handling such items.52
As the year 1923 drew to a close, Governor Wellborn, in a report to the Board
in December, was quite optimistic. He wrote:
“The Bank’s operations, while making a slow start at the beginning of 1923,
picked up momentum after mid-summer, and the last of the current year will see an
increase, not only in the earning assets, but also in the volume of business handled in
the course of our currency and transit operations. Notwithstanding this increase, the
total operating expenses have been held down to slightly less than last year.


“We feel that we are in closer touch with our member banks than ever before,
and hence best able to help them solve the problems with which they come to us. From
time to time officers from the parent bank and branches are sent around to the various
member banks; and I believe that so far as the promotion of good feeling and the development of a better understanding are concerned we have accomplished all that could
be desired.
“I believe that we are justified in inferring the general satisfaction of our
members with the administration which we have given them from the fact that none of
our Directors have been defeated for re-election. In most cases, there has been no
opposition whatever; and, in those instances where there has been another candidate,
the serving Director has always been returned by a wide margin. Surely, if there had
existed any material criticism of our management, it would have been brought out at
election time; and I think we may safely conclude that our members generally are
satisfied with your Board, and with the officials whom you have selected to administer
the affairs of the bank.”53
Throughout 1923, as earlier, much thought and discussion had been devoted
to the feasibility of a Member Bank Relations Department. Indeed, by late 1923 the
matter had progressed to the point of an offer to Thomas R. Bennett, Superintendent,
Banking Department, State of Georgia, to become Manager at $7500 per year. Mr.
Bennett was amenable, but the Federal Reserve Board in Washington dragged its feet
on approval and the matter carried over to 1924.54
In setting forth earnings, expenses, profit and loss for 1923, as compared with
1922, Chairman McCord wrote:


“The gross earnings of $2, 682, 314 for 1923 was an increase of $329, 578
over the gross earnings for the previous year, amounting to $2, 352, 736, while the total
current expenses of $1, 294, 232 for 1923 was only $1179 more than the previous year,
which amounted to $1, 293, 053. The expenses for 1922, however, did not include any
expense for the operation of the Havana Agency, amounting to $11, 264.07 in 1923,
and the expenses for 1923 included an Increase in ‘Taxes on Banking House” of
“The current net earnings .for 1923 were $1, 388, 082 as corn-pared with $1,
059, 683 for 1922. The deductions from current net earnings for furniture and
equipment, for depreciation allowance on-bank buildings and reserve for probable
losses, etc., were $1, 038, 692, as compared with $391, 366 for the previous year.
During the year, the buildings at Atlanta, New Orleans and Nashville were completed
and a large part of the deductions for the year were for depreciation on bank buildings
to bring the present book value to a replacement cost, also a considerable amount was
reserved for probable losses. The net earnings, therefore, for dividends, surplus and
franchise tax were $352, 179 for 1923, as compared with $672, 730 for the previous
The general business picture during the year as it affected the Bank, was
painted by Chairman McCord in the following language:
“At the beginning of the year 1923, business conditions in the Sixth Federal
Reserve District gave promise of continued improvement, which was realized during the
early months followed by some recessions during the late spring and summer. In the
early part of the year rediscount demand came from agricultural sections, and it was not


until the crop moving season that the city banks made demands for rediscount to any
great extent. At the close of the year, all classes of banks in the district were
rediscounting freely with the Federal Reserve Bank.
“Deposits of member banks followed the general trend of business, while the
loans and discounts of all member banks showed an increase from the low point at the
beginning of the year.
“Agricultural prospects were good until the latter part of July and during the
month of August, when continued rains greatly damaged all crops, and in some parts of
the district the wet weather increased the activities of the boll weevil and army worm to
such an extent that the cotton crop was almost totally destroyed. The increased
acreage planted in cotton was considerably reduced by abandonment, due to
unfavorable weather conditions and shortage of labor as the result of the migration to
the North of Negro farm hands. However, the increased price of cotton materially
helped conditions that otherwise might have been irreparable.
The volume of retail trade was greater than for the previous year, and slightly
larger than in 1921, while the volume of wholesale trade was greater than for any year
since 1920. According to the United States Bureau of Labor Statistics, wholesale prices
fluctuated during the year from 150 to 159, based on 100 for 1913 prices. The peak of
prices was in March and April and the lower level was reached in August.
“Building throughout the district continued on a large scale. As reported by
twenty cities, building operations were greater than any year since 1919, while in
volume 1923 exceeded any previous year.
“Probably at the close of 1923, conditions could not be regarded as so
favorable as at the close of the previous year, yet taken as a whole, the end of the year

found the Sixth District on a sound, economic basis.” 56

Chapter 12.

Keller, Dictionary of Dates, II, 332-336.


Minutes, Directors, III, 676.
Keller, Dictionary of Dates, II, 336.
Minutes, Directors, II, 592.
Ibid., 594.
Minutes, Directors, III, 745.
Ibid., 716.
Minutes, Directors, II, 587-589.
Ibid., 595; III, 667.
Ibid., III, 619.
Ibid., 649, 656.
Ibid., 720.
Ibid., 725.
Ibid., 743.
H. C. Frazer, “Brief History of the Havana Agency of the Federal Reserve Bank
of Atlanta,” 1963, p. 13. Hereafter cited as Frazer, “History, Havana Agency.”
Ibid., 14
Minutes, Directors, II, 387. Cf. 396, 422, 424, 428
Ibid., III, 641
Ibid., 643-645
Ibid., 644-645
W. P. G. Harding of the Boston Bank
Pages 111-112
Frazer, “History, Havana Agency,” 10-11
Ibid., 12
Ibid., 12-13
Ibid., 7
Ibid., 8
Page 20
Page 22
Garrett, Atlanta and Environs, II, 794-798
Minutes, Directors, II, 593
Ibid., III, 643
Ibid., 658
Annual Report, 1923, p 22
Minutes, Directors, II, 592-596
Ibid., III, 678-680.
Still living in Atlanta, March, 1964.
Minutes, Directors, III, 692
Ibid., 697
Ibid., 684; Annual Report, 1923, pp. 22-23
Minutes, Directors, II, 594-595; Annual Report, 1923, p. 23
Annual Report, 1923, p. 23



Minutes, Directors, III, 655
Ibid., 718-719
Ibid., 739
Ibid., 744
Ibid., 739
Ibid., 737; Annual Report, 1923, p. 24
Annual Report, 1923, pp. 10-11
Ibid., 9-10


Chapter 13

The year was young when the man who signed the Federal Reserve Act into
law in 1913, died on February 3. For the four preceding years Woodrow Wilson had
lived broken in health and in semi-seclusion, bitter over the defeat of his beloved
concept of a League of Nations. During the same month Congress extended the life and
power of the War Finance Corporation for nine months and J. Pierpont Morgan
presented the $8, 500, 000 library of his father, together with the building in which it was
housed on 36th Street to the City of New York. 1
The presidential election of 1924 pitted Calvin Coolidge and
Charles G. Dawes, Republicans, against John W. Davis, of West Virginia and Charles
W. Bryan of Nebraska. Coolidge was re-elected. A political precedent was set in
November when two states elected female governors, Mrs. Nellie 0. Ross in Wyoming
and Mrs. Miriam “Ma” Ferguson in Texas. 2
On the scientific and transportation front the Radio Corporation of America
demonstrated the transmission of pictures by wireless telegraph between London and
New York and transcontinental air mail service was inaugurated between New York and
San Francisco.3
In May the controversial Soldier Bonus Bill was passed and, in September,
John J. Pershing, General of the Armies, retired from active service at the statutory age
of 64. 4
On the local scene Clifford H. Walker became the first State Governor to


occupy the now controversial stone mansion in Ansley Park; John A. White began his
long tenure in city council and Fulton County abolished the much abused fee system as
a method of compensating certain key officers. Joel Hurt doubled the size of his great
office building by extending it back to Ivy Street; the Biltmore, Robert Fulton and Henry
Grady Hotels opened; George F. Willis, the patent medicine manufacturer, developed
Avondale Estates east of Decatur, and historic old Boyts High School at Courtland and
Gilmer Streets was gutted by fire during the freezing cold early morning hours of
January 6.5
Turn of the year general business conditions were described by Governor M.
B. Wellborn during 1924’s first Board meeting:
“The turn of the New Year finds business conditions in the Sixth District on a
sound basis. The outlook for the immediate future is probably not quite so bright as it
was at this time last year, but it will be remembered that the latter part of 1922 and the
early months of 1923 were accompanied by a tendency to a rather rapid increase in
business. Along with this increase in general business, there was a corresponding
increase in prices, and there was fear in the minds of business men that if these
tendencies continued, business would soon reach an unsound level. The pace of the
first three or four months of the year was, however, checked, and since that time,
business has moved forward on a conservative and sound plane, buying has been done
in a cautious way to meet current requirements, but there has been no tendency to
speculative purchasing in any line...”6
The directors devoted considerable time at their meeting on December 14,
1923 to official personnel for 1924.


Leon C. Simon and P. R. Kitties were elected Class B and Class A directors,
respectively. Joseph A. McCord was redesignated Federal Reserve Agent and
Chairman; Randolph and Parker were continued as General Counsel, and Oscar Wells
succeeded E. W. Lane as a member of the Advisory Council.7
All Branch Bank Directors were re-elected; Creed Taylor was named General
Auditor; L. C. Adelson was elected Manager of the Cuban Agency, at a salary of $12,
000 per year, with an allowance for foreign service of $4, 000. M. B. Wellborn was
unanimously re-elected Governor by a rising vote.8
Other officers elected for 1924 were:

L. Campbell, Deputy Governor
W. Bell, Cashier
B. Roper, Assistant Cashier
H. Tode, Manager Fiscal Agent Dept.
A. Sims, Assistant Cashier
R. Patterson, Assistant Cashier
F. Conniff, Assistant Cashier
W. Honour, Assistant Cashier

New Orleans
Marcus Walker, Manager
W. H. Black, Assistant Manager
J. A. Walker, Cashier
F. C., Assistant Cashier

A. E. Walker, Manager
W. C. Sterrett, Cashier



R. N. Groover, Manager
D. E. Avery, Assistant Manager

G. R. DeSaussure, Manager
W. S. McLarin, Jr., Cashier



J. M. Slattery, Assistant Manager

J. B. McNamara, Manager
J. B. Fort, Jr., Cashier9

As the year progressed a number of changes in the official family took place. In


January, with the acceptance by L. C. Adelson, of the Havana manager ship, J. L.
Campbell was named Senior Deputy Governor, Creed Taylor, Deputy Governor; W. S.
Johns, General Auditor, and J. M. Slattery, Manager, Bank and Public Relations Department.10 L. L. Magruder was named Assistant Manager of the Havana Agency in
March to succeed Mr. Slattery.11 At its April meeting the Board appointed the Messrs.
Adelson and Magruder joint managers of the Havana operation. 12
In September the Nashville Branch Board recommended the resignation of J.
B. McNamara as manager. Mr. McNamara resigned effective November 1 and was
succeeded by Joel B. Fort. Ellis C. Huggins, Jr., succeeded Mr. Fort as Cashier of the
It was also in September that Walter B. Roper, an Assistant Cashier since
1917, tendered his resignation to accept the position of Vice-President of the Georgia
National Bank of Athens, Georgia. The resignation was accepted with resolutions of
regret and good wishes.14
At its meeting on November 7, the Atlanta Board was informed by Chairman
Joseph A. McCord that he has tendered to the Federal Reserve Board in Washington
his resignation as a Class C Director, Chairman, and Federal Reserve Agent, effective
December 31, which had been accepted. He expressed. his high regard and friendship
for the members of the local Board, and stated that Oscar Newton, of Jackson,
Mississippi, had been appointed as his successor. In commending Mr. Newton to the
Board, Mr. McCord said that he regarded him as thoroughly capable and well qualified
for the duties of the office.15
In December the Board passed suitable resolutions on the retirement of Mr.
McCord and.John K. Ottley, who, after six years of yeoman service as a Director retired


at year’s end. Both were presented loving cups from the directors, Governor and
Federal Advisory Councilman.
Mr. Ottley’s successor as a Director was the well-known and colorful native
Atlantan, Eugene R. Black. Born at the close of the Reconstruction Era, on January 7,
1873, Mr. Black was educated for the law and celebrated July 4, 1893 by being
admitted to practice. In 1897 he was appointed Solicitor of the Criminal Court of Atlanta
and, during the same year married Miss Gussie Grady, daughter of the noted editor and
orator, Henry W. Grady. Beginning in 1901, Mr. Black functioned for three years as
General Agent of the Prudential Insurance Company for the State of Georgia. In 1904
he returned to the law as a member of the firm of McDaniel, Alston and Black, his
partners being Sanders McDaniel and Robert C. Alston. In 1921 he became a full-time
banker as President of the Atlanta Trust Company.16
Director-elect Black attended his first Board meeting on December 12, 1924
and on that occasion, in a few happy remarks, expressed his pleasure at his new
association.17 He was destined, during the next ten years, to play a stellar role in the
operation of the Bank.
Joseph A. McCord, who retired at 67, was the original Governor of the Atlanta
Bank and had played an active part in getting Atlanta chosen as a site. Since 1919 he
had held the positions from which heretired at the close of 1924. Following retirement
he devoted himself to private interests and served for a time as Chairman of the
Mortgage Guarantee Company of America. At his death on December 30, 1943, the
Atlanta Journal paid editorial tribute:
“Joseph A. McCord, whose death came in his 87th year, yesterday morning,


was one of the outstanding examples of Atlantans who, born in smaller Georgia
communities, have come to this city in youth and then become leaders in her most vital
“Mr. McCord was a native of Newton County, coming to Atlanta in 1890. He
entered the banking business in 1892, with the old Atlanta Trust and Banking Company.
From that point on his career was a record of advancing service and advancing
responsibility. He retired as governor [sic] of the Sixth District Federal Reserve Bank
only when advancing age compelled his withdrawal from active business affairs.
“It was both as banker and as lay leader in the church that Mr. Mc Cord was
best known. He was one of the organizers of St. Mark Methodist Church, he was a
member of the Warner Hill Bible class there, a trustee of Salem Camp Ground and
trustee and chairman of the executive committee of Young Harris College.
“He served his city and state and nation in many other capacities. He was a
man whom others instinctively liked and respected. His life contributed a large share of
the development of his adopted city. He was a good man, a successful man and, in
every respect, a most distinguished Atlantan.”
That the Bank was growing during the mid-twenties is attested by its payrolls.
As of April 11, 1924 the Atlanta Bank had 256 employees for an annual payroll of $440,
050; the New Orleans Branch, 88 employees for a total of $123, 840; Nashville, 35 for
$44, 928; Birmingham, 29 for $44, 380; Jacksonville, 35 for $49, 780, and the Cuban
Agency, 10 for $21, 528. 18
Officers salaries, as approved by the Federal Reserve Board on February 14,
1924, were:
M. B. Wellborn, Governor


J. L. Campbell, Deputy Governor
Creed Taylor, Deputy Governor
M. W. Bell, Cashier
W. S. Johns, General Auditor
H. F. Conniff, Assistant Cashier
J. M. Slattery, Mgr. Bank Relations Dept.
J. B. McNamara, Mgr. Nashville Branch
J. B> Fort, Cashier, Nashville Branch
D. E. Avery, Assistant Mgr. Savannah Agency
W. H. Black, Assistant Mgr. New Orleans Branch
J. A. Walker, Cashier, New Orleans Branch
F. C. Vasterling, Assistant Cashier, New Orleans
J. A. McCord, Chairman
Ward Albertson, Assistant Federal Reserve Agent

6,500 19

Several matters pertaining to personnel were resolved during 1924. The Board
went on record in March, following a motion by Director Lindsey Hopkins, that it “does
not look with favor on the borrowings from commercial banks or loan agencies by
officers and employees of the Federal Reserve Bank of Atlanta, and that the Governor
be requested to inform the officers and employees.”20
In June the matter of nepotisim came to the fore. It was voted “that, in future, it
shall be the policy of the Federal Reserve Bank of Atlanta and its branches not to
engage employees that are related to officers and directors, and that it does not look
with favor on engaging employees related to other employees.”21
A uniform vacation schedule was adopted in May which provided three weeks
for the Governor, Deputy Governors and Branch Managers. All other officers were given
two weeks. For employees the matter was more involved, and provided:
“One day (exclusive of Sundays) for each month in the employ of the Bank,
preceding the period designated for vacations, except that no vacation period will be
allowed until six months’ service has been completed. Vacation periods not to be
cumulative for more than twelve days (exclusive of Sundays), and not to be granted


prior to April 1 and not later than September 15. Except in cases where employees are
entitled to more than one week and less than two weeks, all vacations should start at
the close of business Saturday, returning the second Monday - in the case of one week
vacations - and the third Monday, in the case of two weeks’ vacations.”22
Governor Wellborn was ready to concede the advantages of good reading,.
but not ready to accord full departmental status to a Bank library. In April he reported:
“The officers of the bank have for sometime been considering the advantages
of establishing a library for the benefit of the employees. Quite a number of books have
been purchased from time to time with this end in view. It is not contemplated that we
go into this matter extensively, i.e., that we establish a separate department, thereby
incurring considerable expense, but it is believed that the library can be put in charge of
one of the departments of the bank and operated for the benefit of the employees
without any additional expense. It is, therefore, suggested that the library be operated in
connection with the infirmary under the direct supervision of Mrs. Jones, who now has
charge of the infirmary. One of the junior officers can be assigned the duty of
supervising the library and infirmary in order that the efficient operation of both may be
assured. This will entail no additional expense whatever to the bank, and it is believed
that the employees will receive quite a benefit in having access to a library of wellselected books.” 23
Some months later, in November, the Special Salary Committee
recommended the combining of the Infirmary and the Library under the supervision of
the Matron now in charge of the Infirmary.24
In an effort to streamline and economize, it was voted in October to


discontinue, effective January 1, 1925, the position of Federal Reserve Agents at
Birmingham, Jacksonville and Nashville. At these branches the Agents acted also in the
capacities of resident auditors, secretaries to the loca]. boards and custodians o1
collateral, their salaries being prorated among the several functions. 25The
duties were subsequently assumed by assistant cashiers. 26
For some time efforts had been made to get a Bank and Public Relations
Department functioning. These efforts bore fruit during the latter half of 1924. The board
committee having to do with the function was composed of Joseph A. McCord,
Chairman; M. B. Wellborn, J. K. Ottley and J. A. McCrary. J. M. Slattery was named
Manager of the department, while Cashier M. W. Bell and Assistant Cashier W. R.
Patterson were assigned as part-time field representatives. 27
As the end of the year approached Chairman McCord submitted a report
upon behalf of the Bank and Public Relations Committee. Addressed to the Board of
Directors and dated December 12, it read:
“… As you know, the Department did not start functioning until June of this
year. .. Visits have been made to the banks in the district by three representatives
selected to do this work, and while the Department has only recently begun to function, I
am of the opinion that great good has been attained by the visitations made.
“Since the November meeting of the Board of Directors, field representatives
of the Department have visited 176 banks; making a total of 788 banks visited up to
December 5th. Representatives have called on all the member banks in Mississippi,
Alabama and Tennessee, and a great many nonmember banks in these states. Mr.
Patterson is at present working in Louisiana. One-half or more of the banks in Georgia


have been covered, and beginning shortly after the first of the year, the work in Florida
will be started.
“The last meeting of our committee was held Wednesday, December 10th,
and I give you below excerpt from the minutes of that meeting:
‘Mr. Ottley stated he felt that in the report of this work submitted by the
Chairman at the December meeting of the Board, the Committee should give some
expression as to the value of the work done and as to the future; and upon motion, the
Chairman was requested to draw up the following resolution:
WHEREAS, This is the last meeting to be held by the Bank and Public
Relations Committee for the year 1924; and
WHEREAS, The Committee feels that the work so far has been very
beneficial, in that it has brought the Federal Reserve Bank in closer contact with the
member banks, and many nonmember banks; that it has given opportunity to explain
many benefits of the workings of the System; to answer many criticisms which have
been advanced against the System and the Federal Reserve Bank of Atlanta; and
WHEREAS, We feel that the amount expended has been justified by the
results attained,
BE I T FURTHER RESOLVED, That this Committee does commend and recommend
the continuance of the work under a similar committee to be appointed by the Chairman
of the Board; and,
BE I T FURTHER RESOLVED, That it is the opinion of the Committee that after all the
banks in the district have been visited one time, future visitation by field representatives
might well be confined to member banks, such nonmember banks as are located in the


same town, or nonmember banks who are prospects for membership; and, if in the
opinion of the Executive Committee certain visitations should be temporarily suspended
in the interest of all concerned, it is suggested that a list of all the banks be furnished
the Bank and Public Relations Committee for their consideration; and
BE I T FURTHER RESOLVED, That we believe this Department, although it has been
in operation but a short time, is one of great importance to the bank, and that it should
have the thorough cooperation of all the officers and heads of departments, in order that
the very best results may be obtained for the bank as a whole.
The above resolution was then adopted.

Respectfully submitted,
(signed) Jos. A. McCord, Chairman,
Bank and Public Relations Committee.”28
In his monthly report to the Board, in February, 1924, Governor Wellborn
cited a number of specific instances wherein the Sixth District Federal Reserve Bank, by
timely aid to certain banks during the post-war depression, had saved the banks and
averted local economic disaster. Three of these instances, described by Wellborn,
First National Bank, Athens ,Alabama:
“This institution suffered from bad management, and had it been permitted to
close in 1920, there is no doubt but that other institutions in its vicinity would have gone
under. We extended them accommodation in the neighborhood of $200, 000, and later,
when conditions had somewhat settled down, reorganization of the bank, aided by the
officers of our bank, was perfected. To accomplish this, we purchased for $25, 000
around $90, 000 of what was considered worthless assets. This amount was considered

small as compared to the loss that would have been taken had the bank been permitted
to go into the hands of a receiver.”
First National Bank, Sparta, Georgia:
“This bank also suffered from poor management, but had it been permitted to
close in the fall of 1920, it would have meant a complete demoralization of the
community and its surrounding territory; it having been the predominant one of the two
banks in the county. . At one time in that year, accommodation close to $300, 000 had
been extended it. New capital was subsequently infused, and one of our officers was
placed with the institution in the effort to work it out. The assets of the bank, however,
were honeycombed with too many imprudent loans, and it became necessary to effect a
reorganization. This was accomplished by our purchasing, for approximately $100, 000,
all of the doubtful assets amounting to about $160, 000. Whatever may be our ultimate
loss in this case, the exigencies of the case in 1920 and the saving of the county from a
set-back that would have perhaps taken fifteen years to recover from, in my opinion
offsets the loss.”
Fourth & First National Bank, Nashville, Tennessee:
“During 1920, this institution, perhaps more than any other, demanded and
received the most careful thought and deliberation. Between the fall of 1919 and the fall
of 1920, its deposits decreased $3, 600, 000, and its loans increased $6, 500, 000. In
the fall of 19L9, it was carrying war obligations of $20, 000, 000. In the fall of 1920, they
had been reduced to only about $11,800,000. Its deposits in 1919 of $19, 300, 000 was
a fair indication of the bank’s importance, not only to its immediate community but the
State of Tennessee at large; it being the depository for hundreds of country banks.


Whether or not its judgment in expending its loans and extremely large investments in
war obligations was wise were not the points that we had then to consider; it was the
general effect upon the State of Tennessee, and perhaps the entire Sixth District. It was
for this bank mainly that our bond repurchase plan was evolved, in order to save it from
the large inroads it was suffering in carrying them, to say nothing of the absorption from
their undivided profits by reason of price decline. I unhesitatingly say that though our
resources were heavily taxed to do it, we saved this institution and the Sixth District
from a shock that would have been terrible in its consequences, and perhaps had an
echo in surrounding Federal Reserve Districts. During the years that have intervened
since 1920, the bank has succeeded in entirely extinguishing its debt, though, of course,
on account of its importance, it has from time to time availed of our discount facilities in
fairly large sums, which, however, seem negligible as compared to what they were once
indebted to us for.”29
Certainly such instances of service indicate that the Federal Reserve System
was fulfilling an important concept of its founders.
The efficacy of branch operations of the Sixth District Federal Reserve Bank
was indicated by a study early in the year. It was accompanied by a statement showing
the estimated net saving if all the functions then performed by the branches were
transferred to the Atlanta office. As reported at the March board meeting:
“It was the concensus of opinion of this Board that in every instance, the
branches of the Federal Reserve Bank of Atlanta were satisfactorily serving the
member banks in their respective zones, and that the services rendered more than
justified the expense of continuing the functions they are now performing. The members


of this Board do not look with favor on the broadening of the powers of any of the
branches or agencies of the Federal Reserve Bank of Atlanta, and have no suggestions
to offer as to increasing or decreasing any of the functions now being performed, but
believe that the service now being rendered by the branches fully justifies the expense
of maintaining them, when compared with the saving that would be effected by
transferring some of the functions to the parent bank.”30
In accordance with this thinking, steps were taken during 1924 for the
improvement of branch facilities in both Birmingham. and Jacksonville. A lot was
purchased on the southeast corner of Fifth Avenue and 18th Street, 50 x 140 feet, in
Birmingham, for $125, 000 cash and Messrs. Warren, Knight & Davis, of that city, were
retained as architects for a new building.31
In Jacksonville, as previously noted, the erection of a building for the branch
had been authorized in 1923. The completed structure was officially accepted by the
Board on August 8, 1924. Total cost was $281, 948.63.32
Earlier in the year the Jacksonville Branch had requested an automobile truck
for transporting moneys and securities to and from the post office and to and from local
member banks. The purchase was disapproved and the Branch was instructed to
“discontinue the practice of transporting moneys and securities to and from local
members, in view of the fact that this practice is not pursued by the Atlanta office or any
of the other branches.”33
Since completion of the new addition to its building in 1923, the Atlanta Bank
had enjoyed the luxury of excess space. Accordingly, in 1924, the War Finance
Corporation was invited to occupy offices in the building rent free, which offer was
accepted. A search was then instituted for another tenant on a paying basis, preferably

an insurance company. At year’s end none had been found.34
On December 12 Director McCrary, Chairman of the Building Committee,
presented to the Board for acceptance the painting “Signing the Federal Reserve Act,”
executed by Atlanta artist, Wilbur G. Kurtz. On motion of Mr. McCrary, secondedby
Director Hartford, the picture was accepted and became an integral part of the Bank’s
decor for many years.35
Operations-wise the Bank was doing well during this period of its history.
Compared with other Federal Reserve Banks and under the heading “Efficiency and
Economy,” Governor Wellborn reported in March, 1924:
“In reviewing the Functional Expense Report for the quarter ending
December 31, 1923, attention is directed to the fact that the Federal Reserve Bank of
Atlanta shows the least number of employees and the second lowest total expense of
any Federal Reserve Bank in the System, notwithstanding the fact that it now operates
four branches and two agencies, which expense does not apply to a great many of the
other Federal Reserve Banks.
“In reviewing the volume of work handled during the quarter, the report shows
that the Federal Reserve Bank of Atlanta handled the second largest number of notes of
any other Federal Reserve Bank -the highest number being handled by the Federal
Reserve Bank of Chicago, 41, 344 pieces, against 41, 287 for Atlanta.
“The Federal Reserve Bank of Atlanta’s showing in currency handled is
seventh highest as compared with the other Federal Reserve Banks; in other words, six
of the Federal Reserve Banks handled more in number of bills than Atlanta, while five
Fedral Reserve Banks handled a less number of bills. The cost per unit of the Federal


Reserve Bank of Atlanta as compared with other Federal Reserve Banks in the handling
of currency appears high. However, this condition is due to the fact that we make one
more verification of money than any other Federal Reserve Bank, which we believe to
be a proper safeguard... Atlanta would, no doubt, make a better showing in currency
operations if this extra verification were eliminated, but it is believed the extra cost is
justified when compared with the protection it affords.
“Transit operations of the Federal Reperve Bank of Atlanta appear to be the
lowest in the system - Atlanta handling the least number of items, which condition, I
presume is due to the fact that Atlanta has so few par points in comparison with other
Federal Reserve Banks.
“Taking the report as a whole, in my oppinion the Federal Reserve Bank of
Atlanta shows up better than any other Federal Reserve Bank in comparing the number
of employees, total expense and volume of business.”36
Total resources of the Atlanta Bank on December 31, 1924 were $242, 845,
000, an increase of $13, 839, 000 over the total of $229, 006, 000 on December 31,
1923. Total reserves increarred approximately forty-eight millions of dollars, from $128,
086, 000 at the close of 1923 to $176, 318, 000 at the close of 1924. Bills discounted
declined $39, 672, 000, from $55, 742, 000 at the end of 1923 to $16, 070, 000 on
December 31, 1924, and bills bought in the open market were nearly three million
dollars less on the same dates. Federal Reserve notes in actual circulation were $140,
894, 000 and $142, 879, 000 on December 31, 1923 and December 31, 1924,
respectively; total deposits were $9, 207, 000 greater at the end of the year 1924 than
they were a year earlier, an increase of approximately 16 percent.37


The discount rate of 4-1/2 percent, which prevailed during 1923 on all classes
of paper except open market transactions, continued in effect until June 18, 1924. On
this date the rate was reduced to 4 percent. No further change was made during the
year. Open market transactions were handled at substantially the same rate of discount
prevailing in other money centers.38
There was no change in the functions and scope of branch operations during
the year.39

Chapter 13.



Keller, Dictionary of Dates, II, 336-340.








Garrett, Atlanta and Environs, II, 801-807.


Minutes Directors, III, 754.


Ibid., 742-745.


Ibid., 746-747.


Ibid., 747.


Ibid., 762-763.


Ibid., 783.

12.. Ibid., 800.

Ibid., 859, 875-876.


Ibid., 868-869.


Ibid., 906.


Biographical records, Federal Reserve Bank of Atlanta.


Minutes, Directors, III, 910-935.


Ibid., 797-798.


Ibid., 783.


Ibid., 789.


Ibid., 826.


Ibid., 808.


Ibid., 802-803.



Ibid., 907.


Ibid., 881-894.


Ibid., 926.


Ibid., 756, 823, 835-837.


Ibid., 916-17.


Ibid., 771-73.


Ibid. , 783-84.


Ibid., 830, 893; Annual Report, 1924, p. 12.


Minutes, Directors, III, 856; Annual Report, 1924, p. 12.


Minutes, Directors, III, 789.


Ibid., 811, 812, 920, 922.


Ibid., 916. The picture now hangs (May, 1965) in the lobby of the Silvey Building


Minutes, Directors, III, 786-87.


Annual Report, 1924, p. 6.


Ibid., 11.


Ibid., 12..


Chapter 14
As the first quarter of the twentieth century came to a close a number of
interesting acts were played on the national stage.
The reticent Vermonter, Calvin Coolidge, having won a presidential term in his
own right was inaugurated on March 4, along with his colorful running-mate, VicePresident Charles Gates Dawes. Soon thereafter the Teapot Dome naval oil reserve
trial began at Cheyenne, Wyoming, involving several highly placed government and
business officials.
Later in the year Colonel William Mitchell, of the Air Service, was courtmartialed for outspoken criticism of the Administration for laxity and negligence in the
operation of the Air Service. In April Henry Ford started the first commercial aviation on
a regular schedule by airplane freight service between Detroit and Chicago. In
midsummer William Jennings Bryan and Clarence Darrow pitted their legal and forensic
talents against each other in connection with the Scopes anti-evolution trial in Dayton,
Tennessee. The effort and the heat were too much for the aging Bryan, who died July
26, five days after the conclusion of the trial. Some other noted departures from the land
of the living in 1925, were Walter Camp, football promoter and oracle; Robert M.
LaFollette, governor, senator, and 1924 presidential candidate; John Singer Sargent,
artist; Thomas R. Marshall, former vice-president, who asserted that “what this country
needs is a good five-cent cigar,” and James Buchanan Duke, tobacconist and
benefactor of Duke University.1
On the home front Candler Field, the former automobile race track at Hapeville,


was leased to the city by Asa G. Candler, Jr., for use as a municipal airport; the
Southern Railway System inaugurated its elegant all-Pullman Crescent Limited on the
New York to New Orleans run. The Davison-Paxon-Stokes Company, Atlanta’s number
two department store, effected a merger with R. H. Macy and Company of New York;
Courts and Company, noted local investment house, began operations modestly in an
office in the Hurt Building. The dizzy Florida land boom reached tremendous proportions
during the year, and the first Forward Atlanta campaign, under the leadership of Ivan
Allen got underway. During the next four years it resulted in the location in the city of
762 new enterprises, employing over 20, 000 persons with an annual payroll of more
than $34, 500, 000.2
At its regular meeting in December, 1924, on the 12th, the Federal Reserve
Board elected directors and officers to serve both the Atlanta Bank and the branches for
Eugene R. Black, of Atlanta was named a Class A director. for a 3-year term,
beginning January 1, 1925. He had no opposition. J. A. McCrary, of Decatur, was
opposed by Harry B. Hoyt, of Jacksonville, Florida for Class B director for the same
period, but was handily re-elected by a vote of 144 to 91.3
The following gentlemen were elected directors of the various branches: New
Orleans, Marcus Walker, J. P. ButLer, Jr., Leon C. Simon and R. S. Hecht, all of that
city; Birmingham, A. E. Walker, W. W. Crawford, and T. 0. Smith, all of Birmingham;
Jacksonville, G. G. Ware, of Leesbury, Florida, andEdwardW. Lane and C. P. Kendall,
of Jacksonville; Nashville, Joel B. Fort, Jr., E. A. Lindsey and J. E. Caldwell, of
Nashville, and T. A. Embrey of Winchester, Tennessee.4


An election of officers for Atlanta and the various branches eventuated as
M. B. Wellborn, Governor

W. H. Toole, Mgr. Fiscal Agt. Dept.

J. L. Campbell, Deputy Governor

Randolph & Parker, Gen. Counsel

Creed Taylor, Deputy Governor

H. F. Conniff, Ass’t. Cashier

M. W. Bell, Cashier

J. B. Tutwiler, Ass’t. Cashier

Ward Albertson, Sec’y. Bd. Directors

R. A. Sims, Ass’t. Cashier

W. S. Johns, General Auditor

J. M. Slattery, Mgr. Bank and Public Relations

J. W. Honour, Ass’t. Auditor


New Orleans
Marcus Walker, Managing Director

A. E. Walker, Managing Director

W. H. Black, Ass’t. Mgr.

H. J. Urguhart, Cashier

J. A. Walker, Cashier

T. N. Knowlton, Ass’t. Cashier

F. C. Vasterling, Ass’t. Cashier
Lawson Brown, Auditor


Geo. R. DeSaussure, Managing Director

Joel B. Fort, Jr., Managing Director

W. S. McLarin, Cashier

E. C. Huggins, Jr., Cashier

Havana Agency

Savannah Agency

L.C. Adelson, Manager

R. N. Groover, Manager

L.L. Magruder, Ass’t. Mgr.

D. E. Avery, Ass’t. Mgr.


Oscar Wells, of Birmingham, was named to membership on the Federal
Advisory Council.5
While the position of Assistant Federal Reserve Agent at limited power
branches had been abolished in 1924, the office was still applicable at Atlanta and New
Orleans. Accordingly, Ward Albertson was elected for Atlanta and Lawson Brown for
New Orleans. William Earl Miller was named Acting Assistant Federal Reserve Agent
for New Orleans.
At the same time the Bank’s new director, Eugene R. Black was given his first
committee assignment. In the words of the Chairman of the committee: “It is my belief
that the advice and counsel of Director Black, who is the president of a large
commercial bank in Atlanta7, will be of great value to the new [special salary]
As the new Board Chairman and Federal Reserve Agent, Oscar Newton,
assumed the chair for his first meeting, at 11 o’clock on the morning of January 9, 1925,
he asked the cooperation of the members of the Board and their support in his
administration of the office, pledging his own best efforts in faithfully serving the
interests of the Bank and the district.9
An additional junior officer was elected later in the meeting in the person of Leo
Starr. He was named Assistant Cashier at the Nashville Branch, where he had
previously served as utility clerk.10
As the year progressed other changes occurred in the official family of the
Bank and its Branches. In February Thomas W. McCoy, who succeeded J. K. Ottley as


a Class A Director, attended his first meeting. Mr. McCoy, President of the Merchants
National Bank and Trust Company, Vicksburg, Mississippi, was a native of Golconda,
Illinois. He had spent his entire working life in the banking business, starting with the
First National Bank at Greenville, Mississippi in 1891.11
As of April 1, 1925 the Bank lost three of its long-time officers by resignation.
They were L. C. Adelson, Manager of the Havana Agency; W. H. Toole, Manager Fiscal
Agent Department, and J. M. Slattery, Manager Bank and Public Relations
Mr. Adelson had performed his duties with distinction and great satisfaction to
the bank. Indeed, his intimate knowledge of the Federal Reserve Act, due to his
residence in Washington during the formative years of the System, and his earlier
connection with the Federal Reserve Board had proved exceedingly valuable.
Warren Harris Toole had been one of the original 1914 directors of the Bank
and had served as such until October, 1917, when he assumed the position from which
he resigned. He had been requested to make the change when the United States
entered World War I so that his particular talent for painstaking work might be devoted
to Liberty and Victory Loans. During this entire period he was in absolute charge of
these .securities, most of them in coupon form. Over a billion dollars worth were
handled by Mr. Toole to the satisfaction of the Bank, the Government and the pablic.
Mr. Slattery, during his long connection with the Bank, had served many
positions with distinction. He began as Secretary to M’. B. Wellborn; then progressed to
Assistant Federal Reserve Agent; Secretary of the Bank; Manager of the Havana
Agency, and finally, Manager of the Bank and Public Relations Department. His duties


were always handled with admirable precision.13
Meanwhile the Federal Reserve Board, at year’s beginning, exercised its
perogative of appointing three directors for each Branch in addition to those already
elected by the Atlanta Board. Its appointments were:
Nashville: W. H. Hartford, 1 year; Paul M. Davis, 2 years; Joseph A. Chapman,
farmer, Columbia, Tennessee, 3 years.
Birmingham: W. H. Kettig, 1 year; Oscar Wells, 2 years; John P. Kohn, real
estate and insurance, Montgomery, Alabama, 3 years.
Jacksonville:J. C. Cooper, 1 year; Fulton Sausey, 2 years; L. C. Edwards,
Florida Citrus Exchange, Tampa, 3 years.
New Orleans: P. H. Saunders, 1 year; L. C. Simon, 2 years; A. P. Bush, 3
According to the by-laws branch bank directors elected by the Federal Reserve
Bank of Atlanta “shall be chosen from the ranks of men well qualified and experienced
in banking,” and the branch bank directors appointed by the Federal Reserve Board
“shall be chosen from the ranks of men of high character and standing who are
engaged in agriculture, industry or commerce, insofar as may be possible or
Since Leon C. Simon was a banker and already on the Atlanta Board, his
appointment to the New Orleans Board had to be revoked. Frank W. Foote, of
Hattiesburg, Mississippi, was appointed in his stead.15
In April, 1925, Nashville Branch Director Joseph A. Chapman resigned
because of ill-health. He was succeeded by William P. Ridley of Columbia,


Tennessee.16 The Birmingham Branch lost a director in the death of Col. Thomas
Octavius Smith on September 18. He was replaced by Walter E. Henley on November
13. Henley had also succeeded Col. Smith as President of the Birmingham Trust and
Savings Company.17 At the August Board meeting Governor Wellborn announced the
death, on the 10th, of Charles A. Lyerly, President of the First National Bank of
Chattanooga, and formerly member of the Federal Advisory Council representing the
Sixth District. Another of the Bank’s original official group had gone.18
While official salaries for 1925 were up somewhat from 1924, economies had
been effected in both total number of employees and in total annual payroll. As of April
1, 1925 the number of employees, both Atlanta Bank and branches, stood at 383,
compared to 489 on January 1, 1922. The annual payroll was $617,450 against $764,
780 for the earlier date - a saving of $147, 330. 19
The current Florida land boom was having an effect upon employment
generally and upon the Bank in particular. Early in the year modest salary increases had
been recommended by the Atlanta Board for eight lower echelon officers. They were
disapproved by the Federal Reserve Board, due to its policy of considering general
salary increases only at the end of the calendar year and because it had refused to give
ear to similar recommendations from other Federal Reserve Banks. In this connection
Deputy Governor J. L. Campbell, of Atlanta, observed, on August 6:
“In view of the close proximity of our bank to the developments now going on in
Florida, we have lost and are losing some of our best men to banks in that state. Our
[Salary] Committee did not have in mind general salary increases, but recommended
only particular cases, feeling that our position is not similar to that of other Federal


Reserve Banks, which are not confronted with this condition. Since the last Board
meeting, Mr. Marvin Russell, field representative in the Failed Banks Department, for
whom we recommended an increase from $2400 to $2700, has accepted a position with
the First National Bank of Bradenton, Florida.”20
A month later, on the same. general subject, Mr. Campbell reported:
“Due to a great many of our employees resigning to accept positions in Florida,
our clerical staff has been badly disorganized for the past sixty days. We have had a
very large turn-over during this period, and while we have succeeded in filling the
positions of those who have resigned, our staff consists to a large degree of inexperienced people at this time. This situation, however, is. Improving daily, and we
hope shortly to again have our organization functioning efficiently.”21
A number of matters concerning branch operations presented themselves for
consideration during 1925. That the Havana Agency was becoming something more of
a burden than a boon is indicated by the following comments by Coy. Wellborn at the
February Board meeting:
“The report of our Auditor’s examination of the Havana Agency, under date of
January 19, 1925, discloses that the operating expenses for the Agency for the year
1924 were $34, 995. 86. This year that figure will be materially reduced inasmuch as the
Manager, L. C. Adelson, has tendered his resignation effective April 1, 1925. The
operating expenses for the current year will, therefore, be around $25, 000. Considering
the fact that we are not permitted to have any earnings at all from the Havana Agency,
its maintenance is quite a heavy tax on our bank. The Boston Federal Reserve Bank
has an agency in Havana from which they derive a gross revenue of about $74, 000 per


annum. Inasmuch as the Atlanta Agency furnishes all the ‘sinews of war,’ which enable
the Boston Agency to make these large profits, it does not seem exactly fair or equitable
to the Atlanta bank that such should be the case. The original establishment of the
Boston Agency took place over the protest of the Atlanta Bank, for we expressed the
view that Cuba, being contiguous to Florida, which is in our District, came under what I
may term our ‘sphere of influence’ rather than that of Boston. Retrenchments and
economy are the watchwords today, and in view of this, it seems to us that there is no
reasonable excuse for the Reserve System going to the expense of maintaining two
agencies in Havana, when one would be able to carry on the work satisfactorily. It was
claimed that the establishment of the Boston Agency would be very helpful to the New
England States in their business transactions with Cuba, but so far, there has been no
evidence of this. No bills have been bought or sold, only dealings in cable transfers
have taken place, a matter which could easily be handled by the Atlanta Agency.”22
Boston was to withdraw two years hence.
The resignations of L. C. Adelson, Manager, of the Havana Agency has been
noted. He was replaced by L. L. Maghuder at the much lower salary of $5, 000 per year.
At the same time H. C. Frazer was elected Assistant Manager at $3600. Both
appointments were effective April 1. 23
In February Deputy Governor J. L. Campbell reported that the New Orleans
Branch was “operating in a very satisfactory manner but that business was extremely
quiet and suggested that the Branch might be over-staffed.24
Jacksonville was still pressing for an armored truck. Mr. Campbell pointed out,
however, that, unlike Atlanta and the other branches, where clearing house balances


are settled by charges or credits to member banks on the books of the Federal Reserve
Bank, Jacksonville had never so operated because it had not been possible to get local
clearing house members to agree to such handling. Therefore, it was necessary to send
to member banks to collect balances due the Branch. The Jacksonville Branch was
asked to conform and, in March,. worked out arrangements to do so, thus obviating the
necessity for an armored truck and the need to transport large amounts of cash through
the streets of Jacksonville.25
By the end of the year building plans for Birmingham had become firm. In
December a contract for the erection of a building was awarded to the A. J. Krebs
Company of Atlanta at a cost of $289, 900. Stone Mountain granite was substituted for
Bedford stone, previously approved for the job.
Closer cooperation between the Atlanta Bank and its Branches was insured in
November when a resolution offered by Director T. W. McCoy was adopted. It provided
that the Managing Directors of the four branches meet in Atlanta with the officers of the
parent bank at least semiannually, on dates to be fixed by the Governor.27
The Bank and Public Relations Department was reorganized and Ward
Albertson was named Manager on April 15, 1925, succeeding J. M. Slattery, resigned.
Gist of the reorganization was set forth in recommendations of a special committee,
composed of Oscar Newton and M. B. Wellborn, as follows:
“That the officers visit group meetings and association meetings of the bankers of the
respective states in the District; also that they visit the member banks and make reports
of their visits to the Manager.
“That employees selected by the Manager, on account of their fitness, make


such visits and reports to him; the selection of employees to be made by the Manager
with the advice and consent of the Executive Committee.
“We believe that the work can be effectively done by the officers and
selected employees as they have an intimate knowledge of the needs of member banks
and of the operation of this bank.
“We recommend that the Manager make a monthly report to

the Board of

Directors of the activities of the Department.”28
From the time the Federal Reserve Banks opened their doors in 1914, there
had been a reluctance on the part of small town and country banks to join the System,
and some, after joining exhibited a querulous attitude.
In January, 1925, J. H. Ingram, President of the Lineville National Bank,
Lineville, Alabama, wrote to Governor Wellborn:
“…Then kindly give me some reasons in your opinion for a small bank to
remain in the Federal Reserve System, and keep up the reserve balance with loss of
interest and loss of exchange, and own stock in the Reserve Bank and get six percent
dividend thereon.
“What advantage have the National Bank over the State Bank under the
present laws and practice?
“I am thinking over the above matter, and the tendency of National Bank Laws
at the present time, and would appreciate your reply, giving me some reasons, as you
see them, for the smaller banks to remain in the Federal Reserve System.”
To which Governor Wellborn ever the forceful advocate of the Re~erve
System, promptly replied:


You make the additional request that I give you some reasons why, in my
opinion, a small bank should remain in the Federal Reserve System, when such
membership requires it to maintain a reserve balance upon which it receives no interest.
I believe there are several good reasons why a small National bank should remain in
the System, thereby retaining its National charter. In the first place, the general public
has more confidence and faith in a National bank than in a state bank, and, under
similar management, the National bank will always take the lead in a small community
for this reason.
“I am inclined to believe that you are asking these questions because at the
present time you are not having occasion to borrow from us, but you will recall that there
was a time when you availed yourself of this privilege. I am sure you found this service
very helpful in 1920-21; and if you had not been a member of the System, you would
have experienced considerable uneasiness through not having this great financial
bulwark back of you to be called upon in times of stress. It is evident from your letter
that you are somewhat restive on account of your membership in the System, which
does not allow you to receive interest on your reserve balance nor collect exchange on
checks which your customers draw on your bank. It is true that the benefits which the
banks and business interests receive from the Federal Reserve must be paid for by
someone. It is a very true saying that one cannot get something for nothing in this world.
“I would like to ask you a question. How would you like for the Federal Reserve
System to be abolished? Before answering, consider that this would mean that the
banks and business world would have to go back to the old order of things when every
bank looked out for itself, and there was no institution like the Federal Reserve to be


depended on to save the situation when an emergency arose. It is very easy for some
to forget the dark days of the past, but I am sure that you will recall the collapse of
business and the fall of 1921. I personally know you to be a thinking man; and I feel
confident that you would be the first to admit that, if the Federal Reserve System had
not backed up to the limit the business and financial world during these years, we would
have experienced the most awful panic that our generation ever saw. As it was, with the
help of the Federal Reserve, business recovered rapidly and pursued the even tenor of
its way.
“If you will go back further into history, you will come to the panic of 1873, from
which it took this country six years to recover, and twenty years later, the panic of 1893
which caused financial depression for at least six or seven years. I mention these facts
because if bankers like yourself are not willing to maintain the Federal Reserve System,
then who is to do it?
“I have been with the Federal Reserve for ten years, and I have seen very few
national banks surrender their charters and take out state charters. Several of those
which did so have since failed, and the depositers in these banks learned a bitter lesson
- one which they will never forget.”29
Since the organization of the Federal Reserve System in 1914, a total of 40
banks in the Sixth District had, in fact, failed. Indeed, the Reserve System, useful as it
had been, was not full insurance against inept or dishonest management. A tabulation
of the failed banks, by state and year, follows:

No. of Banks


No. of Banks
































1925 (to May)

10 30



At about the same time Governor Wellborn wrote to Mr. Ingram at Lineville,
Alabama, he was called upon for his opinion in another matter involving broad policy.
The question was what method should be adopted in extending credit and giving aid
and assistance to banks whose capital is impaired by losses and whose condition is
critical, due in some instances to over-extended condition and in other instances to the
fact that a large portion of their assets consist of slow and frozen paper.
To which question Governor Wellborn, with the support of the Executive
Committee, responded:
...Each case has its own particular difficulties and therefore must be given
consideration on its own merits, taking into consideration the management of the bank,
the standing of its directors and the confidence that can be placed in those operating it,
particularly whether or not they have the confidence of the community. The Executive


Committee realizes that there is some risk involved in extending credit to banks whose
condition is critical, due to impaired capital and the existence of frozen and doubtful
assets, but if the bank can be saved, no loss will be sustained, whereas our experience
has shown that when banks fail and their assets liquidated, that in spite of our caution
and efforts to obtain ample security against their indebtedness, we frequently sustain a
loss on account of a shrinkage in values from the depressed condition in a community
brought about by the bank’s failure.
“The Committee thinks that every effort should be made by us to rehabilitate
these banks by urging the directors to see that the impairment of capital is made good,
realizing of course that the extension of credit by us should not represent the furnishing
of capital and the extension of credit alone will not save a bank, nor overcome its
difficulties brought about by losses in its assets. However, a moderate amount of credit
can be extended with little risk, pending the rehabilitation of a bank by its directors and
stockholders, and in this way avert a crisis in its affairs, and enable it to care for
seasonal shrinkage in deposits until a favorable time when its impairment may be made
Two events of the summer of 1925 had considerable effect upon the operations
of the Sixth District Federal Reserve Bank - the worst drought in 70 years and an
unprecedented real estate boom in south Florida. Writing to his son from Miami Beach
at the height of the boom on October 5, Governor Wellborn said:
“...This summer has been a remarkable one in many respects. The calm which
always follows the storm has come upon the real estaters on the beach and thousands
are now making time while waiting for the coming of a new supply of buyers to fill their


“I have been a spectator in the midst of the most active land speculation the
world has ever had and now after the battle the weary combatants seek repose amid
the graceful palms along these fateful shores. The building campaign follows slow
behind and costly lots are made to produce revenue to satisfy the greedy owners. As
usual, transportation has completely broken down while the clamor for building material
is loud and fierce- -all construction projects are delayed and labor annoyed and
harassed. In the faces of the populace you may read the old story- - one half is worried
and weary and the other frivolous and ‘don’t give a damn’- -mingling in riotous endeavor
for better or for worse, mostly the latter.
“Everything is magnified and exaggerated. The superlative degree reigns
supreme. I never before beheld such serious minded, hard workers, or so many
unscrupulous adventurers. The bright sun shines upon the largest and most varied
collection of thieves ever before gotten together in any clime- -they hesitate at nothing.
All sorts and conditions of men are attracted here by the opportunities for moneymaking- -those without capital must compete with the majority who are smart and keen.
The survivor is put to the most rigid test and deserves all he gets for he has been
obliged to fight every inch of the way.32
In more sober vein, Wellborn reported to his Board of Directors during the
same month:
“Florida is highly prosperous and the boom in real estate has continued there
throughout the year without abatement. In fact, it has developed each month so rapid a
pace that the officers of our bank feel that when the collapse comes in the not distant


future, which we think is inevitable, we will have very serious problems to meet. When
the balloon collapses, it falls to the ground very rapidly; and I venture to predict the
result will be a very sudden and tremendous decline in bank deposits. As history has
always shown in the past, many individuals will be completely wrecked, and their notes
held by banks will be uncollectible. There is nothing we can do except to sit steady, and
warn our banks to keep their funds in liquid condition, if possible. This we have been
doing for the past three years, and it is hoped that when the crash comes, they will be
prepared to some extent to meet the troubles that will arise. 33
“Over quite a large area in North Georgia, starting just above the middle part of
the State, has occurred this summer the most severe drought in the past seventy years.
Northeast Georgia in particular has been practically without rainfall front April to the
present time (October). Naturally, cotton, the chief product of the farms of this section,
has suffered badly, and in many instances not enough will be realized from the cotton
raised to pay for the fertilizer and seed. The severity of the drought will, of course, be
reflected in the business of our member banks in this territory, and this circumstance
naturally gives us a great deal of concern...
“My view is that well managed banks which are suffering through no fault of
their own, but merely through untoward circumstances, should receive a helping hand
from us. I believe that it is only right and fair that our bank should not only show a
sympathetic attitude, but that we should do what we can to render such institutions
substantial relief.
“The conditions as a whole in our district appear to be very favorable. Nearly all
of our industrial plants are operating to full capacity, and the crop conditions--outside of


the sections which have suffered from the drought--are very good indeed. South
Georgia made a splendid cotton crop, and the crops in Alabama are also good. That
state will probably make a million and a quarter bales of cotton. In Mississippi, they
have the best crop they have had in a quarter of a century- -in fact, it has been an
almost perfect one.”34
The following month, November, Wellborn again commented anent the Florida
“We are watchful of the Florida situation in contemplation of what may happen
when the present ‘boom’ recedes. We are urging our members in Florida to hold their
loans down to their local customers, and keep their funds with strong banks; to buy
high-class commercial paper and Government securities. These being, in our opinion,
the safest places to have a secondary reserve. 35
Meanwhile, a revolving currency fund of $2, 000, 000 was established on
August 15 at the First National Bank of Miami in order to take care of currency
requirements of member banks in that city and vicinity. 36
A reckoning on the Florida land extravaganza was soon to come.
During the year 1925, total resource and liability items of the Federal Reserve
Bank of Atlanta increased $53, 683, 000--from $242, 845, 000 on December 31, 1924,
to $296, 528, 000 one year later. Cash reserves decreased during the same period from
$176, 318, 000 to $123, 425, 000. The Reserve deposits of member banks amounted to
$78,276,000 on December 31, 1925, which was $15, 379, 000 greater than on the
same date in 1924.37
With a total membership of 495 banks at the close of 1925, the volume of


accommodation extended to 320 members during the year aggregated $527, 945, 000,
which was $22, 367, 000 less than the amount extended to 390 member banks during
1924, when the membership at the chose of the year was 516 banks.38
On one front during 1925, the Bank did not progress. No tenant could be found
for the unused space in the building. Necessary restrictions imposed by the nature of
the business of the landlord were simply unpalatable to desirable corporate tenants.39


Chapter 14

Keller, Dictionary of Dates, II, 340-345.
Garrett, Atlanta and Environs, II, 811-815.
Minutes, Directors, III, 925.


Ibid. ,923-924.


Ibid., 925-926.


Ibid. , 926.


Atlanta Trust Company.


Minutes, Directors, III, 929.


Ibid. , IV, 937.




Ibid. , 958; biographical records, Federal Reserve Bank of Atlanta.


Minutes, Directors, III, 926.


Ibid. , 926-927.


Ibid. , IV, 954.


Ibid. , 956-957.


Ibid. , 996.


Ibid. , 1049, 1061; Who Was Who in America, Vol. 1, p. 1149.


Ibid. , 1040.


Ibid. , 992.


Ibid. , 1039.


Ibid. , 1045.



Ibid. , 964-965.


Ibid. , 983.


Ibid. , 968.


Ibid., 969, 973, 980.


Ibid., 1063.


Ibid., 1061.


Ibid. , 991.


Ibid., 950-951.


Ibid., 1005.


Ibid. , 1009.


Hopkins, M. B. Wellborn, 120-121.


Minutes, Directors, IV, 1052.


Ibid., 1051.


Ibid. , 1058.


Ibid., 1029, 1040.


Annual Report, 1925, p. 6.


Ibid. , 9.


Minutes, Directors, IV, 979.


Chapter 15

With Collidge in the White House during 1926, the equanimity of the American
people was little disturbed from that quarter during the year.
Henry Ford adopted the five-day week and eight-hour day as standard for his
work force. Congress passed a Revenue Act reducing income taxes by nearly $400,
000, 000, with a maximum rate of 20% for individuals and 13-1/2% for corporations. A
fund of $2, 500, 000 was established by Daniel Guggenheim for the promotion of
aeronautics; the first successful radio-telephone conversation was held between New
York and London, and an original Gutenburg Bible fetched $106, 000 in New York and
was presented to Yale University. 1
It was an interesting year in the world of sports. Robert T. Jones, of
Atlanta, won the British open golf championship; Gertrude Ederle, of NewYork, became
the first woman to swim the English Channel, and Gene Tunney defeated Jack
Dempsey, of Philadelphia, for the world heavyweight boxing championship. Some
notable departures from the land of the living included Luther Burbank, the naturalist;
Charles W. Eliot, president-emeritus of Harvard; Rudolph Valentino, movie actor and
idol of countless American women; and Joseph G. “Uncle Joe” Cannon, speaker of the
House for four straight terms. On September 17 and 18, a hurricane in the Miami,
Florida, area killed 370 persons, injured thousands, caused property damage of $100,
000, 000 and, for practical purposes, wrote finis to the real estate boom.2
Closer to home, Dr. L. G. Hardman took over Georgia’s helm as Governor;


Walter F. George was re-elected to the Senate, defeating Georgia Chief Justice Richard
B. Russell, and Isaac N. Ragsdale, a successful livestock dealer defeated four other
candidates for the Atlanta mayor’s chair. Eugene Talrnadge came to prominence on the
political stage by virtue of election to the post of Commissioner of Agriculture. 3
The City of Atlanta floated a bond issue of $8, 000, 000 for schools, sewers,
waterworks improvements, a new city hall, and for the CentTal Avenue and Pryor Street
viaducts. Private building included a greatly expanded Southern RaiLway Building,
Pullman shops at Kirkwood, Whitehead, and Medical Arts buildings, and the Atlanta
Athletic Club. The Atlanta Historical Society was organized and Thomas H. Pitts closed
his famous Five Points soda fountaion. “To much decentralization and not enough
people downtown,” he said. Neighbor hood shopping areas were coming to the fore.4
The Federal Reserve sank of Atlanta entered 1926 with the same roster of
officers who had functioned during 1925, as did the various branches. 5
The following gentlemen were re-elected to serve three-year terms as Directors
of the various branches: J. H. Frye, Birmingham; G. G. Ware, Jacksonville; T. A.
Embrey, Nashville; and J. P. Butler, New Orleans. Randolph and Parker were re-elected
General Counsel at a retainer fee of $3, 500 per annum, payable monthly, and an
allowance of $1,500 for stenographic services.6
A contest developed for Class “A” and Class “B” Directors for the Atlanta Bank.
Edward C. Melvin, of Selma, Alabama, defeated T. W. McCoy, of Vicksburg,
Mississippi, for the Class “A” post by the narrow margin of 109 to 103. W.H. Hartford
won the Class “B” position by a landslide, 109 to 26, over B. H. Baker, of Cottondale,


The new Director, Mr. Melvin, destined to serve for 10 years, was born in
Selma, Alabama, in 1870. Following a course at the Poughkeepsie Business College he
began his career as an employee of the City National Bank of Selma. During the year
1904 he tried the wholesale grocery business, but soon returned to banking and served
the Selrna National Bank as President and, finally Chairman, for nearly 50 years. He
also functioned as President of the Selma Trust & Savings Bank from its organization
until shortly before his death in 1954.8
At the January 1926 Board meeting, committees were appointed, with W. H.
Kettig designated as Chairman of the Special Salary Committee; J. A. McCrary, Building
Committee; and Oscar Newton, Bank and Public Relations.9
Branch Bank Directors, reappointed at the same time by the Federal Reserve
Board were: P. H. Saunders, New Orleans; W. H. Kettig, Birmingham; J. C. Cooper,
Jacksonville; and W. H. Hartford, Nashville. Oscar Newton was reappointed Federal
Reserve Agent and Chairman, Atlanta; W. H. Kettig as Class “C” Director and Deputy
Board Chairman, Atlanta; and Ward Alberta on and W. B. Miller, Assistant Federal
Reserve Agents, Atlanta and New Orleans, respectively.10
Election of a Federal Advisory Council member, to succeed Oscar Wells,
developed into a spirited affair. The name of E. W. Lane, of Jacksonville, was placed in
nomination by Director McCrary. P. D. Houston, of Nashville, was nominated by Director
Hartford. Two ballots by hand resulted in a tie. Three written ballots produced the same
result. Finally, on the sixth ballot, Mr. Houston forged ahead five to three and was
declared unanimously elected. 11
Persia Daniel Houston (1874- 1957) was, by profession, a banker. He was born


in Marshall County, Tennessee, and spent his adult business life in Nashville. At various
times he was Board Chairman and Director of Southern Trust Company, Louisville;
Honorary Board Chairman, First American National Bank,Nashville; Director, Hermitage
Hotel Company; Chairman, Tennessee State Planning Commission; President,
American Bankers Association and of the Railway Treasurers Association, and a trustee
of both Vanderbilt and Fisk Universities.12
Atlanta Board members were saddened at their February meeting by the
announcement of the death, on January 18, of Peter R. Kittles, a Director since 1918
and in the early days of the Bank, its Auditor. Several Directors paid personal tribute to
their departed associate; appropriate resolutions of regret were adopted, and the chair
occupied by Mr. Kittles as a Director and bearing his name, was sent to his widow. 13
On March 9, an election was held for a Class “A”, Group 3 Director of the
Atlanta Bank for the unexpired term ending December 31, 1926. Julius Morgan, of
Pembroke, Georgia, received 11 votes; T. Y. Smith, of Bartow, Georgia, 14; and G.G.
Ware, of Leesburg, Florida, 118. Mr. Ware was welcomed by Board members at their
meeting on March 12. 14
The new Director, who was to serve until the close of 1935, was that
comparative rarity, a native of Florida, having been born at Providence, that State, in
1885. After serving various banks as bookkeeper and cashier, Mr. Ware became
president successively of the Citizens Bank of Leesburg, Florida; the First National
Bank of Leesburg; and the First National Company, of that city. He also served as
President of the Lake County Chamber of Commerce and Director, Florida
Development Board.15


Few other official changes took place .during the year. In August, Claude
Gilbert was temporarily appointed Assistant Federal Reserve Agent to make a
constructive survey of member banks at a salary of $10, 000 per year. He resigned
November 23 in order to commence special work for the Federal Reserve Board in
Washington. 16
The matter of Deputy Governor J. L. Campbell will be cited later in this chapter.
Meanwhile, in August, James A. Goethe was elected Assistant Manager of the
Savannah Agency at an annual salary of $2, 400. Indeed, for the preceding six months
he had functioned as Manager during the absence of R. N. Groover. 17
Groover had been serving as a special agent of the Bank in Atlanta in
connection with the assets of the defunct Georgia National Bank of Athens. Whi]e so
serving he was guilty of an act of negligence which led to his discharge.
Among the assets of the Georgia National was a note signed by J. B. Joel for
$10,000 due in 1925. Joel made a $1,000 payment by check on January 28, 1926 and
tendered it to Field Representative Groover. Groover later testified that there was no
one in the bank at the moment to receive the check fzom him. So, prior to going to lunch
he went by his hotel room to wash up and locked the check in his trunk for safekeeping.
Other matters came up during the afternoon. The Joel check slipped Groover’s mind
and did not again come to light until he was cleaning out his trunk in May. Greatly
embarrassed, he turned the check in and added one of his own for $33. 00,
representing an interest payment to Mr. Joel.
Groover was given a hearing by the Board of Directors. While he was regarded
as thoroughly honest, he was adjudged guilty of gross negligence and was relieved as


Savannah Agency Manager. He was tendered a position in the Discount Department in
Atlanta at a reduced salary, subject to the approval of the Federal Reserve Board. The
Board did not approve. In a letter to Chairman Oscar Newton, D. R. Crissinger wrote:
“…Mr. Groover has been guilty of gross negligence in the performance of his
duties. For this reason the Board disapproves the recommendation of your Board of
Directors for the further employment of Mr. Groover, and the payment to him of any
Salaries generally throughout the Bank increased in 1926 over 1925. A
comparison of officers’ salaries for the two years is shown below:


M. B. Wellborn


J. L. Campbell





Deputy Governor



Creed Taylor

Deputy Governor



M. W. Bell




H. F. Conniff

Assistant Cashier



R. A. Sims

Assistant Cashier



J. B. Tutwiler

Assistant Cashier



W. S. Johns




J.W. Honour

Assistant Auditor

Ward Albertson

Asst. Federal Reserve Agent





A. E. Walker

Manager, Birmingham



G. R. DeSaussure

Manager, Jacksonville



Joel B. Fort, Jr.

Manager, Nashville




Marcus Walker

Manager, New Orleans



During March 1926, Governor Wellborn submitted recommendations covering
revised vacation schedules for officers and employees. They were adopted and
provided as follows:
Parent Bank and Four Branches:
All officers - three weeks.
Employees- -including Savannah Agency: Employees entering the service of
the bank on or before January 2, 1926, to be granted six days vacation, plus one
additional day for each full month’s service during 1925--no vacation to be granted until
employees shall have served six months. No employee entering the service of the bank
after January 2, 1926 to be entitled to a vacation during the current year.
No vacation should be granted prior to April 1 nor later than September 15.
Except in cases where employees are entitled to more than one week and less
than two weeks, all vacations should start at the close of business Saturday, returning
the second Monday--in the case of one-week vacations, and the third Monday for twoweek vacations.
The Manager of the Havana Agency was given one month with transportation
to and from Havana-Atlanta, paid by the bank. For the Assistant Manager and other
Havana employees- -odd years of service, three weeks; even years six weeks, with
same transportation as above. 20
A number of matters concerning operating policy were settled during 1926. At
this particular point of time in the history of the Federal Reserve System, it appeared
that the Atlanta Bank was the only Federal Reserve Bank where the Board of Directors


did not give approval, in some form, to actions of its Executive Committee. Upon the
matter being cited by the Federal Reserve Board, it was recommended by a committee
of the Atlanta Board that a digest of unusual and important matters acted upon by the
Executive Committee be furnished the Secretary to be submitted to the Board at each
regular monthly meeting.21
As the result of lengthy litigation between the Pascagoula National Bank and the
Federal Reserve Bank of Atlanta, which began in 1924 and was concluded May 4,
1926, in the United States Supreme Court of Appeals for the Fifth Circuit, some
important legal milestones were established. Reported Messrs. Randolph and Parker,
General Counsel:
“This important litigation is ended and the courts have squarely upheld and
sustained the contentions of the Federal Reserve Bank of Atlanta on all issues or points
“As a result the following things are now conclusively established:
“First: The Federal Reserve Bank can legally require, as provided in the
Federal Reserve Act, a member bank to make remittance to it without deduction for socalled exchange charges.’
“Second: The Federal Reserve Bank can legally inaugurate and enforce a
policy of ‘deferred credit’ to its member banks on all remittances made by them in
accordance with reasonable time sechedules adopted.
“Third: The Federal Reserve Banks are permitted, under the terms of Federal
Reserve Act, to handle checks for non-member banks as well as member banks, and
for its member banks can handle checks payable without as well as within its own


“We have taken occasion in passing to refer specifically to the very important
ruling made by Judge (Srnauel H.) Sibley that suits cannot be brotgh.t against the
Federal Reserve Board except in the District of Columbia. This was an issue squarely
raised in this litigation and the decision is of far-reaching importance and should prove
of the utmost value in the future. 22
Randolph and Parker, General Counsel for the Atlanta Bank, were assisted in
this litigation by Walter Wyatt, General Counsel of the Federal Reserve Board, by M. B.
Angell, of the John W. Davis law firm in New York, and by Newton D. Baker, of
A general policy was enunciated at the September Board meeting relative to
“Land Owners’ Endorsement on Tenant Farmers’ Notes,” in the following language:
“It is the general practice of member banks in agricultural sections of this
district since 1920 and 1921 to require land owners to endorse tenant farmers’ paper. In
our numerous conferences with member banks, we suggest and urge that they obtain
the endorsement of land owners, due to the hazard of making advances solely secured
by crops since the boll weevil infestation in this district. However, we cannot determine
in case of a particular note offered whether or not it should be endorsed by land owner.
This must be left to the discretion of the officers of the offering member bank.24
For several years past, Governor Wellborn had worked strenuously in an effort
to have the Bank discontinue the handling of non-cash collection items. In late
September, 1926, a letter was received from Governor Crissinger, of the Federal
Reserve Board, to the effect that each bank exercise its own option as to the collection


of such items at street addresses, but continue the collection of non-cash items
collectible at banks. Wellborn’s happy reaction is indicated by a letter he wrote to
ManagingDirector Walker, of the New Orleans Branch:
“… Am delighted that we have now obtained what I regard as a signal victory.
Only three of the twelve Federal Reserve Banks--Minneapolis, Kansas City, and
Atlanta--were in favor of discontinuing non-cash collections, but we finally prevailed
upon the Federal Reserve Board to adopt a ruling permitting each Reserve Bank to
follow out its own discretion in the matter. I have long regarded the voluhtary
performance of this service by a reserve bank as being very unjust and unfair to
member banks located in Federal Reserve Bank or Branch cities. I do not think the
Federal Reserve Bank should do business with the public…”25
Upshot of the matter was that the Atlanta Board, in December, authorized the
preparation of a circular to be sent to member banks announcing the discontinuance of
handling non-cash items payable at street addresses.26
At the January 1926 Board meeting, Governor Wellborn made an interesting
report on bank failures during the preceding year. He said:
“During the past year, we have had in our district eight national banks to fail
and four state bank members of the Federal Reserve System
“These failures were caused by conditions which existed in 1920 when cotton
dropped from 40 cents to 11 cents a pound during the crop moving season. These
particular banks27 might have been able to weather the storm if they had had good
years immediately following, but these good years did not come. On the contrary, the
crops have been small for the past five years; and, in 1925, to cap the climax, these


sections experienced the severest drought ever known, for practically no rain fell from
March until the latter part of September.
“With regard to taking care of these banks, we rendered them very liberal
assistance, but were careful to follow out the policy of your Board in trying to avoid any
losses ourselves. While we extended to the banks that finally failed liberal
accommodation, I might say that we did not take any extraordinary or heroic steps to
save them, for fear of involving ourselves in ultimate losses. Our procedure was to urge
the directors either to guarantee their borrowings from us, or put into the banks
sufficient funds to restore any impairment of capital. With many of these banks which
were in dire distress because of diminition of deposits brought about by local causes,
our experience was that when those interested in their management began to undertake
a rehabilitation of their affairs through conferences with us or among ‘themselves,
rumors of the nature of these conferences almost invariably leaked out. This was
generally followed by increased deposit withdrawals, which, together with the banks’
inability to obtain further funds from us on the paper offered, resulted ultimately in their
“In the case of the Georgia National Bank of Athens, Georgia, we accepted a
loss of $165, 000 in order that the institution might be taken out of the hands of a
receiver and placed in charge of a holding company organized by the people of Athens
to enable them to liquidate the bank’s affairs over a long period of time and thus avoid
sacrificing its assets by forced collections, such as a receiver in all probability would
have been forced to undertake.
“Our estimated total losses for the other banks that- failed last year amount to


$108, 990.28
As the year progressed the situation in Florida demanded increasing attention
from the officers and directors of the Atlanta Bank.
The Miami Revolving Currency Fund, set up in 1925, was increased from $2,
000, 000 to $3, 000, 000 in January 1926 and was discontinued by order of the Federal
Reserve Board in September. Also, in September, the Board turned thumbs down on
establishing a similar fund at Tampa.29
Toward the end of 1925, Governor Wellborn called .the Directors of the Atlanta
Bank together and told them the boom could not last forever and that the impending
collapse might throw too heavy a burden on the Florida banks. He announced his plan
to visit every member bank in the state.30
Accordingly, he bought a new car and started out, calling on the president of
every member bank from Fernandina to Miami. He warned of the wrath to come and
suggested that the banks be more chary of loans and concentrate more on collections.
When the boom was over their swollen deposits would melt like snow before the sun, he
told them. When asked for advice as to how the surplus funds should be invested, he
recommended the purchase of high class securities on the New York Stock Exchange
which could readily be converted into cash.31
Wellborn reported on the trip and on the Florida situation to the Atlanta Bank
Board on March 12:
“At the request of your Board, I left Atlanta on January 10 for Florida and
returned February 16, having visited 38 member banks from Jacksonville southward. I
did not make my trip hurriedly, because I wanted to have a full talk with the chief officer


of each bank and his associates.
“I have found that speculaticmin real estate, in city property, and subdivisions
are very numerous all over the State. I believe that the speculation, after going on for
the past few years, probably reached its height last summer and prices are now so high
that the buyers are on a strike and therefore not nearly so numerous.
“I believe that the banks will have some very hard problems to solve within the
next year or two and the burden will begin to fall on the banks, in my opinion, within the
next few months. It will come first in the shape of a decline in deposits and those who
are engaged in developing will appeal to the banks to aid them to carry out their
projects. It appears to me that there are a great many notes which have been given for
lots where subdivisions have been in the course of development, and many of these
notes will not be paid promptly. Therefore, the owners of the subdivisions will have to
seek financial assistance from whatever source it may be obtained.
“In discussing matters with member banks, I laid stress on holding their loans
down to a small percentage of their deposits, advising them that in my opinion when the
tide turned (as it is now turning), they will not be able to reduce these loans to their
customers very materially. In other words, it will be hard to collect their bills receivable.
They asked for an expression of my opinion as to what percentage would constitute a
conservative basis, and while I had no value to go by, I stated 25 to 33-1/3 percent
would be a fair basis to work on.
“I found that the small bankers did not look on the situation as being so serious
as did those in the larger banks, for the smaller bankers feel that they can depend on
their correspondents in the financial centers, such as Jacksonville, Miami, and Tampa,


where they are maintaining very comfortable balances.
“Real estate prices appear to me to be out of all reason, and every town I
visited seemed to have experienced a real estate boom. Should our member banks
outside of Jacksonville and Tampa wish to rediscount with us in larger amounts, they
will not be able to present eligible paper--that is, loans they have made to their local
customers. .They may have commercial paper bought in the open market that would be
eligible, but I am afraid that very little of their local paper is eligible as these latter are
based more or less on real estate transactions. If my surmises are correct, they would
have to rely very largely upon their correspondents in the State and without to help them
in taking care of declines in deposits.
“While I have stated above that speculation in Florida has reached its peak, I
did not mean to imply that the bottom will drop out of Florida. On the contrary, I believe
the state will continue to develop and develop along the right lines--that is, substantial
improvements, beautifying the waterways to accommodate the tourists, who I believe
will go to Florida in increasing numbers from now on. Thousands of people have been
to Florida in the past few years who have never been there before, and on account of its
attractive climate and the great advertisting it has had through its boom, Florida will
continue to grow and develop as a natural result, and, agriculturally, because of its
citrus fruits and early vegetables. 32
Deposits of Florida member banks had increased from $165, 984, 000 on June
30, 1924, to $445,917,000 on December 31, 1925.33
Eight months later, on August 13, 1926, Governor Wellborn reported.


“The large number of state banks which have failed in Florida and Georgia
within the past sixty days has attracted universal attention, naturally most marked in this
vicinity, and has had the effect of creating a general distrust in banking by those of the
public who are not familiar with the inner workings of the banking business.
“In Florida, about 41 banks have closed their doors, and in Georgia about 83.
However, only one bank in Florida was a member of our System, The Palm Beach
National Bank, and only one in Georgia, the

The non-member banks

which have failed were members of a chain system of which W. D. Manley, of Atlanta,
and J. R. Anthony, of Florida, were the ‘financial agents’. The failures began in Florida
and were followed by those in Georgia. The Florida banks had had very large deposits
for the past several years--in many instances eight or ten times the capital and surplus
of the bank--they loaned the Georgia banks on call several millions of dollars. When deposits began to decline in Florida, and the Georgia banks were called on to pay, they
could not respond. Also, I understand, the Florida banks had quite a large amount of
paper discounted with Mr. Manley and his associates at attractive rates of interest, and
a number of Georgia banks had the same kind of paper.
“While these failures in Georgia have been disastrous to their own communities, the banks were small, and the general economic and business situation in the
state has not been materially affected, it is currently reported that quite a number of
these failed banks may be reorganized and put on a good basis. This,. however, is
merely surmise based upon statements made in the press by those interested.

“The closing of these banks in Florida and Georgia naturally caused some


anxiety on the part of our member banks. The officers of our bank have been watching
the situation closely and have come to the aid of our member banks in a substantial
manner. In Florida, deposits continue to decline, and that is a problem which we will
have to help our member banks in state (sic) to meet. It is a very serious one, because
many of the banks are unable to collect their bills receivable in sufficient amount to take
care of the deposit decline. Their only resources are to call upon the Federal Reserve
Bank and upon their correspondents in various cities.
“At the present time, Deputy Governor Taylor is in Florida, in company with Mr.
Claude Gilbert, the newly appointed Assistant Federal Reserve Agent.
These gentlemen went to Florida with a view to going into all these matters
thoroughly with the banks in and around Polk County, special attention being paid to the
Polk County National Bank of Bartow, which is borrowing very heavily, about $200, 000
from us and about $500, 000 from correspondents in New. York and elsewhere. This is
a ‘key bank’, and if it should fail, it might cause many other failures. If we are to take
care of our good solvent banks in Florida, it may require a very liberal loan policy on our
part and those banks may be years in liquidating such indebtedness to us.
“It is a very serious situation in that state, and I think will continue so throughout
this year. Therefore, it behooves our bank to regard this as an emergency and to do all
in our power to keep down bank failures, while we must at the same time be careful to
accept only good eligible paper--that is, so far as we can judge from present conditions.
If Florida comes back promptly, much of this paper will soon be retired. On the other
hand, if things continue to go badly in Florida for several years, the borrowers from
those banks may find themselves in the same position as those in Georgia for several


years following the deflation period of 1920-21.” 34
Governor Wellborn then went on to reiterate his faith in the solid and
substantial future of Florida by repeating his report to the Board in March.35
In September, Wellborn again reported on the Florida situation:
“The section of our district which is giving our bank the most concern is, as you
gentlemen know, the state.of Florida, where deflation and readjustment set in during the
spring of this year, following a long period of inflation, which was very intensive in the
years 1923, 1924, and 1925. We are watching closely the banks that are most affected.
“As set forth in my report on conditions in Florida after my visit to that state in
January and February, the large city banks appeared to be more careful and cautious in
anticipating what was to come, and therefore prepared themselves. The small banks
and the intermediate sized banks, as a rule, were less cautious, and I presume they
were in that state of mind because they excpected to rely on their city correspondents
and the Federal Reserve Bank to help them in time of need.
“Since the last meeting of your Board, there has been a very serious situation
in and around Bartow, Florida, of which the Polk County National Bank was the center,
and involved not only that bank but the First National Bank, Avon Park, the
, and the First National Bank, Punta Gorda, which are more or
less allied with the

interests, and the Polk County National Bank.

These interests were also connected with eight or ten state banks in that vicinity, which
are non-members, but the failure of one o.r more might have caused very ~serious
results on account of such connection.
“On September 7, 1926, Florida banks’ borrowing from us amounted to $4,


398, 239. 74--about 8 percent of our total bans to member banks.
“I want especially to call attention to the splendid manner in which the Tampa
member banks and the Jacksonville member banks cooperated with our bank in taking
care of the situation. These banks joined together and raised a fund of $600, 000 and
we promised our hearty assistance in anything that was necessary to be done in aiding
our member banks as above stated to pull through the present crisis, which
arrangements have now all been perfected and, therefore, we do not look for any
special disaster in that immediate section. If something had not been done as has been
done, as above related, it would have affected, and might have resulted in the failure of,
many member and non-member banks in the middle ridge section of Florida. This
shows what cooperation and team work will do. Our Deputy Governor, Mr. Taylor, with
Mr. Claude Gilbert, Assistant Federal Reserve Agent, made several trips to Florida and
did splendid work in this connection. I think it is apt to quote Kipling in connection with
what has been done:
‘It isn’t the individual
Nor the army as a whole,
But the everlasting team work
Of every human soul!.” 36
At the October Board meeting, Ward Albertson, Manager of the Bank and
Public Relations Department, read a letter received from Claude Gilbert, relative to
conditions in Florida at that time. This letter was written after the hurricane of midSeptember. Reported Mr. Gilbert:
“From what I have seen so far, it is beginning to appear that the most of the


banks, particularly in the producing sections of the state, are making good progress and
may be expected to enter into the winter season without substantial further decline in
deposits. Public alarm generally has died down, and unless it should be revived, the
banks will have the time needed to reduce loans to a comfortable level. Most bankers
are expecting an increase in deposits, commencing in the next fifteen to thirty days, with
the return of the winter residents and the movement of the citrus crops to market. Very
few are looking for the high level of deposits of last year to be reached, and practically
all believe that there will be a substantial increase over present figures, and enough
income from produce and tourists to pay obligations for money borrowed.37
An occurence that brought home to the public the value of the Federal Reserve
System in time of emergency was the Cuban crisis of April, 1926. Indeed, the event
may have influenced Congress when the question of renewal of the Federal Reserve
Charter came up later in the year, for the charter was renewed without difficulty.38 Two
other events were certainly brought about by the crisis--the discharge of Deputy
Governor J. L. Campbell by the Federal Reserve Board and the closing of the Boston
Bank’s Havana Agency.39
Early in the week of April 6, rumors were started in the interior of the island to
the effect that the Royal Bank of Canada was in financial trouble and might suspend
payments. By mid-week runs had been started on branches of the Royal Bank in the
interior and on banks in Havana.
The Havana Agency had on hand about $10, 000, 000, most of which was paid
out on cable transfers by the end of the week. By Friday, the 9th, the Boston Agency
had sold an aggregate of $39, 000, 000 in cable transfers to Havana banks which the


Atlanta Agency could not complete because of lack of currency. Something had to be
done quickly to get currency to the Havana Agency by the opening of business Monday,
April 12.
At this point, Governor Wellborn picks up the story:
“Under date of April 9th, we received a request from our Havana Agency to
ship $3, 000, 000 in currency, which seemed quite a large amount to request at that
time, and upon wire inquiry to our Manager of that Agency, he replied to double the
shipment, as conditions there were becoming panicky.
“When this message was received in Atlanta, I was attending a meeting of our
Board of Directors in New Orleans, and upon receiving advice from Atlanta, I cancelled
my New Orleans engagements and returned immediately to the Atlanta office. The next
morning, Saturday, April 10th, we received a telephone call from our Havana Manager
(L. L. Magruder), requesting that we ship immediately by aeroplane or special train
between fifteen and twenty million dollars in currency as he had already received
requests for payments equalling that amount, and that if such currency was not received
by Monday morning, some of the banks on the Island of Cuba would have to suspend
“We immediately got into telephone communication with the Federal Reserve
Board, Washington; Federal Reserve Bank of Boston; Federal Reserve Bank of New
York; and the National City Bank of New York, all of which had received practically the
same information in regard to the situation on the Island of Cuba.
“We set to work preparing shipments of currency ranging from $5 denomination
and up, aggregating $26, 500, 000. It was found that the weight involved in the shipping


of this currency would not permit the use of an aeroplane, and therefore we chartered a
special train with the right-of-way set up through to Key West, Florida, which train left
Atlanta at 4 o’clock, Saturday afternoon, April 10th.40
“The shipment of currency was handled by usual registered mail in charge of
the U.S. Postal authorities, consisting of five Railway Mail Service employees and one
Post Office Inspector. Deputy Governor J. L. Campbell accompanied the shipment on
the special train, together with six employees of our bank, including guards and clerks.
Under agreement with the Postal authorities, Mr. Campbell took three additional guards
to Havana, and further deemed it necessary to take three experienced clerks from our
Atlanta bank to assist our Agency employees at Havana in paying out the currency.
“Mr. J. A. McCrary, a director of our bank, intended to go to Florida, and I
suggested that he accompany the train as far as Cocoa, Florida, his intended
destination. With him went a Mr. Loving, an employee in his engineering business. I
considered that Mr. McCrary and his friend would be an additional protection, for
Governor Crissinger41 had ‘phoned me that morning to be sure to have ample forces
accompany the party. After arriving at Cocoa, Mr. McCrary consulted with Mr. Campbell
and decided to go with the party to Havana.
“The train arrived at Key West at 4 o’clock Sunday afternoon and was met by
the cruiser ‘Cuba’,42 whereupon the shipment of currency was transferred to the boat
and delivered to the Cuban postal authorities. Upon landing at Havana, the shipment
was under military guard from the docks to the vaults of. the Agency, being transported
by trucks. Deputy Governor Campbell, with the guards and other members of the
Atlanta party, followed close behind. The boat arrived at Havana at 2 o’clock Monday


morning; the money was dispatched immediately to our Havana Agency, and payments
were made to the banks at 7 o’clock Monday morning. The Havana banks thus received
funds in ample time before the opening hour of nine o’clock.
“It is our information that on Saturday the Cuban government deposited with
the Havana banks twelve million dollars in currency, which together with other currency
was shipped down the Island of Cuba to branch banks in the aggregate amount of
eighteen million dollars, all of which was by special train. Everything was handled
without interruption and to the entire satisfaction of all concerned, we receiving the
highest degree of cooperation from every source.
“After the above shipment, which was prepared on Saturday afternoon, we
again got in telephone communication with Mr. Case, Deputy Governor of the Federal
Reserve Bank of New York, who informed us that the amount of money being shipped
would not be sufficient to care for the needs of the banks. Therefore, we immediately
instructed our New Orleans Branch to ship by registered mail ten million dollars in
currency, which arrived in Cuba on Wednesday, April 14th. All told, the following
shipments were made to the Island of Cuba, on Saturday, April 10th:
Prom Atlanta


From New Orleans


From Washington




All pending payments in Cuba were completed early Monday morning and the
runs subsided as banks were able to meet demands made upon them. In about two
weeks conditions returned to normal and a large portion of the currency paid out flowed


back to the Agency in payment of cable transfers of funds to the United States. The
Federal Reserve Agencies were highly commended by the Cuban government and
press for the expeditious manner in which the situation was handled.44
About a year later, Cuban President Cachado arrived in Atlanta with his full
staff for an official visit. The city gave the Cubans the most elaborate reception it could
muster. GovernorWellborn was the principal speaker at the official luncheon.45
Meanwhile, the Cuban operation had some repercussions. On April 28, 1926,
certain rumors, criticisms and charges of misconduct reflecting upon the character of
service rendered by the Havana Agency of the Federal Reserve Bank of Atlanta in
Cuba came to the attention of the Federal Reserve Board in Washington. On May 1,
that Board adopted a resolution which authorized and directed its Board Member
George R. James to go to Havana and make a thorough investigation of the bank run
and its aftermath. Mr. James and a committee appointed to help him made an
investigation. He subsequently personally appeared at a special meeting of the Atlanta
Board on May 31 and made a report.
The specific charges and criticisms investigated by Mr. James and his
committee were six in number:
“1. That the Havana Agency of the Federal Reserve Bank of Atlanta did not
have a sufficiently large supply of currency on hand in Havana to meet or pay cable
transfers received by the Boston Agency as they were presented.
“2. That the Atlanta Agency was ‘asleep on the job’ and did not take proper
steps to insure getting additional currency in Havana by Monday morning, April 12.
“3. That nothing but praise is heard for the Boston Agency, but Atlanta is being


criticized for lack of cash reserves and initiative in Havana.
“4. That all members of the party in charge of the currency from the Federal
Reserve Bank of Atlanta proceeded from Key West to Havana on a ‘joy ride’ or pleasure
“5. That on the way over from Key West to Havana the entire party from Atlanta
became intoxicated.
“6. That the men were in a disgraceful condition upon arrival in Havana and
conducted themselves in such a way when the boat was docked as to disgrace the
Federal Reserve Bank of Atlanta in the eyes of the bankers and officers of the Cuban
Government who were at the dock to meet the boat.”46
While the findings of the James Committee did not bear out all of these
charges and criticisms, the smoke did, however, conceal a modest flame of irregularity:
“1. The Atlanta Agency did not have sufficient currency on hand to pay the
cable transfers received by the Boston Agency as and when presented; but the
Committee is not disposed to lay particular stress upon this situation because there was
a sudden and abnormal demand for currency arising out of the run on the two most
important banks in Cuba. The Committee found, however, that the supply of currency
on hand at the time the run developed was not sufficient to meet such an emergency as
might have been reasonably expected.
“2. The Committee finds that the Atlanta Agency was not ‘asleep on the job’ but
had its hands full paying out such currency as it had on hand; that it was very busy at
this task until 4 p. m. , Saturday, April 10th; that it did get word to the home office in
Atlanta in time for the home office to start a special train for Key West carrying a large


amount of currency by 4 p. in., Saturday, April 10th.
“3. Your Committee heard nothing but praise for the manner in which the
Boston and Atlanta Agencies met the emergency. Atlanta was criticized for not having
sufficient cash reserves on hand to meet the emergency, but the Committee heard no
criticism of lack of initiative on the part of the Havana Agency.
“4. This charge was substantiated. Nineteen men in all, including Messrs.
Campbell, McCrary,


in addition to a

number of Post Office inspectors and at least one railroad man were taken to Havana
over the protest of Mr. Montavvo, Cuban Director of the Post, and the officers of the
Cuban gunboat. Of these men, only four or five were actually needed in Havana, and
none of them were needed to guard the money on the way over because the money
was in the custody of the Cuban Government. The Committee finds that Mr. Campbell
was responsible for taking these men to Havana on a pleasure trip imposing an
unnecessary expense on the Federal Reserve Bank of Atlanta.
5. This charge was not substantiated in full. There was evidence to the effect
that there was general drinking among the party, and that Mr. Campbell and three
unidentified men of the party were drunk on the boat. The only person identified and
clearly proven to be intoxicated on the boat was Mr. Campbell.
“6. This charge was not substantiated. The overwhelming preponderance of
testimony showed that nothing improper occurred upon the arrival of the men in
Havana, and that they did a good job unloading, checking, and paying out the
The James Committee made several additional findings of fact, substantially as


That there is a feeling of jealousy and mutual distrust between the two Federal
Reserve Agencies in Havana, causing confusion and misunderstanding, and that one
Agency could best handle the situation; that the Atlanta Agency should carry at least
$10, 000, 000 for current purposes and an additional $20, 000, 000 as a reserve to
meet possible emergencies; that the currency in Cuba is disgracefully dirty and should
be cleaned up and that W. C. Rich, Manager of the Boston Agency, did not play so
large a role as reported in obtaining the cooperation of the Cuban Government in the
After which the Committee made the following recommendations:
“1. That Mr. Joseph L. Campbell, Deputy Governor of the Federal Reserve
Bank of Atlanta, be eliminated from the Federal Reserve System.
“2. That the Havana Agency of the Federal Reserve Bank of Boston be
discontinued and all of its functions transferred to the Havana Agency of the Federal
Reserve Bank of Atlanta.
“3. That the Federal Reserve Bank of Atlanta be required to set up and
maintain an adequate organization to provide the proper service for the Federal
Reserve System in Cuba.
“4. That on the basis of the Committee’s findings of fact regarding the
amount of currency which should be carried in Havana, i. e., $10, 000, 000 for current
purposes and a reserve of $20, 000, 000 additional to meet possible emergencies, your
Committee recommends that the $10, 000, 000 be carried in Havana in the form of
issued currency and that the $20, 000, 000 be carried there in the form of unissued


Federal Reserve Notes in the custody of an Assistant Federal Reserve Agent assigned
to Havana.
“5. That to this end the present organization of the Havana Agency of the
Federal Reserve Bank of Atlanta be further augmented by the appointment of a man of
proper education, training and experietee to the position of Manager of the Agency and
that Mr. L. L. Magruder, the present Manager, be appointed Assistant Federal Reserve
Agent and assigned to the Havana Agency.
“6. Your Committee is very emphatic in its opinion that the Havana Agency of
the Federal Reserve Bank of Atlanta should be housed independently of any
commercial banking institution doing business in Cuba ...
“7. Your Committee is deeply impressed with the responsibility of providing a
clean currency for Cuba…”49
The Atlanta Board was, naturally, taken aback by the charges and criticisms of
the James Committee, though it heartily endorsed the latter’s recommendation that the
Cuba Agency be given to the Atlanta bank alone. Indeed, the dual operation, with
Boston also in Havana, had always constituted an annoying situation for the Atlanta
On the afternoon of the same day, May 31, that the charges and criticisms
were made, the Atlanta Board resolved as follows:
“First; That the Federal Reserve Board be requested to furnish us the charges
made against this bank and its officers.
“Second; That the Federal Reserve Bank be requested to furnish us the names
of the party or parties making such charges.


“Third; That the Federal Reserve Board furnish us the evidence concerning the
Cuban shipment as gathered by its committee.”50
The fourth paragraph of the resolution provided for a committee to confer with
the Federal Reserve Board; to investigate every detail of the Cuban shipment; to go
wherever necessary and to employ such help as may be necessary; and finally, a
request to the Federal Reserve Board to defer any action until the investigation had
been completed.51
The Atlanta Committee consisted of E. R. Black, Chairman, and Directors E. C.
Melvin and G. G. Ware.52 These gentlemen made a thorough investigation and
reported their findings at the regular Atlanta Board meeting on September 24, 1926.
The report was quite lengthy and went into much detail, though its gist is reflected in the
concluding paragraph:
“We have in fairness to everybody endeavored to present a full report to this
Board and our conclusion is that the Federal Reserve Bank of Atlanta did a good job in
this Cuban shipment; that all of its officers and employees were loyal, faithful, intelligent
and capable in the discharge of their duties in the matter of this shipment; that none of
these officers and employees acted in a manner that was not gentlemanly and not in
accord with the dignity of our Bank, and that our Bank and its officers have the right to
feel proud that as a member of the Federal Reserve System the Federal Reserve Bank
of Atlanta in this emergency did its full part towards meeting the Situation which was
forced upon it. 53
A discussion of the report followed, after which, on motion of Director Hartford,
seconded by Director Hopkins, it was approved, though not unanimously. Chairman


Newton voted in the negative with the comment that, “I cannot vote to approve the
report of the Committee which absolves Mr. Campbell from all blame in the matter of his
conduct as the official head of the expedition which transported twenty-six million dollars
in currency from the Federal Reserve Bank of Atlanta to Havana..”54
The Campbell matter came .to a head in October upon receipt of a, letter from
the Federal Reserve Board in Washington, signed by Walter L. Eddy, Secretary, in
which, by order of the Board, Joseph L. Campbell was discharged. In part, the letter
“…After careful consideration of the evidence ... the Board is of the opinion that
most of the charges against Mr. Campbell are substantially true and supported by the
“…Mr. Campbell demonstrated a lack of certain qualifications which are
requisite and necessary for a senior officer of a Federal Reserve Bank...”55
Though the action of the Federal Reserve Board prevailed, Mr. Campbell ‘s
associates on the Atlanta Board, with the exception of Mr. Newton, moved and passed
resolutions of confidence and respect. In part, they read:
“…The Board of Directors of the Federal Reserve Bank of Atlanta voices its
implicit and unshakeable confidence in the high character and integrity of J. L.
Campbell, Deputy Governor, and deeply regrets the action of the Federal Reserve
Board in ignoring the action taken by this Board in exonerating the said Campbell.56
He was allowed to resign, effective November 15, l926.
As the furor over Deputy Governor Campbell was at its height in early
November, the dual Atlanta-Boston operation in Havana was being considered. The


Federal Reserve Board scheduled a hearing in Washington to discuss a two-point
1. To consolidate the Havana Agencies of the Federal Reserve Banks of
Boston and Atlanta, and
2. To place under the supervision of the Federal Reserve Bank of Atlanta an
agency performing all of the functions now performed by the existing agencies.57
A committee from the clearing houses of the Sixth District, chaired by Oscar
Wells and the Atlanta Bank’s Committee on Cuban Agency, composed of Directors
Kettig, Black, Hopkins, Simon, and Ware, went to Washington to plead the cause of the
Atlanta Agency. The groups were armed with convincing data prepared by a Committee
of the Atlanta Clearing House Association, headed by John K. Ottley.58
On December 7, the Federal Reserve Board, in a letter signed by D. R.
Crissinger, Governor, the Atlanta Board was officially notified that effective January 1,
1927, the Boston Agency in Havana would be closed and its functions taken over by the
Havana Agency of the Federal Reserve Bank of Atlanta. Resolutions of appreciation
were adopted by the Atlanta Board and forwarded to Washington. 59
All in all, 1926 was a busy and somewhat exciting year for the Federal Reserve
Bank of Atlanta. Earnings, compared with the three previous years, were excellent. On
a total of $3, 045, 867, net earnings, available for dividends, surplus and franchise tax
came to $1,228, 327.60

Chapter 15



Keller, Dictionary of Dates, IL, 345-350.




Garrett, Atlanta and Environs, II, 818-825.




Minutes, Directors, IV, 1071.


Ibid., 1072.




Biographical Records, Federal Reserve Bank, Atlanta.


Minutes, Directors, IV, 1083.

10. Ibid., 1085-1086.
11. Ibid., 1086.
12. Who Was Who in America, III, 420.
13. Minutes, Directors, IV, 1087, 1092-1093.
14. Ibid., 1094.
15. Biographical Records, Federal Reserve Bank, Atlanta.
16. Minutes, Directors, IV, 1171, 1233.
17. Ibid., 1185, 1187.
18. Ibid., 1209-1212, 1230-1231.
19. Ibid., 1064-1065.
20. Ibid. , 1098.

21. Ibid., 1113.


22. Ibid., 1139.
23. Ibid.

Ibid. , 1180.

25. Ibid. , 1226-1227.
26. Ibid. , 1244.
27. National Banks: Georgia National, Athens, Georgia; First, Buena-Vista,
Georgia; First, Conyers, Georgia; First, Covington, Georgia; First,
Greensboro, Georgia; First, Hampton, Georgia; First Sylvester, Georgia;
First, Quincy, Florida. State banks: Bank of Bowersville, Southern•
Exchange Bank, Dublin; Oglethorpe County Bank, Lexington; and
American State Bank, Athens, all in Georgia.
28. Minutes, Directors, IV, 1078.
29. Ibid., 1079, 1186.
30. Hopkins, M. B. Wellborn, 121.
31. Ibid.
32. Ibid., 1096-1097.
33. Ibid. , 1097,
34. Ibid., 1165.
35. Ibid., 1165—1166.
36. Ibid., 1184.
37. Ibid. , 1204.

38. Hopkins, M. B. Wellborn,114.


39. Frazer, “Brief History, Havana Agency”, 14.
40. The train, chartered from the Southern Railway, consisted of locomotive,
express car and

one coach. It stopped only for fuel and made

the run through Georgia and 500 miles down the east coast of Florida five
hours ahead of its schedule.
41. Of the Federal Reserve Board, Washington.
42. The ‘Cuba’ was a gunboat rather than a cruiser.
43. Minutes, Directors, IV, 1139-1140.
44. Frazer, “Brief History, Havana Agency,” 15.
45. Hopkins, M. B. Wellborn, 119.
46. Minutes, Directors, IV, 1124-1125.
47. Ibid., 1125.
48. Ibid., 1126.
49. Ibid., 1127.
50. Ibid., 1129.
51. Ibid.
52. Ibid.
53. Ibid., 1201..
54. Ibid.
55. Ibid., 1218-1219
56. Ibid., 1214
57. Ibid., 1216
58. Ibid., 1217


59. Ibid., 1237-1238
60. Annual Report, 1926, p. 13


Chapter 16

By all odds the most dramatic event of 1927 occurred in May when a daring young man
named Charles A. Lindberg made the first solo flight from west to east across the Atlantic
Ocean. He was accorded a series of ovations and his plane, “The Spirit of St. Louis,” found
permanent sanctuary in the Smithsonian Institution. On the scientific and construction front the
first transatlantic commercial telephone service was opened between New York and London in
early January; the $12 million Moffat Tunnel, seven miles long, under James Peak, Colorado,
on the Denver & Rio Grande Western Railroad, was completed in February, while the Holland
Tunnel under the Hudson River in New York City, longest vecular tunnel in the world, was
opened in November.1
In March a Federal Board of Radio Control was appointed by President Coolidge and
held its first meeting on the 15th. Disastrous spring floods, the worst in history, caused
tremendous damage in the Mississippi River Valley. Commerce Secretary Herbert Hoover was
placed in charge of relief.2
On the financial front, a number of events, national in scope, occurred. On February 6,
the Federal Reserve Board established a rediscount rate of 3-1/2% for the Federal Reserve
Bank of Chicago--the first time this power had been used by the Board of direct determination of
rate of discount for member banks.3
The Atlanta Bank went along with the lower rate on August 13, following comment on the
subject by Governor Wellborn the day before:


“Since the other Federal Reserve Banks have recently reduced their rediscount rate
from 4% to 3-1/2%, I suppose it will be in order for our bank to do likewise. While there is no
apparent reason for the Atlanta bank to have such a low rate under present conditions, yet our
borrowing banks would conceive that they were not being treated justly if we did not give them
the same rate enjoyed by member banks in other districts. The Federal Reserve Act says that
rates shall be fixed with a view of accommodating commerce and business. Our present rate of
4% seems to be to be low enough to serve this purpose.”4
A few days after the Federal Reserve Board acted on the rediscount rate, the World War
Foreign Debt Commission was dissolved after having negotiated settlements with 13 countries
for eventual payment of $11,522,354,000 of principal and interest. 0h February 25, the National
Bank Consolidation Act of Congress provided for indefinite extension of the charters of Federal
Reserve Banks and allowed national banks to establish branches. In late May, Treasury
Secretary Andrew Mellon authorized a reduction in the size of paper money by
about one-third. The new bills measured ô-l/8x 2-5/8 inches.5 Smaller sized wallets became the
order of the day.
In Atlanta, during 1927, Lindberg Day, October 11, was a colorful occasion. The flyer
received a great airport welcome; thousands lined the streets to catch a glimpse as he rode by;
and others thronged Grant Field at Georgia Tech to hear him speak. 6
The City was engaged in an extensive street widening program in order to cope with an
ever increasing traffic problem. Among the principal streets involved were Courtland, Luckie,
Peters, Fair, Capital Avenue, and Techwood Drive. Also, during ‘27 a piece of downtown real
estate brought an all-time high front foot price- -$13, 000 per foot for the Clarke corner at the
northeast intersection of Peachtree and Edgewood.7


The official family of the Federal Reserve Bank of Atlanta and its branches for 1927 was
provided for at the December 1926 Board meeting, when all officers and directors were reelected. 8 As always, however, there were some changes as the year progressed.
Effective January 15, 1927, V. K. Bowman, Chief Clerk, Discount Department, became
Assistant Cashier in charge of the same department at an annual salary of $4, 200.9
The resignation of Deputy Governor J. L. Campbell in late 1926 had created a vacancy
which was filled on February 11, 1927 by the election of Hugh Foster to the position. He was a
banker of wide practical experience, having served for 17 years as President of the First
National Bank of Union Springs, Alabama. Later he was connected with the Exchange National
Bank of Montgomery, and then with the First National Bank of Montgomery, as Vice President.
Assistant Cashier George J. White, of the Jacksonville Branch, a veteran of seven years
service, resigned in early June. He was succeeded in August by the first woman to be elevated
to an official position in the Bank, Miss Mary E. Mahon, an employee of the Branch.11
Assistant Cashier J. B. Tutwiler, an officer of the Atlanta Bank for many years, resigned
effective August 1 to accept a position with the National Bank of Commerce in New York City.
The Board, in accepting Mr. Tutwiler’s resignation, extended felicitations for “abundant success
in his new field for which his past banking experience has equipped him.12
Two officers of the New Orleans Branch swapped jobs in early August. Assistant
Manager W. H. Black became Cashier, and Cashier James A. Walker became Assistant
Manager, both at an annual salary of $6, 200. 13
The thinning rank of original Atlanta Bank directors was further depleted on August 1,
1927, by the death, in Nashville, Tennessee, of Captain William H. Hartford, at age 67. He had
served as a Class B Director since November 1914 and had been Chairman of the Nashville


Branch since its organization. In its resolution upon the death of Captain Hartford, the Board of
Directors said:
“... As a Director he was always mindful of the interests of the Bank, always attentive to
his duties, and always courteous and kindly in his relations with his fellow directors. His record
of attending every directors’ meeting, until illness prevented, was striking evidence of his deep
interest in this Bank. His keen judgment and unselfish interest in the Bank enhanced his value
as a Director, and his kindly disposition and gentle courtesy endeared him to all the members of
our Board.14
The colorful newspaper publisher, soldier and United States Senator, Luke Lea, of
Nashville, Tennessee, succeeded Captain Hartford as a Class B Director a~ October 8 and
attended his first Board meeting in Atlanta on October 14.15
Colonel Lea (1873-1945) was born in Nashville and attended the University of the South
and Columbia University. He organized the Nashville Tennesseean in 1907 and became its
publisher. During World War I he organized and became Lt. Col., 114th Field Artillery and
served 10 months in combat in France, even leading an unsuccessful attempt to kidnap the
Kaiser. He was awarded the Distinguished Service Medal. Prior to the war, Col. Lea had
represented Tennessee in the United States Senate from 1911 to 1917. 16
Colonel Lea served as a Director of the Federal Reserve Bank of Atlanta until November
14, 1930. In 1934, he was imprisoned for his part in the $17, 000, 000 failure of the Asheville
Central Bank & Trust Company. He was later paroled and finally pardoned in 1937 by Governor
Clyde R. Hoey of North Carolina. 17
Prior to 1927, the Executive Committee of the Federal Reserve Bank of Atlanta was a bit
on the informal side as to membership and continuity. It had always comprised two Board


members appointed monthly and rotating among the various Directors. In January 1927, a
committee 18 appointed to study the matter recommended as follows:
First, a Discount Committee composed of the Governor, the Chairman of the Board, the
two Deputy Governors, and the Assistant Federal Reserve Agent, which Discount Committee
should meet daily and handle all discounts offered the bank. The Chairman of this Committee
should be the Governor of the Bank. 19
Second, an Executive Committee, composed of the Governor, the Chairman of the
Board, and three members of the Board, the Governor to be Chairman. The Committee should
meet twice a week and should consider and handle all questions of importance similar to those
handled by the Executive Committee in the past. At the present time the three directors,
members of this Committee, should be the three engaged in business in Atlanta. This
suggestion is made because these three directors can attend meetings twice a week without
inconvenience, and will make certain that the Executive Committee at its meeting will have
present at least two of the three directors doing business in Atlanta. This Committee should be
elected for a period of six months in order to give it a full test as to efficiency and service. The
Executive Committee may be called into session oftener as may be desired by the officers of
the Bank, but unless so called should meet only twice a week at the regular meeting each week.
Such meetings should be at 11 o’clock Tuesday and Thursday of each week. The officers
should have the right at any time to invite other directors to meet with the Committee and other
directors as they may be in the city at the time of such meetings will be expected to attend, but
the duty shall be upon the three members appointed to attend the meetings.20


On February 11, 1927, the By-Laws of the Bank were amended substantially in
compliance with the above recommendations. The following powers were vested in the Discount

To pass upon all commercial paper submitted for discount.


To initiate and conduct open-market transactions.


To buy and sell securities.21

The powers of the Executive Committee were defined as follows:

To initiate and conduct open-market transactions.


To recommend to the Board of Directors from time to time changes in the
discount rate.


To buy and sell securities.


To apply for and provide for the security of such Federal Reserve notes as may
be, in the judgment of the Committee or of the Board, necessary for the general
requirements of the bank.


To employ or to delegate to officers of the bank authority to employ clerks and
other subordinates and to define their duties and to fix their compensations.



To approve bonds furnished by the officers and employees of the bank
and to provide for their custody.
In general, to conduct the business of the bank, subject to the supervision and
control of the Board of Directors.22

During the first quarter of 1927 a long-range building program was completed wherein
the four branches of the Atlanta Bank, New Orleans, Nashville, Jacksonville and Birmingham, in
that order, were housed in buildings owned by the bank.

Moving day for Birmingham was January 23, 1927. According to the report on the


subject by Managing Director Walker, the moving was accomplished by the bank in a careful
and expeditious manner. No chances were taken. Said Mr. Walker:
“…The time required was three hours and forty-five minutes. Through the Secret Service
Department of the United States Government, the help of armed Marines was secured, and the
Chief of Police of Birmingham furnished a squad of policemen, automobile scouts, and plain
clothes men to guard the money while being loaded and unloaded, and also while enroute to the
new building.23
The formal opening of the building was held on March 11, at which time the Atlanta
Bank Board held its monthly meeting in Birmingham. The Federal Reserve Board in
Washington was represented by Member Edmund Platt. 24
During the course of his dedicatory speech, Governor Wellborn paid tribute to his old
friend W. P. G. Harding, Governor of the Federal Reserve Bank of Boston. He said:
“We are gathered here today to pay tribute not only to those directly responsible for the
erection of this beautiful building, but, in a broader sense, to the spirit and enterprise of the City
of Birmingham. There is another reason why I feel an unusually keen pleasure at helping you to
dedicate this handsome new building today- -a sentimental reason. The Federal Reserve
System is growing every year, its value to the country increasing, and to my mind the man
who contributed most to its success by nursing it through the dangerous days of its infancy is
my friend and your friend, Mr. W. P. G. Harding. 25
Later in the year it became necessary to build a tunnel under Fifth Avenue to connect
the Birmingham Branch with the U. S. Post Office. The low bidder, Johnson-Woolley
Construction Company, was awarded the job in October for $13,951. 26
It has already been noted that effective January 1, 1927, the Federal Reserve Board
authorized the Federal Reserve Bank of Boston to discontinue its Havana Agency. At the same


time it authorized the Federal Reserve Bank of Atlanta to assume, through its Havana Agency,
the function of the Boston Agency and to operate as the sole agency. The principal difference in
operating as sole agency was that the Atlanta Agency dealt directly with the local banks in
negotiating for cable transfers of funds rather than through the Boston Agency. 27
Effective March 1, 1927, the Federal Reserve Board modified the powers of the Havana
Agency, substantially as follows:
“To make direct exchanges in like denominations and amounts of new or fit currency for
mutilated or unfit currency tendered by the treasury of the Republic of Cuba or by any banking
institution doing business in Havana, charging for such exchanges a commission at the rate of
$1.00 per $1,000. 28
This change in the service rendered by the Havana Agency cured a long standing ill and
was beneficial to the Cuban Treasury as well as the Havana banks. Heretofore in order to
exchange unfit or mutilated currency for fit or new currency it had been necessary to tender unfit
or mutilated currency in payment of the transfer to the United States paying $1.00 per
$1,000 for the transfer, and to request a like transfer of funds from the United States payable in
new and fit currency again paying a commission of $1,00 per $1,000. This arrangement had
cost the banks $2.00 per $1,000 to exchange their unfit for new currency. Under the new
authority the banks could accomplish the same result at half the cost. 29
An urgent need in connection with the Havana Agency at this time was space--both
adequate and suitable. On March 10, 1927, a Committee composed of Board members W. H.
Kettig and E. R. Black, after a visit to Cuba, made the following observations relative to this
“We found the Agency in quarters on the second floor of the National City Bank Building.


The entire space occupied by our Agency was approximately 30 x 15 feet. This space was
divided into two rooms, one room about 10 x 15 feet in size was used as the office of Mr.
Magruder, Mr. Frazer and the stenographer. The other office was used for counting and sorting
currency. The space was totally inadequate for the uses involved. Neither Mr. Magruder nor Mr.
Frazer had any room for the transaction of their business. There could be no privacy in any
business transaction in that room and there was not space enough in the room for more than
three or four people. The space in the adjoining room was limited and the transactions in that
room necessarily crowded.
“The office was hidden on the second floor behind the legal department of the National
City Bank and was utterly devoid of any prominence. In our opinion such quarters could give no
publicity to the fact that the Federal Reserve Bank of Atlanta was operating in Cuba and any
knowledge relative to such operations must necessarily have been confined to the banks
transacting business with them.
“The currency of our Agency is stored in steel boxes in a cutoff portion of the vault of the
National City Bank. The space in this vault is very limited and some of our currency is stored in
the front part of the vault occupied by the National City Bank. Certainly there is not enough room
in this vault for the currency which will have to be kept in Cuba for the purposes of our Agency.
“We are of opinion that the Agency in Cuba of the Federal Reserve Bank of Atlanta is
entitled to a prominent location, both because of its importance to the Federal Reserve Bank of

Atlanta and its importance to Cuban interests . Our Agency in Cuba is entitled to the best and
safest quarters obtainable and should be so located as to be in position to take part in the


economic and financial life of Havana.30
The upshot of this situation was that in May 1927 a lease was negotiated for satisfactory
space on the ground floor of “La Metropolitana” office building immediately adjacent to the
National City Bank Building on Progresso Street, comprising about 2200 square feet. Plans for
construction of a vault, office space, currency sorting area, a teller’s cage, and currency
cancellation and shipping area were initiated. The architectural firm of A. Ten Eyck Brown
prepared plans and bids on the work which were requested in April 1928. In June of that year
bids were accepted and contracts were awarded. Total cost of completed quarters amounted to
approximately $70, 000 which included ADT Phonetalarm system and other extras not included
in original contract. 31
Actual work on the new quarters began in July and was completed in mid- December
1928. Creed Taylor, Deputy Governor of the Atlanta Bank, went to Havana to assist Messrs.
Magruder and Frazer in the moving of some $20 millionin currency then held by the Agency.
Full cooperation of the Havana Police Department and of the Cuban Army was secured. The
Police Department closed one block of the street immediately fronting on the Agency quarters.
The Army provided soldiers to police the entire block which was closed to traffic during the
move. The currency was placed in buses, locked and sealed, and rolled out of the rear entrance
of the National City Bank to the sidewalk and then about 200 feet up the sidewalk to the
entrance of the new Agency quarters. The entire move was completed smoothly and without
incident. 32
Following a trip to Florida, Governor Wellborn reported briefly on conditions there in
January 1927, during the aftermath’ of the real estate boom:

“I have just returned from a ten days trip through Florida. I visited a number of banks in
that state, including those in Jacksonville and Miami. The decline in deposits of the Jacksonville


member banks has not been such that they have found it necessary to rediscount, and the only
one of the Miami members now under rediscount with us is the result of taking over two other
On failed banks generally in the Sixth District territory, Governor Wellborn reported in
“Of the 63 banks which have failed since the organization of the Federal Reserve Bank
of Atlanta, we have sustained losses on 21 banks and on 42 banks have had no losses. 34
Later in the year, in November, it appeared timely, in Governor Wellborn’s opinion, to
make a statement relative to credit policies. Said the Governor:
“In view of occasional criticisms which have been directed against this bank on account
of losses sustained in the attempt to save member banks which became deeply involved, I feel
that the broad question of whether we have been right in the policy we have pursued since the
trying days of 1920-21 should be freely and franking discussed by us at this meeting. It is
gratifying that our bank has never had any criticism from the Federal Reserve Board about this
subject or any other of our policies.
“It is quite true that there have been considerable losses, but, in my opinion, any
Reserve Bank which fulfilled its duty towards its members was bound to incur losses. We could
have operated our banks in such a manner as never to have had to charge off a dollar by
pursuing a ‘safety first policy and simply allowing those of our member banks who got into
difficulties to struggle along with only our passive support, and in the great majority of
instances, eventually close their doors. There have been many cases where we have
deliberately and knowingly run the risk of losses, all with the sanction of our Board. Sometimes
we have failed to pull the banks through, but I feel that such unfortunate experiences are more


than compensated for by the large number of banks which we have been able to put on their
feet and’ which are now showing an active and healthy condition. If we consider purely the
question of money lost, you gentlemen in New Orleans 35 would come in for a large share of
the blame because your losses have been very heavy, but I think your Board has acted for the
best interests of the District in what it has done, and that it would have been doing less than its
duty to refuse to go to the aid of these banks.36
The Board thereupon supported the Governor by the following resolution upon the
subject of credit policy:
“WHEREAS, There has been from a few sources criticism of the credit policies of the
Atlanta Federal Reserve Bank and its branches during the past six years, owing to the
exaggerated statements of losses sustained; and
“WHEREAS, We conceive that this impression should be corrected, if possible, and that
the whole questions hinges upon to what extent- -if any-- a Reserve Bank should risk loss by
going to the aid of involved member banks; and
“WHEREAS, It is our belief that a Reserve Bank should extend every reasonable
assistance to a member bank in difficulties where there is a reasonable chance for such bank to
survive, even at the risk of some loss to the Reserve Bank;
“THEREFORE, BE IT RESOLVED, That this Board desires to go formally on record as
approving the policy that has been followed by the Federal Reserve Bank of Atlanta and its
branches as best for the interests of the District.37

Following his statement on credit policy, Governor Wellborn took occasion to comment
on withdrawal of state banks from membership. He said:


“During the past few years, nineteen state banks have withdrawn from membership in
the Federal Reserve Bank of Atlanta. This large number of withdrawals is unusual, and I
thought it best to bring the matter to your attention. My knowledge of their reasons leads me to
believe that the main factor in their determination was the circumstance that the small banks at
the present time are earning very little, and take the position that it is expensive for them to hold
membership in the Federal Reserve System because of their loss of exchange charges and
interest on their reserve deposits with us.38
Indeed, during 1927, due to new banks organized, conversions, other changes, and
suspensions, there was a net gain of two national banks and a net loss of 13 state bank
members for a total membership of 464 against 475 at the beginning of the year. 39
In reporting upon general business conditions in the Sixth District during 1927, Chairman
Oscar Newton wrote:
“Activity in most lines of industry and trade averaged somewhat lower in 1927 than in
1926. Production of bituminous coal in Alabama and Tennessee was smaller than in 1.9 26 and
1925 and the output of pig iron and furnace activity in Alabama were at somewhat lower levels.
Permits issued for the construction of buildings within the corporate limits of 20 reporting cities
averaged 34. 8 percent less in value in 1927 than in 1926, and contracts awarded for new
building in the district as a whole averaged 26.5 percent less than in 1926. Sales of
merchandise by 120 wholesale firms in eight different lines of trade averaged 14 percent

smaller in 1927 than in 1926. Retail trade of 46 department stores in the larger cities of the
district, on the other hand, increased slightly and averaged 1.1 percent larger than in 1926 and


5.7 percent larger than in 1925.
“Commercial failures during 1927 were greater, both in number and in liabilities than in
either of the two preceding years. Agricultural conditions improved during the year, largely as
the result of higher cotton prices in the last six months of the year. The money returns from
agricultural production in the six states comprising the district, based upon prices prevailing
December 1, were estimated by the Department of Agriculture at $1,057,957,000, an increase
of $97, 635, 000 over the value of crops in 1926, but less than the value of crops produced in
It was not surprising, therefore, that the Federal Reserve Bank of Atlanta did not do as
well in ‘27 as in ‘26. Reported Chairman Newton:
“A comparison of the balance sheets of the Federal Reserve Bank of Atlanta at the end
of 1927 and 1926 shows a decrease of $20, 449, 000 in the total of resources and liabilities.
The total at the close of 1927 was $258, 662, 000, compared with $270,111,000 a year earlier…
“Total current expenses during 1927 amounted to $1,264,156, and were smaller by
$725, 012 than in 1926. Salary expenses were only slightly larger, and decreases were shown
in traveling expenses, insurance on currency and security shipments, rent, office supplies and
printing and stationery, telegraph, postage1 and express expenses.
“Current net earnings in 1927 were a little less than half as large as in 1926. After
deduction for depreciation on bank premises and furniture and equipment, net earnings

available for dividends, surplus and franchise tax amounted to $669,904. Of this amount,
dividends amounting to $365, 817 were paid, and $364, 087 was transferred to surplus.”41


The careers of most successful and forceful men are marked by turning point years.
Such a year for Maximilian B. Wellborn was 1927. On March 25, after a long illness, Mrs. Mary
Graves Wellborn, his wife since 1889, died at 60. The bereaved husband’s grief is best
expressed in his own words:
“Mary was my ideal of a wife. She had a very strong character, being determined and
aggressive like her father; yet with her soft but determined mouth, her gentle blue eyes and her
fair skin, she had beauty and grace to a marked degree, and withal she was sweet and gentle
and lovable. No man ever had a dearer wife, and I shall mourn her loss to the end of my
Governor Wellborn had always planned to retired when he reached 65, but he was just
a month short of his 66th birthday when he left the bank at the end of 1927.43
At the October 1927 Board meeting, and in anticipation of Wellborn’s retirement, a
committee composed of Directors Melvin, Ware, Lea, and McCrary was appointed to draft
suitable resolutions of appreciation for his long and distinguished service. 44 The resolutions
were presented at the December meeting by Director Ware, seconded by Director Hopkins and
adopted. As an important chapter in the history of the Bank, they follow:
“For some years prior to 1914, Governor Wellborn was a successful banker in Alabama.
In that state he had engaged largely in its commercial and banking life, was intensely interested
in its public affairs and was regarded as one of its leaders.
“In 1914 he was President of the First National Bank of Anniston, President of the First
National Bank of Piedmont; of the First National Bank of Jacksonville and President of the
Anniston Banking and Loan Company. These several positions identified him prominently with
the commercial life of that State. In 1914 he resigned the presidencies of these four banking
institutions and at a large financial sacrifice moved to Atlanta to accept the first office created for


the Federal Reserve Bank of Atlanta.
“At the urgent request of his friend, Hon. W. P. G. Harding, a member of the Federal
Reserve Board, Governor Wellborn accepted the chairmanship of the Board of Directors of our
Bank. He immediately proceeded to organize the bank. Directors were selected and in the fall of
1914 held their first meeting in Atlanta, over which Governor Wellborn presided. At that meeting
the officers of the bank were selected. The bank moved into small quarters in the Hurt
Building and the Federal Reserve Bank of Atlanta was established and ready for business.
“Governor Wellborn continued as Chairman of the Federal Reserve Bank of Atlanta until
March 1919, when at the request of our Board of Directors he assumed the Governorship of this
Bank and has continued from that date to act as Governor.
“His leadership in this Bank is best evidenced by a brief narrative of the growth of the
“On December 30, 1915, its capital stock was $2, 422, 400, its surplus was nothing, and
its reserve deposits were $8, 501, 512. On December 31, 1926, or about twelve years since its
opening date, its capital was $5, 020, 000; its surplus $9,632,000, and its reserve deposits
$71,413, 000.
“In addition to its accumulated surplus this Bank has paid in to the Federal Government
as a franchise tax $7, 323, 470. If this sum were added to its surplus today, it would, besides
paying its dividends, have accumulated in eleven years time on earned surplus of $16,955,470.
On December 30, 1915, it had small rented quarters in the Hurt Building in Atlanta. It
has today invested in bank premises in Atlanta $1,813,765, in Jacksonville $282, 776, in
Nashville $284, 717, in Birmingham $436,643, in New Orleans $1,097,233, or; a total in such
investments of $3,915,134,000.
“At the end of 1914, the officers and employees of the Bank numbered twenty-seven,

with a salary list for the year 1915 of $53, 602, 00. During the year 1926, the Bank had 403
employees and 27 officers, with an annual payroll of $678,444.00.
“The recital of these figures is given with some pride on our part, as evidencing the
growth of our Bank, and are stated in simple justice to Governor Wellborn as a striking tribute to
the growth and success of this Bank under his able leadership.
“Probably the most striking policy inaugurated and insisted upon by Governor Wellborn
during his administration has been his determination to aid consistently deserving member
banks. This policy has been followed rigidly by him during his entire tenure of office and a
statement of the application of this-policy during the trying days of 1920 will serve as an
illustration of the tenacity with which he adhered to this purpose and the scope to which this
purpose was pursued.
“In 1920 the Atlanta Bank, under his leadership and following his policy, helped the
South materially in passing through its financial crisis. At the beginning of the year 1920 there
was little indication of impending trouble. This Bank had a reserve percentage of 60. 6, which
was the second best showing at that time of any bank in the entire Reserve System. In the
summer of that year things grew rapidly worse financially, and on September 28, the high peak
of rediscounts was reached, totalling the amazing figure of $183, 000, 000. The actual reserve
percentage fell to 40. 85 against an adjusted reserve percentage of only 14. 9. This strain was
terrific, but this Bank, through Governor Wellborn’s leadership, served this section, gradually
bringing about sounder credit conditions.

“At this time statements were issued by this Bank to the effect that ample credit
accommodations would be extended to the member banks in order to allow these member
banks to furnish their customers funds to prevent the dumping of the cotton crop on a weak and


falling market. These loans to member banks on January 1, 1920 amounted to $88, 052, 000,
while on November 20, 1920 the total loans to member banks were $182, 258, 000. Again,
Federal Reserve notes issued by this Bank were $155, 000, 000 on January 1, 1920, and
increased steadily to $174, 000, 000 on January 21, 1921. During this time, this Bank loaned
not only all of its own available funds, its capital, its surplus, and its reserve, but after it-s own
resources were exhausted, actually borrowed from other Federal Reserve Banks $49, 000, 000
to take care of the situation in this District.
“These facts are given as an evidence of the extent to which Governor Wellborn served
in solving the strenuous problems of that period, and as further evidence of that policy of aid to
member banks and to this section which has dominated his career as Governor.
“High testimony has been given to Governor Wellborn’s action during this period. In
January 1922, Senator E. D. Smith, of South Carolina, during an investigation by a
Congressional committee, after hearing Governor Wellborn’ s testimony on the subject of farm
credits, said:
‘In all of these trying times the country has been through, a
clear note of sound common sense has rung through it all
from the Governor of the Federal Reserve Bank of Atlanta.
“Another tribute to Governor Wellborn’s part in handling the banking situation during this
period was delivered by Hon. D. R. Crissinger, then Comptroller of the Currency, at Gainesville,
Florida, in 1922, when he said:
‘A year ago when I assumed office as Comptroller of the Currency, the Fifth and Sixth
Federal Reserve Districts offered the greatest problems of any to the Federal Re serve
Board. The heavy accommodations which these Districts, particularly the Sixth, had
granted to the member banks in order to avert the economic disasters which would have
resulted in a further slump in the agricultural field, had of necessity brought about the
gravest conditions in these sections and it seemed doubtful to us whether the situation
could be worked out without the greatest hardship to all concerned. We were inclined at
first to disagree with Governor Wellborn of Atlanta in some of the policies which he
pursued, but I desire to state right here that he was right and that we, the members of
the Federal Reserve Board, were wrong. Governor Wellborn gave to his District the


benefits of a lifelong experience and sound banking ability. Thanks to his courageous,
intelligent and consistent direction, the Sixth District is now giving the Board less
concern than any other Reserve District in the United States. Governor Wellborn is justly
entitled to full credit for having handled the administration of the Atlanta Bank so
“We are glad to record in these resolutions this tribute from the recent Governor of the
Federal Reserve Board. Any statement relative to Governor Wellborn’s career as head of this
Bank would be incomplete without giving him due credit for his achievements during this trying
period and it must have been pleasing to him that full praise and credit were given at that time
by Governor Crissinger.
“Innumerable instances could be given of Governor Wellborn’s ability in dealing with the
intricate problems facing him in the inauguration of this Bank and in conducting its affairs
through trying crises and through the period of thirteen years in which it has developed. We
might instance the Florida situation. In a very short period of time the banking situation in Florida
materially changed and in order for him to be fully advised as to that changing situation and the
general conditions in Florida, it was necessary for him to visit the different member banks in
Florida and at the proper time he made a trip through Florida, visiting each member bank,
ascertaining its condition, giving it encouragement, and letting not only the banks in Florida but
also the people of Florida know that the Federal Reserve Bank was interested in conditions in

that state and desired through the proper channels and in the fullest measure in a proper way to
aid in that situation. This but evidenced Governor Wellborn’s intimate knowledge of conditions
throughout his District and his earnest desire to know personally of these conditions.
“It has, of course, been during his administration that the Cuban Agency of the Federal
Reserve Bank of Atlanta has been established and through his leadership our Bank has the only
agency in the Federal Reserve System located on foreign soil. In the spring of 1926 when a


financial crisis arose in Havana and a run was impending upon member banks in Havana, this
Bank shipped and mailed currency to its agent in Cuba something over $40,000,000, the report
coming in on Friday and the money being on hand in Havana Monday morning to save the
situation. This is cited as an evidence of the ability of Governor Wellborn in a trying situation
which called for all his resources as an able man and called heavily upon the resources of this
“Your committee has narrated these different events in Governor Wellborn’s career as
Chairman of the Board and Governor of this Bank in order to have inscribed on our minutes a
permanent record of his achievements.
“Throughout the years in his relations with the Directors and officers and employees of
this Bank, he has been courteous and considerate. In his home, aided by his most estimable
wife, there has had the Directors as his guests on many occasions and between him and his
Directors there has existed a cordial relationship and a lasting friendship.
“One year ago he announced to us, his purpose to retire as Governor of this Bank on
January 1, 1928, in order that he may enjoy that rest to which his labors have eminently entitled
him. This Bank will miss his wise leadership and his careful guidance and strong personality
and eminent ability which have characterized him as Governor. We regret this decision to retire,
but we want him to know that he carries out of his office the very best wishes of the Directors
for many years of enjoyment and contentment.” 45

After the passage of brief, but appropriate formal resolutions, Chairman Oscar Newton,
on behalf of the members of the Board, presented to Governor Wellborn twelve silver goblets as
a token of friendship and expressed the sincere wishes of the members of the Board for his


future happiness and welfare.46
Of the many testimonials paid to Mr. Wellborn, both editorially and by personal letter, the
following from the Birmingham News is notable:
“Voluntary retirement of Maximilian B. Wellborn, Governor of the Federal Reserve Bank
of Atlanta, after almost 13 consecutive years spent in building that establishment from a
delicate experiment in infancy to a titan for strength and service to ‘the whole South, is of more
than passing significance.
“When called in 1914 to accept the chairmanship of the board of directors of the newly
created bank, Mr. Wellborn conceivably had no desire to neglect his personal pressing business
engagements. As president of three strong going Alabama banks, it was no mean sacrifice he
was asked to make to give up his life work- -the very children of his well organized brain- -and
see this experiment through. In those far-off days not every American financier was confident
the scheme would work. Eastern capital was rather skeptical of this democratic effort to
guarantee the equilibration of currency which so long had been left to the tender ministrations of
Wall Street. One imagines that even bankers of Mr. Wellborn’s type felt, in a way, as if his
bridges were being burned behind him, and that he was quitting the old certain and sure
avenues he understood well for some uncertain port he could not quite divine
“One spark of that humanness in Maximilian B. Wellborn’s nature is that, despite his long
residence in a neighboring state, he has never relinquished his Alabama citizenship.

Always he has called Anniston his home. After his return from abroad 47 he will come back to
Anniston to live.
“Indubitably, Mr. Wellborn is not a man who will be content to sit with folded hands and


rest. Dynamic, resourceful, sagacious, progressive, and proud of his home state, it may be
expected that hereafter he will play no small part in the development of the state he loves.48
Nearly 30 years of useful life lay ahead for M. B. Wellborn. Though he took up
permanent residence at Maxwellborn, his country place near Anniston, Alabama, he devoted
some time to public service. In 1932 he moved back to Atlanta for a year to accept a special
post created by President Hoover- -adviser to the RFC in the Sixth Federal Reserve District.
Subsequently, In 1934, he was elected to the Alabama State Senate, a position to which he
brought wisdom, experience and integrity. Max Wellborn outlived practically all of his contemporaries. He died at 95 on November 28, 1957 and was laid to rest beside his wife in
Edgemont Cemetery, Anniston.49
Prior to 1927 it had been the custom to elect officers of the Bank at the December Board
meeting to serve for the ensuing year. This custom was changed by the following resolution,
offered by Director G. C. Ware at the meeting of December 9, 1927:
“WHEREAS, it is our belief that it will be pleasing to the members of the Federal Reserve
Board for our annual election of officers to be held at our meeting in January; and

“WHEREAS, such act will work to the end that there may be unanimity in our own
Board; and
“WHEREAS, the election in January will further work for the promotion of that
harmonious relation between our Board and the Federal Reserve Board that is so much desired
by us;
“THEREFORE, BE IT RESOLVED, that the election called for under our amended bylaws for this meeting be deferred until the January, 1928 meeting of our Board, and that notice
be accepted at this time by this Board of such necessary change in our amended by-laws


relating to elections as will accord with this action.”
The resolution was seconded by Director E. C. Melvin and adopted.50
Approval was not, however, unanimous. The recent Cuban matter and the discharge of
Deputy Governor Joseph L. Campbell by the Federal Reserve Board In Washington had been a
source Of annoyance and displeasure to Director Lindsey Hopkins, who, incidentally, was
retiring from the Board effective December 31, 1927. He not only voted against the above
resolution but gave vent to his feelings in the following language:
“I object to the passing of the resolution on the grounds that it does not alter the
outcome of the election in the least, and can only serve to make further subservient the
independent will of the Directors of this Bank.
“I am convinced that practically all, if not all, of the friction and unpleasantness in the
conduct of the affairs of this Bank have been occasioned by the meddling and gossiping of Mr.
George R. James. 51
“(1) His going direct to Cuba and investigating the conduct of one of our employees
without first advising this Bank.
“(2) That in discussing the matter of Mr. Campbellts conduct on the trip to Cuba with the
Board, Mr. James insisted that the matter be held in strict confidence, but subsequent to this
time it developed that Mr. James had discussed the matter with a member or members of the
Atlanta Clearing House Association.
“(3) That Mr. James greatly exaggerated the incidents and details of the alleged
unbecoming conduct of Mr. Campbell on the Cuban trip, as was later disclosed by a full and
free investigation on the part of this Board.


“(4) In making the statement to our Directors that three members of the Federal
Reserve Board at Washington had said to him that they would not support the Federal Reserve
Bank of Atlanta in its efforts to secure the Cuban Agency while Wellborn, Campbell, and
McCrary were connected with our Bank.
“I think that these activities and statements are contrary to the best interests of the
Federal Reserve System, and that these activities and statements and other statements have
created discord and dissension in our Board.”52
Time was destined to heal these wounds.

Chapter 16


Keller, Dictionary of Dates, II, 350-356





Ibid, 350.

4/ Minutes, Directors, V, 1336; Annual Report, 1927, p. 10

Keller, Dictionary of Dates, II, 352.


Garrett, Atlanta and Environs, II, 828-834

7/ Ibid.

Minutes, Directors, IV, 1246-1247.


Ibid., V, 1263; Annual Report, 1927, p. 10


Minutes, Directors, V, 1275.


Ibid, 1302, 1334.

12/ Ibid, 1333.

Ibid, 1334.


Ibid, 1338.


Ibid, 1343.


Who Was Who in America, II, 315.


Biographical Records, Federal Reserve Bank of Atlanta; Time Magazine, July
12, 1937, p. 70.


Composed of E.C. Melvin, Chariman; W. H. Kettig and E.R. Black.


Minutes, Directors, V, 1253.




Ibid, 1277.


Ibid, 1278.


Ibid, 1274; Annual Report, 1927, p. 10


24/ Minutes, Directors, V, 1283.
25/ Hopkins, M.B. Wellborn, 113.

Minutes, Directors, V, 1345.

27/ Frazer, “Brief History, Hvana Agency,” 17.
28/ Ibid., 18.
29/ Ibid.
30/ Minutes, Directors, V, 1285-1286.
31/ Frazer, “Brief History, Havana Agency”, 19-20.
32/ Ibid., 20.
33/ Minutes, Directors, V, 1258.
34/ Ibid., 1325.
35/ Hopkins, M.B. Wellborn, 113.
36/ Minutes, Directors, V, 1357.

Ibid. , 1359-1360


Ibid. , 1357-1358.

39/ Annual Report, 1927, p. 9.
40/ Ibid., 5.
41/ Ibid., 6.


Hopkins, M.B. Wellborn, 141.




Minutes, Directors, V, 1353.


Ibid., 1373-1376.



Ibid., 1376.


He and his daughter Margaret sailed from New York in mid-January 1928 for a
tour of Spain and Southern Europe.


Quoted in Hopkins, M.B. Wellborn, 151-152.


Hopkins, M. B. Wellborn, 168, 173, 273.


Minutes, Directors, V, 1371-1372.


Member of Federal Reserve Board and a merchant, manufacturer and banker of
Memphis, Tennessee. He spearheaded the Cuban investigation for the Federal
Reserve Board.


Minutes, Directors, V, 1372.


Chapter 17

Nineteen twenty-eight was another year of general prosperity and progress on
many fronts.
In early April, the American Telephone and Telegraph, for the first time in history,
transmitted a moving picture by wire. In mid-June, Miss Amelia Earhart became the first
woman to make a trans-Atlantic flight, flying from Newfoundland to Wales in 20 hours
and 45 minutes in a Fokker monoplane. Warner Brothers produced the first all-talking
motion picture in New York in July. It was titled “The Lights of New York.”
The year produced an exciting presidential contest, wherein Republicans Herbert
Hoover and Charles Curtis defeated Democrats Alfred E. Smith and. Joseph T.
In Congress the Clayton Anti-Trust Act, was amended in March to permit limited
interlocking’ bank directorates, while in May, an Act provided that state banks might be
designated by the Federal Reserve Board as general depositaries of public money by
the Treasury.1
On the local political front, L. C. Hardman was re-elected Governor of Georgia,
defeating E. D. Rivers. On September 26, Franklin D. Roosevelt made his maiden
Atlanta speech. As Governor of New York, he spoke on behalf of Al Smith for President
against Herbert Hoover.


Construction-wise Atlanta reached a new high in ‘28, $27,580,541. Included
were a General Motors assembly plant for Chevrolet; two stories to the Southern
Railway Building to accommodate 1200 office workers transferred from Washington, D.
C.,; and a new store for J. P. Allen and Company at Peachtree and Cain Streets. A city
planning commission was set up to aid in a more orderly growth, and Carlyle Fraser, a
native of New York, founded the Genuine Parts Company, destined to become a giant
in the automotive parts field.
As the year drew to a close, Georgia Tech drew national football attention and
renown by an undefeated season and a Rose Bowl victory.2
About three years before he retired as Governor of the Federal Reserve Bank of
Atlanta, M. B. Wellborn began to ponder the inevitable matter of a successor.
One of Atlanta’s most popular citizens of the period was Eugene R. Black,
lawyer and banker. Indeed, his daughter Julia, had married Governor Wellborn’s son,
Walter, in 1921. The two men were long-time friends and business associates.
“I’d like to have you succeed me,” Wellborn told Black one day.
“That would be bully,” Mr. Black replied. “How do we go about it?”
The first step was election to the Board of Directors. The custom, evolved by
Governor Wellborn, was for the three Atlanta Clearing House banks to nominate their
candidate, who would then be voted on by all the member banks. Mr. Black told
Governor Wellborn next day that two of the three banks had agreed to support him. The
third later made it unanimous, so he was nominated a Class “A” director in due course,
and elected for a term of three years beginning January 1, 1925.3


Three years later, at the Board of Directors’ meeting of January 13, 1928,
Chairman Newton proposed that the regular order of business be suspended; that
Eugene R. Black be elected Governor of the bank. He was unanimously elected,
accepted in a few well chosen words, and sat with the Board during the of the meeting.
Governor Black, able as he was in the law and in banking, brought a certain
informality and a leavening spirit of wit to banking floor and board room.
An associate remembers that Governor Black liked people and never saw a
stranger since everyone (to him) was a friend until proven otherwise. On the occasion
of a business trip to Miami with two associates, Mr. Black insisted that both spend most
of the time in his Pullman drawing room where the hours were spent in conversation
and dice shooting. The Governor was excellent in both.5
On another occasion the same associate recalled that Black was in great
demand as a speaker. One of the civic clubs in Decatur, Georgia persuaded him to
make an address and a subject was chosen. After a laudatory introduction, the speaker
arose, bowed to the master of ceremonies, stood looking at the audience for a period
and, without cracking a smile told amusing and extraneous stories for thirty minutes. He
ended by announcing the subject about which he had been asked to talk, said he did
not know much of interest about it and sat down. 6
Another associate recalls a motor trip to Southeast Georgia with Governor
Black during the banking troubles prior to the Banking Holiday of 1933. One of the
bank’s chauffeurs was driving. After passing through a small town local officers stopped
the car for speeding. The Governor asked the officer the amount of the fine, and upon


being told $5, asked the officer to make it $10, because he would be coming back
through within two hours.
Said the same associate: “Governor Black was a man that just couldn’t say no to
his friends, beggars, or panhandlers. It was amazing the number of people who made a
path to his office for handouts. I never saw him refuse anyone.7
During Governor Black’s first year in office a number of changes took place in
the official family of the Bank.
In December 1927, J. A. McCrary was re-elected a Class B Director by the
member banks of Group 2 and H. Lane Young was elected Class A Director by the
member banks in Group 1. Both for terms of three years beginning January 1, 1928.8
The new Director, Mr. Young, though self-made, had been in the banking
business for nearly 30 years. Born in Quitman, Georgia, in 1878, he began his career
as a runner for the Merchants & Farmers Bank in his native town in 1899.
Subsequently, he organized the First National Bank of Quitman and operated it from
1905 to 1918. During the next year or so he was connected with the National City Bank
of New York. In 1920 he became Vice President of the Citizens and Southern Bank in
Atlanta and was holding that title in addition to that of Executive Manager when he
became a Director of the Federal Reserve Bank.9
To succeed Director Lindsey Hopkins, who retired December 31, 1929, the Bank
secured the services of George Simmons Harris (1881-1950), then President of the
Exposition Cotton Mills in Atlanta. He was a native of Cedartown, Georgia, and, after
schooling at the United States Naval Academy, the Georgia School of Technology, and


the Lowell (Massachusetts) Textile School, spent his entire business career in the
textile field.10
The annual election held on January 13, 1928, did not produce any changes in
the official family of the Bank, but as the year progressed, some changes were
In late January acceptances were received from the following appointees as
Branch Directors:
New Orleans,

Albert P. Bush


W. P. Ridley


E. F. Allison, President, Allison
Lumber Company, Bellamy, Alabama


S.0. Chase, Chase & Company, Sanford, Florida11

George R. DeSaussure, Manager of the Jacksonville Branch since its
establishment in August, 1918, died in early 1928.12 W. S. McLarin was named to the
vacant post and George S. Vardeman was made Cashier at Jacksonville, both effective
February 11.13
At about the same time two resignations were received. Director R. S. Hecht, of
the New Orleans Branch, being about to depart upon an extended European trip,
resigned in late January. B. C. Huggins, Jr., Cashier at Nashville, resigned effective
March 1 in order to accept a position with better salary opportunities.14 Both vacancies
were filled promptly. John E. Bouden, Jr., President of the Whitney-Central National
Bank of New Orleans, was elected to the vacant Board post. E. R. Harrison, Assistant


Vice President of the American National Bank of Nashville, succeeded Mr. Huggins in
the Nashville Branch.15
Much later in the year two other official resignations were received. Captain T.
A. Embrey, because of’ failing health and inability to attend meetings, tendered his
resignation in September as a Director of the Nashville Branch. The position was not
filled until early 1929. 16 In December, C. P. Kendall, a Director of the Jacksonville
Branch, resigned because of his contemplated withdrawal from the Barnett National
Bank. Arthur F. Perry, President of the Florida National Bank, was named to the
In response to a bound copy of the resolutions adopted at the time of his
retirement, former Governor M. B. Wellborn wrote to Governor Black on May 20, 1928.
His letter, significant historically, follows:
“I want to express to you, and through you to the Board of Directors, my
sincerest thanks for the folio containing the resolutions in reference to my work as
Chairman of the Board and later as Governor of the Bank; in all thirteen years of
service, I greatly appreciate the complimentary expressions of the Board.
“These resolutions speak largely the history of the Federal Reserve Bank from
its organization in November 1914, to the completion of my efforts in its behalf down to
my retirement from the bank in January, 1928. This period of events meant much to the
section of our country embraced in the Sixth District and the work accomplished, with
the concurrence and hearty support of the Board during that time, was an invaluable
service to the agricultural, commercial, and industrial interests of our district.
“During these momentous times, including a severe business depression at the


beginning of the bank’s existence the World War having began in August), then
followed by our participation in the great war which upset the ordinary affairs of Europe
and this continent, the Federal Reserve played a conspicuous and valuable part in
financing the war, which never could have been done with such success without the
active aid of the Federal Reserve Banks.
“Following these great events an extraordinary inflation took place, as was usual
after great wars, then came a deflation of tremendous magnitude which strained almost
to the breaking point the resources not only of the commercial banks but of the Federal
Reserve System itself. The Atlanta bank then took an advanced position and ‘stepped
out’, probably to a greater extent than any of the twelve Reserve Banks, to the relief of
business in our district and with your support, rendered an assistance to the banks in
the District that, in my opinion, prevented a panic and utter collapse in business.
“I, therefore, repeat that I have a just pride in what our bank has accomplished
and, at the close of my business career of fifty years, I am happy to have been officially
connected with your great institution from its beginning and that the pages of its history
are filled with my name during this strenuous period of the world’s affairs.
“Truly the Federal Reserve Bank has left its footprints on the sands of time and it
is my sincere hope that it will continue forever in its splendid work.
“The bound copy of the resolutions, which you were so kind as to have made in
such a handsome and attractive type, will ever be kept in loving rememberance of my
association with the Atlanta Reserve Bank, and I shall leave it a rich heritage to my
children and their descendants.
“With warmest regards to each member of the Board, I am
Yours sincerely,

(signed) M. B. Wellborn”18
It was natural that Governor E. R. Black, with his friendly and outgoing
personality, should have been public and bank relations minded. In April 1928, a
committee composed of Mr. Black, H. Lane Young, J. A. McCrary, and Oscar Newton,
recognizing an increasing need for such activity, wrote:
“...We recommend that an active committee on Public and Member Bank
Relations be established, composed of senior and junior officers of this bank, with Ward
Albertson, present Manager of Bank and Public Relations as Chairman of such
Committee, the Chairman to have active charge of the work of such Committee and to
keep full data relative thereto. This Committee will work along the following lines:
“(1) It will seek to cultivate the good will and cooperation of member banks and
non-member banks and to ascertain the extent to which member banks are availing
themselves of the privileges and facilities of their membership, and to do everything
possible to encourage them to avail themselves of these benefits and services, and to
obtain information-for the use and benefit of our discount committee concerning the
conditions, management, and operating program of the bank visited, and the business,
industrial and agricultural conditions of the community where such member bank visited
is located.
“(2) To adjust specific complaints and grievances of member banks and to
persuade our member banks of the correctness of our general policy and to fully inform
member banks as to our regulations and endeavor to get them to understand such
regulations and to persuade them that regulations are necessary and not just red tape
making transactions with this bank difficult.


“The member of the committee visiting such member bank shall make a full
report to the Chairman of the committee of his visit to such member bank, such report
to cover:

Management of the bank and its personnel


General situation of the bank


Information as to the customers of the bank


Information as to community conditions


Details of such visit, character of his reception as representing this
bank, attitude of the member bank towards this bank, any
antagonism or lack of understanding on the part of the member

“This committee in its work through its representatives shall visit non-member
banks of the community as well as member banks, and shall endeavor in every way to
obtain the good will and friendship of such non-member banks.
“This committee shall also have charge of the public relations work of this bank.
We believe that this bank should be represented upon every reasonable opportunity, in
order that the work of the bank and the services of the bank to this district may be
properly set forth by a representative of this bank and be fully understood .throughout
the district. To this end, we feel that a representative of this bank should attend each
state convention of the banks of this district and should attend as many group meetings
of banks as possible and at other public functions should represent the bank, and
through all these mediums, should engender throughout the district a feeling of respect
and good will towards this bank...
“This committee will also see that through letters written by this bank arid
its officials the good will of member banks is obtained and through the press and
other mediums the objects of the bank and its services axe properly presented.... “


At midyear, Governor Black was moved to the following comment relative to
“member bank relations:”
“During the month of June, 64 visits were made to member banks by the officers
of this bank and since January 1 to the end of the six months’ period, 160 visits have
been made to member banks.
“In connection with our member bank work, my mind has undergone a radical
change as to the general feeling among our member banks toward our bank. To be
perfectly frank, I had the feeling that our relations with member banks were rather
distant and formal and that there was not the close feeling of cooperation and
friendship which there should have been. My feeling in this regard has been entirely
changed. At first, my visits with the bankers of Florida, Alabama, and Georgia at their
annual conventions and my meeting with the Tennessee bankers at the Nashville
meeting of our Board convinced me that the member banks had a warm regard for our
bank,, appreciated our facilities and desired in every way to cooperate with us in
making our bank just such a successful institution in the promotion of community
conditions relating to agriculture, commerce, and industry as we would want it to be.
“If the visits with those member bankers had not persuaded me that this was the
case, I would have been so convinced by letters received from member banks during
the past thirty days. Beginning early in June, I wrote a personal letter to the President of
each member bank and in that letter called his attention to our desire to be of service to
his bank and to the different facilities which we offered for that service and to the
facilities which he was using and those which he was not using, and expressed the
hope that he would continue to use the facilities that he was using and suggested that it


would be to the interest of his bank to use those facilities which he was not using. I also
asked for any suggestions that he might make which would aid us in better serving his
“I have received replies from a great many of these banks. In some of the replies
some requests were made and these requests have been promptly corn-plied with. I
should like very much for our Directors to read these letters. All of them express
appreciation of my letter, the highest regard for the Federal Reserve Bank, the value of
the services of our bank to the member bank, and expressions of appreciation of the
cordial relations with our bank. I am certain that if our Directors read these letters they
would feel that the old impression as to the lack of close relationship with our member
banks was wrong and that on the contrary the member banks have a very high and
personal regard for our efforts in their behalf.”20
During his first year as Governor, Mr. Black was largely responsible for two other
moves that tended to better bank and public relations and to a better understanding
within the bank and among its branches.
Weekly officers’ meetings, including all, not just senior, officers were instituted
and semi-annual meetings of branch bank managers were started. In addition, the four
branch managers were added to the member bank relations committee. 21
In the spring of 1928, with the scars of boom and hurricane about healed and
with business humming in Miami,

of that city applied for a

revolving currency fund. The application was not without precedent, a similar fund
having been set up a couple of years earlier for use of Miami banks during the boom.
The Atlanta Board approved the application and placed $1,500,000 in custody of the


applicant for a period of six months. Upon the expiration of this, period, a request was
made for a six-months extension. The Atlanta Board acquiesed in only a three-month
extension with the following comment:
“…An extension of six months in the period of operation of the fund is not looked
upon with favor by the Board, which feels that if the emergency which made necessary
the re-establishment of the fund still exists and it is desired that the fund be continued,
the Board would be justified in designating Miami as a reserve city....”22
At the beginning of the year, on February 7, cash holdings of the various
components of the Sixth District Federal Reserve totalled $55,269,719.00, divided
as follows:
New Orleans

$ 8,019,059.89
$ 8,957,368.20
$ 7,213,159.54
$ 6,164,177.30
$ 4,566,212.20
$ 1,463,071.00

Holdings in Havana were soon increased to $20, 000, 000. 00.23
Since August, 1927, the discount rate of the Atlanta Bank had been 3-1/2%.
The rate had been fixed so as to put the Bank in line with every other Federal Reserve
Bank.24 As 1928 progressed, however, the rate nearly doubled. On February 11, it
went from 3-1/2 to 4%; on May 26 from 4 to 4-1/2, and to 5% on July 14. During the
early months of the year, interest rates charged by member banks in Atlanta on prime
commercial loans eligible for rediscount with the Federal Reserve Banks ranged from 41/2 to 6%, and at branch Federal Reserve Bank cities in this district from 5 to 6%.


During the last five months of the year, rates at Atlanta and New Orleans ranged from
5-1/2 to 6%. 25
In commenting on the discount situation in November, Governor Black wrote:
“The large volume of business of this bank during 1928 has resulted in large
surplus earnings. There has not been a time during the year when we have not given
earnest consideration to our rediscounts. It has not been our purpose to endeavor to
earn excessively, but rather to accommodate our member banks and to promote
commerce, industry, and agriculture, and our rediscount rates this year have been fixed
with regard to the preservation of our reserves, to the safeguarding of the credit of this
bank, and to the proper accommodation of our member banks in their credit needs. We
would have been glad during the fall season to have lowered our discount rate, but
demands upon us and the condition of our reserves prohibited this. At such time as the
demand upon us may sufficiently abate and our reserve position warrant it, I will make
recommendations relative to a change of rate. At the present time, in my opinion, our
present rate must be maintained.”26
Though activity in nearly all lines of industry and trade in the Sixth Federal
Reserve District averaged somewhat lower in ‘28 than in ‘27 and, though the total
resources and liabilities of the Bankat the close of business on the last day of the year
were smaller than at the close of any year since 1923, total earnings during 1928 were
larger than for any year since 1921, and exceeded those for 1927 by 73%.27
Current net earnings for 1928 came to $2,325,022, compared with $803,683 for
‘27. After deductions for depreciation on bank premises, and furniture and equipment,
reserves for probable losses, and other deductions, the net earnings available for


dividends, surplus and franchise tax amounted to $1,693,985, compared with a total of
$669,904 for 1927. Dividends amountings to $312,259 were paid to member banks;
$558,425 was transferred to surplus account, and a franchise tax to the United States
Government amounting to $823, 301 was paid.28
Some personal recollections by a retired officer concerning day to day activities
at the Bank during this period of its history will be interesting:
“From the mid-twenties until the bank holiday in 1933, the Discount function was
very active, up to 40 clerks working in the discount and credit functions. That was the
day when financial statements were required for every line exceeding $500. Also, notes
from 50~ up were tendered for rediscount or as additional collateral to a member bank’s
‘line of credit’. The daily rush to inspect the notes received for negotiability and
correctness, the pulling of the credit information on all notes, the necessary review and
notation on the applications, preparation of discount status of the respective bank
requesting further credit, all completed in time to present it physically to the 2 P. M.
meeting of the Discount Committee, made old people out of young people rapidly.
“The periodic examination by the examiners of the Federal Reserve Board was a
nightmare in those days. All notes had to be balanced by the 10 classes or divisions
then required (commercial, agricultural, livestock, secured, unsecured, real estate
security, government bond secured, additional collateral, etc.). A detailed listing of
notes held for each bank, showing those forwarded to the bank in anticipation of
maturity, was prepared as a reconcilement. Nearly every typist and steno in the bank
was used. Financial statements on all notes of over a designated amount had to be
pulled for review by the examiners. Then the big argument started trying to justify the


rediscounting of certain notes. Examination after examination- -Creed Taylor, Deputy
Governor; Ward Albertson, Assistant Federal Reserve Agent; and the writer argued
practically the night through with the Chief Examiner over the lines, amounts advanced
to banks, and the condition of the member bank in requiring such advance.
“During these years many trips were made to banks in trouble, credit
examinations made of assets, and on occasion, special trips made by car, train, or
plane carrying large sums of currency to stop bank runs. Governor Black participated in
some of these. One, in particular, still is a vivid memory. We, H. F. Conniff and the
writer, conveyed by train a large sum to Miami, Florida, placing the currency in the vault
of the First National Bank of Miami. Several times each day we would enter the vault to
see that the money was there, recounting it each morning. Credit asset checks were
made in two banks and advance lines determined. The coldness of the economic
climate in that city was then underscored, as the weather changed to a North-Easter
with temperature down in the thirities. We with our summer clothes since we were going
to the ‘deep South’ that December.” 29


Chapter 17


Keller, Dictionary of Dates, II, 356-361.


Garrett, Atlanta and Environs, II, 837-846.


Hopkins, M. B. Wellborn, 141-142.


Minutes, Directors, V, 1377.


Recollections of V. K. Bowman, typescript.




Recollections of Lewis M. Clark, typescript.


Minutes, Directors, V, 1372.


Biographical Records of the Bank; Who’s Who in America, 1963-1965.


Biographical Records of the Bank; Who Was Who in America, II, 236.


Minutes, Directors, V. 1388.


Ibid, 1390.


Ibid., 1400.


Ibid., 1391.


Ibid., 1400.


Ibid., 1478, 1494, 1498.


Ibid. , 1497-1498.


Ibid. , 1442.


Ibid. , 1417-1418.


Ibid. , 1451.


Ibid. , 1404-1427.



Ibid., 1413, 1419, 1475.


Ibid., 1394.


Ibid. , 1396.


Annual Report, 1928, pp. 10-11.


Minutes, Directors, V., 1491.


Annual Report, 1928, pp. 5-6.


Ibid. , 6


Recollections of V. K. Bowman, typescript.


Chapter 18

The big news in 1929 and the events felt most keenly by most of the population
for years to come were financial. True, invention and exploration made an annual bow
as usual--airmail lines between the United States and Cuba, Puerto-Rico, Santo
Domingo, Nassau and the Bahamas went into service; the Richard Byrd expedition
reached the South Pole in November, and telephone service from shore to ships at sea
was successfully demonstrated in December--but the big news of the year was
On March 26, trading on the New York Stock Exchange totalled 8, 246, 740
shares, highest record, marked by severe declines with call money 20%. Over 300 low
records of the year were made. A couple of months later, on May 22, stocks broke from
two to 18 points with 200 at a new low for the year on news that the Federal Reserve
Advisory Council bad recommended a 6% New York Reserve bank rate, but rallied the
following day on failure of the advanced rate to materialize.2
The new smaller sized national currency went into circulation on July 10. A week
later, on the 17th, two large banks in Tampa, Florida, and 12 smaller banks with about
$2Z, 000, 000 deposits suspended payments because of depression caused by
damage charged to the Mediterranean fruit fly. On August 8 the Federal Farm Board
made its first loan, an advance of $300, 000, to the Florida Citrus Exchange in order to
relieve growers affected by a quarantine imposed in April because of the Mediterranean
fruit fly.3


Meanwhile, the stock market boiled. A committee of the Investment Bankers
Association reported, on October 16, that speculation in public service stocks had
reached a danger point, and that many stocks were selling for prices far above their
intrinsic value. A week later, on the 20th, the New York Stock Exchange experienced
the most severe break in its history. Trading of 12,894,650 shares set a record. So did
the Curb, with 6,337,415 shares traded. The industrial average went down 12.18 points.
On November 12, the market collapsed. During a three-hour market (10 a.m. to 1 p.m.)
sales of 6,452,770 shares were recorded and on the Curb Exchange, 2, 204, 700
shares. Average of industrials descended 16 points. The next day stock prices reached
new lows for the year in a 7,761,000 share market.4
Between November 14 and December 6, the Federal Reserve Bank of New York
lowered its rediscount rate from 5 to 4-l/2%--the second cut in two weeks; the Chicago
Federal Reserve and the San Francisco Federal Reserve Banks followed suit. Then, on
December 12, stocks on the New York Exchange declined again, from 2 to 22 points,
the worst break since November l3.5 The stage was being set for the years of
depression to follow.
At the same time, financial history was being made in Atlanta. On November 25,
the city became the home of the largest financial institution south of Philadelphia, This
came about as the result of a merger between the Atlanta and Lowry National Bank and
the Fourth National Bank to form the First National Bank of Atlanta. As Ralph Smith, of
the Atlanta Journal, wrote at the time:
“Not since the location in our midst of the Federal Reserve Bank of the Sixth
District, in 1914, has there been any material development in Atlanta, in Georgia, or in


the South, of such far-reaching consequences as the bank merger. The First National
Bank confirms and copper-rivets Atlanta’s financial preeminence, and widens, too, its
sphere of usefulness, influence, and supremacy...”6
Concurrently, the Atlanta Trust Company, for some time past in a bind, was
being bailed out. On December 3, the Citizens & Southern National Bank loaned the
Atlanta Trust Company a sufficient sum to pay its depositers in full and purchased its
headquarters building at Marietta, Broad, and Walton Streets. A remodeling job was
begun in March 1930 and, on January 19, 1932 the C. & S. occupied its present Atlanta
The Federal Reserve Bank of Atlanta, of course, had a stake in the affairs of the
Atlanta Trust Company. Governor Black, former President of the latter, during the
course of the December 1929 Board meeting of the Reserve Bank, recited the efforts
made by the Re serve Bank and the agreements made by that bank in the matter, they
“First: That the Reserve Bank would look primarily to its rediscounts for their
collection, and only to assets of the Atlanta Trust Company after the Citizens &
Southern National Bank bad been repaid its advances and expenditures in connection
with the liquidation of that company, and explained that this action was in line with the
law of Georgia which gives depositors a preference over the other creditors.
“Second: The guaranty of $1,050,000 given by the Reserve Bank and the three
other banks named, in which guaranty the Reserve Bank joined to the maximum extent
of $200, 000 ...”8


Governor Black also called attention to the fact that the Directors of the Atlanta
Trust Company had furnished to the Reserve Bank their guaranty in the sum of
$200,000 to guarantee the Reserve Bank against loss by reason of its connection with
the guaranty. 9
Meanwhile, Atlanta’s great building boom of the ‘20’s was giving into its declining
phase. Completed during ‘29 were the Pryor Street, Wall Street, and Central Avenue
viaducts; the Rhodes-Haverty and Southern Bell Telephone Company Buildings, and
the new City Hall on Mitchell Street which was occupied in February of the following
year. In April of 1929, the City of Atlanta purchased Candler Field--all 297 acres of it--for
$94,500 and the stage was set for Atlanta’s future pre-eminence as an air transportation
As usual some changes and re-elections involving the official family of the Bank
and its branches occurred at the beginning of the year.
Branch Directors named for a three-year term beginning January 1, 1929, were:
Birmingham, J. H. Frye; Jacksonville, G. G. Ware; and New Orleans, R. S. Hecht. The
vacancy at Nashville, to succeed Captain T. A. Embrey, was not filled until March 8,
when J. B. Ramsey, President of the Holston Union National Bank, of Knoxville, was
named to the post.11 W. H. Kettig, P. H. Saunders, J. C. Cooper, and Luke Lea were all
reappointed as Directors at Birmingham, New Orleans, Jacksonville, and Nashville,
respectively. 12
J. H. Frye, who served several years as a Director of the Birmingham Branch,
was a well-to-do though frugal man. In that connection, a member of the staff in Atlanta
remembers an amusing incident.


During his tenure, Mr. Frye was asked to make some calls at rural banks in
Alabama. He couldn’t drive a car but used a chauffeur for the purpose. Following a
day’s trip he turned in an expense account for five cents. This, no doubt, was the
smallest such account ever prepared by anyone connected with the Bank. The incident
was. brought to Chairman Newton’s attention, who was asked if he didn’t think the
account was in error and that $5. 00.was intended. Newton knew Frye well and
commented: “No, I’m sure the amount is correct. Mr. Frye no doubt bought a peanut
butter sandwich and gave his chauffeur half of it. “13
Branch Managers A. E. Walker, W. S. McLarin, Jr., Joel B. Fort, Jr., and Marcus
Walker were all re-elected to their respective posts, Birmingham, Jacksonville,
Nashville, and New Orleans,14 while E. C. Melvin and Colonel Luke Lea were reelected as Class A and Class B Directors.15
All officers of the Atlanta Bank were re-elected at the January 1929 Board
meeting and, in addition, P. L . T. Beavers was elected an Assistant Cashier in charge
of the Transit Department and S. P. Schuessler to the same rank, in charge of the
Fiscal Agency Department. All Branch officers were re-elected to their respective
J. P. Butler, Jr., President of the Canal Bank and Trust Company, New Orleans,
was elected as the member of the Federal Advisory Council to represent the Sixth
District for 1929. He succeeded P. D. Houston, of Nashville, Tennessee, who had
served usefully during 1926, 1927, and 1928. 17
The number of officers and employees of the Bank, including branches and
agencies, remained steady throughout 1929. On January 1, the total was 430; on


December 31, 434. 18
Late in 1928, the officers and directors of the Bank had planned a trip to Havana
to attend the opening of the new quarters there. However, because of a completion
delay until mid-December, it was decided to postpone the trip until January 1929. The
group, which arrived in Havana on the 14th, was composed of Vice-Governor Edmund
Platt, Federal Reserve Board, Washington, D. C., and Mrs. Platt; Governor and Mrs. E.
R. Black, Chairman and Mrs. Oscar Newton, Director George S. Harris, wife and
daughter; Director J. A. McCrary and two daughters; Director E. C. Melvin and two
daughters; Director and Mrs. L. C. Simon; Director and Mrs. G. G. Ware; P. D. Houston,
of Nashville, representing Director Luke Lea; Vice-Chairman W. H. Kettig, Mrs. Kettig,
daughter and a friend; and Haynes McFadden, representing The Southern Banker. 19
A reception was held at the Agency, located in the Metropolitana Building.
Commented J. A. McCrary, Chairman of the Building Committee:
“The grille work, vaults, counters, desks, and furniture present not only an
attractive appearance but one of safety and economical installation. Our Havana
Agency quarters are now in keeping with our bank.” 20
The improvements at Havana came to a total cost of $70,672. 53.21 And, since
the cost of living in Havana ranged from 30 to 40% higher than in the States, the
salaries of Manager Magruder and Assistant Manager Frazer, of the Agency, were
upped substantially, effective January 1, l929--Magruder’s from $6, 000 to $8,400;
Frazer’s from $4,200 to $6,300.22
Beginning in January 1929, General Auditor W. S. Johns was requested by
Governor Black to make a brief annual report to the Board. As an interesting

commentary on current operations, Mr. Johns’ first report is informative and is herewith
“In order that there might be some uniform procedure in the auditing work of the
twelve reserve banks, the Federal Reserve Board appointed a committee to make a
study of auditing procedure and under date of December 12, 1924, the findings of this
committee were submitted by the Federal Reserve Board to our Board of Directors, who
referred the report to the General Auditor for study and recommendation. The Board’s
procedure, with a few minor exceptions, was recommended by the General Auditor and
in February 1925, this procedure was adopted by our Board of Directors as the auditing
procedure for the Federal Reserve Bank of Atlanta.
“At the Head Office a continuous examination of the various departments is
made... Where two departments are closely allied in their functions, such departments
are examined simultaneously. While a balance sheet examination is most desirable, it
has been attempted infrequently due to the difficulties in making such an examination.
We have four branches and two agencies, far apart geographically, and the expense of
a force sufficient to make a balance sheet examination is not warranted in my opinion
by the results obtained, as the Auditing Department would have an excessive force for a
large part of the year. So far, I have been unwilling to go outside of the bank to employ
temporary examiners for a balance sheet examination as I am unwilling to certify as
correct work performed by men unless I have had sufficient opportunity to determine
their ability and reliability. I have found by long experience that a close relation and
observation of the various departments is most effective in obtaining correct operating


“Two balance sheet examinations of the New Orleans Branch were made during
the year, which is the minimum, usually three are made. The examination consists of a
complete count of all tangible assets and verification of all accounts as reflected in the
balance sheet.
“These three branches are operated on the memorandum plan. Five examinations were made of the Birmingham Branch, four of the Jacksonville Branch, and five of
the Nashville Branch. As far as possible, a balance sheet examination of these
branches is made by including a verification of the accounts that are maintained at the
head office, such as the Reserve and Deferred Credit balances of the branch zone
members and branch deferred debits due from other Federal Reserve banks. The
Auditing Department also makes a daily check of all transactions of the limited power
branches forwarded to the Head Office for entry.
“Our agency at Havana maintains a stock of currency for the purchase and sale
of cable transfers and denominational exchanges of currency. The Savannah Agency
maintains a stock of currency and coin for the convenience of the Savannah member
banks and holds a limited amount of securities for the account of the Head Office. Two
examinations of the Havana Agency and four of the Savannah Agency were made
during the year 1928 and a complete verification of the currency and security holdings
was made at each examination.


“A system of joint controls has been established over all currency, coin,
securities, or other valuables and, in my opinion, the amount of single control valuables
has been reduced to a minimum. Due regard has been given for the safety of valuable
receipts or shipments. At our Nashville Branch the post office and express company call
for and deliver all valuable shipments and there is, therefore, no liability at this branch.
Our Birmingham Branch has a tunnel connection with the post office, through which all
valuable shipments are transported. At our Jacksonville Branch, valuable shipments are
transported in an armored car at so much per trip, the bank sending its guards with
each receipt or shipment. The truck is not owned by the Jacksonville Branch. At
Savannah and Havana, shipments are transported by automobile under proper guard.
The Head Office owns its own armored car and shipments are made under proper
“In September, 1926, the General Auditor was made responsible for the proper
authorization, proper approval, and propriety of all expenses of the Federal Reserve
Bank of Atlanta before the expense was incurred. All expenses at the Head Office are
examined and approved by the Auditing Department before a purchase is made. It was
found very inconvenient to require the branches and agencies to forward all
expenditures to the Head Office for approval before purchases and the branches have
been allowed to incur the necessary expenses of operation without the approval of this
department before purchase. The expense incurred by our limited power branches and
agencies are immediately forwarded to the Auditing Department, where they are


scrutinized for approval. The current expenses of our New Orleans Branch are
examined during the periodical branch examination. The branch and agency
expenditures have been conservative and the present method of handling their
expenses by the Auditing Department is considered satisfactory.
“The Auditing Department has the full cooperation of all officers and employees
and they have materially assisted this department in doing a constructive work. I am of
the opinion that the Federal Reserve Bank of Atlanta is operated in accordance with the
rules and regulations of the Federal Reserve Board, of its Board of Directors, and in
conformity with the Federal Reserve Act. “23
With a spirit of speculation becoming more widespread throughout the country at
the beginning of 1929, the Federal Reserve Board addressed a letter to Chairman
Newton of the Atlanta Bank and presumably to the Chairmen of the other eleven
Reserve banks, under date of February 2, 1929. The burden of the letter was a warning
against the granting of speculative credit. It concluded by requesting the following
information from the Chairman: (a) How they keep themselves fully informed of the use
made of borrowings by their member banks; (b) What methods they employ to protect
their institution against the improper use of its credit facilities by member banks; (c) How
effective these methods have been. To which Chairman Newton replied promptly:
“Your letter of February 2nd, advising us of the attitude of the Federal Reserve
Board with respect to the credit situation and the problem confronting the administration
of the Federal Reserve Banks, has been read with interest and carefully considered.
“Answering your inquiries:
“(a) The members of this Board reside in Alabama, Florida, Georgia, Louisiana,


and Tennessee, five of the six states and parts of states which comprise this district.
They keep themselves informed in regard to the general uses of Federal Reserve credit
in their respective sections by conference with representatives of member banks, and at
the meetings of the Board discuss freely the credit conditions which prevail in their
respective sections of the district. In fact, the meetings of the Board frequently served
as a clearing house for the interchange and discussing of views regarding the uses of
credit and other matters pertaining to the operations of the bank. At the daily meeting of
our discount committee, there are generally two Directors present, and at the semiweekly meetings of our executive committee there are generally four Directors present.
At these meetings and at the Board meetings, the Directors are given information by the
Governor and Chairman regarding the uses of Federal Reserve credit by member
banks, which information is obtained from interviews with the representatives of the
member banks and from the reports of member banks.
“(b) The officers and Directors have from time to time conferred with
representatives of member banks who use Federal Reserve credit, and have informed
these representatives of the policy of the bank; namely, that the Federal Reserve credits
should be used for agricultural, commercial, and industrial needs as provided in the
Federal Reserve Act, and not speculative purposes. Last summer, when there was a
rapid expansion in loans to member banks in this district, the Governor and Chairman
called a conference of representative bankers from different points in our district for a
discussion of the proper use of Federal Reserve credit by our member banks, and at
this conference assurances were given of their hearty cooperation in our effort to restrict
Federal Reserve credit in our district to its proper uses.


“(c) We believe that a proof of the effectiveness of the methods employed is
shown in the figures from the reports of condition of member banks as of October 3 and
December 31, 1928. These figures reveal that on October 3, 1928, 31 member banks
(not having bills payable or rediscounts with the Federal Reserve Bank of Atlanta ) had
loans to New York brokers and dealers aggregating $26, 092, 296. 52, and nine other
member banks having bills payable and rediscounts with the Federal Reserve Bank of
Atlanta, had loans to brokers and dealers aggregating $2, 041, 385. 60. On December
31, 1928, 43 member banks (not having bills payable or rediscounts with the Federal
Reserve Bank of Atlanta) had loans to New York brokers and dealers aggregating $21,
060, 233. 70, and three other member banks, having bills payable and rediscounts
amounting to $668, 546. 90, had loans to New York brokers and dealers aggregating
$1,468, 354. 21.
“This matter was today fully discussed by our Directors, and I am instructed by
them to advise that in the Statements in this letter they are in full accord, and that the
policy of this bank will continue to be adverse to the use of our credit for speculative
purposes. They and I feel that our record, as disclosed in this letter, will reveal that our
effort to conserve our credit for legitimate uses, evidences our accord with the spirit of
your letter to us on this subject. 24
The hatches were being battened down for the storm that lay ahead.
In May, Governor Black, in reporting to the Board of Directors on the subject of
credit conditions, wrote:
“…We are giving close study to credit conditions in our territory and are
endeavoring to protect the bank in all lendings to member banks, having due regard for


the situations in the different banks and in the different communities. In the case of any
bank in a weakened or extended condition, we are protecting our bank by the
requirement of additional collateral. In the case of some banks we are declining any
rediscounts because of the impaired capital of such banks and in such cases are
lending only on commodity secured or government secured paper. We are working with
member banks under a restricted line of credit where the solvency of such banks is
questionable or where, in our opinion, the management has not taken proper steps to
put the bank in good condition. In a number of other cases, we have consulted with the
officers of banks in an effort to aid them in getting their banks in good condition. Certain
portions of our territory have been affected by flood conditions and crop conditions, and
special attention is being given to demands of banks in such localities....”25
In September the Governor again reported on credit:
“I am glad to report that our member banks are almost unanimously following our
policy of restricting Federal Reserve credit to the uses named in the Federal Reserve
Act. In the weekly condition report of member banks of August 28, we have only two
reporting banks who are borrowing from us who were lending on call in New York. One
of these accounts is $224, 000 and was really loaned on local collateral through local
agencies of a New York broker. The other amount is only $110, 000, so that of the
reporting member banks in our whole district, there is only $334, 000 that could possibly
be charged to loans to brokers in New York by banks who are borrowing from us. This
cooperation on the part of our member banks is enabling us to make effective the policy
of direct action which was announced by the Federal Reserve Board and adopted by
our bank and has been adhered to since its announcement.26


Meanwhile, between July 11 and July 24, five bank failures occurred in Florida.
The closing of all of them was incident to and followed upon the closing of the Citizens
Bank & Trust Company of Tampa and practically grew out of the alarm that the failure of
that bank spread among depositers in Florida. In addition to the failure of these Florida
banks there were heavy runs upon the St. Augustine National Bank, and the First
National Bank of Gainesville. These two banks were in excellent condition and in each
case, after a run of two days upon them, weathered the storm and re-opened.27
Following a visit to Florida, Governor Black reported to the Board on August 9:
“In a visit which I made to. Florida, I found that there was a general unrest
among the depositers in a large number of Florida banks; that confidence had been lost
in a large measure by those depositers. I found that all the banks were strengthening as
far as possible their cash position and were endeavoring to allay the alarm insofar as
each individual bank was concerned. The banks in St. Petersburg and Orlando took
advantage of the sixty-day clause in connection with their savings deposits. I doubted
the wisdom of this but it may have been a necessity. We are watching this drastic
measure with these banks in an effort to learn whether such a step can be successful
with a commercial bank...
“The Florida banking situation is, of course, the culmination of the history of the
last three years in Florida, augmented by the unrest, distrust and lack of confidence
engendered by the situation in regard to their vegetable crops and citrus fruits caused
by the presence of the Mediterranean fly. The Government’s efforts in Florida should
help much towards clearing up the financial situation in that State, and when it is
demonstrated that fruit and vegetables may be shipped from Florida during the coming


season a very radical step will be taken towards permanent improvement among the
financial institutions of that State…”28
In November, concerning the situation at Tampa, the Governor wrote:
“During October there was a run upon our two member banks in Tampa and
upon two non-member banks in Ybor City, adjoining Tampa. We were called on for
immediate assistance, and we had $1, 000, 000 transported by airplane in charge of Mr.
McLarin, Manager of our Jacksonville Branch, and $5, 000, 000 sent by registered mail.
Deputy Governor Taylor and I went by automobile to Tampa and arrived there before
the banks opened the next morning. We saw that the cash position of the two banks
was all right and remained until Monday, when the situation was entirely remedied.29
At the same time, Governor Black reported to the Board on the situation of
Reserve Banks during the week of the stock market crash.
“It will be interesting to note the situation as to all the Reserve banks from
October 23, 1929, to October 30, 1929, or during the week in which the New York stock
situation existed. The earning assets of the System during that week increased from $1,
336, 656, 000 on October 23 to $1,648, 742, 000 on October 30, or an increase of
$312, 000 ... In New York there was an increase of $114,849,000 in holdings of
Government securities and an increase of $138,971,000 in bills discounted, these two
figures showing an increase in the earning assets of the New York bank during this
week of $253, 820, 000, which was doubtless primarily had in order to aid the situation
in New York during the past week. In our own bank there was an increase of
Government securities owned of $5,087, 000, a decrease in bankers acceptances of $1,
011, 000, and an increase in bills discounted of $5, 400, 000.


“The Open .Market Committee reports that during this week the call rate
remained relatively easy. On all days of the period, call money was quoted at six
percent, except on Tuesday when, due to the acute unsettlement in stock prices, the
renewal rate was set at five percent before the opening of the stock market and that rate
held until shortly after two o’clock, when there was an advance to six percent. The Open
Market Committee also reports that:
“The principal development of the calendar week with respect to the money
market situation was a further increase of $150, 000, 000 in the reserve requirements of
the New York City member banks, following a rise of $67, 000, 000 in the preceding
week. This increase in reserve requirements accompanied a huge increase in the
deposits of the city banks, which in turn was due to the taking over by these banks of
brokers’ loans which had been called in very heavy amounts by out-of-town banks and
other lenders. During the reporting week ending Wednesday, October 30, a period in
which total brokers’ loans in New York showed an unprecedented reduction of
$1,096,000,000, loans placed by New York City banks for others declined $1, 380, 000,
000 and loans for out-of-town banks decreased $707, 000, 000, while loans placed by
New York City banks for their own account actually rose $392, 000, 000. The New York
City banks were able to shoulder the huge burden which was transferred to them
without any disturbance to the money market by reason of an increase of over $150,
000, 000 in the security holdings of the Reserve Banks and a further increase of $50,
000, 000 in their borrowings from the New York Reserve Bank, following practically as
large an increase in their borrowings in the preceding weeks. From other sources of


funds the New York market gained very little, as an inflow from other parts of the
country was largely offset by an increase in requirements for currency.
“Quotations for time money dropped further early in the week to a flat six percent
level for all maturities. With the stock brokers as busy as they were, little attention was
paid to time money on most of the days, though toward the end of the week a fair
volume of loans for periods of one to four months was reported as having been
arranged at a six percent rate. The present level for time money is at least three percent
below the highest level of the year and is the lowest quotation since August 1928.
“The dealers’ rates for commercial paper declined rather promptly on the
reduction in the New York Reserve Bank’s discount rate. Prime names were offered
principally at a range of 5-3/4 to 6 percent, as against 6 to 6-1/4 percent earlier in the
week. The bank investment demand for paper was reported to have been better than in
a considerable number of months. Orders emanated both from the country banks direct
and also through the New York City banks for account of out-of-town correspondents.
The rate reduction effected by the dealers was, of course, a quick move in order to
induce larger commercial borrowings through the open market, as dealers’ sales
operations had to a considerable extent been hindered by the lack of material on hand.
“Accompanying the unprecedented stock market activities during the current
calendar week, the volume of trading in government securities on both the New York
Stock Exchange and the over-the-counter market was enormous. This activity was due
principally to selling and buying in the first and last part of the week, respectively, by
large corporations and banks and the Federal Reserve Bank purchases during the early
part of the week. Prices of all issues advanced sharply during the early part of the week


and fell off considerably during the middle of the week… However, on Friday and
Saturday, due to the large volume of buying, on the part of New York City banks and the
reduction in the rediscount rate at the Federal Reserve Bank of New York, prices in the
over-the-counter market for all issues of Government securities again advanced sharply
and dealers’ offering prices at the end of the week showed that loss which occurred in
the middle of the week had been discounted and the net changes at the erd of the week
over the previous week’s close in most cases showed substantial gains.
“The total holdings in the Systems Special Investment Account of Government
securities on October 30 was $47,500,000, of which amount our bank owned
$2,496,500. During the week ending October 30, the Federal Reserve Bank of New
York bought $120,000,000 of short-term Governments, of which $25,000,000 was
transferred to the System Account. In the $25,000,000 purchase of Governments during
the week named, all Federal Reserve Banks participated except Richmond,
Minneapolis, and San Francisco. All the Federal Reserve Banks are participating in the
holdings of bankers’ acceptances except the St. Louis bank.
“On October 30 the holdings of Government securities in the System was
$292,688,000 and bills purchased $339,885,000, giving a total of both amounting to
“I have given you the details of the System’s operations during the past week
because I know it is a matter of interest to you and because you should be fully advised
as to these facts and especially as to the operations of the Open Market Investment
Committee for the account of the other Federal Reserve Banks and our bank. It is a


matter of congratulation that the Stock Exchange situation which existed in New York
did not result in a business panic or disaster and that it was not accompanied by the
collapse either of brokerage houses or financial institutions. Certainly this bank would
regretfully see either a business panic or financial disaster and very earnestly hopes for
a return to normal conditions in the market and in the business of the country.
“Most financial writers, including economists and financiers, have been actively
discussing the question as to the effect on business of this collapse of the stock market.
The agreement among these writers is general that business dealing in luxuries will be
materially affected by reason of the widespread loss throughout the country and most of
them agree that business dealing with essentials will be somewhat affected. All of them
agree, and I feel that they are right in feeling that the loss of confidence in business
circles engendered by the disaster on the Stock Exchange will affect business
generally. I am hopeful that with a return to normal conditions on the Stock Exchange,
when stocks are selling on a basis of real value and when purchasers are influenced in
their investments in seeking sound investments and in determining values upon the
basis of the return upon investments, business may return to a normal basis.
“The disaster on the New York Stock Exchange in the amount involved
exceeded any similar situation, so far as I know, in past history, and we cannot hope to
escape its full effects without paying some of the penalties involved to finance and
business. “ 30
In his last statement, Governor Black was a prophet indeed.
For 1929 as a whole, the Federal Reserve Bank of Atlanta did well. Total
resources and liabilities at the close of business on December 31 were larger by


$11,961, 000 than at the close of 1928, but were smaller than at the end of other years
since 1924. Totals were $250, 843, 000 for ‘29, compared with $238, 882, 000 for ‘28.
Total cash reserves at the close of 1929 amounted to $153,517,000, and were $25,
808, 000 greater than at the close of 1928.31
Total earnings for the year 1929 amounted to $4,116,049, an increase of
$537,893 over the preceding year, and were greater than for any year since 1921.
Current net earnings for ‘29 amounted to $2, 602, 810, compared with $2,325,022, for
1928, and were larger than for any other year since 1921.32
An interesting facet of the Bank’s 1929 business concerned the substitution of
old large size for new small size currency. The exchange of old for new began on July
10 and between that date and July 12, the Federal Reserve Bank of Atlanta placed in
circulation $13, 009, 390 of the new size bills.33
In summing up the 1920’s, Journalist Herbert Brotter wrote:34
“The 1920’s saw the closing of many smaller banks, particularly in agricultural
communities, but also saw improving industrial conditions after the relatively short
depression (of 1920-21), and a substantial decrease upon the Reserve banks for
discounts took place. Even so, there were fluctuations, and operations by the Reserve
banks in the Government securities market taught the System that under coordination
they had the quality of a major instrument of credit policy.
“Also in this period, through the initiative of the New York Reserve Bank, strong
and enduring correspondent relations were established with the Bank of England, the
Bank of France, and other European central banks. These arrangements have been of
great importance in the ultimate achievement by the United States of world leadership in


“During the latter part of the twenties there was building up an economic situation
which resulted in the stock market crash of 1929 and the American share in the
depression of the thirties. When the speculative situation became apparent through
rapidly rising security prices and the increasing demand for bank credit to finance
security operations, the Reserve banks attempted to deal with it through advances in
discount rates, and the Federal Reserve Board through public warnings. After the
collapse, discount rates were reduced and purchases of Government securities were
made by the Reserve banks to ease the banking situation “
In more critical vein, Mark Sullivan, writing much earlier, said:35
“... Daniel R. Crissinger was head of the Federal Reserve System during a
period (1923-1927) in which was made a mistake of Federal Reserve policy that was
the largest single cause of the depression of 1929 so far as the causes arose in
“I refer to the failure to raise rediscount rates at the end of the rising market that
should have come to a normal end about 1925. As a consequence of the failure to raise
discount rates, a second rising market was piled on top of the first, inviting the collapse
of 1929. The motive for keeping discount rates low was laudable- -to present no
temptation to European gold and capital to come to the United States, and thereby to
enable Britain, France, and Germany to get back on a normal fiscal basis ...”
But, continued Mr. Brotter:
“The ability of the System to deal adequately with the situation was hampered by
legal restrictions upon the discounting powers of the Reserve banks and on the


collateral that could be used to secure Federal Reserve notes until 1932, when the
Congress authorized the use of Government securities as collateral for the notes and
somewhat relaxed the discounting restrictions. The Reserve banks were thus enabled
to buy Government securities in greater volume and to increase the reserves of the
banking system.
Even so, as the 20’ s ended, the economic situation was destined to get much
worse before it got better.

Chapter 18

Keller, Dictionary of Dates, II, 36 1-368.











Garrett, Atlanta and Environs, II, 856-857.


Ibid. , 340.


Minutes, Directors, VI, 1671.


Garrett, Atlanta and Environs, II, 848-856.
Minutes, Directors, V, 1498; VI, 1555.


Ibid. , VI, 1534.


Recolletions of Lewis M. Clark.
Minutes, Directors, V, 1498.


Ibid. , 1509.


Ibid. , VI, 1514-1515.


Ibid. , 1515-1536-1537.


Annual Report, 1929, p. 11.
Frazer, “History Havana Agency,” 20-2 1.


Minutes, Directors, VI, 1553.


Ibid. , 1567.


Ibid. , 1519-1520.


Ibid. ,



Ibid. ,



Ibid. ,







Ibid. ,



Ibid. ,



Ibid. ,



Annual Report, 1929, pp 6-7.




Minutes, Directors, VI, 1607.
“The Fed’s First Half-Century”, Banking, Journal of the American Bankers
Association, Dec. 1963, p. 44.


Our Times, The Twenties, (New York, 1935) Vol. 6, p. 143.


The Troubled Thirties
Chapter 19

The year 1930, like the last quarter of its predecessor, was marked by financial
news of a depressing nature.
In February, the Federal Farm Board and Cotton Cooperative Association took
over the handling of cotton; the Federal Reserve Bank of New York reduced its discount
rate from 4½ to 4 percent and, on the 24th, the New York Stock Exchange had its first
5,000,000 share day since October 10, 1929.
In March cotton went to 14.5 cents, lowest price since 1927; the New York
Federal Reserve again reduced its discount rate from 4 to 3½ percent, while on the 18th
a merger of the Chase National Bank of New York and the Equitable Trust Company
and the Inter-State Trust Company, created the world’s greatest bank, with resources of
On May 1 the New York Federal Reserve lowered its rate of discount from 3½ to
3 percent. Five weeks later stocks broke heavily on the New York Exchange and
reached a new low on June 18. Meanwhile, on the 14th, wheat fell below $1.00. Before
the month was out the New York Reserve discount rate had been cut to 2½ percent;
wheat went to 87-3/4, lowest since 1914, and cotton to 13¢. As June closed, the public
debt stood at $16,185,308,299.
On September 16, President Hoover named Eugene Meyer, Jr., subsequently
publisher of the Washington Post, to the governorship of the Federal Reserve Board in
Washington, succeeding Roy A. Young, resigned. October 9 saw another severe break
in stock prices, led by ‘United States Steel. On the 29th Treasury


Secretary Andrew Mellon issued a statement to the effect that “the underlying causes of
the present world-wide depression could be traced primarily to overproduction.”
In mid-November Caldwell & Company, investment brokers in Nashville,
Tennessee, went into receivership, which event led to the failure of several banks,
including the State Bank of Tennessee. Less than a month later the Bank of the United
States in New York City, with 60 branches and 400,000 depositers, suspended,
followed two weeks later by the closing of the Chelsea Bank in New York, as the result
of a run. At the same time the Federal Reserve Bank of New York reduced its discount
rate to 2 percent, lowest in history. Concurrently wheat sank to 62.75¢ per bushel and
cotton to 9½ per pound, new lows.
Altogether, during 1930, commercial failures as reported by R.

G. Dun &

Company, totalled 26,355 with liabilities of $668,283,842, compared with 22,109 in
1929. Bank failures were reported as 1326 representing 903,954,000 depositors.1
Meanwhile Congress was not idle. On March 31 an Act authorized an
appropriation of $230,000,000 for the erection of public buildings in all sections of the
country; in April the Federal Road Act was amended, appropriating $300,000,000 for
highway construction to States; in December President Hoover asked Congress for
$150,000,000 to aid the unemployed, a Joint Resolution provided $45,000,000 for
agricultural relief in drought and storm stricken areas, and $150,000,000 was
appropriated for addition to the Federal Farm Board revolving fund.2
The Federal Reserve Act received attention too. During April it was amended
three times--as to limitations upon the rediscount by member banks; to permit member
banks to withdraw without waiting six months after filing intention and, as to bank
liquidation. It was amended again in June as to the election of directors of banks, trust
powers rights, and assessments of cost of examinations.3


The year was of course notable for events other than financial. In January a new
planet was recorded and named Pluto; in February Chief Justice William Howard Taft
resigned and was succeeded by Charles Evans Hughes. Taft died March 8. On April 1
results of the Census of 1930 were announced. Total population of the United States
came to 122,775,046, a 16 percent increase over 1920. The four largest cities were
New York, Chicago, Philadelphia and Detroit, in that order. The number of unemployed
stood at 2,508,151--about 2 percent of the population. This figure was destined to
increase markedly soon.4
Locally, Atlanta posted a population of 270,035, a gain of 70,000 over 1920;
James L. Key became mayor of the city after an interval of several years, and Richard
B. Russell was elected to the Governor’s Chair. Robert T. Jones won the grand slam of
golfdom and brought international fame to himself and to his native city. Natural gas
was piped into Atlanta, supplanting the time-honored manufactured gas, in use since
1855, and the building boom of the 20’s sputtered to a halt with the completion of the
William-Oliver Building, Ten Pryor Street Building, the Georgia Power Company’s Plant
Atkinson near Bolton, and the Union Passenger Station on Forsyth Street.5
Official elections within the Atlanta Federal Reserve Bank during 1930 produced
some re-elections, some promotions and some new members of the official family.
The terms of Directors Oscar Newton, Leon C. Simon and G. G. Ware all expired
on December 31, 1929. They were all re-elected for the three year term ending
December 31, 1932. In addition, Mr. Newton was reappointed Deputy Chairman for
1930. At the January 1930 Board Meeting all officers were re-elected and, in addition,
L. M. Clark was elected an Assistant Cashier.6
Early in the year the New Orleans Board suffered a severe loss in the death of
Director John E. Borden. In February he was replaced by J. D. O’Keefe, of New


At its April 12 meeting the Atlanta Board took occasion to note the death of
W.P.G. Harding, which occurred on the 7th. Suitable resolutions were adopted in
memory of this key figure in the early history of the Federal Reserve System, both as an
original member of the 1914 Washington Board and subsequently as Governor of the
Boston Bank.8
Effective May 1, 1930 the law firm of Randolph, Parker & Fortson, General
Counsel for the Bank, was dissolved. On the 9th, Robert S. Parker and Hollins
Randolph were named attorneys for the Bank, Mr. Parker at an annual salary of $2900
per annum, plus an extra $1500 for clerk hire, and 9 Mr. Randolph, $600 per annum.9
While on vacation in Atlanta, Havana Branch Manager L. L. Magruder died on
July 30. In the service of the Bank for twelve and a half years, Mr. Magruder was highly
regarded. In his personal relations he was quiet, kindly and courageous and through his
friendly qualities endeared himself to the Directors and his fellow officers.10
The vacancy created by Mr. Magruder’s death was filled by the promotion of
Assistant Havana Manager H. C. Frazer. A. H. Alston was elected Assistant Manager.
The first order of business at the November Board meeting was the reading of a
telegram of resignation from Class “B” Director Luke Lea of Nashville. The resignation
was accepted, and the chair bearing his name which he had used while a board
member was ordered sent to Colonel Lea.11
The Board thus lost a banker and newspaper man but gained a railroad
president. At a special meeting held in January 1931, James B. Hill (1878-1952), of
Nashville, then President of the Nashville, Chattanooga & St. Louis Railroad, was
elected to the vacancy.12
On October 24, 1930 the Bank suffered the sudden loss of a key officer when
Deputy Governor Creed Taylor was fatally burned in a fire which heavily damaged his
home on Fifteenth Street in Atlanta.13


Mr. Taylor took employment in a country bank at Demopolis, Alabama at the age
of 16 and all through his subsequent career never forgot this useful experience. He
entered the employ of the Atlanta Federal Reserve on July 1, 1918. His progress
through the years was steady. Resolutions adopted by the Board at its November
meeting defined some of his characteristics in the following language:14
“No man in the Reserve System had more intimate knowledge of the Federal
Reserve Act and of the functions of a Reserve Bank . .
“He intimately knew the condition and problem of each member bank. He was
firm in his effort to improve banking conditions, but in his firmness was sympathetic of
the conditions involved in the improvement of each bank.. The problem of the large
bank engaged his best ability.
“His outstanding characteristics as an officer were his ability, his courage and his
loyalty. A problem of the Reserve Bank was his personal problem. The bank was first
with him. He had no other thought than it should have its full rights.
“As a man he was modest, gentle, courteous and helpful always. His relations
with his fellow officers and the directors were close and the friendships formed with him
were warm and sincere... 15
On November 14 the Chairman of the Board and the Governor presented the
Board a number of applications for the position of Deputy Governor, together with letters
of endorsement. After considerable deliberation W. S. Johns, veteran General Auditor,
was elected Deputy Governor to replace Mr. Taylor, and E. P. Paris was elected
General Auditor. Salaries for the two men so elected were fixed at $12,000 and $6500
per annum respectively.16
In early December 1930 resignations were received from Nashville Branch
Directors J. B. Ramsey and E. A. Lindsey. Their places were filled later in the month by
Frank J. Harle, Cashier of the Cleveland Tennessee. National Bank, succeeding Mr.
Ramsey, and C. W. Bailey, President of the First National Bank of Clarksville,
succeeding Mr. Kindsey.17
Since E. R. Black succeeded M. B. Wellborn as Governor in 1928, the Bank and


Public Relations Department had become more and more active. During 1930, from
year’s beginning to November 14, the Governor, Chairman Newton and a number of
their associates made a total of 364 talks and visits to various banks. The value of
personal contact in the field was being demonstrated.18
To augment the already busy officers in this activity, a new position, called
“special representative”, was created in November. The principal duty of the position
was to visit member and non-member banks in the interest of better relations. The
salary range was fixed at $2,400 to $3,000 per year. Accordingly two young men were
transferred to the Bank Relations Department, H. N. Harrison from Credit, and A. A.
McCurry from Transit.19
A proposal was received in January 1930 of a community relations nature--an
invitation to join a newly formed Central Marietta Street Association. To be composed of
property owners along Marietta Street from Five Points to Spring, the principal purpose
of the Association was to enhance values and improve conditions in the area. It was
well sponsored and officered. After considerable deliveration the Reserve Bank voted to
join for annual dues of $675 based on property valuation. Two Board members, Newton
and Kettig voted in the negative. So did the Federal Reserve Board in Washington
which felt that the expenditure was not justified.20
As the financial depression continued to deepen, more and more attention was
devoted to suspended banks and to banks in an unsatisfactory condition. In January
1930 anent this subject, Governor Black reported:
“Every earnest effort possible is bring expended in the collection of amounts due
us by suspended banks. We have representatives working to make collection on our
paper. The Failed Bank Division itself is working tirelessly and the officers of the bank
are aiding in every effort that is being made. Deputy Governor Creed Taylor has spent
the present week in Tampa, Florida, where he is making every effort to reduce the
indebtedness of the Citizens Bank and Trust Company very materially during the winter
season. Special efforts are being made in the case of other failed banks in Florida,
since it is the season of the year in that state when collections should be made .
“The great number of banks in unsatisfactory condition, the increasing amount of
claims account of suspended banks and the many exceptions taken to the statements


supporting paper held by the Reserve Bank, indicate the seriousness of the situation
which requires the closest attention on the part of the management and emphasizes the
need of extending credit in the cases of banks in an unsatisfactory condition only to
such banks as are making every effort and showing ability to improve their
In 1930 as in 1926, the Cuban Agency made history. For approximately two
years after the Agency occupied its new quarters business conditions were generally
normal and operations moved along smoothly. Early in 1930, however, the Cuban
government was faced with meeting some relatively heavy payments to banks in the
United States on its outstanding bonded indebtedness. The Treasury balance in dollars
were relatively low and it was faced with the possibility of having to pay out about
$2,750,000 of its gold coin reserve which it was extremely anxious to retain for future
reserve purposes. At the request of the Cuban government and by authority of the
Atlanta Bank, the Agency was authorized to make an advance of $2,750,000 in Federal
Reserve notes to the Cuban treasury against security of like value of Cuban gold coin
which was received and held by the Agency under a re-purchase agreement. The
Cuban government was thereby enabled to meet its obligation in dollars and the gold
was retained in Cuba and redeemed by the Cuban Treasury in small lots over a period
of six months.
Late in September 1930, another banking crisis arose. The morning papers of
Friday, September 26, carried notice of the closing of the

one of

the Cuban banks and member of the Havana Clearinghouse Association. This incident
caused heavy withdrawals on Friday from all Havana banks and by Saturday the run
had spread to the banks in the interior of the Island. By the close of business Saturday,
September 27, the cash reserves of the Havana banks as well as the Havana Agency
were practically exhausted, and based on experience with similar runs in the past, local
banks had requested transfers aggregating over $20-million for Monday of the following
week. The Federal Reserve Bank of Atlanta took immediate action and arranged for
shipment of $5-million from the Jacksonville Branch by plane and $25-million from the


Atlanta Bank by special train. Indeed, declared Governor Black, “Cuba will have the
money that it needs.”
There being no regular boat sailing from Key West on Sunday, the Cuban
government again, as in 1926, made the gunboat Cuba available to the Havana Agency
to proceed to Key West to meet the special train and transport the shipment to Havana.
H. C. Frazer, who recently had succeeded the late L. L. Magruder as Manager of the
Havana Agency, made the trip to Key West aboard the Cuba. Jacksonville Manager W.
S. McLarin, Jr., accompanied the shipment by train and boat. The latter shipment was
delivered in Havana early Sunday morning and was transferred to the Agency vault by
Cuban armored trucks guarded by soldiers.
With $25 million additional reserves the Agency was in position to meet
alldemands of the Havana banks on Monday, September 30, and by the end of the
week conditions were again relatively normal. Within several weeks after the bank run in
September, public confidence in banks appeared to be completely restored and
business throughout the Island was reportedly normal.22
A couple of months later the Nashville Branch became the scene of some
feverish action. It was reported to the Board by Governor Black on November 14:
“On Monday November 3rd, I was notified that Caldwell & Company, of
Nashville, Tennessee, would close Wednesday morning and that the closing of this
bond house would cause much trouble in the Tennessee region. We immediately
shipped ample funds to our Nashville Agency and Mr. Conniff and Mr. Bowman,
Assistant Cashiers, and I went to Nashville. We spent the entire week there
endeavoring to aid in every way that the Reserve Bank could aid and we feel that the
result in Nashville that no bank in that city has closed is due in part to the efforts of the
Reserve Bank. Ample credit facilities and ample funds were at hand for every call and
any emergency.
“We returned to Atlanta on Saturday night, the 8th. On Sunday afternoon,
November 9th, I was notified that the Holston-Union National Bank of Knoxville was in
trouble and Mr. Coniff was immediately sent there and I immediately went to Nashville. I
spent Monday and Tuesday in Nashville endeavoring to aid in the Knoxville situation in
any way that I could and endeavoring to hold the Nashville situation in check. Little aid
could be rendered the Holston-Union National Bank because of its condition and
because of its large present borrowings from us. The Holston-Union closed today,


November 12th, and there has been a run on the City National Bank of Knoxville and
the East Tennessee National Bank of Knoxville. This run was caused largely by
certificate holders and savings depositors. About $500,000 was drawn out of each bank
today. These two banks with other banks have invoked the thirty day clause on
certificate holders and savings depositors. We have today approved approximately
$800,000 rediscounts for the City National Bank upon condition that additional collateral
of $400,000 be furnished us. No call has been made upon us by the East Tennessee
National Bank for credit facilities. We are today shipping sums to these two banks in
Knoxville which will be adequate for any demand made upon them and I am hopeful
that the situation there has been relieved.
“The affairs of Caldwell & Company in Nashville are being handled by a
committee of bankers and the outcome of that situation cannot be foretold. It extends
from the Banco Kentucky in Kentucky to Nashville, Knoxville, Memphis, and into
Arkansas. We are watching developments in our territory affected by this situation and
are prepared to render every aid that can be consistently rendered.” 23
A few months before, during the summer and early fall, the Nashville Branch had
undergone an $8000 interior remodeling and modernizing job.24
On January 28, 1930 there was held in Washington with the Federal Reserve
Board a conference, of a representative from each Federal Reserve Bank, with the
exception of Kansas City. Each was represented by its Governor, except Boston, from
which the Deputy Governor was in attendance.
The principal business of the conference was discussion of the question as to
whether any steps should be taken by the Open Market Committee at the present time
which might make money easier or tighter or leave it practically where it was. In
reaching a judgement the following facts, as they appeared to be, were considered:
“1.The panicky feeling has subsided.
2. A business recession has taken place, the extent or duration
of which is not yet possible to determine.
3. Money has been made available to commerce and industry at more
reasonable rates.
4. Liquidation is progressing in an orderly fashion.
5. Rediscounts have 1~een reduced to under $450,000,000.
6. However, there is a large variety of security loans in member banks which they
are anxious to get reduced.
7. Liquidation has been slower in country banks than in city banks.
“Under the circumstances it is the judgment of the Committee that no open
market operations in Government securities are necessary at this time either to halt or
to expedite the present trend in credit.


“The Committee believes, however, that it would have an unfortunate effect upon
business if the demand for additional credit for spring business, concurrently with the
running off of the present bill portfolio of the System should result in a hardening of
“It therefore recommends that the minimum buying rate for bills, fixed by the
Federal Reserve Board, be reduced so that the Federal Reserve banks may have such
flexibility in their bill operations that the present portfolio be not only maintained but may
if necessary be increased to such extent as to avoid the hardening of rates which might
result from a seasonal demand for additional reserve credit.25
On March 25 there was a meeting in Washington of the new Open Market
Committee, composed of a representative from each of the Federal Reserve Banks. At
this time the old committee was discontinued and a new committee, voluntary in
character, to be known as the Open Market Policy Conference was set up in its place.
Briefly, the function of the Conference was to consider, develop and recommend
policies and plans with regard to open market operations.
Governor Black, who represented the Atlanta Bank, reported to his own Board
upon his return.”
“I very heartily approve of the action taken at Washington, as I have always felt
that the Federal Reserve Bank of Atlanta, and indeed each Federal Reserve Bank,
should have a representative on the Open Market Committee and should take part in its
purchases and sales in the formulation of its policies.” 26
On September 27 the Open Market Policy Conference made the following
recommendations, which were approved by Eugene Meyer, Governor, Federal Reserve
Board, Washington:
“In view of the continued severe depression in business activity, trade and
commodity prices in this country, as well as the rest of the world, it is the sense of the
conference that it should be the policy of the System so far as possible to maintain the
present easy money rate position in the principal money centers, it being the opinion of
the conference that under present conditions no further easing of such money rates
would be advisable and that no firming of such rates would be desirable whether
because of seasonal requirements, gold exports or other causes.
“It is, therefore, recommended that the executive committee authorized, if
necessary, to supplement bill purchases by the purchase of government securities in
the event that the seasonal demand for Federal Reserve credit, gold exports, or other


factors should tend unnecessarily to tighten present money rates, and that in the event
any condition should develop which would require sales of government securities to
execute this policy the executive committee should be authorized to make such sales. It
is understood, however, that if the committee should have to buy or sell more than
$100,000,000 of government securities to maintain the status quo, new authority should
be procured in accordance with the prescribed procedure…”27
Meanwhile, in May, Governor Harrison, of the Federal Reserve Bank of New
York, having recently been to Europe, made an economic report to the Open Market
Policy Conference.
He emphasized the worldwide nature of the recent price declines and business
depression and indicated the influence of this world depression. upon the position of the
United States as reflected in part by the fact that this country’s export trade for the first
quarter of 1930 was about 22 percent less than for a like period in 1929, and the import
trade was approximately 20 percent less. While the worldwide depression appeared in
part to be an over production of certain principal commodities, it also appeared to reflect
a shortage of working capital, and thus a restriction of purchasing power in a number of
countries, and had been affected by the stringent credit conditions prevailing last year in
world money markets, which, in turn, were a part of the reflection of the use of funds for
speculation centering about the New York security markets but world-wide in its scope.
The recovery of the world trade appeared in turn to be in no small degree dependent
upon the restoration of purchasing power through the medium of foreign borrowings in
the New York money market, just as the recovery of domestic trade appeared to be
much dependent on the new financing for domestic enterprise in the United States.28
At the July meeting of the Atlanta Bank Board, Governor Black gave his views on
the current economic situation which, incidentally, was due to get much worse.
“I am not going to outline business conditions at length. You gentlemen are
thoroughly familiar with them. There is little difference in conditions in our District and
other Districts. Commodity prices are at low level. Business depression is
acknowledged, pessimism is present and harmful. Improvement this year in our District
is largely dependent upon crop returns and prices and any permanent improvement is
dependent upon practically the same conditions as would show improvement in other
districts--that is, upon improved world markets for surplus agricultural and industrial


products, the employment of funds in new enterprises in this country and abroad, an
increased demand for products to improve commodity prices, limitation of production
until surplus can be materially reduced, increased consumption and increased
purchasing power here and abroad, a return of faith in the commercial world, and the
replacement of the present pessimism with at least a determination to succeed coupled
with such economies as will make possible debt retirement…”29
“In our own District I feel that our bank should aid our member banks directly in
every way possible. I doubt if any rate we fix will immediately affect industry, agriculture
or commerce, nor do I believe it will affect rates on short time loans, but, to be specific,
most of our member banks need all the earnings they can get and to save all the
charges they can save. In an effort to aid toward these earnings and the reduction of
these charges I should like to see our rate reduced to 3-½ percent. I should also favor
such reduction at this time as an evidence to business and agriculture that we want to
aid in supplying funds on a basis of encouragement to business and agriculture.”30
After a general discussion of the situation and at the request of Mr. Black, each
Director expressed his views. It was moved and seconded that this Board approve a
policy of further purchases of Governments at the rate of $25,000,000 per week and the
participation by this bank in such purchases, all with the purpose of providing funds
through the bond market for the financing of enterprises, the encouragement of
commerce, industry and agriculture, to the end that commodity prices might be improved and funds provided for the purchase in our own and the world market of
American products. The motion was carried, only Director H. Lane Young voting in the
In October Governor Black enunciated a policy, through the medium of a circular,
concerning cotton. A large crop of the southern staple had been produced, but much
distress was being occasioned by two factors--the low price of the product and undue
haste in its sale. Said the Governor:
“Our bank has shown its intense interest to be of aid in the orderly marketing of
crops and we have used our credit facilities in purchasing bankers’ acceptances
secured by agricultural commodities, by loans to the Intermediate Credit Banks upon
paper secured by agricultural commodities, and by direct discounts to our agricultural
banks. Heretofore we have loaned to member banks 80 percent of the market value of
cotton at the time the loan was made. We are willing now to increase this loan to 90
percent to be made upon notes, drafts and bills of exchange secured by warehouse
receipts, shipping documents or other evidences of title to cotton.
“It is of course understood that our requirements as to independent storage of
cotton must be followed…

“The purpose of this circular is to emphasize our desire to cooperate to the fullest
extent in making available the resources of the Federal Reserve Bank of Atlanta in any
proper manner to permit and further the orderly marketing of cotton.”32
At the beginning of the year 1930 there were 366 national banks and 62 state
bank members of the Federal Reserve System in the Sixth District, a total of 428
member banks. During 1930 there were two new national banks organized in the
district, three state banks were admitted to membership, and five non-member state
banks converted into national banks, thereby becoming members. There were,
however, during the year numerous other changes in membership due to
consolidations, withdrawals, suspensions and other causes, resulting in net losses for
the year of 25 national bank and 13 state bank members, a total reduction of 38.33
Total earnings during 1930 for the Sixth District Federal Reserve Bank amounted
to $1,963,724, smaller by $2,152,325, or 52.3 percent than for 1929, and the smallest
since 1924. The decrease was only partly due to the fact that the rediscount rate was
lower in ‘30 than in ‘29. It was due principally to a decline of 61.8 percent in the volume
of discounts handled. A larger volume of purchased bills was handled during 1930 than
in any other year excepting 1925, but earnings from them were 42 percent less than in
1929 because of lower rates. Volume of United States security purchases also
increased and earnings from them increased 84 percent over those in l929.34
Current net earnings for the year amounted to $590,842, a decline of 77.3
percent compared with 1929, and smaller than for any year since 1917. After
deductions for depreciation on bank premises and on furniture and equipment, reserves
for probable losses and other deductions, there remained $323,307, an amount
sufficient to pay the regular dividend of six percent per annum on the paid-in capital
stock of the bank. No change in the surplus account was made, nor was a franchise tax
paid to the United States Government for l93O.35


Thus, for the Atlanta Federal Reserve Bank ended the first full year of the Great
Depression. The outlook was bleak.


Chapter 19

Keller5 Dictionary of Dates5 II, pp 368-377.


Ibid, 375-377.




Ibid, 368-377.


Garrett, Atlanta and Environs, II, 866-882.


Annual Report, 1929, p. 11; Minutes. Directors, VI, 1672, 1674-1675.


Minutes, Directors, VI, 1693,1698.


Ibid., 1730-1731.


Ibid., 1732, 1743-1753.


Ibid., 1775; Atlanta Journal, July 31, 1930.


Annual Report, 1930, p. 12.


Minutes, Directors, VI; 1809.


Director Hill was a native of Spencer, Tennessee and graduated from George
Peabody College for Teachers in 1898. The same year he began his railroad
career as a telegraph operator for the N.C. & ST. L. After many successive steps
he became president in 1926 and served as such until 1934, when he was elected
president of the larger Louisville & Nashville and moved to Louisville. Retired in
1950. He served the Atlanta Federal Reserve as a Director from January 21, 1931
to December 14, 1934; as a Director of the Nashville Branch for the same period
of time and of the Louisville Branch of the Federal Reserve Bank of St. Louis from
1935 to 1941.


Atlanta Journal, Oct. 24, 1930.


Minutes, Directors, VI, 1816-1817.


Ibid., 1818.


Ibid., 1820, 1834.


Ibid., 1811.


Ibid., 1810.


Ibid., 1689-1690, 1707, 1718, 1732.


Ibid., 1680, 1683.


Frazer, “Brief History, Havana Agency”, 22-24; Minutes. Directors, VI,


Ibid., 1815.


Ibid., 1755-1756.


Ibid., 1705-1706.


Ibid., 1724.


Ibid., 1799.


Ibid., 1750.


Ibid., 1763.


Ibid., 1764


Ibid., 1765-1766.


Ibid., 1800-1801.


Annual Report, 1930, p. 11.


Ibid., 7.






Spain became a republic in 1931 and the Japanese invaded Manchuria, the latter
a roundabout prelude to another invasion ten years later which plunged the United
States into World War II. The “Star Spangled Banner” was officially declared the U. S.
national anthem, and the Wichersham Report on Prohibition indicated local enforcement
impossible but stubbornly opposed repeal. The Hawley-Smoot Tariff schedules reached
an all-time high: a total of 2294 banks failed as against 6987 in 1-930, and President
Hoover proclaimed a one-year moratorium on Allied war-debt payments.1
In connection with President Hoover’s action on debt payments, Governor Black,
just back from an Executive Committee meeting of the Open Market Policy Conference
in New York on June 22, reported to the Atlanta Board:
“At the meeting this action of President Hoover2 was discussed and commended.
A very hopeful feeling prevailed as the result of this action. It was thought that with the
concurrence of the other powers interested in such a step it might bc- the one step
necessary. to start an upward trend in business. . . I am of the opinion that it was an
absolutely necessary.act, due not only to the condition in Germany but throughout
central Europe. The response to it among bank circles in Germany was almost
instantaneous. I am hoping as I dictate this report that France will give her accord and
that the result of this action among the nations will be an immediate commencement of
improvement in worldwide conditions…”3
At its December, 1930 meeting the Atlanta Board re—elected H. Lane Young as
a Class A director and J. A. McCrary a Class B director, both for 3-year terms beginning
January 1, 1931. At the same time W. E. Henley, Arthur F. Perry, C. A. Craig and J. D.
O’Keef were elected directors of the Birmingham, Jacksonville, Nashville and New
Orleans Branches respectively, all for three-year terms. Managing Directors for the
above four branches were all re-elected for one-year terms.4

At the January 1931 meeting, the resignation of W. S. McLarin, Jr., Managing


Director of the Jacksonville Branch was accepted, and Hugh Foster, formerly Deputy
Governor, was elected to succeed him. H.F. Conniff, formerly Assistant Cashier, was
elected Deputy Governor to succeed Mr. Foster, and W. S. McLarin, Jr., was elected
Assistant Deputy Governor. Other officers of the bank were re-elected at the same
Only one change in the officer group occurred during the remainer of the year.
On April 9, J. P. Butler of New Orleans, having resigned from the Canal Bank & Trust
Company to enter the field of private business, also resigned as a member of the
Federal Advisory Council. He was replaced by John K. Ottley, President of the newly
organized First National Bank of Atlanta and a former Director of the Atlanta Reserve
At this time the five highest paid officers of the bank, not including Chairman and
Federal Reserve Agent, Oscar Newton, were E. R. Black, Governor, $25,000 per
annum; W. S. Johns, Deputy Governor, $12,000; H. F. Conniff, Deputy Governor,
$10,000; M. W. Bell, Cashier, 9,000; and Marcus Walker, Managing Director, New
Orleans Branch, $15,000.7
Financial stringency to the contrary notwithstanding, funds were appropriated, as
they had been in 1928, 1929 and 1930, for welfare and educational work. Upon the
recommendation of Governor Black and the Managing Committee $6,850 was
earmarked for the Federal Reserve Bank Clubs at the parent bank and branches for
1931. The money was used for recreation, athletics, annual outings, entertainment,
sickness, flowers, expenses of Chapters of American Institute of Banking, and for prizes
for completing A.I.B. courses. It was realized that man does not live by bread alone.
Matters concerning failed and suspended banks continued to occupy the best

efforts of Governor Black and his associates during 1931. On January 9, by way of


summation, he reported.8
“On January 1, 1931, we had completed the liquidation of 68 failed banks, which
banks at the time closed owed us $8,290,913.72. Of this amount $7,649,082.53 was
collected; $641,830.19 was loss. The loss on these 68 banks whose liquidation has
been completed was little less than 7 percent of the total due us at the time of their
“Prior to the failure of the Holston-Union National Bank of Knoxville, the City
National Bank in Miami and the consolidation of the New Orleans Bank & Trust
Company, we had reduced the amount due us in our Failed Banks Department to
$2,182,718, which was the lowest figure that we had reached in a long while. These
three banks added the following amounts: Holston-Union National Bank, $1,374,450;
the City National Bank in Miami, $366,159.59; New Orleans Bank & Trust Company,
$1,405,163.81, bringing the grand total against us to $5,333,490.18.
“The closed banks now being handled by us are 54 in number. Their liability at
date of closing was $14,209,298.58. Of this sum we have collected $7,390,420.71;
having charged off $1,545,825.09; have recovered $6O,437,40, and as against any
further liability we have reserves set up of $1,303,490.33. In addition to this reserve we
have some capital stock, some real estate, and a great quantity of notes from which to
collect or materially reduce the amount due us…”9
Continued the Governor:
“Uneasiness exists all over our District, following the failures throughout the
country. Inquiries are being received from a large number of banks as to their paper and
the attitude of this bank. We have exerted every effort to allay the feeling of unrest in
our section and to aid our member banks as far as we consistently can in the present
“I will enter into no discussion as to the situation in this country by reason of
closed banks because you gentlemen are as familiar with it as I am, but it is appalling to
consider that during 1930 banks closed in America with an aggregate of deposits of
$700,000,000. This has brought consternation in the localities where banks have
closed; and looked at from a cold business basis it has very largely curtailed buying
power throughout the nation. The energies of every officer of our bank are directed
toward relieving the situation that can be relieved in our own District and these efforts
will be continued. Up to the present time we-feel that our District has, comparatively
speaking, largely escaped the result of the panicky feeling throughout the nation
concerning the banks of the country. I am hopeful that this panicky feeling may soon be
allayed and that the banks will be allowed to perform normally their valuable services to
their respective communities. It is this hope that is spurring our efforts at this time…”10
Again, on March 13 to the Board:
“The real problem in our bank at the present time is the solution of the question
of our extended banks and the accommodations which this bank may extend to such
banks. A general policy may not be adopted as to this because of the differing
conditions in each of these banks. In connection with each bank, where justified, we
have been endeavoring to aid them through our credit facilities in the solution of their
problems, extending such aid, under such terms and conditions as make our advances

reasonably safe. Consultations are being had with the officers of these banks as to their
requirements. Efforts are being made to get them to exert every effort to make
collections and better their condition. Encouragement is given them in their work and we
are hopeful that crop returns this fall will, in connection with our efforts, materially
improve the conditions of these banks.”11
In October, 1931, the Governor discussed suspended banks with the Board in the
following language:
“We now have 58 suspended member banks in the course of liquidation. These
58 banks are all located in small cities or country towns with the exception of one in
Knoxville, Tennessee, one in St. Augustine, Florida, one in St. Petersburg, Florida, one
in Tampa, Florida and one in Jackson, Mississippi. With the exception of these five city
banks each of the closed banks has the same character of assets, these assets
practically all arising from agricultural operations and when secured being secured by
first or second mortgages on real estate, scattered live stock, farming implements, etc.
Where the closed bank is located in a small town having been dependent largely upon
agriculture for its business, the assets are of the same character and in some cases
include mortgages, first and second, upon real estate in the town or city where the bank
is located.
“A number of these suspended banks have been in receivership for a year or
more. In the case of such banks the quick assets have been collected in and dividends
have been paid, so far as such dividends could be paid, and these now remain in the
hands of receivers, real estate, first and second mortgages on farm lands or city
property and live stock. The liquidation of these reamining assets, especially due to
conditions during the pasj2 two years has necessarily been slow and will continue
“We are facing these problems as best we can. Visits are being made to a
number of these banks to ascertain their exact condition. Collateral in the case of each
of them is being required in order to protect our position with them. Conferences are
being had with their officers in an effort to have them remedy their position, if possible,
and frank statements as to their needs are being given us and frank statements on our
part as to remedies which should be applied by them are being given them and an
understanding had as to our position relative to further aid. In the case of some banks
we still have past due paper. We have carried it in this shape believing it could be better
collected. This situation is limited to a few banks…”13
At the May Board meeting Governor Black made the not surprising statement
that ‘‘every Reserve Bank is experiencing a deficit in operations. He went on to submit
figures showing the net deficits of Reserve banks of comparable size to Atlanta during
the first three months of 1931:


$ 48,123


St. Louis
Kansas City


The Governor then elaborated the subject:
“The smaller deficits in the St. Louis bank, the Minneapolis bank, the Kansas City
bank and the Dallas bank were due to their ability to participate fully in Government
operations of the Open Market Committee .
“…The Federal Reserve Bank of Atlanta during 1930 was operated as
economically as any reserve bank. We are watching our expenses as closely as we
can. We are not replacing employees unless such replacement is demanded, and our
general policy has been to retain the employees that we have in order to have trained
help when we need it and to refrain as far as possible from augmenting the present
employment situation. This policy, I believe, is correct.”14
At the same meeting and on the subject of expense of operation, the following
resolution, offered by Director Kettig, was adopted:
“WHEREAS, the Federal Reserve Bank of Atlanta is operating at a loss and it
does not appear at present that the situation will soon improve; and
WHEREAS, all commercial and industrial companies are reducing their expenses
by reduction in salaries and the elimination of unnecessary employees,
BE IT RESOLVED, THEREFORE, that a committee of two, composed of the
Governor of the Bank and the Chairman of the Board, be requested to make a survey of
the bank’s expenses in all of its departments.
BE IT FURTHER RESOLVED that this committee take under consideration the
following questions:
FIRST: Should the salaries of all the employees of the Bank, from top to bottom,
be reduced, say, 10 percent?
SECOND: Should all employees that are not necessary for the operation of the
Bank be eliminated?
THIRD: Is there any other way of reducing expenses?
RESOLVED that the above name Committee be requested to report its findings
and recommendations to this Board at a future meeting.” 15
The June meeting the Board produced a long, well-documented re ort from
Committeemen Black and Newton.
Careful studies had indicated that dismissal of 19 employees and cuts in o


officers and employees salaries would result in a total annual saving of $53,662--not a
significant amount in the total operation of the Bank and its branches. Black and Newton
then boiled their report down to three moral questions, which in effect, they said, were
economic questions:
“(1) By dismissing these employees we add to the present unemployment
problem, and the Reserve Bank should consider squarely whether in this time of
emergency it can afford, for the saving involved, a step which would materially add to
the problem.
“(2) By wage reduction we would at this time tacitly admit the necessity of a wage
reduction and would be construed to have affirmed that if a wage reduction is necessary
in the Federal Reserve Bank, it is necessary everywhere. Until the present situation has
had more time in which to iron itself out and our economic life has had more opportunity
to adjust itself, we would hesitate to have the Reserve Bank proclaim this position. We
rather think that the Reserve Bank should be one of the last to proclaim this attitude.
This wage reduction question is a very vital question in America today. Purported
promises, agreements and understanding are being announced in regard to it. Bad faith
on the one side or the other is being proclaimed, and very serious consideration should
be given as to whether the Reserve Bank should lead in such a movement.
“(3) The Reserve Bank is considered by the public as a quasi governmental
institution, and it might be well understood by the public that a governmental institution
had taken an advance stand in the matter of the necessity of a general wage reduction.
This might be considered a very expensive step for a Reserve Bank to take for the
saving involved in such a step. We would anticipate that such action on the part of the
Reserve Bank might well be taken as a reason or excuse for such reductions in the
financial and industrial corporations in our section, and if we set the precedent such
action would be taken at least as a precedent. At this time we hesitate to recommend
such action in view of the price we might pay for it and especially in view of the limited
saving which at this time could be effected by it.
“It is our belief that our present policy should for the present be continued, this
policy being: (a) economic operation and elimination of waste and all unnecessary
expense; (b) no replacements where employees leave the service; (c) elimination of any
drones in our service and gradual reduction of force as the present situation may
“We feel that this policy should be pursued and that further action should not be
taken at this time because it has not yet been demonstrated that the present situation is
permanent and that present interest rates have become normal. If it becomes
demonstrated to our Directors that the present depression is to be of long duration, then
it will be necessary to minutely study our bank, its branches and agencies and the
departments in each one of them and consider the elimination and/or curtailment of
service. . .16
It was just as well that the Directors, as of June 12, 1931, could not foresee


either the length or the depth of the depression.
The Havana Agency carried on during the year, even though the political
situation in Cuba was, as a live volcano, always about to erupt. Manager H. C. Frazer,
in Atlanta on vacation in August, made an interesting report to the Board:
“…You gentlemen are familiar with the physical properties of our quarters. The
front of our agency is well protected by steel gratings, the door is kept locked, our vaults
are most modern. During the present political trouble in Cuba we have extra guards and
extra protection day and night. I feel little apprehension as to the safety of our holdings.
Newspaper reports narrate the spread of the present revolutionary efforts. Those efforts
appear to be centered largely in the outlying provinces. The situation in Havana seems
to be well under control by Government authorities. As long as the army remains loyal
the revolution cannot gain much headway. I have no reason to suspect that the army
will not remain loyal and will keep control. In any event, I feel that a revolution in Cuba
will be entirely political and I would not apprehend danger to our holdings if, through
revolution, there should be a change of government.” 17
During lids same period, May to August, 1931, the Federal Reserve Bank of
Atlanta took on even more of an international flavor. Discussions at Open Market Policy
Conferences in both New York and Washington, attended by Governor Black, led
inevitably to methods for further augmentation of market funds, with emphasis on
foreign credit and foreign bill holdings. The European situation, it was felt, made
necessary the participation of Reserve Banks in the purchase of foreign bills.18
Accordingly participations, ranging in amounts from $50,000 to $900,000 were
approved for the Atlanta Bank, guaranteed respectively by the Austrian National Bank,
the National Bank of Hungary, the Reichsbank, the Bank of England, and the Bank for
International Settlements.19
In advocating participation in these foreign loans, Governor Black said:
“(1) Because I felt that the richest country in the world should join in solving the
market problems of the world.
“(2) Because the Reserve System should have a part in protecting American
investment and the holdingsof our member banks in German investments.
“(3) Because keeping open the markets of Germany and of Europe to our cotton
is absolutely essential to the welfare of the South.
“It may be that we will lose something in these participations. If so, what we lose
would be infintesimal in comparison with what we would lose if there were a European

collapse and a closing of European markets to our products…”20
The only actual action taken by the Bank in connection with foreign loans,
however, was the renewal of a participation in a loan of $1,400,000 to the National Bank
of Austria by the Reserve Banks. The Atlanta participation in the loan was $39,418.34
and was made on condition that the second loan agreed to be made this bank be
It was just as well. Central Europe experienced a financial collapse in May, 1931.
President Hoover believed the situation so serious that he secured consent from the
interested governments, and later approval of the American Congress, of a one-year
moratorium on inter-governmental debts. This step unfortunately did not prove so
effective as he had hoped and did little to improve the immediate situation either in
Europe or the United States. In fact, the picture grew darker in September when Great
Britain, followed by many others, suspended gold payments, and did so despite aid
extended by the Federal Reserve Bank of New York in an effort to bolster her monetary
system. The disastrous effect of all this on the American securities market and in turn
upon the solvency of many American banks led Hoover to initiate the organization of a
voluntary agency, known as the National Credit Corporation, by means of which the
strong banks might help the weak.22
In November Federal Advisory Council Member John K. Ottley attended a
meeting in Washington concerning the National Credit Corporation.. Upon his return he
described the plan of the President for the formation of the Corporation to the Atlanta
Board. Resolutions of approval were passed. Office space was tendered in buildings of
the Bank in Atlanta, Nashville, Birmingham, New Orleans and Jacksonville and the
opening of a deposit account for the Corporation was authorized.23

Another current problem of the year was the low price and its effect on banks-404

primarily small banks in rural acreas. In commenting upon this situation, in September,
Governor Black said:
“We have been concerned at the low price of cotton as it affects our district, its
agriculture and commerce, and as it might affect our country banks primarily, and
secondly, its effect upon the repayment of obligations of some of our small banks to this
bank. Banks in this district of $160,000 capital and surplus and under owe us
$2,675,514. Liquidation by these banks has been retarded by the lateness of the cotton
crop. We are anticipating a normal liquidation by most of these country banks as the
cotton is picked. The low price will necessarily affect liquidation by .some of our smaller
banks whose condition is extended.
“The questions involved in this situation are receiving our best attention. We are
giving every aid to those banks needing our assistance in gathering the crops and are
ready to follow our policy established last year of handling for our member banks cotton
secured paper to ninety percent of the market value of cotton, all in an effort to further
the orderly marketing of the crop.” 24
Agricultural production during 1931 in the six states comprising the Sixth Federal
Reserve District increased substantially over 1930 and 1929, although total crop values
were lower, and other available statistical evidence for 1931 disclosed unfavorable
comparisons with 1930 in business and industry in the district, with the exception of a
small gain in textile activity. These statistical comparisons were accentuated by a
continued decline in the price of commodities.25
Results of operation for the Federal Reserve Bank of Atlanta reflected the poor
general economic situation.
Total resourses of the Bank amounted on December 31, 1931, to $201,896,000,
and were smaller by $26,206,000 than the total of $228,102,000 on the corresponding
date a year earlier, and were also smaller than at the close of any year since 1917.26
Total earnings during the year 1931 amounted to $1,448,835, smaller by 26.2
percent than in 1930, and less than for any other year since 1917. This decline in
earnings was due partly to a lower discount rate (3 percent since January 10) in effect
most of the year, and in part also to a decline of 12.7 percent in the volume of paper
purchased. Costs of operation declined 7.6 percent from 1930.27
Current net earnings for 1931 amounted to only $180,059. There were


miscellaneous additions to current net earnings amounting to $45,598. These combined
amounts were sufficient to provide for depreciation on bank premises, and on furniture
and equipment; reserve for probable losses and other minor deductions. It was
necessary, however, to make a charge against surplus account covering dividends paid
during the year and depreciation on United States securities. This reduced the surplus
account from $10,857,310 to $10,448,658 on December 31, 1931. As was the case in
1930, no franchise tax was paid to the United States Government for 1931.28
By way of summation Governor Black wrote:
“The year has been a hard one on our member banks and on the Reserve Bank.
Problems have presented themselves which were both new to our member banks and
to the Reserve Bank. Our officers and employees have expended every effort to the
solution of these problems and hardly a day has passed that a new problem, either in a
member bank or in the Reserve Bank has not presented itself. We in the Reserve Bank
have known no office hours and distances have been largely eliminated in the solution
of problems throughout the district…”29


Chapter 20

The Life History of the United States (12 Vols. New York, 1964), 10, pp. 152-153.
Hereafter cited as Life History.


Announced on June 21.


Minutes, Directors, VII, 1916.


Ibid., VI, 1834


Ibid., VII, 1835—1836; Annual Report, 1931, pp. 12-13.


Ibid., 1872, 1882.


Ibid., 1838.


Ibid., 1847.


Ibid., 1842

10. Ibid., 1843

Ibid., 1865


Ibid., 1953


Ibid., 1978


Ibid., 1885-1886.


Ibid., 1890


Ibid., 1899


Ibid., 1923

18. Ibid., 1927

Ibid., 1929


Ibid., 1927-1928.


Ibid., 1936



Harold U. Faulkner, From Versailles to the New Deal (New Haven, Conn., 1950).


Minutes. Directors, VI, 1969.


Ibid., 1936.


Annual Report, 1931, p. 7.


Ibid., 10.


Ibid., 10—11.


Ibid., 11.


Minutes. Directors, VII, 1995.



If the depression as a whole and the year 1932 in particular had a theme song, it
must surely have been Harbury and Garney’s “Brother, Can You Spare a Dime.” It
seemed to epitomize the period. The image was heightened, to some extent, by Erskine
Caldwell’s novel of poverty, Tobacco Road, published the same year.
The depression was more than two years old when the seventy-second
Congress met in December, 1931. It was quite clear by now that Government efforts to
halt or relieve the catastrophe had failed. It was even more so heavy and bank failures
so numerous that business loans and credit were obvious in late January and February
of 1932 when the drain of gold became rapidly shrinking. Bank failures and the fear that
the United States would follow Great Britain and other European countries in going off
the gold standard spread pessimism throughout the business world and started
numerous runs on the banks. In many respects February, 1932 marked the worst crisis
of the depression until the final bank debacle a year later.1
Although President Hoover in his message to Congress warned against
excessive expansion in the schedule of Federal public works, he was now in the mood
for more strenuous Federal action in the economic crisis. He proposed that the Treasury
be empowered to subscribe to further stock in Federal Land Banks to aid agriculture;
that a system of home-loan banks be created to aid home owners in saving or
improving their homes and that a Reconstruction Finance Corporation with a
“reasonable capital” be established. The last recommendation came because of the
inadequacy of the National Credit Association in savings banks and providing


necessary credit. These were the main proposals as suggested by Hoover after two
years experience and they comprised the chief program of the Seventy-second
Urged by a special message from the President, Congress, in January
established the Reconstruction Finance Corporation, the best known and undoubtedly
the most useful of the agencies set up during the Hoover administration to counteract
the depression. The FRC was to have a capital stock of $500,000,000 to be subscribed
by the Treasury with power to issue obligations up to three times that amount. The act
authorized it to loan on security to banks of various types, trust companies, building and
loan assaciations, insurance companies, mortgage and loan companies, agricultural
and live-stock credit associations and, with the approval of the Interstate Commerce
Commission, to railroads. Its life was set at ten years and it was to be governed by a
board of seven including the Secretary of the Treasury, the Governor of the Federal
Reserve Board and the Farm Loan Commissioner.3
In the pessimism of the last months of the Hoover administration many criticized
the RCS as simply a means of ladling out credit to banks and industries who had
already proved incapable of directing the nation’s economic life. The fact remains,
however, that it saved many a bank, industry, and railroad from destruction and thus
played an important part in mitigating some of the force of the depression. It proved
itself so valuable that the Roosevelt Administration continued it and rested heavily upon
On the local front, as 1932 opened, Fulton County was nearly tripled in area as
Milton County to the north and Campbell to the south were merged into the former. In
May the Roswell District of Cobb County was added. Richard B. Russell was elected to
the United States Senate and Eugene Talmadge defeated five other candidates for the
governship. On July 1, the day Franklin D. Roosevelt won the Democratic nomination


for president at Chicago, machinery was set in motion in Fulton County to succor
destitute families of the unemployed. The Atlanta Chamber of Commerce launched a
“back to the farm” movement. On October 24 Nominee Roosevelt visited Atlanta, spoke
at the Auditorium that evening, and was accorded a great ovation.5
At its meeting in December, 1931, the Atlanta Federal Reserve Board elected the
following Branch Directors to serve three-year terms beginning January 1, 1932:
Birmingham, J. H. Frye; Jacksonville, C. C. Ware; Nashville, Frank J. Harle; and New
Orleans, R. S. Hecht. Managing Directors A. E. Walker, Birmingham; Hugh Foster,
Jacksonville; Joel B. Fort, Jr., Nashville; and Marcus Walker, New Orleans, were all reelected to serve for 1932.6
Directors E. C. Melvin, J. B. Hill and W. H. Kettig were all re-elected to serve until
December 31, 1934. Oscar Newton was reappointed by the Federal Reserve Board as
Chairman and Federal Reserve Agent, and W. H. Kettig as Deputy Chairman. All
officers of the Bank were re-elected for the year.7
The only change during the year was occasioned by the death, on July 3, 1932,
of Managing Director A. E. Walker, of the Birmingham Branch. John H. Frye, a Director
of that Branch, was named to succeed Mr. Walker on July 8. The Board vacancy was
filled by John G. Farley of Birmingham on September 9.8
Two actions concerning personnel during the year reflected the ever-worsening
financial crisis. The usual annual appropriation of $6850 to the Federal Reserve Bank
Clubs for recreational and educational work was cut to $245O.9 In December the Salary
Committee of the Board recommended that the salaries of all employees be reduced 12
percent, without the dismissal of any employee. The recommendation was adopted and
the Chairman, Governor and Managing Committee were empowered to act in the


Creation of the Reconstruction Finance Corporation, destined to play an
important role in the operations of the Federal Reserve System, brought immediate
comment from Governor Black.
“This Corporation /R.F.C./ was organized about ten days ago and already has
established agencies in New Orleans for the states of Louisiana and Mississippi and in
Atlanta for the rest of our territory. The organization will be enlarged to cover our
different branch cities as need arises for such enlarged organization. We have
cooperated with the Reconstruction Corporation in the establishment of these agencies
and have given them quarters in our banks in Atlanta and New Orleans and have
agreed to act as custodian and depositary for them and to furnish them our credit
facilities. A large demand from all over the district is apparent in connection with the
operation of this corporation.”11
Three months later in May, the Governor was able to make a very tangible report
on the R. F. C.
“The Reconstruction Finance Corporation is continuing to do fine work in our
territory. The Atlanta office has extended credit to 71 banks, totaling $10,000,000; the
New Orleans office, 63 banks, totaling $9.784,566; Nashville, 55 banks, totaling
$3,023,304; Birmingham, 47 banks, totaling $2,106,651; and Jacksonville, 2 banks,
totaling $30,000. Total credit extended to 238 banks, totaling $24,993,000. Other loans
approved and authorized but not yet paid aggregate $13,534,500.
“This has had a fine effect in our district and has aided in holding failures down to
a minimum. The same effect has been had throughout the country during the month of
April, there being only 67 failures in the United States during that month.” 12
“The Citizens Reconstruction Corporation, seeking to bring money out of
hoarding, is apparently have a fine effect throughout the country. This was a
courageous step and one apparently fraught with danger, but the very courage of the
undertaking appears to have insured its success. My information is that banks are
receiving new time deposits and that the general effect of this special movement is
recognized as good.” 13
The passage of the original Glass-Steagall Act of February 27, 1932 had a farreaching effect upon the operations of the Federal Reserve System. Briefly, it provided
for three things:
1. For group loans to groups of five or more member banks within the district, a
majority of them independently owned or controlled, provided the bank or banks
receiving such loans have no adequate amount of eligible and acceptable assets
available to enable such bank or banks to obtain sufficient credit from the Federal


Reserve Bank through rediscounts or advances further than provided in the second
section of the bill.
2. Until March 3, 1933, and in exceptional and exigent circumstances and when
any member bank having a capital of not exceeding $5,000,000, has no further eligible
and acceptable assets available to enable it to obtain adequate credit accommodations
through rediscounting of the Federal Reserve Bank . . . then any Federal Reserve Bank,
subject to approval of not less than five members of the Federal Reserve Board, may
make advances to such member bank in its time or demand promissory notes secured
to the satisfaction of such Federal Reserve Bank .
3. Amends the Federal Reserve Act by providing that until March 3, 1933,
should the Federal Reserve Board deem it in the public interest, it may, upon a majority
vote of its members authorize the Federal Reserve Bank to offer and the Federal
Reserve Agents to accept as collateral security direct obligations of the United States.
This provision is capable of greatly broadening the free gold position of the system.14
It was decided, during a meeting of the Federal Reserve Governor’s Conference
in Washington in May, to hold District meetings of leading bankers and industrialists.
The Sixth District meeting was held June 2. Thirty-seven were in attendance, including
financiers and industrialists from Atlanta, Nashville, Birmingham, New Orleans,
Jacksonville, Savannah, Selma, Leesburg and Chattanooga. In reporting upon the
meeting, Governor Black wrote:
“The meeting was well attended and intense interest was manifested in it. A
statement of the Federal Reserve policy of purchasing Governments and the objects
and purposes of that policy were fully explained and unanimously approved. A
discussion was had as to ‘business conditions in our district and a number of
constructive suggestions were made as to betterment of both credit and business
conditions. A committee of twelve were our Mr. George S. Harris as Chairman was
appointed to consider credit and business conditions in this district and to take steps to
improve them.” 15
In spite of all that anyone could do the business situation remained dismal.
Governor Black, reporting to the Board in July on conditions in the Sixth District, said:


“The economic and banking situation has shown little change. Business
conditions show little improvement. Confidence has been largely restored in our banks.
Credit demands are limited and credit conditions show little change. Fortunately, we
have escaped the banking panic that has existed during the past month in the Boston
and Chicago districts. The Chicago situation has been felt in the northern part of our
district but without appreciable effect. This situation up to date has not spread to other
districts, but the 49 banks in the Chicago district and the situation in the larger Chicago
banks has had its effect all over, these effects being the loss of deposits, the increase in
currency, a stimulas to further hoarding, and a general uneasiness in all financial
circles. We should congratulate ourselves that these effects have been appreciably
smaller in our district.”16
The Havana Agency during 1932 did not pursue an altogether even tenor of way.
In midsummer word was received that Cuban secret police had searched the home of
Manager H. C. Frazer while he was in the United States on vacation.
Governor Black began an immediate investigation through Cuban Ambassador
Guggenheim. It appeared that the police searched the house on information that a large
quantity of arms had been hidden in some house in the general area to be used for
revolutionary purposes. They were unaware of the identity of the occupant of the Frazer
house. A letter of apology from the Cuban Foreign Office, reading in part as follows,
closed the matter:
“With the greatest pleasure I inform Your Excellency that the Government of the
Republic has the highest regard for Mr. Fraser and the institution which he represents
here, and laments what occurred and the molestation and trouble which was caused Mr.
Frazer as a result. We believe it was demonstrated that there was no deliberate
intention on the part of our police to cause the slightest disturbance to Mr. Frazer, who,
as has been previously stated, is a person held in our highest esteem.”17
Early in 1932, the Cuban Congress passed legislation authori:ing the coinage of
silver pesos. The agreement was conferred into with the Export-Import Bank of the
United States whereby the Export-Import Bank would advance funds for the purchase of
silver bullion, have the coins minted by the Philadelphia Mint and shipped to Cuba
against payment of cost of bullion, interest and mint charges. The Havana Agency was
designated as Agent for the Export-Import Bank and drafts (payable in United States


dollars) were drawn on the Cuban Treasury Department payable to the Havana Agency
as Agent for the Export-Import Bank to cover each shipment. Proceeds of the drafts
were transferred by wire for the account of the Export-Import Bank at which time release
of the shipment by the Philadelphia Mint was authorized.18
The first contract was made for 20,000,000 pesos with a schedule for shipments
of 500,000 pesos weekly. The shipments were consigned to the Havana Agency,
received by it from the Railway Express Company shipside, and delivered shipside to
the representative of the Cuban Treasury Department. Additional contracts were made
over a period of several years until an aggregate of 80,000,000 pesos were minted and
delivered to the Cuban Government.19
During the fall of 1932 Governor Black visited Cuba and reported conditions
there to the Atlanta Bank Board:
“I found general conditions in Cuba very slow. Bank clearings were off. The
turnover of checks was off, receipts at the Customs House were off and the price of
Cuban raw sugar was down. The silver problem showed considerable improvement
during October, silver coin now being quoted at 17/8 to 2 per cent discounts. The rise in
silver is attributable to its wide distribution throughout the Island, to its being accepted in
part payment of taxes, and Dr. Ferrara is of the opinion that it will go to par with our
currency. His reason for his desire to export American silver La to remove it as a factor
of comparison of values with Cuban silver coin.
“Manager Frazer and Assistant Manager Alston were performing every service
satisfactorily. I am of opinion that our bank is to be congratulated upon having two men
of the caliber of these two in charge of its foreign agency.”20
One result of the new Federal legislation, typified by the Reconstruction Finance
Corporation Act, was a plethora of loan applications.
Reporting to the Board in September Governor Black said:


“During August we have had innumerable applications for loans to individuals,
partnerships and corporations. Applicants have come in person and requests for loans
have come in large number through the mails. This department has been handled by
Deputy Governor Conniff, who has exercised great patience and care and given due
consideration to each ‘applicant and to each request for information as to a loan.
During the month we have declined loans because of ineligibility, unacceptability,
lack of endorsers or lack of collateral. During the early part of September we have made
one loan to the

located in Tennessee in the sum of $50,000.00.

My information is that these loans have been very few throughout the system.”21
In November Governor Black made an interesting report to the Board on both
country and city banks in the Sixth District. It is an interesting exposition of current
economic conditions:
“Collections have been exceedingly slow with country banks. They have been
unable to collect. Cotton that has sold has been limited in. quantity and the price low.
The Government Seed Office has been insistent upon the collection of its loans upon
the crops and Federal Land Banks have been active in collecting interest and
installments. Many of our banks made limited loans as related to this years crop. All of
the factors named’ have in a large number of cases greatly restricted collections by our
member banks. The result oust be a carryover on our part for many of these banks. In
each such case we are carrying large additional collateral in an effort to protect our
position with these banks in connection with our advances to them.
“A serious question is being presented to a number of these country banks under
present conditions. Collections have been small with them and their cash position is
low. Many have borrowed from the Reconstruction Finance Corporation. The funds
borrowed have been consumed in operations and they now find themselves in a
position where their cash position is low, their collections exceedingly limited, their


assets largely pledged, and before them a years operation before further substantial
seasonal collections can be made. In the case of each of these banks we are aiding as
far as we can, but we, as well as these member banks, realize the seriousness of their
present situation. Some of them can be aided, some of them can pull through, but in my
opinion some of them must succumb. A revival of business, the reestablishment of land
values, especially agricultural land values, an increase in commodity prices, especially
agricultural products--all combining to aid in increasing deposits and in the collection of
their receivables--is apparently the one remedy which will avail these banks. I should
like the Directors to know that in this situation concerning these agricultural banks we
are acting with caution and with an earnest desire to aid those that are solvent to have
an opportunity to realize upon their present frozen assets and to weather present
conditions. Our Finance Committee and Executive Committee are diligent in considering
this aggregate proposition and the problems by each one of these banks as its condition
is presented by officers of such banks to this bank.22
“We also have problems in connection with many city banks. The condition of
these banks is such that only a revival of business and reestablishment of values, both
of securities and of real estate can ultimately save them. The cash position of most of
these city banks is all right. Their intrinsic condition oust ultimately be remedied. In the
case of each such city bank our officers are giving their earnest attention to efforts to aid
them in the solution of the different problems presented by the different banks.
“As a whole, the demand upon us by our banks for our credit f aduties is limited.
It is not a question of credit so much with them as it is a question of soundness. There
oust be a revival of business and there must be a substantial increase in values
ultimately in order that the problem of these banks might be worked out. Reserve Banks
during the past year especially have aided in a very large degree in maintaining credit
conditions. The Reserve Banks can aid in many ways in the revival of business. They


can lend their different agencies to the restoration of fair values, but in the end they can
not aid in capitalization or in the repairing of impaired capital. That is inherently a
problem for the bank involved and oust be solved by each individual bank if our banking
structure is to be placed on a firm basis. Credit has been superabundant from Reserve
Banks and other Government agencies, but credit cannot solve the problem of impaired
“Applications to the Reconstruction Finance Corporation have become fewer in
the past few weeks. In my opinion this is due to two things: (1) a large number of the
banks desiring aid from that Corporation have already obtained that aid; (2) a number of
the banks hesitate to have their loans with that Corporation made public.
“In addition to the. Reconstruction Finance Corporation, the Home Loan Banks
have been established and the Agricultural Credit Corporation has been established.
These agencies should aid home owners and agriculture in refinancing present debts.
Neither of them will pay debts, and ultimately debts must be paid. They are of large
advantage in bridging over the period between the solution of unemployment, restricted
wages and depression in values of real estate and farm property, but again we come to
the conclusion that for ultimate relief to be afforded, there must be a revival of business
and agriculture, a rise in value of real estate and commodities, so that ultimately these
classes of our people may be enabled to pay the debts represented by their home
mortgages and the liens upon their farms and farm crops. I believe that the conditions of
the past three years have taught material lessons to our people. Lessons of thrift and
economy have been deeply learned. I also believe that in our country there will be a
revival of business and the reestablishment of values will go a long way toward solving
our problem. The Reserve Bank is intensely interested in all this and it should stand
ready with its resources and its facilities to aid in every movement that looks to its
accomplishment. We are proceeding with all our member banks and with each bank


fully cognizant of our responsibilities in the present situation.23
Brave words on the part of the Governor, to be sure, and fundamental to the
revival of the economy. But the road back was destined to be long and steep.
In commenting upon the subject of relief and unemployment at this time,
Governor Black said:
“The unemployment and relief problem is a pressing one. Outside of the efforts of
each corporation and each community in this regard it may be interesting to you to be
advised of the following amounts that have been advanced to our different Sixth District
states for relief purposes:












Eugene Meyer, noted public figure, newspaper executive and, since September
16, 1930, Governor of the Federal Reserve Board, visited Atlanta in late November,
1932, accompanied by Floyd R. Harrison, his assistant. Both attended a special
meeting of the local Federal Reserve Board on November 26. The meeting was devoted
for the most part to a talk by Governor Eugene R. Black, who took the occasion to
capsule the operations of the Sixth District Bank from its inception in 1914 to date. After
introducing the Atlanta Directors individually and noting that two, Messrs. J. A. McCrary
and W. H. Kettig, had both served since the bank opened, Governor Black reported:
“In December 1914 we had 381 member banks with capital and surplus of $88,
476, 000 and deposits of $237, 566, 000. In June 1932 we had 338 member banks with
a capital and surplus of $153, 558, 000 and with deposits of $832, 835, 000 and with


total reserves of $1, 123,433,000.
“During the seventeen years of its existence from the middle of November 1914,
through the year 1930, this bank has extended credit to commerce, industry, and
agriculture to the extent of $16, 145, 148, 000. $14, 384, 667, 000 of this extenstion of
credit has been through the discount or rediscount of negotiable paper offered by the
member banks in this district, the balance through purchase in open market or from
other Federal Reserve Banks of acceptances and government securities.
“Through this large amount of credit accomodation there have resulted earnings
which have amounted to $47,932,930, which earnings have been made through
average normal interest returns.
“During this period, current operating expenses and the cost of printing and
shipping currency have totaled $17,997, 132 and there has also been set aside out of
earnings over $6,409, 126 for depreciation and reserves, etc. These deductions have
left during this period more than $23, 709, 132 as net earnings available for dividends,
surplus and franchise tax. Of this amount $4, 214, 508 has been paid to member banks
in the form of dividends, $10,448, 658 carried to surplus account, and $8,950,561 has
been paid to the United States Government for franchise tax.
“At the present moment our capital is $4,681,500 and our surplus $10,448,658.
Our member banks reserve account is $41,919,345, as against $49,915, 295 on the
same date last year. We have earning assets totalling $71, 072, 808, made up of bills
discounted secured by Government obligations, $2,467, 376; other bills discounted,
$18, 340, 194; bills bought in open market, $3, 663, 438; United States bonds and notes
$19, 375, 550; Treasury Certificates and Bills, $27, 226, 250. Our Federal Reserve


notes in actual circulation are $97, 241,730.
“For the current year our gross earnings have been $1,826,695; our current
expenses $1,069,240; our net earnings $757,455; our dividends, paid and accrued
$261,310; and our net earnings available for depreciation allowance, reserve, surplus
and franchise tax, are $469,476, as of date November 23rd.
“During the past three years we have participated in all open market purchases
of bills and in all open market purchases of Governments where our gold position or
reserve position would allow.
“We have four branches and two agencies ... In addition to our main building in
Atlanta, we have adequate buildings and facilities at each of our branches. In Havana
we have leased quarters with our own constructed vault facilities. We have maintained
in Havana about $12, 500, 000 for uses of the Agency and in New Orleans we keep
$10,000,000 of unissued currency for any emergency conditions there. In Jacksonville
we have $10, 000, 000 unissued currency for purpose of transportation to Cuba in the
event of an emergency.
“During the years 1930, 1931, and 1932 we have had 72 member bank
suspensions. These have consisted practically of the smaller banks and we have
averted any suspensions, with the exception of the Holston-Union National Bank of
Knoxville, among the banks of our district in larger cities.
“At the present time, practically one-fourth of our banks are in an extended
condition, these banks being continued in large measure to country banks and their
condition being due to crop conditions and managerial problems during the past three
years. We have, however, certain situations among the banks of our cities that are
requiring and receiving our constant attention.

“The bank as a whole receives the loyal and faithful services of its officers and
employees. Our relations with the Federal Reserve Board have been most cordial and
we have appreciated such suggestions as they have made and such directions as they
have given. In the larger problems for the past three years, our bank has taken an
active and earnest interest in close collaboration and cooperation with the other reserve
banks of the System as a whole.25
Governor Meyer spoke on general banking and business conditions. His remarks
were helpful and constructive and were very much appreciated by all those present.26


Chapter 21
1. Faulkner, From Versailles to the New Deal, 351.
2. Ibid., 351-352.
3. Ibid., 352-353.
4. Ibid., 353.
5. Garrett, Atlanta and Environs, II, 893-900.
6. Minutes, Directors, VII, 1988-1989.
7. Annual Report, 1931, p. 11.
8. Ibid., 1932, p. 16.
9. Minutes, Directors, VII, 2047, 2055.
10. Ibid., 2109.
11. Ibid., 2010.
12. Ibid., 2038.
13. Ibid., 2019.
14. Ibid., 2019-2022.
15. Ibid., 2054.
16. Ibid., 2063.
17. Ibid., 2070.
18. Frazer, “Brief History Havana Agency,” 24-25.
19. Ibid. , 25.
20. Minutes, Directors, VII, 2103-2104.
21. Ibid., 2084.


22. Ibid., 2099-2101.
23. Ibid., 2100.
24. Ibid., 2100-2101.
25. Ibid., 2106-2108.
26. Ibid., 2108.


Chapter 22

Nineteen thirty-three was a fateful year. Hitler came to power in Germany and
that country promptly left the League of Nations. Franklin D. Roosevelt was inaugurated
President; the Democrats came into control of both houses of Congress; the 21st
Amendment ended prohibition; Roosevelt announced a “Good Neighbor” policy toward
Latin America; the London Economic Conference failed to promote international
cooperation; and the United States recognized the U. S. S. R.1
Meanwhile a banking panic had preceded Roosevelt’s inauguration and
unemployment had reached an estimated 15 million. The new President had a mandate
to do something. He did. The First Hundred Days of his administration saw New Deal
agencies proliferate-- CCC, FERA, AAA, TVA, HOLC, FDIC, NRA,C WA, etc.2
Early during the “Hundred Days” came the Banking Holiday. Since early in the
year, banks were forced to close in one state after another. The final crisis was reached
in March as President Franklin D. Roosevelt took office. Proclaiming a four-day bank
holiday, he closed all banks, and only those which were sound were allowed to reopen.
Some 2, J13 remained closed.
Chairman Oscar Newton reported the matter in detail:
“The uncertainty prevailing throughout the country in regard to banking
conditions, and the continued suspension of banks, resulted in the banking crisis early
in March. Difficulties which resulted in a banking holiday in Michigan on February 14
spread rapidly, and similar moratoria were declared in Indiana on February 23,
Maryland on February 25, Arkansas on February 27, and Ohio on February 28. As the


number of states having these holidays increased, banks in those states withdrew funds
from their correspondents in other states. On March 1, holidays or restrictions were
imposed in four additional states, two of them Alabama and Tennessee, in the Sixth
Federal Reserve District; on March 2, six additional states were added to the list,
among them Louisiana and Mississippi; on March 3 seven other states, including
Georgia, were added to the list, and on March 4, suspension of banking operations
became virtually complete with suspension in 25 other states, including Florida.
“By Presidential Proclamation all banking institutions were required to remain
..closed during the week beginning Monday, March 6, through Saturday, March 11, and
beginning on March 13, 14, and 15, banks considered to be in sound condition were
issued licenses by the Secretary of the Treasury to resume normal banking operations.
In a number of unlicensed banks plans for reorganization were made, and others were
placed in the hands of Conservators. In the Federal Reserve Bulletin for March and
subsequent months were published the President’s Proclamation, regulations issued by
the Secretary of the Treasury prescribing the limited banking functions which were
permitted under certain conditions during the banking holiday, emergency banking
legislation passed by Congress on March 9, the Banking Act of 1933 passed by
Congress in June, interpretations of these Acts of Congress, and other important
matters relating to the banking emergency.
“In the Sixth District the demand by member banks for Federal Reserve currency
began to be felt early in February. In the three weeks from February 1 to February 21,
Federal Reserve note circulation of this bank increased by $13,370,000; from February
21 to March 1, there was an increase of $14,884,000; and during the first half of March,


there was a further increase of $50,484, 000. From February 1 to March 15, the total
increase was $78, 738, 000. From that time there was a decline each week to a low
level for the year of $115, 765, 000 on July 26. In order to obtain this large supply of
currency, member banks increased their discounts by about 34 millions of dollars
between February 8 and March 15, this bank increased its holdings of United States
securities by nearly 30 million and its holdings of purchased bills by more than 17
millions, and member bank reserve accounts were reduced by less than 10 millions of
In somewhat more informal vein, V. K. Bowman, now 4 retired, in 1933 an
assistant cashier, reminiscening in 1961, wrote:
“The banking holiday arrived! Phoned around 1 a.m., to come to the bank,
picking up the two senior secretaries enroute. Feelings indescribable! Business halted
on dead center. Phones constantly ringing. City bankers crowding Governor Black’s
office. Plans made to make advances to member banks on any asset having value
were made. The personnel of the Examination and Accounting divisions were assigned
to assist the Credit division in this work. The bank was filled with bank officers from all
over the District. Mail sacks, garbage cans, waste baskets, card board boxes, anything
that would hold and carry notes and collateral were stacked up in the vault, they having
been inspected, listed and valued for collateral to advances to be made on request to
the respective member banks when they were licensed to reopen for business at the
end of the Holiday. Fortunately, not many advances were required, and in a few weeks
the remaining assets deposited for that purpose had been returned to the owning banks
without the loss of a single item.


“The period of the holiday was one of real ‘team effort’ on the part of all, from
janitor to office boy to Governor. Governor Black showed his recognition of this by
inviting all of the officers and department heads of the bank to his home for a dinner. A
host extraordinary, his ability as a raconteur made the meal and after dinner talks one
of those rarely experienced events in life.
“During the after-dinner conversations, his radio suddenly stopped in the middle
of a symphony movement. An announcer came on with a special report from
Washington to the effect that the President was considering calling Mr. Newton to
Washington to head up the Federal Reserve Board. Congratulations showered on Mr.
Newton and a toast was given with loud acclaim! The time of denouement arrived- Grady Black5 had cut in on the radio from outside and made the announcement. All a
grand leg-pulling; the inflation and deflation of personal hopes and gratification had
been so obvious--made your heart ache ...”6
As a matter of fact, Governor Black was called to Washington in May by
President Roosevelt and appointed to the governorship of the Federal Reserve
Board, succeeding Eugene Meyer. 7 A telegram from Black was read to the Board
members of the Atlanta Bank at their regular meeting on May 12:
“I hereby tender my resignation as Governor of the Federal Reserve Bank of
Atlanta effective upon my confirmation in my new position. This resignation is tendered
with great regret and with very deep appreciation of the cordial relations which have
existed between the directors of the Federal Reserve Bank and me.
“I am especially appreciative of the attitude of the directors toward the resumption of my duties with the Federal Reserve Bank of Atlanta upon the termination of


emergency duties here.” 8
The following resolution was then offered and adopted:
“WHEREAS, the Governor of this bank has been signally honored by an
appointment to the Governorship of the Federal Reserve Board; and
“WHEREAS, the Governor has tendered his resignation as an officer of this
bank, effective upon the assumption of his new office,
“THEREFORE, BE IT RESOLVED By the directors of the Federal Reserve Bank
of Atlanta, in meeting regularly assembled, that the resignation so tendered be and the
same is hereby accepted.
“BE IT FURTHER RESOLVED That we extend to Governor Black our sincere
and ..cordial congratulations, and at the same time express the hope that the present
trying and emergent conditions will shortly so far abate as to permit of the resumption of
his duties as Governor of this bank.”
W. S. Johns, Deputy Governor, was appointed Acting Governor and assumed
that office May 19 upon the departure of Governor Black.
Meanwhile, following the Bank Holiday, there took place, on June 16 and August
23, 1933, a thorough revision of Federal banking laws. The chief changes fall under
four heads. First, to restore public confidence in banks, an independent Federal Deposit
Insurance Corporation was founded. All member banks of the Federal Reserve System
had to join it and most other banks did likewise. By paying annually 1/12 of 1% of its
average deposits, a bank guaranteed its depositors against losses up to $5, 000. By
1945, 92% of all banks in the nation belonged, 96% of all depositors were protected,
and 46% of all depositors were safeguarded. Bank failures dropped to 57 in 1934 and


none in 1945. 10 The F. D. I. C. was a creation of the second Glass Steagall Act and,
while there were strong theoretical objections on the basis that well-managed banks
were made to pay for the badly managed banks over whose policies they had no
control, the Corporation has become an integral part of the banking system.
The second great change was the divorcement of commercial and investment
banking. Third, restrictions on real estate loans were relaxed, partly to help farmers and
partly so that member banks could compete better with state banks. Fourth, the Federal
Reserve Board was reorganized, renamed the Board of Governors of the Federal
Reserve System, and given greater control over banks. Supervisory functions became
direct-control functions. The board was granted authority to increase member banks’
reserves against deposits up to double of what they had been and also to increase the
margin requirements on stock exchanges.11
In addition to the resignation of Governor Black and the designation of W. S.
Johns as “Acting Governor”, a number of other changes took place in the Bank’s official
family during 1933. At the December 1932 Board meeting, Directors G. G. Ware and
Leon C. Simon were re-elected Class “A” and Class “B” Directors for the three year
term beginning January 1, 1933, while at the January meeting, following, all officers
were re-elected for the year.12
In June, George S. Harris, a Class “C” Director, resigned because of his removal,
for business reasons, to Charlotte, North Carolina, outside of the Sixth Reserve District.
On July 27, James P. Allen, President of the J. P. Allen Company, a leading Atlanta
department store, and active in the civic and business life of the city, was appointed by
the Federal Reserve Board to succeed Mr. Harris.18


Ward Albertson, connected with the Bank since its organization, Assistant
Federal Reserve Agent since early 1919, and Secretary of the Board of Directors
since 1923, died on May 16, 1933. Lewis M. Clark, formerly Assistant Cashier, was
appointed to succeed Mr. Albertson as Assistant Federal Reserve Agent and at the
August Board meeting was elected Secretary of the Board.14
John C. Cooper, of Jacksonville, Florida, who had served as a Director of the
Jacksonville Branch since its establishment on August 1, 1918, died December 17,
1933. On the 23rd, Bayliss W. Haynes, President of the Wilson and Toomer Fertilizer
Company of Jacksonville, was appointed to succeed Mr. Cooper.
It will be remembered that the Board of the Atlanta Bank voted in December
1932 to reduce salaries 12%, without the dismissal of any employee. The action was
pron3ptly approved by the Federal Reserve Board.15
Before these actions took effect, however, the Atlanta Board met on January 6,
1933, at which time Governor Black presented a memorandum of facts covering the
question of employees’ and officers’ salaries in the bank. After full discussion and in
consideration of the lowest paid employees, as set forth in Governor Black’s
memorandum, the following motion was put by Director Melvin:
“(1) That for the year 1933 salaries of all employees receiving $1,000 per year or
less be the same as for 1932.
“(2) That for the year 1933 salaries of all employees receiving between $1, 000
and $1, 200 per year be reduced five percent below the salary paid such employees
respectively in 1932.


“(3) That for the year 1933 salaries of all employees receiving over $1,200 per
year be reduced ten percent below the salary paid such employees respectively in
“(4) That necessary adjustments be made in salaries on the border line in the
groups named in paragraphs 1, 2, and 3, so that reductions will not reduce any salary in
paragraph 2 below the salary paid any employee in paragraph 1, or the salary in
paragraph 3 below any salary in 2.
The above was seconded and adopted, Directors Young and Simon voting in the
negative. 16
Director Young explained his negative vote as follows:
“Some six or eight years ago the commercial banks of Atlanta furnished to the
Federal Reserve Bank a list of all their employees, giving the position and annual salary
of each, and it was agreed between the Federal Reserve Bank and the commercial
banks of Atlanta that the salaries of employees of each, as living and working
conditions were the same, would be adjusted and maintained on practically the same
basis. This was done at that time and kept approximately on that basis until about three
years ago, at which time the depression came on and the commercial banks set about
reducing their expenses, including salaries of employees, and as the Federal Reserve
Bank has not reduced such salaries during that period, the average of the Federal
Reserve Bank of Atlanta is about 25% above the average paid by the commercial
banks in Atlanta at this time. I feel there is no good reason for this difference and that it
should be adjusted. Therefore, I have to vote against the small reduction which the
resolution carries. “17


A reduction in officers’ salaries was covered in a motion put by Director Melvin:
“That for the year 1933 all officers’ salaries in their respective official positions be
reduced ten percent below the respective salaries paid such officers for the year 1932,
and that such salaries be fixed for the year 1933 at the same figure as 1932 less such
reduction of ten percent; except that the salary of the Managing Director of the
Jacksonville Branch be first placed at the same figure ($6, 500) as the salaries of the
Managers at Birmingham and Nashville, and for 1933 be reduced said ten percent, so
that with such ten percent reduction it would be $5, 850.”
The motion was carried.18
As it turned out the salary reductions were of short duration. On July 14
Chairman Newton read to the Atlanta Board a letter he had received from the Federal
Reserve Board, dated June 23, with ‘which was enclosed a resolution adopted by the
Board, as follows:
“The Federal Reserve Board has given consideration to the general policy
involved in general or flat rate reductions of salaries which have been made at various
Federal Reserve banks, either in connection with share-the-work plans or
independently thereof, and a copy of a resolution adopted by the Federal Reserve
Board with regard thereto is enclosed.
“In accordance with the last paragraph thereof, it is requested that you bring the
resolution to the attention of the board of directors of your bank at its next meeting, and
it will be appreciated if you will advise the Board of the action taken by your directors in
connection therewith.


“WHEREAS, Nation-wide efforts are now being made to encourage industrial
and business interests to raise salaries and wages in order to increase the purchasing
power of the people and thereby to promote business recovery, a movement in this
direction is already under way, and it would be well for the Federal Reserve banks to
participate in this movement;
“WHEREAS, all of the Federal Reserve banks are operating at a profit, most of
them having already realized sufficient net earnings to pay their dividends for the first
six months of 1933, and the aggregate net earnings of the twelve banks are far in
excess of the aggregate dividend requirements;
“WHEREAS, the Banking Act of 1933 amends Section 7 of the Federal Reserve
Act so as to relieve the Federal Reserve banks of the necessity of paying any franchise
tax to the Government, thus eliminating any financial interest of the Government in their
“WHEREAS, the increased duties devolving upon the Federal Reserve banks
under legislation enacted during 1933, together with the improvement in business
conditions, are resulting in a substantial increase in the volume of their work, thereby
eliminating the necessity of reducing the number of employees of the various Federal
Reserve banks, including those where additional employees were taken on in carrying
out the share-the-work plans in effect at those banks;
“WHEREAS, it appears that the cost of living is advancing;
“NOW, THEREFORE, BE IT RESOLVED, That there appears to be no occasion
for continuing in effect the emergency reductions in salaries of the officers and
employees of the Federal Reserve banks;


“BE IT FURTHER RESOLVED, That it is the sense of the Federal Reserve
Board that the Board of Directors of each Federal Reserve bank should give prompt
consideration to terminating the emergency reductions in the salaries of their officers
and employees, effective July 1, 1933, or as soon thereafter as it is practicable to do
“BE IT FURTHER RESOLVED, That the Board’s Secretary be hereby instructed
to transmit a copy of this resolution to the Chairman of the Board of Directors of each
Federal Reserve bank and request him to bring it to the attention of the Board of
Directors at its next meeting.”19
After considerable discussion, in which it was pointed out that the cost of living
was indeed on the rise, it was voted to postpone a decision until the August Board
meeting so as to give the Salary Committee more time for study. 20 The study
apparently supported the conclusions of the Federal Reserve Board, for, on August 1.1,
it was voted to restore the salaries of officers and employees to schedules in effect
before the emergency reductions, effective August 1, 1933.21
In early May 1933, a letter was received from the Federal Reserve Board in
Washington setting forth the undesirability of Federal Reserve Agents, their assistants
and staff members incurring indebtedness directly or indirectly to member banks and
asking for a report on any individuals so indebted.22 At the same time the Board called
attention to a 1924 circular letter, the gist of which was:
“…the Federal Reserve Board believes it will be as obvious to the directors of the
Federal Reserve banks as it is to itself that the good conduct and repute of the Federal


Reserve System require that the officers of the reserve banks shall give their entire time
and attention to the affairs of the banks and not to be identified with any outside
business interests. “23
After careful consideration of the above matters, the Atlanta Board expressed
the opinion that the relationship of debtor and creditor of officers and heads of
departments of Federal Reserve banks and their member banks is undesirable, and
went on record as favoring that principal.
“However, ‘ said the Board, “in order that the policy resulting from such a
declaration of principle may not fall unduly hard on officers and heads of departments
having existing loans, if any, it was agreed that reasonable time should be given the
makers to liquidate such loans and in determining what constitutes a ‘reasonable time’ it
was agreed that all the facts and circumstances should be considered, but that officers
and heads of departments who may have existing loans should liquidate them as soon
as possible without entailing undue hardship upon the makers.”24
During the entire history of the Federal Reserve System, little opportunity has
existed for its officers and key personnel to wheel, deal, or deviate from the path of
rectitude and honesty.
By the summer of 1933, particularly in the cotton growing South, conditions were
showing a slight improvement. In a report on June 9, Acting Governor Johns told the
Board that total loans to member banks amounted to $18, 247, 000 and on June 30 to
only $7, 894, 000--a decrease for the month amounting to $10, 353, 000. He went on to


“On account of the continued increase in the price of cotton, very few of our
agricultural member banks are asking for additional accommodation. Many of them are
further decreasing their indebtedness to the Reserve Bank, and several have paid their
indebtedness in full during the month.”25
On October 13, the Acting Governor reported again in similar vein:
“In former years at this season, the Reserve Bank has carried a large amount of
commodity discounts for its member banks, but we are being offered at this time
practically no cotton or commodity secured paper. On account of the Government’s
expected cotton financing program, there appears to be a disposition on the part of
farmers to hold their cotton, and on account of the improved positions of our agricultural
member banks they are able to carry cotton or other commodity loans in their own
portfolio and their appears to be no necessity for them to offer this paper to the Reserve
A month prior to the bank holiday of early March, a crisis arose among the banks
in New Orleans which was resolved by the recently organized Reconstruction Finance
Corporation plus the personal presence of Atlanta Bank Governor Eugene R. Black.
Indeed, as Governor Black left New Orleans on the afternoon of February 9, R. S.
Hecht, President of the Hibernia Bank & Trust Company, telegraphed Chairman Oscar
Newton of the Atlanta Bank as follows:
“Mr. Black left this afternoon after having spent five strenuous days with us. I will
leave it to him to advise you of the harrowing but interesting details of this Black Week,
but I want to add something else which I know he won’t tell you, that is, that he was a
tower of strength to the situation as a whole and I don’t know how we could have ever


got the results we did without his splendid cooperation and his patience and tact, which
held all the various interests together at all times. I will not speak of the gratitude which I
and my directors feel for the help he rendered our own institution but I want you and his
other colleagues to know that the whole city of New Orleans owes him a real debt of
gratitude for his untiring and effective work.27
The following day at a meeting of the Atlanta Board, Director Leon Simon of New
Orleans made the statement that when Governor Black arrived in New Orleans Sunday
morning the bankers were demoralized. In this situation he did a wonderful piece of
work in that he materially aided the banks and the Reconstruction Finance Corporation
in the determination of the large sums necessary to avert this crisis. Director Simon
further stated that, in his opinion, Governor Black’s presence in New Orleans was the
main factor in accomplishing those things that were necessary to the restoration of
confidence and the return to a normal state.” 28
The entire history of the Havana Agency was marked by periodic crisis and its
1933 operations were no exception to the pattern. Wrote H. C. Frazer:29
“The impact of the banking crisis which developed in the United States in late
February and early March 1933 was strongly reflected in banking in Cuba. With the
announcement of banking moratoriums in various states within the United States, the
Cuban public became extremely apprehensive and Havana banks began reinforcing
their cash reserves. On Friday and Saturday, March 3 and 4, the Agency paid to the
Havana banks around $20 million, completely depleting its reserves. Withdrawals from
Havana banks were rather heavy on these two days.


“To cope with the situation which was becoming critical, the Cuban President,
General Gerado Machado, after consultation with representatives of the Havana
Clearinghouse banks, the Manager of the Havana Agency, the Secretary of the
Treasury, and other high government officials, issued a decree on Sunday, March 5,
declaring Monday, Tuesday, and Wednesday, March 6, 7, and 8 as bank holidays. The
decree cited the banking holidays declared last week in many of the states in the United
States, including New York, and set forth the close relationship existing between
American and Cuban banks.
“Banking circles felt certain the hysteria induced locally by closing of banks in the
United States would have worn off before Thursday, but prepared to add to their
reserves of cash in the event that the pattern of Saturday’s withdrawals should continue
when the banks reopened for business. Shipments aggregating $20 million were
received by the Havana Agency early in the week of March 6, but because of the freeze
on Federal Reserve funds imposed by the Presidential order in the United States, no
payments could be made to the Havana banks.

, on which

withdrawals had been heaviest, received shipments aggregating $10 million by air from
its head office in New York.

also received shipments of

sizeable amounts from New York.
“On Wednesday, March 8, after further conference with Havana bankers and
government officials, President Machado extended the bank holidays for an indefinite
period to run until the closing order in the United States was lifted. During the period the
banks were closed, each of the eight Clearinghouse banks insisted that before
reopening for business it would need considerable additional cash reserves. The


Agency held around $20 million but the banks felt that this would not be sufficient to
meet their requirements. None of the banks would divulge to the others its cash
position, which made it extremely difficult for the Agency Manager and Atlanta officials
to analyze the true situation.
“Finally, each of the Clearinghouse banks agreed to divulge to the Agency
Manager in strictest confidence the amount of cash reserves held by it. When a
tabulation was completed, it showed that in the aggregate the eight Havana
Clearinghouse banks held around $50 million and the Agency held $20 million. This
figure, in the opinion of the officials of the Atlanta Bank and Agency Manager, was more
than adequate to meet whatever situation developed.
“Governor Black instructed the Agency Manager to assure the banks that should
an unusual situation arise after reopening, the Federal Reserve Bank of Atlanta would
promptly make additional funds available through the Agency. Upon being informed of
the aggregate reserves available, the Havana bankers were agreeable surprised and
promptly petitioned President Machado to withdraw the closing order. This was done
and when the banks reopened later in March, contrary to expectations, very moderate
withdrawals were experienced. In about a week or ten days conditions had returned to
During this time the Cuban political situation had become extremely tense. The
Machado regime was publicly charged with tyranny and dictatorship and numerous
demonstrations and riots had occurred throughout the island. Open defiance of the
administration in all instances had been successfully suppressed by the Army which
had remained loyal to President Machado up to this time. A strong anti-Machado force


had developed, however, among citizens and some segments of the Army, and as this
revolutionary movement gained in momentum, riots and disorders became more
Finally, early on the morning of September 4, 1933, Sergeant Fulgencio Batista,
with other non-commissioned officers of the Army, staged a bloodless coup, taking over
the Army and arresting most of the old officers who were Machado supporters.
Machado and many of his associates fled the country. Immediately following, complete
disorder prevailed in Havana and throughout the Island. The Presidential Palace and
many government buildings and homes of Cabinet members were ransacked.
The Army, under Sergeant Batista (after the coup to become “Colonel”), took
over the government and, on September 5, declared martial law, which brought some
semblance of order. During the week or so it required to restore partial order, all banks
and business houses were closed.
The guards at the Agency quarters maintained their regular tours of duty and
received full cooperation and protection from police and members of the armed forces.
On the morning of September 5,when Manager H. C. Frazer arrived at the Agency, he
encountered a machine gun manned by a squad of soldiers, mounted on the sidewalk
in front of the building. The officer in charge of the group greeted Frazer and said, “You
have nothing to fear. We are here on orders of Colonel Batista to protect the Federal
Reserve Bank and its personnel.” This protection was maintained for a week and within
a month or so conditions returned to normal.30
Even so, Acting Governor W. S. Johns took occasion to report briefly on the
Havana Agency situation at the December Board meeting.


“While conditions in Havana have improved, our Agency Manager is still
retaining his extra guard force, as an extra precaution, and this extra force will be
retained until conditions will fully warrant a reduction in the number of guards…”31
Since its opening in 1919, the Savannah Agency had never been characterized
by high volume. Periodically, the question arose as to the feasibility of its continuance. It
arose in May 1933 and a committee, composed of Director Kettig and Chairman
Newton or Deputy Governor Johns was appointed to investigate the need for keeping
the Agency in operation.32
The Savannah Clearing House, composed of the four Reserve member banks,
urged continuance and assured the Committee that all reasonable safety measures as
to protection of funds were being taken. After due consideration the committee made its
report on July 14, which concluded as follows:
“…It is the opinion of your committee that this Agency is performing a valuable
service to the four member banks in Savannah, and that, in view of its importance as a
port and the need for large sums of money from time to time beyond the normal amount
of money that a bank would carry, the continuation of the Agency is justified.
“The Savannah banks make large shipments of currency to banks in their
territory and some of these banks are members of the Federal Reserve System. To this
extent the Federal Reserve Bank is relieved of transportation cost on money shipped by
Savannah banks to our member banks.
“In view of the long and satisfactory operation of the Agency as it relates to our
Savannah member banks, and after considering the service to our Savannah member


banks that this Agency renders, it is the opinion of your committee that it should be
continued, and we so recommend.”
The Agency was continued for another 12 years.
In American economic history, 1933 was indeed a watershed year. The winter
was grim. Fifteen million men and women had no jobs and millions more were working
for reduced salaries and wages. At least three million were on relief.
Farm prices had fallen so low that a wagonload of corn would not pay for the
shoeing of a pair of horses. A truckload of hogs would barely buy a new set of tires. The
dollar value of American exports was the lowest in 30 years.
General Motors and United States Steel shares were selling at about 8 percent
of the prices they had commanded in 1929. At a lavish dinner given by the Spanish
ambassador, Secretary of the Treasury Mills was called from the table every few
minutes for telephone reports of the latest bank closings.34
Yet, before spring the picture began to brighten and the character of a rew era
began to take form. Indeed, Chairman Oscar Newton was able to devote the first
paragraph of the Bank’s Annual Report for the year to relatively good news. He wrote:
“Although business and industrial activity, which had been declining for more
than three years, reached new low levels during the first quarter of 1933. The year in
retrospect may be considered one in which considerable progress was made toward
improved business, industrial, and banking conditions. The seasonally adjusted index of
retail trade in the Sixth District reached an all-time low in March but by December
department store sales had increased to the highest level in two years. Wholesale trade
reached the lowest level on record in February, but increased each month through


October, and declined less than usual in November and December. Building permits
issued at twenty cities in the District were less in February than in any other month for
which figures are available, and building and construction contract awards reached their
lowest point in April but for the year exceeded the 1932 total by 51. 5 percent.”35
Total resources of the Federal Reserve Bank of Atlanta at the close of 1933
amounted to $233, 384, 000, greater by $55, 716, 000 than the total at the end of 1932,
and also larger than at the close of 1931 or 1930. 36
Earnings, however, were off. The total came to $1,686, 497 for the year, smaller
by 15. 8 percent than in 1932, but 16.4 percent larger than in 1931. With the exception
of 1931, however, earnings in 1933 were smaller than for any other year since 1917.
Current net earnings for 1933 amounted to $365,230, a decline of 53.5 percent
compared with the total for 1932, and except for 1931, the smallest for any year since
An episode which took place in mid-summer of 1933 illustrated the fact that hard
times breed desperation and desperation in turn often finds expression in spectacular
crime. So it happened that on the hot morning of July 6, John K. Ottley, President of the
First National Bank of Atlanta, was boldly kidnapped for ransom, the first crime of its
type ever consummated in the annals of the city.
As Mr. Ottley drove from the driveway of his Peachtree Road estate, he was
accosted by a young man who indicated a desire for a ride into town. Having previously
seen the young man in the vicinity of his home, Ottley stopped to pick him up. As he did
a pistol was thrust into his side with a command to get into the back seat and keep still.
The banker complied. Another young man, heretofore concealed, took the wheel. The


car was driven to a remote spot some 30 miles north of Atlanta. A ransom note, asking
for $40, 000, was crudely written and later delivered to the Negro caretaker of the Ottley
estate. It was turned over to the police. The man who first held up Mr. Ottley disappeared. The younger man was arrested at Suwanee, Georgia, where he and the victim
had walked following the disappearance of the first man. This man, an ex-convict
named Delensky, was captured in Texas in August and given a long prison sentence.
Banker Ottley was shaken but uninjured. All he lost was the ten dollar bill he had on his
person and his glasses. 38


Chapter 22


Life History, Vol. 11, p. 168.




Annual Report, 1933, p. 7-8.


March, 1966.


A son of the Governor.


Typescript on file at the Bank.


Annual Report, 1933, p. 16.


Minutes, Directors, VIII, 2162.




Collier’s Encyclopedia, 20 vols., (New York, 1957), 3, p. 80.




Minutes, Directors, VII, 2119; VIII, 2121-2122.


Ibid., VIII, 2184, 2193, 2203; Annual Report, 1933, p. 17.


Annual Report, 1933, p. 17; Minutes, Directors, VIII, 2176, 2203.


Annual Report, 1933, p. 17.


Minutes, Directors, VIII, 2132-2133.


Ibid., 2133.




Ibid. , 2187-2188.


Ibid., 2188.


Ibid., 2208.



Ibid. , 2168-2169.


Ibid. , 2169.


Ibid., 2170.


Ibid., 2190.


Ibid., 2222.


Ibid., 2135.




“Brief History, Havana Agency”, 25-28.


Ibid., 28-29.


Minutes, Directors, VIII, 2239.


Ibid., 2172.


Ibid. , 2194-2 195.


Conrad Knickerbocker, “1933 in America: The Low Point,” Atlanta Constitution,
March 21, 1966.


Annual Report, 1933, p. 7.


Ibid., 12.


Ibid., 13.


Garrett, Atlanta and Environs, II, 911-912.


Chapter 23

New Deal legislation continued to proliferate during the second year of the
Roosevelt administration and, in 1934, involved the Export-Import Bank, Cotton Control
Act, SEC. FHA, Corporate Bankruptcy Act, FCC, and the Silver Purchase Act.
The latter provided for the purchase of all new domestically-mined silver at a rate
nearly twice the world price. Silver was no longer bought for the formal purpose of
“increasing and stabilizing domestic prices. “ Catering to this sectional interest meant
the accumulation of great silver stocks to add to the problem of the gold stocks. None of
the critics or defenders of the silver program could have foreseen that, within a few
years, $400, 000, 000 of the accumulated metal would be used in the machinery that
produced the atomic bomb. 1
Gold also received attention. Congress passed the Gold Reserve Act of January
30, 1934. Wrote Dennis W. Brogan:2
“The Act authorized the President to fix the gold content of the dollar at between
50 and 60 percent of its former weight. Of the profit which the Treasury would make
through the revaluation of its gold stocks, two billion dollars was to be used as a
stabilization fund to keep the dollar in reasonable balance with foreign currencies. All
the gold owned by the Federal Reserve Banks was to be handed over to the Treasury
and paid for with dollar certificates. Gold coin was removed from the monetary system.
Two days after this sweeping measure became law, the President revalued the dollar at
a rate that kept just inside the maximum legal devaluation of 60 percent, and gold was
now bought at a rate ($35 an ounce) that reflected almost exactly the devaluation.


Nearly $3, 000, 000, 000 profit resulted from these measures. Although the formal
purpose of the Stabilization fund was to control the external value of the dollar, it put
great internal inflationary powers in the hands of its administrators; they had to get
dollars to sell abroad and to get the dollars they had to deposit gold with the Federal
Reserve System, adding to the banking reserves in an inflationary sense.
“One result of this policy was a drain of European gold into the United States. A
permanent and increasingly favorable balance of trade existed on the American side,
and especially after the armament race had begun in Europe, an increasing demand for
goods that dollars or gold could buy in America, with no corresponding increase in
American demand for European goods. Each new crisis that racked Europe caused a
further movement of gold to America, until the great gold hoard buried at Fort Knox in
Kentucky became a symbol of fantastic times. For as the influx continued, the Treasury
cut off the new gold from the general currency system by purchasing it direct and
allotting it to an ‘inactive account’; it was sterilized. This hedging against inflation
seemed less prudent in the recession of 1937-38, and by the spring of 1938,
sterilization was abandoned.”
Passage of the Gold Reserve Act was taken cognizance 0± by the Directors of
the Atlanta Federal Reserve Bank at their regular meeting on February 9. Reported
Acting Governor W. S. Johns:
“At 3:30 p.m. on January 30, the President approved the ‘Gold Reserve Act of
1934’ and immediately the Secretary of the Treasury demanded a transfer of title and
interest to all gold coin or bullion held by the Federal Reserve Bank of Atlanta. The
Bank had no bullion but gold coin held by the bank amounted to $7, 685, 000 which was


transferred to the Secretary of the Treasury as to title and interest, this gold coin being
held in custody for the account of the Treasury Department, under custody prescribed
by the Secretary of the Treasury. This transfer of title and interest was made after
conferring with Mr. Oscar Newton, Federal Reserve Agent and Chairman of the Board,
and we also had a telegram from the Federal Reserve Board, dated January 30th,
which quoted an opinion given by Newton D. Baker, System’s Counsel, and Walter
Wyatt, Federal Reserve Board’s Counsel, that when demand was made for this gold
coin, after the Gold Reserve Act of 1934 had been signed by the President, such
demand should be complied with by the Federal Reserve Banks without any reservation
or protest, but before making the demanded transfer, an opinion was obtained from the
banks General Counsel, Mr. Robert S. Parker, who concurred in the conclusions
reached by Messrs. Baker and Wyatt that we should comply with the law, without
reservation or protest.”3
The Board ratified and confirmed the above action.4
Locally, in Atlanta and Fulton County, 1934 was an improvement over 1933. As
the year moved along, money became more plentiful and agricultural conditions
improved. True, the City began the year with a deficit of $1,047,399.68. Mayor Key
asked city leaders to meet the situation courageously. The Coca-Cola Company
advanced the city $800, 000 with which to help meet the emergency. But slowly and
surely the times were getting better.5
In commenting upon the Atlanta unemployment situation, the City Builder for
March, 1934, said:


“At the close of the year 1933, records showed, as a result of a survey, that 5,
339 firms employing 50, 641 people had added 5, 316 new employees, making a total
of old and new, 56, 957. With these figures as a basis, our estimates are that between
seven and eight thousand additional people were put on payrolls during the last six
months of the year.
“The maximum number receiving unemployment relief during the peak of 1933
was 22, 000 people. The number now receiving direct relief is about 10,000. In February
of 1934, there were in Fulton County 15,000 people working on CWA jobs.”
At its January, 1934 meeting, the Board re-elected all officers of the Atlanta
Bank. During the year, however, certain changes among Board members and branch
managers took place.
Ryburn G. Clay, President of the Fulton National Bank of Atlanta, was elected a
Director by member banks in Group I for a three year term beginning January 1. He
succeeded H. Lane Young whose term expired with the end of 1933. Mr. Young was
elected as the member of the Federal Advisory Council to represent the Sixth Federal
Reserve District for 1934, succeeding John K. Ottley who retired from the Council at the
close of 1933. 6
William Webb Crawford, a Director of the Birmingham Branch, noted for his
ability and good humor, died on January 15. He was replaced, effective April 16, by
Frank M. Moody, President of the First National Bank of Tuscaloosa, Alabama.
Following his Service as Governor of the Federal Reserve Board, in Washington,
from May 19, 1933, Governor E. R. Black returned on August 15, 1934, to the
governorship of the Federal Reserve Bank of Atlanta at an annual salary of $35, 000.-


At the same time he assumed, at the request of President Roosevelt, the duties and
responsibilities of Liaison Officer between the Administration and the banks of the
nation, presenting the recovery program to the banks and other financial institutions.
After serving in this dual capacity for more than four months, during which time he was
in constant demand as a speaker at bankers’ conventions throughout the country,
Governor Black died on the morning of December 19.8
On September 17, 1934, George S. Vardeman, Jr., was appointed Acting
Manager of the Jacksonville Branch on account of Manager Hugh Foster’s lengthy
illness. On October 31, Mr. Foster died, and Mr. Vardeman was elected Managing
Director of the Branch. T. A. Lanford, of the parent bank, was elected Cashier,
succeeding Mr. Vardeman.9
Hugh Foster was a man of engaging personality. Endowed with distinctive
natural gifts, he was also highly educated, having graduated from Southwestern
Presbyterian University at Clarksville, Tennessee, and Princeton University.
In 1905, he organized the First National Bank of Union Springs, Alabama, and
served as Cashier of that institution until January 1922, when he moved to Montgomery
to accept the vice presidency of the Exchange National Bank of that city. He served in
that capacity until 1926, when the Exchange was merged with the First National Bank of
Montgomery. He served as vice-president of the merged bank until January 1, 1927,
when he was elected Deputy Governor of the Federal Reserve Bank of Atlanta. In
January 1931, he became Managing Director of the Jacksonville Branch and so served
until illness forced his retirement. 10


As the year drew to a close, two Directors of the parent bank and a Director of
the New Orleans Branch tendered their resignations. E. C. Melvin had served since
January 1, 1926, three terms, as a Class A Director. J. B. Hill, a Class B Director since
January 21, 1931, resigned because his election to the presidency of the Louisville &
Nashville Railroad required his removal from Nashville to Louisville, outside of the Sixth
District. Dr. P. H. Saunders, a Director of the New Orleans Branch since its
establishment in 1915 and its Chairman since 1922, resigned because of the press of
other business interest.11
In November, successors were elected to Messrs. Melvin and Hill, whose terms
ran to year’s end. Mr. Melvin was succeeded by W. D. Cook, Executive Vice President
of the First National Bank, Meredian, Mississippi. Fitzgerald Hall, President of the
Nashville, Chattanooga & St. Louis Railway, succeeded Mr. Hill and was also appointed
a Director and Chairman of the Board of Directors of the Nashville Branch. 12
At its regular meeting, on February 9, 1934, the Directors of the parent bank
adopted the following resolution:
“RESOLVED That the Federal Reserve Bank of Atlanta adopt, subject to the
approval of the Federal Reserve Board and effective March 1, 1934, the Retirement and
Pension System submitted and recommended by the Pension system Committee of the
Governor’s Conference and set out in a report of that Committee made to the Federal
Reserve Board under date of November 22, 1933.”
It was also voted to discontinue the Group Insurance on the lives of the
employees upon the adoption of the above retirement and pension plan. Membership in


the retirement system was a requirement for all new regular employees and the passing
of a physical examination became mandatory. 13
The Acting Governor was able to make, in January 1934, a sanguine report as to
the aftermath of the banking holiday of March, 1933. He wrote:
“On March 18, just subsequent to the banking emergency, 62 member banks did
not open --52 of these banks were indebted to the Reserve Bank. The total
indebtedness of these 52 banks to the Reserve Bank was $10,889,231, of which
amount $9, 165, 890 was indebtedness other than Government or commodity secured.
These banks have now been reduced to 9 banks with an indebtedness of approximately
$1,321,000, and in my opinion the remaining conservator or restricted banks will not
cause any loss to the Reserve Bank as we appear to have ample collateral to liquidate
our indebtedness. Most of the conservator banks have under way plans for
reorganization or payment of their indebtedness to the Reserve Bank through the
organization of new banks.”14
By mid-April only two member banks were operating under a conservatorship,
owing the Federal Reserve an aggregate amount of $68,565.15 The Reconstruction
Finance Corporation was playing a large role in this favorable situation.
During the exigencies of the banking holiday and attendant emergencies the
Bank Relations Department had practically ceased to function. Indeed, a discussion
was had at the May, 1934 Board meeting relative to the inactivity of the Department
during the past several months. The Chairman of the Bank Relations Committee
explained that the two field representatives heretofore assigned to the work were being


used in the Examination Department but would resume their normal duties soon.
Indeed, the Chairman stated he would call a meeting of the Committee soon and review
the situation.16
By early June, the Department had begun to function again and by year’s end
was going full blast, with a total of 352 calls on banks having been made by officers,
field representatives and employees.17
On July 6, 1934 Chairman Newton informed the members of the Board that he
and Acting Governor Johns recently attended a joint conference of Chairmen and
Governors of the Federal Reserve Banks in Washington at which conference careful
consideration was given to Section 13(b) of the Federal Reserve Act, which relates to
discounts, purchases, loans and commitments by Federal Reserve Banks to provide
working capital for established industrial and commercial businesses. The Chairman
explained that the conferees had given earnest consideration to the law and the
regulations to be issued by the Federal Reserve Board relating to loans to be made
under this section. 18
After a general discussion of the law, the Chairman opened the meeting to
nominations by the Directors of five individuals whose duties would be to serve as
members of the Industrial Advisory Committee for the Sixth Federal Reserve District.
The following were appointed:
William A. Parker, President, Beck & Gregg Hardware Co., Atlanta Ga.
Morgan McNeel, President, McNeel Marb.e Works, Marietta, Ga.
John Sanford, President, Armour Fertilizer Works, Atlanta, Ga.
A. R. Forsyth, Executive Vice President, Gulf States Steel Co., Birmingham, Ala.


Ernest T. George, President, Seaboard Refining Co., New Orleans, La. 19
The gist of the new law as to industrial loans was set forth in a letter from the
Federal Reserve Board:
“That in exceptional circumstances when it appears to the satisfaction of your
bank that an established industrial or commercial business located in your district is
unable to obtain requisite financial assistance on a reasonable basis from the usual
sources, your bank may make loans to, or purchase obligations of such industrial or
commercial business, or may make commitments with respect thereto, on a reasonable
and sound basis, for the purpose of providing it with working capital.
“That your bank shall have power to discount for, or purchase from, any financing
institution operating in your district obligations entered into for the purpose of obtaining
working capital for any established industrial or commercial business; to make loans or
advances to any such financing institution or the security of such obligations, or to make
commitments with regard to such loans or advances on their security, including
commitments made in advance of the actual undertaking of such obligations. This
provision requires participation by the financing institution.
“Under these two provisions, loans may be made direct to established industrial
or commercial businesses or indirectly through financing institutions, such loans in
either case to be for working capital.”20
Rates for these loans were covered in a telegram from the Federal Reserve
“On direct loans or advances to established industrial or commercial businesses,
6% per annum; and on advances to member banks, nonmember banks and other


financing institutions, 5% per annum; Board also approves for your bank, effective
immediately, following flat rates on commitments for industrial advances computed on
percentages of commitment, and varying with duration of commitment: 1/2% up to
ninety days; 1% ninety-one to one hundred eighty days; 1-1/2% one hundred eighty-one
to two hundred seventy days,; and 2%, two hundred seventy-one to three hundred sixtyfive days.” 21
On September 14, Governor Black was able to report:
“Our bank is making real progress in the matter of industrial loans. Our Industrial
Committee is working faithfully and our officers are giving a large part of their time to
this function...”22
At year’s end, under the heading “Industrial Advances,” Chairman Newton
“During the last five months of 1934 there were 75 Industrial Advances made by
this bank, totalling $872, 443 in amount, under authority contained in the Act of
Congress of June 19, 1934, which authorized such advances in exceptional
circumstances to established industrial or commercial businesses unable to obtain
necessary financial assistance from the usual sources. In addtion to these advances,
commitments to make further advances were made during this period to the extent of
$761,500.” 23


Because of the extra load of work thrown upon General Counsel Robert S.
Parker as a result of industrial loan activity, Governor Black recommended in
September that Mr. Parker’s salary be increased by $500 per month, effective July 1,
1934. The recommendation was approved by the Board. 24
At its meeting on August 10, 1934, the Board welcomed the return of Governor
Black. The Governor acknowledged the greetings of the Chairman and the Directors
and discussed briefly general conditions as they affected the country as a whole. He
referred particularly to the sound condition of the banks of the country and the part they
may contribute to the Recovery Program.25
A month later Mr. Black reported that he had visited Birmingham, Nashville, and
New Orleans and found the branches in each city “in good condition, well-officered, and
functioning properly.” He also reported that he had- talked with numerous bankers and
industrialists in all three cities and that business had improved and that credit was
readily available. 26 The depression had. lost its deepest sting.
The Board meeting of November 2 was distinguished by the presence, in
addition to the Directors of the Atlanta, of the Branch Directors and Managing Directors
of the branches. Practically everyone present commented upon the economic situation.
It was the concensus of opinion “that agricultural conditions in the Sixth District
are very good. Farmers are liquidating their current bills and paying on indebtedness
contracted in previous years. The citrus crop in Florida will be large and representatives
from that State expressed the opinion that if a fair price is obtained many old debts will
be paid. “ The speakers were unanimous in their assertion that industrial conditions
have materially improved, except in the coal and iron sections.27


Ever since 1923, when it was placed in operation, the Havana Agency had been
a recurring problem. It produced a profit of $14, 578 in 1927. Expenses exceeded gross
by $10, 884 in 1928 and volume of operations had declined ever since. In June 1934,
the Atlanta Bank requested permission of the Federal Reserve Board to close the
Agency. Political and economic conditions in Cuba were unstable. The Cuban
government had issued a decree prohibiting the exportation of money, from which
decree the Agency was able to obtain exemption. By this time the so-called Platt
Amendment of 1901 had been abrogated by treaty. The State Department, however,
speaking through Assistant Secretary Sumner Welles, favored maintenance of the
Agency as a stabilizing factor in the political and economic affairs of the Island. It was,
therefore, continued although cash holdings were reduced in September to $5,000,000.
Total resources of the Federal Reserve Bank of Atlanta at the end of 1934 stood
at $255,823,000, larger by $22.4 million that at the end of 1933, and larger than at the
close of any year since 1927. The increase in total resources on December 31, 1934,
compared with a year earlier was almost identical in amount with an increase in
holdings of United States Government securities, an increase in reserves being
practically offset by decreases in other items in the comparative balance sheet. Total
reserves held by the bank at the end of 1934 amounted to $139, 177, 000, greater by
$9,085,000 than a year earlier, and the largest total since the close of 1930.30
Total earnings during 1934 amounted to $1, 818, 161, larger by 7.8% than during
1933, and also larger than in 1931, but smaller than in any other years since 1917. Net
earnings for 1934 amounted to $512, 067. 31


In accordance with a provision in the Banking Act of 1933, which required
Federal Reserve Banks to subscribe to stock in the Federal Deposit Insurance
Corporation to the extent of fifty percent of their surplus on January 1, 1933, this bank
early in 1934 purchased stock in that corporation to the extent of $5, 272, 031. 55, and
its surplus was accordingly reduced by that amount.32
The sudden death of Governor Eugene R. Black on December 19, 1934, has
been briefly noted. On January 10, 1935, at a special Board meeting, Chairman Newton
stated that the meeting was the first since the death of Governor Black and that he felt
he could not begin the session without first referring briefly to the loss sustained by the
bank in the passing of Governor Black. The Chairman spoke of Mr. Black’s faithfulness,
loyalty to duty, and friendliness. He emphasized the fact that Governor Black had a
keen interest in the Federal Reserve System and gave of his time and advice freely in
all matters pertaining to the strengthening of the System. The Chairman stated that the
Directors of the Federal Reserve Bank of Atlanta had lost a faithful friend. The Directors
then stood for several moments with bowed heads in memory of their departed
While not a banker’s banker, in the usual sense of that term, Eugene Black
provided the Federal Reserve Bank of Atlanta with courageous leadership. The impress
of his attractive personality was long felt by the bank and by the community he had
served so well.


Chapter 23

Dennis W. Brogan, The Era of Franklin D. Roosevelt, (New Haven, 1950) p. 68.

2.Ibid., p. 65-66.
3.Minutes, Directors, VIII, 2272.
4.Ibid., 2273-2274.
5.Garrett, Atlanta and Environs, II, 916.
6.Minutes, Directors, VIII, 2248, 2251.
7.Ibid., 2268; Annual Report, 1934, p. 19.
8.Annual Report, 1934, pp 18-19; Minutes, Directors, VIII, 2351.
9.Minutes, Directors, 2345-2346, 2365; Annual Report, 1934, p. 20.
Minutes, Directors, VIII, 2365.

Ibid., 2380-2381.


Ibid., 2385; Annual Report, 1934, p. 19.


Minutes, Directors, VIII, 2274, 2285, 2296.
Ibid., 2258.
Ibid., 2293.
Ibid., 2303.


Ibid., 2312, 2379-2380.


Ibid., 2330.




Ibid., 2323.


Ibid., 2343.


Ibid. 2348.


Annual Report, 1934, p. 17.


Minutes, Directors, VIII, 2346.


Ibid. , 2336.


Ibid., 2348.


Ibid., 2365.


Adopted following the Spanish-American War in an effort to stal~Lize conditions
in Cuba.


Minutes, Directors, VIII, 2316, 2318, 2319, 2328, 2336, 2351, 2357, 2375.


Annual Report, 1934, p. 15.


Ibid. , 15—16.


Ibid., 16.


Minutes, Directors, IX, 2387.


Chapter 24

As the decade of the 1930’s reached midpoint, events of great future import were
taking place. Hitler, coming rapidly to the fore in Germany, proclaimed anti-Semitic laws;
Congress defeated a proposal that the United States join the World Court; the Supreme
Court upheld the 1933 gold legislation but invalidated the National Industrial Recovery
Act. Huey Long was assassinated in Louisiana. New Deal legislation brought forth the
NLRA, Social Security Act, Wealth Tax Act, Banking Act, and the Public Utility Holding
Company Act. Italy invaded Ethiopia, ignoring League of Nations sanctions, and
industrial unionists within the AFL formed the Committee for Industrial Organization,
better known simply as the CIO.1
Business generally improved. Indeed, nearly all of the available series of
statistics gave evidence of widespread improvement in the Sixth Federal Reserve
District in comparison with other recent years. The volume of trade at both wholesale
and retail was the largest since 1930. Residential building was at its highest level since
the same year, and electric power production reached the highest level on record.
Deposits and investment holdings of member banks in the District continued to
increase, but loans to customers declined.2
Locally, State Auditor Tom Wisdom announced, on January 5, that Georgia
finished 1934 with a balance of $6, 697, 860, greatest in its financial history. A week
later salaries of Fulton County employees were hiked $140,000 annually. On April 3,
deposits in Georgia banks showed an increase of $21, 000, 000 over the preceding


year, while a survey in October revealed Atlanta’s per capita debt to be the lowest in the
country. Nineteen thirty-five was not a flush year but things were getting better.3
At year’s beginning, W. H. Kettig began a new three-year term as a Class C
director of the Atlanta bank; a new one-year term as Deputy Chairman, and the same
as a director of the Birmingham Branch.4
A special Board meeting of the Bank was held on January 10, 1935, during the
course of which Chairman Kettig announced he would entertain nominations for
Governor, a position vacant since the death of Eugene R. Black three weeks before.
After a discussion it was agreed that in view of Director McCrary’s continued service as
a member of the Board since the organization of the Bank, he be given the honor of
nominating a candidate for Governor. He nominated Oscar Newton and spoke of the
service rendered by Mr. Newton since his election to the Board in 1919 and his
subsequent service as Chairman of the Board and Federal Reserve Agent. The
nomination was seconded by Director Cook, and Mr. Newton was unanimously elected
by a rising vote.5
L. M. Clark, than an officer of the bank, reminiscing many years later tells an
amusing story about Mr. Newton.
Soon after he became Governor, Mr. Newton was preparing to go to Sea Island,
Georgia, to a bankers’ meeting. He was trying to be very careful in getting together the
proper clothes for the occasion and went to especial pains to get a blue coat and white
trousers, of which outfit he was very proud. But when he arrived at Sea Island, much to
his consternation and embarrassment, he found most of the visiting bankers in white
coats and blue trousers.


During 1934, one of the veteran officers of the Bank, Deputy Governor W. S.
Johns, fell by the wayside. In his recollections, V. K. Bowman wrote:
“Some months after the bank holiday, L. M. Clark and V. K. Bowman were given
a very disagreeable task to perform. During one of the regular meetings of the
Governors of the twelve Federal Reserve Banks in the office of the Federal Reserve
Board, Washington, Mr. Johns had given way to his weakness for drink and returned to
Atlanta in that condition on the same train with one of the Federal Reserve Board
members. The Federal Reserve Agent instructed us to go to the home of Mr. Johns,6
inform him he had been removed from his position of Deputy Governor, but would be
given a clerical job in the Discount Department. A few months later he was forced to
Actually, Mr. Johns was allowed to resign as Deputy Governor, which he did on
January 11, 1935; He pulled himself together and after serving some months in the
clerical position mentioned above, left the Bank and for several years was employed as
an examiner for the Reconstruction Finance Corporation. 7
To fill the vacancy created by the resignation of Deputy Governor W.S. Johns,
the services of a distinguished Atlanta banker were obtained.
Hiram Warner Martin, President of the Trust Company of Georgia from 1931 to
1933, and of noted Georgia lineage, was born at Greenville, Meriwether County, July
30, 1882, and attended Emory College at Oxford. He began his banking career in 1901
as a messenger for the Lowry National Bank in Atlanta. Twenty years later he was its
president. From August 15, 1933, to October 31, 1934, he served as Assistant to the
Governor of the Federal Reserve Board in Washington, D. C. Mr. Martin was by nature


gentle, courteous, generous, considerate, fair, honorable, and just in all of his dealings
with his fellow man and always had a smile and a word of encouragement for all. 8
As the year 1935 progressed, other official changes in personnel occurred. On
January 11, T. A. Lanford, formerly Chief Clerk of the Discount Department in Atlanta,
was elected Cashier of the Jacksonville Branch. At the same time, E. T. George
resigned as a member of the Industrial Advisory Committee for the Sixth District. He
was succeeded on January 22 by Andrew M. Lockett, a contracting engineer, of New
Orleans. William A. Parker resigned from the same committee on September 20
because of increased duties in his position as President of the Beck & Gregg Hardware
Company of Atlanta.9
The long and ably served terms of George G. Ware and Leon C. Simon as Class
A and Class B Directors, respectively, came to an end on December 31, 1935. Mr.
Ware had served 10 years and Mr. Simon 16. Deputy Chairman Kettig, at the
December 1935 meeting, compared the Board of Directors to a club composed of
selected members and stated that in such an organization it is but natural that the
closest of fellowship and brotherly love exists. He said that it seemed only yesterday
since these two men were elected as members of the Board and he compared the
passing of time to a “short walk around the block.” He also said that at most we are here
for only a short time and that on an occasion like this the members were made sad due
tote discontinuance of the monthly association and fellowship with old friends that had
through the years endeared them to their associates. The Deputy Chairman referred to
Director Simon as an aggressive director but one who always gave plausible reasons
for any position he might take and voted his convictions after careful deliberation. He


referred to Director Ware as a man with a quiet, composed disposition, and compared
his nature to the orange blossoms that are so plentiful in his native state. He said that
Director Ware was not the type to be the first to speak on every subject that came up for
discussion, but that when he voiced an opinion it was evident that he had given careful
consideration to the issue.10
Mr. Ware was succeeded by George J. White, Executive Vice President of the
First National Bank of Mount Dora, Florida, and Mr. Simon by Ernest T. George,
President and Chairman of the Seaboard Refining Company, Ltd., New Orleans, both
for three-year terms beginning January 1, 1936.
Another long official service record came to a close on December 31, 1935,
when Frank W. Foote, a Director of the New Orleans Branch since January 1920,
retired. Mr. Foote, in fact, was an original Director of the Atlanta Bank, serving from
November 16, 1914 to December 31, 1919. Being a deep student of finance and
political economy, Mr. Foote’s advice and counsel were invaluable during the formative
period of the Federal Reserve System.11
Under date of January 5, 1935, the attitude of the Federal Reserve Board toward
bank salaries and employment generally was set forth in a letter to Oscar Newton by
Governor M. S. Eccles:
“The Board has been considering the situation with respect to the salaries of
officers and employees of Federal Reserve Banks. It has noted that during the period
from 1928 to 1933 the total number of officers and employees of the twelve Federal
Reserve Banks increased from 9,989 to 11,781; that the total of all salaries paid
increased from $17, 200, 000 to $20, 400, 000 and that there was an increase in the


average salary paid. These figures, of course, include all salaries for which
reimbursement is made to the Federal Reserve Banks. The figures for 1934 had not
been prepared at the time of this compilation, but it seems likely that for the system as a
whole the increase was accentuated. During this period of five years, living expenses
have undergone a material reduction throughout the United States and, while there
have been for short periods some relatively small general reductions in salaries at the
Federal Reserve banks, such general reductions were terminated more than a year
ago, and where additional people were taken on to provide increased employment there
was no corresponding subsequent curtailment of working forces.
“The Federal Reserve banks in their personnel policies have recognized their
favorable position with respect to their earnings and have shown a considerate attitude
toward their officers and employees in respect not only to salaries but also to other
phases of their employment relations, while other banking institutions and industrial
enterprises have been compelled to curtail farces and reduce salaries to a great extent.
Various provisions for the welfare of the employees of the banks have been made at the
expense of the banks and within the past year there has been introduced a retirement
system to which the banks are contributing a large sum annually.
“With these considerations in mind, the Board has reviewed its policies in
passing upon salaries of officers and employees of the Federal Reserve banks and has
decided that there should be no increase at this time in salaries of officers and
employees receiving more than $5, 000 per annum, or in any salaries not covered by
the approved salary classification plan, unless there is involved a change from one
position to another of greater duties and responsibility for which the salary proposed is


reasonable in relation to the other salaries paid by the bank. The Board has also
decided not to approve increases in maximum salaries for positions covered by the
existing classification plans, except where there is involved a change in duties and
responsibilities, calling for a revision of the specifications, for which higher
compensation should be allowed. It is felt that the subject of the salary classification
plans should be discussed with the governors of the banks at their next meeting in
“Under these policies it would not be a sufficient ground for approving an
increase of salary merely that the volume of work has increased or that the officer or
employee has rendered good service or that he might go elsewhere if his salary were
not increased.
“In this connection, the Board believes that when a vacancy occurs anywhere in
the organization of a Federal Reserve Bank, an effort should be made to carry on the
work through the other members of the existing forces and therefore that new people
should not be employed unless absolutely essential and when persons capable of doing
the work are not already available elsewhere in the organization.
“The Board feels further that any readjustments that may be found necessary
should not result in increasing the aggregate payroll. In fact, it would be the expectation
of the Board under existing conditions that notwithstanding any increases in salaries in
individual cases there should be some decrease in the total payroll as the result of
deaths, resignations, and retirements.
“It is the view of the Board that boards of directors of the Federal Reserve banks
and the Federal Reserve Board share in the responsibility of seeing that every


reasonable effort is made by the banks not only to build up the efficiency of their
organizations but also to be watchful against increases in expenses which can be
avoided without impairment of the quality and adequacy of the services which the banks
are called upon to render, as would be their duty if they were operating privately owned
commercial banking institutions, and therefore that all changes in salaries as well as
other expenses should be made the subject of special scrutiny in the light of this
“It will be appreciated if you will call this letter to the attention of your Board
promptly as it expresses the general position which the Board will take in acting upon
pending or proposed salary increases.” 12
Needless to say, few raises in pay were granted during 1935. Indeed, a few
official salaries were reduced, including that of Deputy Governor H. Warner Martin’s
from $15, 000 to $13, 500. A proposal to fix the salary of General Counsel Robert S.
Parker at $15, 000 per annum was put in abeyance even though Mr. Parker had
withdrawn from the firm of Colquitt, Parker, Troutman, & Arkwright in order to devote full
time to the legal affairs of the Bank.13
The matter of separation pay came up for lengthy discussion at the July Board
meeting and eventuated in a motion by Director Cook “that the Federal Reserve Bank of
Atlanta adopt the policy of continuing to pay an employee salary at the current rate for a
period up to a maximum of six months from the date of the involuntary termination of his
employment by the bank, in the case of employees who have had more than five years
of service, and that for employees with service of five years or less payments be made
for periods of less than six months.” The resolution was to the further effect that the


Executive Committee be empowered to act in the case of individual employees and be
clothed with full discretion in particular cases, to provide the number of months for which
salaries are to be paid, not, however, in excess of the limitations stated in the resolution.
Despite the current policy of austerity as to salaries, the Board, in January 1935
voted to pay to the widow of the late Governor E. R. Black the sum of $25, 000, as
partial compensation to her for financial sacrifice made by her husband while serving as
Governor of the Federal Reserve Board in Washington. Several months later, in
October, a portrait of Mr. Black, commissioned by the Federal Reserve Bank Club, was
officially presented to the Bank. 15
In order to clarify some of the far-reaching effects of the Banking Act of 1935 and
its relationship to the Federal Reserve System, the following is quoted from a discussion
published on the occasion of the System’s 50th anniversary in 1963. 16
“Under the terms of the Federal Reserve Act of 1913 it is worthy of note that the
Reserve bank charters were to run for 20 years. But such was the change of political
climate that, unlike the First and Second Banks of the United States, and with very little
debate, the charters of the 12 Reserve banks were extended without limit before the 20year period expired.
“Mr. Brotter: ‘Well, Mr. Morrill, you have brought us now to the period of the
1930’s17 and the great changes that were made by the Congress. Governor
Szymczak, that was exactly the time when you came on the Board, and I wonder if you
would discuss some of the big changes that were made during the thirties, particularly
those that you witnessed.’
“Mrs Szymczak: ‘When I came to the Board in 1933, some of the legislation was

already passed by Congress, because an emergency developed that required quick
action by the legislative authority to enable the Federal Reserve System to function,
with the intent of having an influence on business and industry, through the credit
situation in the country.
‘So, therefore, in the thirties--I believe it was in May 1933--Congress passed
emergency legislation enabling the Federal Reserve Board, under an emergency, to
increase or decrease reserve requirements with the approval of the President of the
United States and with a minimum vote of five of the then seven Board members. This,
of course, was not used because it became evident that, should the Board declare an
emergency in order to increase or decrease reserve requirements, it would add to rather
than take away from the emergency in the economy and in the money market. It was
not a good instrument of monetary policy.
‘However, the Banking Act of 1935 supplemented the legislation on reserve
requirements by giving the Federal Reserve Board power to increase or decrease
reserve requirements up to twice the statutory minimum. At that time the statutory
minimum was 13% for demand deposits of central reserve city banks, 10% for reserve
city banks, and 7% for country banks. On time and savings deposits the Board was
given the power to double the statutory minimum, which was 3%.
‘Because of a huge increase in bank reserves, with inflationary threats, the Board
used this instrument of monetary policy even though, at that time, it had no experience
in the use of an instrument that was so blunt. It affected all member banks

no matter what their position in loans and investments and in their reserves. The Board.


used it twice on the upside and once on the downside during this early period.
‘Then, of course, there developed in 1933 a new organization in the Federal
Reserve that was based upon an agreement among the presidents, then called the
governors, of the 12 Federal Reserve banks and which developed later, in the Banking
Act of 1935, into an Open Market Committee. However, it began through the original
authority in the Federal Reserve Act.
‘In the Banking Act of 1935, the Open Market Committee was to consist of the
seven appointed Board members. Under the Banking Act of 1935, the two ex-officio
members (the Secretary of the Treasury and the Comptroller of the Currency) were no
longer members of the Board and instead of five appointive members of the Board, the
legislation authorized the seven appointive members plus five presidents of the 12
Federal Reserve banks.
‘This was further changed a little later so that, instead of a rotation of all the
presidents of the Federal Reserve Banks, the president of the New York Federal
Reserve Bank became a continuing member of the Open Market Committee, inasmuch
as the New York bank was located in the money and the capital markets and inasmuch
as the New York bank was and continued to be the agent of the Open Market
‘A real System developed then, in my opinion, because the presidents, all of
them at one time or another, worked together with the Federal Reserve Board in the
monetary field. No longer was there a separation of the Federal Reserve banks and the
Board of Governors, but rather there was a system for formulation and operation, not
only in open market policy which was very important, but also at these meetings of the


Open Market Committee there could be and there were discussed the economy, the
credit situation, and the use of other instruments of monetary policy, such as reserve
requirements and discount rates which, according to the Banking Act of 1935, had to be
reviewed every 14 days by the directors of the 12 Federal Reserve banks and submitted
to the Board in Washington for approval or disapproval, for review and determination.
Cooperation, therefore, on reserve requirements, open market operations, and discount
rates made the whole system participate in effectuating monetary policy in the interest
of the economy.
‘Therefore, the whole situation created by this System cooperation enabled the
Board members to understand what was going on in various parts of the country, not
only by their own direct contacts and knowledge, but also from the presidents of the
Federal Reserve banks as they attended the meetings. It also enabled the Federal
Reserve banks to cooperate with the Board in Washington by holding annual meetings
of new directors of the 12 Federal Reserve banks. Every new director of a Federal
Reserve bank now comes to Washington for about a day or two. With this constant
contact there is no separation of Washington from the rest of the country, but there is a
unified System approach to the whole country- -and its economy.
‘Also, the Federal Advisory Council -- consisting of 12 bankers appointed by the
directors of the 12 Federal Reserve banks--brings to the Board in Washington not only
the view of these bankers, but also the knowledge they obtain in their particular parts of
the country.

‘And, the chairmen and vice-chairmen of the Federal Reserve banks, who are


appointed by the Board of Governors, meet with the Board at least once a year.“
“Mr. Brotter: ‘Do you believe those contacts are important?’
“Mr. Szymczak: ‘I think, from my experience, they are the most important
contribution that the System has made over the years to consolidate its manpower and
know-how in the money and credit field to serve the public interest. There is not a
separation between the private banking interests and the public interest, as personified
by the Government in Washington. These two become one- -the public interest. That is
a very vital thing, in my opinion, because economic and money and credit policy must
have a national approach to the whole economy, not merely parts of it.
“Mr. Morrill: ‘In saying they become one, however, you don’t mean to imply they
always agree?’
“Mr. Szymczak: ‘No, there is disagreement, not only among the presidents who
attend the meetings of the Open Market Committee, but there is also disagreement
among the Board members who are on the Open Market Committee--and that is as it
should be.
‘It is also important to note here that in the Banking Act o~ 1935 there is a
provision for an annual report by the Board of Governors to Congress on the monetary
policy questions as they arise and this report shows how the individual members of the
Open Market Committee voted and why. This also informs the public.
‘There are other matters that are important, in my opinion. For instance, the
original open market operations started by each Federal Reserve bank buying or selling
to meet its own requirements; to earn its living. One of the original purposes of those
open market operations was not only to meet the situation, but also to get revenue by


which to operate.’
“Mr. Morrill: ‘It might be commented in that connection that the freedom of any
bank to participate or not participate continued on down until the Banking Act of 1935.’
“Mr. Szymczak: ‘Yes. In this connection there were several developments. The
first was before 1922. Then in 1922 until 1923 there was a voluntary agreement among
the Federal Reserve banks to get together under the direction of the chairman, who was
the president (governor) of the New York Federal Reserve Bank. And there were in this
voluntary committee four banks- -New York, Philadelphia, Boston and Chicago. Later
on, Cleveland was added to the first four, making five.’
“Mr. Burgess: ‘In 1923 the important thing that happened was the Federal
Reserve Board passed a resolution which recognized this committee and its relation to
the Board and specified what it considered should be the objectives of the work of the
Committee. It gave the Committee for the first time a kind of a System status. That was
the beginning of the steps that you outlined to make this thing into one organ for the
whole System.’
“Mr. Szymczak: ‘That is right. You see, 12 heads of the Federal Reserve banks
were organized under regulations issued by the Federal Reserve Board and that Board
had the power of approval or disapproval. If a bank did not want to join in the buying or
selling of securities in the open market, it had to notify the chairman of the Open Market
Committee and likewise the chairman of the Federal Reserve Board.’
“Evolution of the Open Market Committee.
“Mr. Morrill: ‘It is fair to comment at this point that probably the first time the
System realized that open market operations had an effect upon the reserves of


member banks was shortly following the original organization of this group of
presidents. For example, some Reserve banks discovered that when they bought
Government securities their discounts were retired, and vice versa.’
“Mr. Szymczak: ‘Yes. That was one of the reasons for the development which
was initiated by the New York Federal Reserve Bank. It was evident that member banks
borrowed at the Federal Reserve banks when they had to meet the situation in which
they had no reserves. Therefore, when the system operated to provide them reserves
by buying Government securities, the member banks reduced their borrowing at the
Federal Reserve banks. In the original, of course, even the bankers’ acceptances were
not bought or sold for the purpose of affecting the reserves of the banks. They were for
the purpose of developing a bankers’ acceptance market in this country such as was
developed abroad, and we were trying to follow in this country what other central banks
were doing in their countries.’
“Mr. Burgess: ‘The interesting thing to me about all this is that there was a
process of evolution. A process of finding out by experience how these things operated
all through the early and middle 1920’s. We were finding out by practical experience
how all these things would work and we did not need a Congress to come and tell us
what we should do. In the Banking Acts of 1933 and 1935, Congress was simply putting
into law what the System had learned from experience.’
“Mr. Szymczak: ‘And we learned more and more that interest rates, discount
rates, generally throughout the country, are national. We learned that we could not
change a discount in one Federal Reserve district and not do it in another.’
“Mr. Brotter: ‘Does that mean that the original concept of a group of 12 regional


banks with some degree of autonomy was gradually being lost in a national concept?’
“Mr. Szymczak: ‘No, I would not say that. I think it was the national concept of
monetary policy that made the System one. I am trying to bring out the fact that the
System became a true unity, not two parts, one consisting of the 12 Federal Reserve
banks and a Board in Washington, and one representing the interests of the banks who
were considered for a period of time as the owners of the Federal Reserve System
because they owned stock in their Federal Reserve banks. They soon learned they
weren’t the owners of the Federal Reserve System, that it was and is a public
institution- -part of our Government.’
“Mr. McKee: ‘I want to make an observation in that connection. I think that if you
were looking at the time when the System was set up, one could imagine that they had
in view creating a nationwide debt payment system in this country in place of one that
had been very limited. How many people had checking accounts? The only money that
was saved was saved in savings accounts. But, as the country grew, the economy
required the check collection as it has become today through the Federal Reserve.
What would you do without it?
‘Now I would like to give some of those people some of the credit for foresight
because it was through the building of the 12 Federal Reserve banks which took the
place of sub-treasuries that there was produced the ability to handle the large volume of
not only the public’s exchange of credit and debt, but the Government’s as well.’
“Mr. Burgess: ‘That meant that checks, when they were used in payment of debts
or other contracts, could be collected promptly. A check on Dallas is just as good as a
check on New York now because it is collected through the Federal Reserve System so


“Mr. Brotter: ‘Would you tell us, Governor McKee, something about changes that
were enacted in the thirties, such as control over the stock market margins, consumer
credit, and so forth?’
“Mr. McKee: ‘From the experience gained from the great depression, Congress,
after extensive hearings, passed the Acts of 1933, 1934, and 1935 that created the
Federal Deposit Insurance Corporation, the Securities and Exchange Commission, and
gave statutory recognition to the Federal Reserve System Open Market Committee.
These acts did much to restore confidence and create sound policies for the future
regarding credit and economic stabilization.
‘While the authority granted under the Acts of 1933 and 1935 presented the
problem of many new regulations to be issued, the Federal Reserve System issued
such regulations after exhaustive hearings were held with interested parties.’ “
The general subject of relations between the Federal Reserve Board and the
Federal Reserve Banks and member banks is set forth in the answer by the Atlanta
Bank to a letter from Governor M. S. Eccles, dated February 6, 1935 wherein certain
questions were asked.
The following represented the concensus of opinion among the officers and - directors as to how the questions should be answered:
“1. General credit situation
(a) Are commercial banks doing everything in their power to improve the
“We believe that banks in the Sixth Federal Reserve District are doing everything


which they might reasonably be expected to do in order to improve the situation. In our
opinion the banks are generally desirous of extending credit and making sound loans
and are vigorously exerting themselves to do so.
“The difficulty does not appear to be an unwillingness on the part of the banks to
extend credit. On the contrary, there appears to be a scarcity of demand among
borrowers who are in position to use available funds advantageously and at the same
time offer reasonable assurance of repayment. A number of banks have representatives
in the field actively soliciting loans and are also extensively advertising for loans.
“2. Interest rates.
(a) On time and savings deposits of member banks.
“We are of the opinion that under conditions such as now obtain the permitted
maximum rate of interest should remain at 2-1/2% per annum. A lower prescribed
maximum rate might place member banks at a disadvantage because of competition of
postal savings bonds, and it is believed that the banks of the country, rural as well as
city, .are unable at the present time to pay more than 2-1 / 2%.
“(b) On loans of member banks and on industrial advances and commitments by
Federal Reserve Banks.
“No answer is made to this question at this time. Governor Newton will shortly
attend a conference in Dallas, Texas, between the officers and directors of the Dallas
Bank and Governors of several of the other Reserve Banks. Our answer to this question
may be molded by the discussion which will be had at that conference.
“3. Matters affecting admission of nonmember banks to Federal Reserve System.
“(a) Earnings of nonmember banks from exchange collection charge.


“This is a question of considerable importance in the Sixth Federal Reserve
District. A number of nonmember banks, in making inquiries concerning membership in
the Federal Reserve System, have stated that they feel that they could not forego the
exacting of charges for the payment and remission of checks drawn on themselves.
This applies peculiarly to banks located in the smaller communities. While member
banks may, of course, make charges within the limits prescribed by law for collecting
items placed with them on deposit (and city banks customarily make such charges),
member banks located in smaller communities would be unable to receive any
considerable amount of revenue from this source, even if a long established custom of
not making collection charges did not militate against their doing so.
“It has been stated by the officers of some of these institutions that the revenue
from exchange (and by this we mean charges for the payment and remission of checks
as distinguished from collection charges) will average in a bank with a capital as small
as $15,000 from $1,500 to $1,800 per annum. If deprived of this revenue such banks of
necessity would be compelled to liquidate. Revenue from this source, according to
reliable information obtained from the nonmember banks, in most instances is sufficient
to cover the salary of the executive officer in charge of the bank.
“We believe that a large percentage of nonmember banks in the district would
apply for membership if they felt that they might retain the equivalent of a substantial
portion of the exchange charges which are now being made.
“3 (b) Present conditions of membership
“Laying to one side for the moment questions of capital requirements of
nonmember banks, we give it as our opinion that the conditions of membership


presently being prescribed by the Federal Reserve Board should not be
materially changed; this for the reason that it is believed that modification of the
conditions would have a tendency to lower the standards of membership and give the
member banks opportunity to deviate from sound banking principles. Member banks,
almost without exception, regard their membership very highly and would not appreciate
the lowering of standards in order that membership in the System might be easier of
“Assuming that the Federal Reserve Board is to be invested with the right to
waive, in whole or in part, the capital requirements of banks applying for membership,
we believe that the Board might properly admit to membership any sound bank having
the capital required by State law and be rather liberal in fixing the time within which the
bank would be compelled to bring its capital requirements up to those set out in Section
“(c) Advisability of extension of membership to banks outside the States and the
District of Columbia.
“We know of no reason why the privilege of membership should not be extended
to national banks located in Alaska and in the insular possessions of the United States.
“4. Need for continuance of assistance of Reconstruction Finance Corporation in
connection with rehabilitation of capital structure of banks.
“It is felt that for several years at least there will be a real need for ... this
assistance. Our conclusions are based upon the belief that a number of banks which
sold preferred stock will in all likelihood be compelled later on to strengthen their capital
structures, and it does not appear possible for such banks under present conditions to


secure additional capital from private investors.
“5. Adequacy of reimbursement of Federal Reserve banks by Treasury and other
Governmental agencies for various services rendered and for space used in Federal
Reserve bank buildings.
“Reference to the statistical data prepared by the Federal Reserve Banks
incorporated in a report of the fiscal agency and depositary expenses to the Federal
Reserve Banks, compiled by the Division of Bank Operations for the six months period
ending June 30, 1934, reveals that Federal Reserve Banks expended $932, 000 in the
performance of services, no part of which was reimbursed by the United States
Treasury Department. It is our opinion that a considerable part of these expenditures
should be reimbursed and we therefore suggest that a careful study be made of all
these expenditures with a view to securing ... adequate reimbursement ... in connection
with services rendered exclusively in a fiscal agency capacity.
“6. Regulations fixing margin requirements for loans by banks upon equity
securities registered on national security exchanges.
“(a) Circumstances under which regulation should be issued.
“The regulation should be issued at such times as the Board may deem advisable. We believe, however, that its effective date should be fixed at least 15 and
perhaps 30 days after the date of its release, in order that the banks may have ample
time in which to familiarize themselves with its provisions. We think also that as to loans
held by banks at the time of the effective date of the regulation, reasonable time should
be given for the bringing of margin requirements within the prescribed limits; this fcr the
reason that any unusual volume of sales occurring within a comparatively short time


and occasioned by the regulation might demoralize the securities market.
“(b) Whether regulation should permit borrower to obtain from bank more than he
could obtain from broker under Regulation T.
“In our opinion there is no logical basis for a discrimination by the Federal
Reserve Board in favor of a bank and against a broker in fixing margin requirements for
such advances.
“7. Economic and statistical divisions of Federal Reserve Banks.
“(a) Usefulness to officers and directors.
“The directors and officers of this bank believe that the information furnished by the economic and statistical division of the bank is of value to them and they
recommend continuance of the service.
“(b) Value of Federal Reserve Bank Monthly Review.
“The directors and officers also feel that the issuance of the bank’s Monthly
Review is of general value and that this is demonstrated by the constant demand for
copies. Approximately 3, 400 of our Reviews, including those sent to member banks in
the Sixth District, are mailed each month. These Reviews go into 45 of the States and
15 foreign countries. We are constantly adding new names to our list and noting
changes of addresses. An effort is made to assemble in one document all available data
in regard to business conditions and business trends in the district. Such data is
accompanied by citations of sources of information and consists of statements of
existing facts as distinguished from prophecies as to business trends or developments.
A number of individuals have stated that our Review gives more actual information and
reliable statistics than they are able to obtain elsewhere. For this reason, an effort is


made to place in the Review information concerning as many different lines of business
as is reasonably feasible.
“8. Establishment of career system for personnel of Federal Reserve Banks.
“It is the consensus of opinion that there should be established the basis of a
career system for the personnel of the Federal Reserve Banks. It has been tentatively
suggested that each Federal Reserve Bank might furnish the Federal Reserve Board
with the names of junior officers and employees who have demonstrated exceptional
ability and whose services might be employed to better advantage by another Federal
Reserve Bank because of lack of opportunity for advancement with the bank of present
“9. Criticisms of existing regulations or rulings or procedure of the Federal
Reserve Board, with specific recommendations as to changes which would correct any
unsatisfactory features of relations between the Board or its staff and Federal Reserve
Banks or member banks.
“The examiners stationed at this bank often advise the officer in charge of bank
examination that the management of our member banks complain of the number,
variety, and extent of reports that they are required to prepare. The banks themselves
would welcome a revision of report forms and the reduction of requests for reports to a
minimum. They would also like consolidations of reports wherever possible.
“The officers and directors of this bank do not recommend the discontinuance of
any reports now required nor the elimination of information sought to be elicited thereby.
We believe that the Federal Reserve Board and the office of the Comptroller of the
Currency have from time to time been advised of the viewpoint of the member banks on


this subject and are endeavoring to comply with the wishes of the banks to the full
extent consistent with the gathering of necessary or important statistical or other data.
We do say, however, that any progress in the direction of the lightening of what member
banks regard as a burden would be welcomed and appreciated.
“In connection with our dealings with member banks, and particularly in the
handling of the work of the Federal Reserve Agent, promptness on the part of the Board
in giving rulings and replying to letters asking for advice would be of great assistance.
This is not said by way of criticism, since we realize the unusual pressure which has
been put upon the Board in recent years. We might add also that we now receive
rulings and replies to inquiries much more promptly than was formerly the case. In this
bank we have endeavored to reduce to a minimum requests for rulings and advice.
“We believe that it would be beneficial to the officers of the reserve banks were
the examiners of the Federal Reserve Board at the time of making examinations of
reserve banks to offer constructive and helpful suggestions. This would bring about
frank discussions which would not only be beneficial, in our opinion, but would also
eliminate discussions by correspondence. Through such constructive suggestions the
officers of the reserve banks might also learn more clearly the viewpoint of the Board on
matters, some of which are of relatively small importance and could be disposed of
during the period of examination.
“In your letter you make reference to the possibility that to some of the member
banks the actions of the Board or its staff may seem ‘bureaucratic or impractical or
unduly rigid’. It is undoubtedly true that a number of the member banks may have
regarded some of the rulings, decisions, and requirements of the Board as being


somewhat harsh and burdensome. We think that we should say, however, that in many
instances this point of view was the result of a failure to understand that the Board’s
actions were required by the Banking Act of 1933, and were not the result of some
arbitrary action taken by the Board itself. In all such cases we have endeavored to
make plain to the banks that the particular ruling of the Board or some specified
requirement was made or imposed because of provisions of law and not as a regulation
originating in the Board.
“Some complaint was occasioned by reason of reports made to United States
Attorneys of possible violations of Section 22(g) of the Federal Reserve Act, in cases
where it seemed apparent that no actual violation was intended or was at most
technical. This source of possible friction has now been eliminated.
“We believe that no harm would result from the standpoint of the public interest
or otherwise were the Board to modify some what its requirements in the granting of
permits under the Clayton Act to serve more than one bank as director. In cases where
an officer or director has manifestly abused his office or has been negligent in the
discharge of his duties, we believe that the grant of a permit would be incompatible with
the public interest, and that the sole question of inquiry should not center around the
question of curtailment of credit facilities or the lessening of competition. However,
technical questions such as the possibility of the lessening of competition and restriction
of credit in cases of banks which are not within the prohibitions of Section 8 might be
regarded as of relatively minor importance.
“As regards the relations between the Board and the Federal Reserve Banks, we
desire at all time the utmost of harmony and cooperation. It might be well, however, for
the Board to take under advisement the question of whether the expenditure of

relatively small amounts, in cases where there is no specific authorization by law and
the object to be attained is not improper or unlawful, might perhaps be left to the
various Federal Reserve banks and not call for special authority given by the Board.
“The examiners also sometimes criticse unimportant matters involving questions
of local management rather than of general policy.
“We are not endeavoring to particularize and are only suggesting that in so far as
minor matters are concerned--matters which involve no question of general policy and
are of purely local concern- -more of autonomy might be left to the Federal Reserve
Banks and greater latitude be given to its officers and directors for the exericse of their
“As stated, the above are the answers approved by the officers and directors of
this bank to the questions submitted in your letter of February 6, 1935.”18
The Banking Act of 1935 provided for important organizational changes within
the Federal Reserve System. As set forth in a press release by the Board of Governors
of the System, they were:
“The Board of Governors of the Federal Reserve System19 today, in connection
with important changes in the organization of the Federal Reserve System which go into
effect on February 1 and on March 1, 1936, under the terms of the Banking Act of 1935,
issued the following statement:
“On February 1, 1936, the Board of Governors of the Federal Reserve System
will be succeeded by a new Board, as provided by the Banking Act of 1935. As of March
1, 1936, by the terms of the Act, each Federal Reserve bank will elect, in lieu of its
governor, a president, who will thereupon become and be formally recognized in the law


as the chief executive officer of the bank when approved by the new board.
“In order that the new Board which takes office on February 1, 1936, may be free
to make its own designation of chairmen and Federal Reserve agents at the same time
that it is required to pass upon the selection of the newly-elected presidents of the
Federal Reserve banks, the present Board of Governors has decided to have the
designation of all chairmen and Federal Reserve agents expire on March 1, 1936, and
has also decided for the same reasons not to fill existing vacancies.20 The new Board
will thus be enabled to be represented at the different Federal Reserve banks by
Chairmen and Federal Reserve agents of its own selection, chosen in accordance with
its views as to how the chairmanships may best be made to fit into the changed
organization of the Federal Reserve System ...
“In acting upon other Class C directorships expiring December 31, as well as
upon the appointments of such directors as it is authorized to appoint at branches of
the Federal Reserve banks, the Board of Governors has also been guided by the views
it expressed by letter of January 9, 1935, to directors of Federal Reserve banks and of
their branches, as follows:
“In view of the special character of the functions of these institutions and the
public interest in them, the Board believes that the composition of the boards and the
tenure of service of their members are matters of great importance. The Board
recognizes that experience gained from participation in the direction of the management
of the Federal Reserve banks and their branches has its distinct value, but believes that
this can be overstressed and that there are special advantages that would come to
these institutions from bringing to bear on their management from time to time new


points of view and differing backgrounds of experience. In consequence, the Board
believes that neither great length of service nor too frequent changes are desirable and
has endeavored to find a solution which on the whole and in the long run will be
conducive to the best development of the policies of the banks and at the same time
protect them against criticisms based either upon the fact or the possibility of
crystallization of control of their managements by particular individuals or groups
through long continuance in power.
“Therefore, the Board has reached the conclusion that six years of service
represents the maximum period during which a director should remain continuously in
office. It will be guided by this view in future and will not continue in office as directors
men appointed by it who have served six or more consecutive years (except in the
cases of chairmen of the Federal Reserve banks).
“It is also the view of the Board that the welfare of the Federal Reserve banks will
be served best by directors whose business and financial interests are primarily within
and representative of the bank or branch territory for which they are selected rather than
of interest controlled or owned outside of such territory.
“With respect to directors of branches, the Board also stated:
“It is the intention of the Board to follow uniformly in all districts the policy of
selecting as its appointees individuals who are not officers of banks or primarily
engaged in banking, although they may be stockholders or directors of banks.
“The Board expects to apply these principles in the selection of directors
appointed by it in the future ...
“Vacancies which will occur as of January 1, 1936, as a result of the application,


of the Board’s policy, are not being filled at this time, for the reasons stated, but will be
left for the new Board to fill in accordance with such policies as it may wish to adopt.”
As noted, the Banking Act of 1935, enacted in August, amended Section 4 of the
Federal Reserve Act, to become effective March 1, 1936, by providing specifically for
the appointment by the Board of Directors of each Federal Reserve Bank of “a
president, vice-presidents and such other officers and employees as are not otherwise
provided for.” Prior to the effective date of this amendment there was no designation in
the Act of the official titles of officers of Federal Reserve Banks with the exception of the
Chairman of the Board and Federal Reserve Agent, and the Assistant Federal Reserve
In accordance with this provision of law, Oscar Newton, who had served as
Governor., of the bank since January 1935, and as Chairman and Federal Reserve
Agent for ten years prior to that time, was, at a meeting of the Board of Directors in
February, elected President of the bank for a five-year term, effective March 1.22
Robert S. Parker, who had served as General Counsel for a number of years,
was elected First Vice President for a term of five years, effective March 1, continuing to
serve also as General Counsel. H. F. Conniff and W. S. McLarin, Jr., formerly Deputy
Governor and Assistant Deputy Governor, were elected Vice President and Assistant
Vice President, respectively, for the remainder of 1936. H. Lane Young was re-elected
to represent the Sixth Federal Reserve District on the Federal Advisory Council during
the year 1936. 23
In the fall of 1935 it was decided to accelerate the activities of the Bank Relation
Committee by having all officers participate.


As the committee met at the New Orleans Branch on November 8, Chairman
W. H. Kettig stated that following an informal discussion by the directors at the October
meeting he had requested Board Secretary L. M. Clark to prepare a memorandum for
consideration of the Committee in line with a suggestion that Bank Relations work be
conducted by officers of the parent bank and branches.
Consideration was given to a suggested itinerary which provided that the officers
visit each member bank and, as far as practicable, each nonmember bank in the district.
The itinerary was arranged so that each officer is to visit an allotted number of banks
within a period of one to two weeks. When this officer has completed his itinerary and
forwarded to the Manager of the Bank Relations Department a separate report of his
visit to each member and non-member bank assigned to him he will exchange
itineraries with other officers of the parent bank or branches. The same procedure to be
followed until all officers have had an opportunity to visit the banks in the Sixth District.
It was the opinion of the Committee that the adoption of the suggested plan will
be an improvement over that now in effect, and will bring about a Closer relationship
between the officers of the parent bank and branches and of member banks. At the
same time the plan would provide the officers an opportunity to become personally
acquainted with officers of prospective member banks. 24
From 1934 on, the activities of the Havana Agency showed a Steady decline. In
an effort to distribute the burden a memorandum of agreement was signed by all 12
Federal Reserve banks in May 1935. Under the agreement, effective June 1, the
Agency began operations as a joint enterprise of all of the Federal Reserve banks,
though the Atlanta Bank continued its actual operating functions. At the same time, it
was resolved “that under normal and usual conditions the stock of fit or usable currency

kept at said Agency shall be as nearly $5, 000, 000 as may be reasonably
It will be remembered that under the provisions of Section 13b of the Federal
Reserve Act, approved June 19, 1934, Federal Reserve banks began in August of that
year to make loans direct to established industrial and commercial businesses for the
purposes of providing working capital, and to make commitments to banks, trust
companies and other financial institutions with respect to such loans.
Reporting upon results of this operation at the end of 1935, Deputy Board
Chairman W. H. Kettig wrote:
“Efforts have been made continuously to acquaint banks and the business public
with the provisions of the legislation relating to these industrial loans, and with the
requirements to be met and the methods of obtaining them. The Industrial Advisory
Committee for the Sixth Federal Reserve District is composed of the following:
John E. Sanford, Chairman
President and Chairman, Armour Fertilizer Works
Atlanta, Georgia
A. R. Forsyth, Vice-Chairman
Vice President and Treasurer, Gulf States Steel Co.
Birmingham, Alabama
George Winship
A. M. Lockett
President, Fulton Supply Co.
President, A. M. Lockett & Co., Ltd.
Atlanta, Georgia
New Orleans, Louisiana
I. C. Mimer
Executive Vice-President, Gate City Cotton Mills
Atlanta, Georgia
“During the last five months of 1934, industrial advances were made in 75
instances, aggregating $872,443, and in addition, commitments amounting to $761, 500
were made to banks or other financial institutions in Connection with such loans made

by those institutions. During 1935 industrial advances amounting to $635, 097 were
made in 81 instances, an increase of 8. 0 per cent in number, but a decrease of 27. 2
per cent in total amount, compared with such advances made in 1934. In 16 other
instances commitments were entered into to the extent of $346, 950 in Connection with
such advances made by banks to business firms.”26
Total resources of the Federal Reserve Bank of Atlanta at the close of the year
1935 amounted to $312, 248, 000, the largest total for any year since its organization.
This represents an increase of more than 56 millions, or 22. 1 per cent, over the total a
year earlier; was nearly 79 millions greater than two years earlier, and 134. 6 millions
greater than at the close of 1932.27
Total current earnings during 1935 amounted to $1,672,606, the smallest since
1931, and except for that year, since .1917. Earnings on discounted bills were the
smallest on record, and on purchased bills the smallest since 1915. Earnings on United
States Government securities, which accounted for 91 per cent of total earnings, were
slightly less than in 1934, but larger than for any other year. Current net earnings in
1935 amounted to $235, 421. 28

Chapter 24

Life History of the United States, Vol. 11, p. 168.


Annual Report, 1935, p. 11.


Garrett, Atlanta and Environs, II, p. 924.


Minutes, Directors, IX, p. 2391.


Minutes, Directors, IX, 2391-2392.


934 Lullwater Road, Druid Hills.


Atlanta City Directory, 1940, et. seq.


Biographical records of the Federal Reserve Bank of Atlanta.


Minutes, Directors, IX, 2395, 2426, 2518.


Ibid. ,2551-2552.


Ibid., 2554.


Ibid., 2390-2391.


Ibid., 2536, 2543.


Ibid., 2490.


Ibid., 2392-2393, 2419, 2517.


“The Fed’s First Half-Century,” Banking Journal of the American Bankers
Association, Dec. 1963, p. 42, et. seq. A symposium composed of Herbert
Bratter, Washington Correspondent, Banking, moderator; W. ~Randolph
Burgess, banking and Chairman, Atlantic Treaty Assn; Chester Morrill, former
Secretary of the Federal Reserve Board; M. S. Szymczak,,. member Federal
Reserve Board, 1933-61; and John K. McKee, retired banker.


Mr. Morrill had reviewed the history of the Reserve System since 1913.


Minutes, Directors, IX, 2435-2439. The letter gave the officers and directors
of the Atlanta Bank an opportunity to express themselves freely on many
policy matters concerning the Federal Reserve System.


Quoted from Minutes, Directors, IX, 2540-2542, Dec. 13, 1935.



The office of Chairman and Federal Reserve Agent in Atlanta had been vacant
since the elevation of Oscar Newton to the governorship in January 1935.


Annual Report, 1935, p. 20.





24. Minutes, Directors, IX, 2537.
25. Ibid., 2389, 2455, et. seq., 2477.
26. Annual Report, 1935, p. 18.
27. Ibid., 16.
28. Ibid., 17.


Chapter 25

Nineteen thirty-six, like its predecessor, was a year in which events of great
future portent were chronicled.
Germany remilitarized the Rhineland; the Spanish Civil War began; Edward VIII
abdicated the throne of England for marital reasons and George VI was crowned.
Franklin D. Roosevelt was re-elected President of the United States, defeating Alfred
Landon by a landslide. The Supreme Court invalidkted the Agricultural Adjustment Act;
major testing of sulfa drugs was begun, and Margaret Mitchell’s Gone With the Wind
was published in May. 1
The local economic situation was highlighted by Mayor James L. Key, a. staunch
supporter of President Roosevelt, in a speech to council on January 6:
“We enter upon the business of the city for the year 1936 with a feeling of hope
and optimism which comes from improvements in business and industry on every hand,
from a returning market for property and from increased employment. The mounting
bank deposits, liberality of credits and reduction in interest charges, all of which indicate
that we are recovering rapidly from the depression and that a momentum has been
taken in business and industry on all sides which will emble it to carry on, regardless of
whether Federal aid is continued or not, in the future. I feel that we can safely say for
our city, at least, that we have seen the end of the depression ...
“If it were not for the fact that this city has suffered from many indiscretions, from
poor judgment and living beyond its income, it would be in perfect financial condition


today. Covering a period of several years the city has accumulated a deficit of more
than $1, 500, 000. This deficit remains and cannot be removed until tax values have
returned to a normal state…”2
‘Thirty-six was a key year in the annals of the Federal Reserve Banking System.
Under terms of the Banking Act of 1935 and the influence of a strong chief executive in
the White House and a strong System Governor in Marriner Stoddard Eccles, the
System became much more Washington oriented.
In late January, President Roosevelt sent to the Senate the nominations of six of
the seven members of the Federal Reserve Board which, according to the Banking Act
of 1935, was to be reconstructed February 1. Only two members of the old board were
named to the new: Governor Eccles, New Dealing banker from Utah, and Menc S.
Szymczak, one-time comptroller of Chicago. The new appointees: Joseph A. Broderick,
one-time New York State Superintendent of Banks; Ronald Ransom, Executive Vice
President, Fulton National Bank of Atlanta; John K. McKee, one-time receiver for
national banks in Ohio and Pennsylvania, for the last two and one-half years chief
examiner for the RFC; Ralph W. Morrison, Texas hydro-electric figure, who in 1933 was
one of the U. S. delegates to the World Monetary and Economic Conference at
On February 10, Time reported:4
“Without debate, without dissent, the Senate last week confirmed six appointments to the Federal Reserve Board submitted by President Roosevelt. The
seventh appointee is yet to be chosen. Three days later the old Board, set up by
Woodrow Wilson 22 years ago, passed out of legal existence. Though their terms had


not expired, four members of the old Board were retired without pensions. At 67, John
Jacob Thomas, a Roosevelt appointee, returns to his farm and his law practice in
Nebraska. George Roosa James, 69, wise and crotchety, goes back to Memphis to train
his son in the wholesale dry goods trade. The two members who have sat on the Board
since its first meeting in 1914 will stay on in Washington: Charles Sumner Hamlin, 74,
as a technical advisor to the new Board; Adolph Caspar Miller, 70, as an advisor on its
new $3, 400, 000 marble building, contracts for which were let last week.
“The new Board is new in far more than personnel. Now called the Board
of Governors of the Federal Reserve System, it is headed by a chairman instead of a
governor. Annual salaries have been upped from $12, 000 to $15,000. The Board’s
powers were so vastly augmented by the Banking Act of 1935’that it now sits virtually as
the directorate of a central bank of is sue. Along with the Board’s enlarged authority
over the country’s currency and credit goes a greater responsibility for U. S. economic
life than any single body has ever had before in U. S. history. Today the U. S. has a
managed currency. With the advice and consent of the administration, the Reserve
Board is the manager. And in the management process a tremendous potential
momentum toward inflation has been built up. If this force is not properly braked, most
disinterested observers agree that the U. S. may go on a reckless ride which would
make the boom of the 1920’s seem like a harmless trolley trip.
“Indeed, there is some doubt whether the Board can keep this momentum under
control, because many of the inflationary threats lie not upon the records in its rented
quarters across from the Treasury but in the cloak rooms of the Capitol ...
“In personnel the Reserve Board that took office last week differs from all former


boards. For the first time in history it is predominantly a debtor board, representing
people who borrow money rather than lend it. Though the influence of big Eastern
bankers upon Reserve Board policy has been largely exaggerated, previous boards
have tended to think of U. S. economic life in terms of the banking system. The new
Board will think of the banking system in terms of U. S. economic life.
“Every member is a Roosevelt appointee. Besides Chairman Marriner S. Eccles,
only one member is a carryover from the old Board--Menc Stephen Szymczak, whom
President Roosevelt added to the old Board in 1933. Born in Chicago 42 years ago,
Governor Szymczak has often thought of changing his name, used to preface political
speeches with an explanation that it was pronounced Szymchak. His father, a Pole, was
a day laborer. Tall, robust, good-natured, Governor Szymczak went to St. Mary’s
College in Kansas, continued his studies at DePaul University in Chicago, eventually
joined the faculty there, teaching business logic, psychology, ethics. For two years he
was superintendent of Cook County’s Forest Preserve District. A political protege of
Chicago’s late Mayor Anton Cermak, and a Roosevelt campaigner in Polish districts,
Mr. Szymczak was Comptroller of the City of Chicago when the President named him to
the Board. To bankers he is that rare creature- -a political appointee who turns out
better than expected.
“Since the full term for a Board Governors is 14 years, the fir* appointments were
staggered to allow for one retirement every two years. Governor. Szymczak got the
twelve-year appointment. Only full (14-year) term went to Joseph A. Broderick, one-time
(1929-1934) New York State Banking Superintendent. His appointment was something
of a homecoming, since he had served on the organization committee which worked out


the technical details of the Federal Reserve Banks in 1914, was the Board’s first chief
examiner. After a nine-year turn as vice president in a big Manhattan bank, Mr.
Broderick was picked to head New York’s Banking Department by Governor Franklin D.
“While Mr. Broderick was in office, Manhattan’s Bank of the United States blew
up. In the horrid aftermath the Banking Superintendent was indicted for neglect of duty
and conspiracy along with the bank’s officers and directors. One of the trial’s high points
was the parade of Broderick witnesses, inclu4ing Governor Roosevelt, Alfred E. Smith,
Charles Edwin Mitchell. He was acquitted. Now 54, brisk, hard-working, humorous, he is
popular with bankers, is the only member with anything like an Eastern banking
“The ten-year term went to John Keowan McKee, a Pittsburgher who has lived in
Washington for the past four years, lately as RFC’s chief examiner. Husky, energetic,
43, he made a name for himself as a receiver of closed banks in Ohio and
Pennsylvania, acting for the U. S. Comptroller of the Currency. Much of RFC’s rosy
record is attributed to Mr. McKee’s examining department.
“Having no political qualifications, appointments to the Board must be made with
‘due regard’ to geographical and economic interests. No two members may be named
from the same Reserve District. The South’s representative is Ronald Ransom, 54,
Executive Vice President of Atlanta’s Fulton National Bank. A suave, studious, blueeyed six-footer, he is the one member who looks the banker’s part and dresses
accordingly. He got into banking by way of the Law, founded Fulton National’s trust
department, married the daughter of Georgia’s late great Hoke Smith. His is the six-year


“Shortest term (two years) went to Ralph Waldo Morrison, Texan utilitarian,
whom President Roosevelt sent to the London Economic Conference in 1933. He is a
close friend of Vice President Garner, a generous contributor to the National Democratic
Committee’s campaign funds. A Missourian by birth, he spent his
youth in South America, selling railroad equipment and adding machines. Later he
promoted and operated a tramp steamship line, finally became interested in Texas
power companies. The system he built up was shrewdly sold to Samuel Insull before
1929. Today he owns hotels, ice companies, Mexican power companies, does large
scale entertainment on his ranch at Spotford, Texas. Jowled, powerfully-built, 53, he is
suspicious of the press, which he thinks mistreated him in London three years ago. To
newshawks last week he drawled: ‘A Federal Reserve Board membership is not a talkin’
“The one remarkable man on the new Board is the governor appointed to the
four-year term and designated by the President as Chairman. At 45, Marriner Stoddard
Eccles is lean, smallish, nervous, intense. In manner he is pleasant, impersonal. Like
many another New Dealer he is convinced that in money management lies the salvation
of Capitalism ...“
Meanwhile, on January 10, 1936, the Atlanta Bank filled its Branch direct3rates
by appointment and re-appointment and elected officers to serve until February 29 of
the same year. Frank M. Moody and C. W. Bailey were reappointed as directors of the
Birmingham and Nashville branches, respectively. W. R. McQuaid, President, Barnett
National Bank, Jacksonville, and H. Holmes, Executive Vice President, Delta National


Bank, Yazoo City, Mississippi, were appointed as directors of the Jacksonville and New
Orleans branches, respectively.5
All of the officers of the Atlanta Bank and branches were re-elected for the short
term, the four top spots being filled by Oscar Newton as Governor; H. Warner Martin,
Deputy Governor; H. F. Conniff, Deputy Governor, and W. S. McLarin, Jr., Assistant
Deputy Governor. 6
Then, on February 14 and February 25, the Board proceeded to an election
of officers as provided by the Banking Act of 1935. The titles of governor and deputy
governor disappeared from the official roster.
Oscar Newton was named President for a term of 5 years at a salary of $25, 000
annually. Robert S. Parker was named First Vice President, at $15, 000 per year; H. F.
Conniff, as Vice President at $10, 500, and W. S. McLarin, Jr., as Assistant Vice
President at $8, 500. Deputy Governor H. Warner Martin read a communication from
Chairman Eccles, of the Federal Reserve Board in which he was tendered an
appointment as Class C Director to be designated Chairman of the Board and Federal
Reserve Agent. He had accepted, effective March 1. At the same time Director W. H.
Kettig, who had functioned as Chairman during the years more than twelve! the position
had been vacant, was tendered a vote of thanks and re-appointed Deputy Chairman.7
The Washington influence was felt right away with receipt 0± the following
letter from Chairman M. S. Eccles, dated March 25, 1936:
“In considering salaries of officers of the Federal Reserve banks for the year
1936, recommended by the Boards of Directors of the respective Federal Reserve
banks, the Board of Governors of the Federal Reserve System, as constituted prior to


February 13, 1936,.. decided to approve salaries of Governors, Deputy Governors, and
Assistant Deputy Governors for the period January 1 to February 29, 1936, and of other
officers of the bank for the year 1936 at the rates the officers were receiving at the end
of 1935, and in doing so expressed the view that there should be no increases in
salaries of officers except in exceptional circumstances, until a thorough and careful
analysis had been made of the organizations of the Federal Reserve banks.
“Since entering upon its duties the new Board of Governors has had before it
many important questions with respect to the personnel and salary payments of the
Federal Reserve Banks and the distribution of duties between the Federal Reserve
banks and the Federal Reserve agents. After studying these ~atters the Board decided
to approve all recommendations submitted by the respective Boards of Directors with
respect to salaries of Presidents, First Vice Presidents, Vice Presidents and Assistant
Vice Presidents for the period March 1 to December 31, 1936, inclusive, at the rates
which were being p~ to such officers prior to that date, and that no recommendation
involving an increase in salary should be approved in the absence of unusual
circumstances or a change in position.
“Before taking this action the Board decided to ask the Presidents of the Federal
Reserve banks to institute promptly a thorough survey of the organizations and salary
payments of their respective banks and in order that the Board night fully acquaint the
Presidents with the policies it had adopted with respect to these and other matters, it
asked them to come to Washington for a conference with the Board of Governors on
Monday, March 16. At the conference the Board told the Presidents that it had already
instituted a thorough survey of its own organization here in Washington.


“In connection with the distribution of duties between the Federal Reserve banks
and the Federal Reserve agents, the Board had in mind a procedure looking toward the
placing of the chairmanships largely upon an honorary basis, with the thought that the
routine duties with respect to the issuance of Federal Reserve notes and the holding of
collateral security therefor would actually be performed by assistant Federal Reserve
agents who would be experienced in such work and who would receive salaries
commensurate with the duties and responsibilities to be assumed. This would make it
possible for the Board to obtain outstanding men of recognized prestige and influence in
their communities to act in the capacity of Chairmen and Federal Reserve agents with
the understanding that it would not be necessary for them to devote their full time to the
“The procedure contemplated would result in the transfer of the bank
examination work and the research work heretofore handled by the Federal Reserve
agents to the banking departments with the understanding, however, that such functions
would as heretofore be conducted under the general supervision of the Board of
Governors. Heretofore, as you know, all appointments of Federal Reserve Examiners
have been subject to the approval of the Board of Governors and the Board would
expect such appointments, including particularly that of the person in charge of the
examination function, to continue to be subject to its approval.
“The Board of Governors at the conference held in Washington on March 16 and
17 asked the Presidents to review their entire organizations with a view to effecting
economies wherever possible to do so without impairing the efficient operations of the
banks. The Presidents were also asked to furnish the Board with reports as to how they


would propose to effect the transfer of certain duties now handled by the Federal
Reserve agents to the banking departments; of the personnel they would expect to
place in charge of the several operations; and of the economies which would be
effected by making such transfers, in addition to the economies which would be effected
by placing the chairmanships of the Federal Reserve banks largely upon an honorary
“The Board would like to have these reports include an organization chart which
will bring out clearly the principal functions o r units into which the bank is to be divided
after the transfer of certain duties from the Agent’s department to the bank. Such charts
should show the name of the officer in charge of each unit and be accompanied by a
brief description of the duties of each officer of the bank. Separate charts should be
prepared for the head office and each branch. In making these studies it is important
that careful thought be given to the operations now handled by branches of Federal
Reserve banks with particular reference to the necessity for the branches. If the
branches are considered necessary, a review of their operations should be made to
determine whether any of the operations now being handled by them could be
transferred to the head office at a substantial saving in operating cost and without
impairing the services which the System is now rendering to member banks and
through them to commerce, industry, and agriculture.
“Pursuant to a recommendation made by a sub-committee of a conference of
representatives of all Federal Reserve banks, the Board has approved a revised
personnel classification plan which will necessitate the Federal Reserve banks’
classifying all non-official positions in accordance with the revised plan. Under this plan


the duties of each non-official position of the bank will be described briefly, and this,
together with the organization charts, should give the Board of Governors a complete
picture of the organization adopted by the Federal Reserve banks following the
completion of the survey which the Board has requested the Presidents to undertake.
“In making the survey the Board will expect the management of each Federal
Reserve bank to give careful consideration to the qualifications and salary of each
officer and employee of the bank and to the need for their services. As you have been
previously advised, the Board expects that salaries paid to employees of
the Federal Reserve banks will not be out of line with salaries paid for corresponding
work by local member banks. With respect to salaries of officers, the Board realizes that
the duties required of officers of Federal Reserve banks are substantially different from
those required of officers in the larger member banks and for that reason the salaries
paid by local member banks, particularly to the senior officers of such banks, cannot, of
course, be considered as a guide in fixing salaries of the senior officers of the Federal
Reserve banks…”8
After the letter was read, President Newton said that some progress had been
made in the conduct of the survey but that he would delay making any statement until a
later meeting of the Board.
At the June 12 meeting of the Atlanta Board, President Newton did submit to the
Board a revision of the personnel classification plan, which, after discussion and on
motion of Director Clay, seconded by Director Cook, was unanimously approved.9
President Newton’s report was, in due course, forwarded to Washington and, on
August 20, elicited the following letter from Chester Morrill, Secretary to the Board of


“The Board has reviewed the report of the survey made of the operations of the
Federal Reserve Bank of Atlanta, a copy of which was recently transmitted to the
“In the Board’s letter of March 25, 1936, it was stated that the Board had in mind
a procedure looking toward the placing of the chairmanship largely upon an honorary
basis ... In this connection, there is attached a copy of a letter to Mr. Walsh, Federal
Reserve Agent at Dallas, with respect to the duties to be performed by him as Chairman
and Federal Reserve Agent on an honorary basis. The Board would expect the
principles and procedure set forth in the letter to Chairman Walsh to be followed at all
Federal Reserve Banks.
“The Board’s letter of March 25, 1936 also stated that the procedure contemplated would result in the transfer of the bank examination work and the re
search work, heretofore handled by the Federal Reserve agents, to the banking
departments with the understanding, however, that such functions would, as heretofore,
be conducted under the general supervision of the Board of Governors.
“In order to acquaint you more fully with the conditions under which it is
contemplated that the examination and research work will be transferred to the banks,
these conditions are set forth below in general terms.. With respect to the examination
function, the plan contemplates that:

All appointments of examiners at the Federal Reserve banks will
continue to be subject to the approval of the Board of Governors.


The examination department will continue as a separate unit.



The examination department will be under the supervision of a vice
president to be designated by the bank after consultation with the Board.


The budget for this function will be subject to advance approval of the Board
of Governors.

“The Vice President in charge of examinations will be designated as an examiner
for the Federal Reserve bank and the Board would expect that official to be responsible
directly to the president of the bank and not to another vice president or other officer.
The Board notes with approval the proposed plan to elect Assistant Zeder al Reserve
Agent (L. M.) Clark a Vice President and to place the bank examination department
under his supervision. It is understood that your directors propose that Mr. Clark as Vice
President will continue to receive a salary of $7, 500 per year, and the Board approves.
The Board approves also the designation of Mr. Clark as an examiner for the Federal
Reserve Bank of Atlanta.
“While it is expected that the President will keep himself informed of the activities
and policies of the examination department, it is contemplated that correspondence,
other than that relating to policy matters, would be carried on by the Board and its staff
directly with the Vice President in charge of examinations. This procedure would be
similar to that generally followed with respect to other correspondence about routine
operating matters.
“After the transfer is made the Board will expect that the present policy of
decentralization of examination work under the ultimate responsibility of the Board will
continue, that the examination work will be conducted by the Federal Reserve banks
under the general policies adopted by the Board, and that general supervision of the


examination work of the System as a whole will continue to be exercised by the Board’s
Division of Examinations.
“In the past the Federal Reserve agent’s department has had custody of reports
of examination made by the various agencies, which reports have been made available
to certain officers of the bank and to certain designated employees in the Credit and
Discount and other departments of the bank. When the bank examination department is
transferred to the Federal Reserve bank, instructions should be issued providing that
the bank examination department will continue to have custody of reports of
examinations, and proper safeguards should be established in order to preserve the
confidential character of such information and to insure that the reports will be made
available to officers or employees of other departments only when justified in the
performance of their duties.
“The principles to govern the operations of the research and statistical
organizations after their transfer from the agent’s department to the bank are outlined in
the following paragraphs:
“Scope and Purpose. The purpose of the work of the research and statistical
divisions of the Federal Reserve banks is to collect and digest information bearing on
the problems with which the Federal Reserve System is confronted, either as a matter
of current operation or as the basis of Federal Reserve policies.
“These divisions should provide a necessary service to the officials of the banks
and to the Board of Governors of the Federal Reserve System and should also be
useful to the general public. Owing to the joint usefulness of these services the Board
expects its Division of Research and Statistics to keep in close touch with the activities


of similar departments at the Reserve banks and expects full cooperation in the
System’s work in this field.
“When a new project in the research and statistical field is in contemplation at a
Reserve bank, it should be worked out in cooperation with the Board’s Director of
Research and Statistics, except as to projects of small scope which involve no
considerable expense. From time to time the Director of the Board’s Division of
Research and Statistics may find it necessary to request the cooperation of one more
Federal Reserve banks on research studies.
“Publications. The Board wishes to continue the present practice under which all
publications of the Federal Reserve banks dealing with matters of more than local
interest are submitted to the Board of Governors and issued only with the approval of
the Board.
“Budget and Personnel. The budget of the statistical and analytical function
should continue to be subject to the advance approval of the Board and all
appointments of persons to Supervisory positions in the statistical function should be
subject to the approval of the Board. The Board would expect the person in charge of
these functions to report directly to the President of the bank
“It is further contemplated that any work heretofore handled by the Federal
Reserve agents in connection with administration of the Securities Exchange Act of
1934 will also be transferred to the banking departments with the understanding that
this work, like the examination work and research work, will, as heretofore, be
conducted under the general supervision of the Board of Governors. The conditions of
transfer contemplated by the plan do not include any specification as to whether the


Reserve bank shall have a separate unit for doing this work, as this would appear at
present to be necessary at only a few of the Federal Reserve banks, but it is expected
that all appointments or assignments of persons to supervisory positions in handling this
work at each Federal Reserve bank will be subject to the approval of the Board of
“Your proposed recommendations to the directors of the bank as to changes in
salaries of officers as of January 1, 1937, has been noted. Any recornmendations made
by your directors in this Connection will be considered by the Board when the salaries of
the officers of other Federal Reserve banks are considered at the first of the year.
“With respect to the statutory duties of the Federal Reserve agent, there is
attached a copy of a letter being addressed to Mr. Martin today in Connection with the
appointment of an Assistant Federal Reserve Agent, and an Alternate Assistant Federal
Reserve Agent at the bank.
“It is not expected that the Assistant Federal Reserve Agent will be charged with
responsibility under Section 30 of the Banking Act of 1933. The Vice President in
charge of examinations should be charged with the responsibility of keeping the Federal
Reserve agent advised of violations of law by directors and officers of state member
banks and of unsound banking practices in order to enable the Federal Reserve agent
to comply with the requirements of that section regarding the issuance of warnings to
the directors and officers involved and the certification facts in such cases to the Board
of Governors.
“Effective when Mr. McCravey has executed the customary bond as Assistant
Federal Reserve Agent in accordance with the Board’s separate letter of this date to Mr.


Martin, or as soon thereafter as is convenient, the Board authorized the transfer to the
bank, in conformity with this letter, of the non-statutory duties previously performed in
the Agent’s department. Please advise the Board by wire, for its records, the date upon
which the transfer is effected.
Very truly yours,

Secretary.” 11

On the morning of August 26, Messrs. L. M. Clark, 3. R. McCravey, Jr.,
and Mrs. Genevieve M. Barnett assumed the duties of Vice President, Assistant Federal
Reserve Agent and Alternate Assistant Federal Reserve Agent, respectively.12
The action of the Federal Reserve Board in changing the status and duties of the
chairmen of the individual Reserve banks inspired the following comment from Time
Magazine on March 16, 1936, under the heading, “Reservists Out:”
“Like the U. S. Constitution, the Federal Reserve System was originally designed
with a full set of checks and balances. A check: to have the chairmen of the twelve
regional Reserve Banks appointed by the Reserve Boarg in Washington. A balance: to
have the governors (now presidents) named by the local directors of each Reserve
Bank. Last year when the New Deal architects remodeled the Federal Reserve System
into what for all practical purposes is a central bank of issue under political control, the
reconstituted Reserve Board was given the power to veto the choices of the twelve
Reserve Banks for both presidents and first vice presidents.
“Having thus obtained a potent voice in the naming of the two ranking officers in
each Reserve Bank, Marriner Stoddard Eccles, the New Deal’s chief banking architect,
proposed to abolish the office of Reserve Bank chairman, which, so far as the need for


centralized control was concerned, was now wholly superflous. On that point, however,
Mr. Eccles had to give in to Congress. Last week Federal Reserve Board Chairman
Eccles apparently set out to abolish the office anyhow.
“This was to be accomplished by the simple expedient of putting the Reserve
Bank chairmanships on a ‘purely honorary basis.’ Net result in the first week was the
laconic announcement that services of six of the ten present chairmen (there are two
vacancies) would be ‘terminated’ at the end of April. Presumably they found an
‘honorary basis’ somewhat hollow. Two other chairmen-- Atlanta’s H. Warner Martin and
Cleveland’s E. S. Burke, Jr. - apparently accepted the ‘honor’. 13 Another two were
“Chairman John Jacob Thomas of the Kansas City Reserve Bank had already
received his appointment at $20, 000 per year. A 67-year old Nebraska farmer-lawyer,
he was a Roosevelt appointee to the old Reserve Board but was dropped when the new
Board took office. His retirement was not without compensations, for he got only $12,
000 in Washington.
“Chairman William Beckwith (‘Bill’) Gerry of the Minneapolis Reserve also stayed
on at $20, 000 per year. Kindly, spindly, 68-year old Banker Gerry was governor until a
fortnight ago, when he swapped jobs with John Newton Peyton, the chairman, who was
18 years his junior. Duly elected president, Banker Peyton met the Board’s new
requirement that a Reserve Bank president must be under 65 when elected, and not
over 70 in any event.
“One reason given by the Reserve Board for its campaign to liquidate chairmen
is that it will put an ‘end to dual executive responsibility,’ something Chairman Eccles


ahbors. Another excuse was economy. Total salaries of the twelve chairmanships
amounted to $285, 000 annually. However, the Reserve Board has not the slightest
legitimate interest in profits of the Reserve Banks for the stockholders are the System’s
6,400 member banks.
“Most famed of the six chairmen to be liquidated is J. (for James) Herbert Case
of the New York Reserve, whose President George Leslie Harrison already he’s the
Board’s approval. Mr. Case drew the top Reserve Bank chairman salary ($50, 000) and
by reputation earned every penny of it. Now 63, be has been a banker since 1888,
when he started as a clerk in a small New Jersey institution, was a crack Manhattan
Bank vice president before he entered the New York Reserve as a deputy governor in
1917. Cerebral, conservative, intensely public minded, he is a profound student of
central banking. His son, Everett Needham Case, married Owen D. Young’s only
daughter Josephine. Mr. Case declined to comment on his sudden ousting, but his old
Manhattan colleagues were anonymously incensed, declaring that it was ‘perfectly
awful’ and made them ‘sick at heart.’
“Nearly as much banking wrath was stirred up by the Reserve Board’s veto of the
Philadelphia Reserve Bank’s choice for President. George W. (for Washington) Norris,
who is no kin of Senator George W. (for William) Norris; or that other Nebraskan,
Grocer George W. Norris, who ran against him for the Senate. A short, peppery, whitemustached gentleman of 71, Philadelphia’s George W. Norris has been head of the
city’s Reserve Bank since 1920. A longtime partner in the private banking house of
Edward B. Smith & Company, he entered the Reserve the year it was founded,
withdrew to become Wartime Federal Farm Loan Commissioner and one of the chief


builders of the present Federal Farm Loan Bank System. According to the Reserve
Board, Banker Norris was automatically disqualified for the Philadelphia presidency by
his age. ‘An absurd camouflage’ boiled President Donal McCormick of Harrisburg’s
Dauphin Deposit Trust Co.
“Presumably the head of this curiously Bourbon bank was referring to a brush
that occurred between Mr. Norris and Chairman Eccles last summer at a local banking
convention. In a long address old Mr. Norris ripped into the Banking Bill, not then
passed, with such statements as: ‘I hope never to see a central bank in this country,
either in name or in fact, but if we should have to suffer such a bank, I would rather see
it located anywhere else than in Washington!’
“Mr. Eccles, whose work the Banking Bill was, did not arrive at the convention in
time to hear the Norris philippic. But, on reading a copy of it, he almost tore up his own
speech with the idea of delivering an extemporaneous rebuttal. In the end Mr. Eccles
merely interlarded his prepared address with heavy broadsides aimed in Mr. Norris’
direction. And last week on learning of his rejection, Mr. Norris declared: ‘I leave it to an
informed and intelligent public to judge whether the reasons assigned by the Board of
Governors are their real reasons.’
“Banker Norris was not the Only presidential choice turned down by the Board. -It
also vetoed the names of Richmond’s President George James Seay, 74, and San
Francisco’s JohnU. Calkins, 72. But just why U.S. bankers professed such loud surprise
at the Board’s wholesale housecleaning was by no means clear. Their indignation was
understandable, for the ousted Reservists were able, experienced bankers in their own
banking tradition. Chairman Eccles has exceedingly precise ideas of what the Federal


Reserve System should be, which is certainly not what old-line bankers think it should
be. That Chairman Eccles would try to run a Reserve System staffed with antagonistic
executives would not in reason be expected, any more than a private banker could be
expected to tolerate a hostile group of vice presidents in his own institution. “
A number of official personnel changes were made in the Atlanta Bank during
1936 subsequent to the February election held in compliance with the Banking Act of
At its June meeting the Board directed President Newton to request the retirement from active service, effective December 31, 1936, of Cashier M. Ii. Bell,
Assistant Cashier R. A. Sims, and Assistant Auditor 3. W. Honour, all of whom had
reached or passed retirement age. 14
At the same meeting, President Newton stated that in his opinion there was an
excess of official personnel at the New Orleans Branch; that he had conferred with
Manager Marcus Walker and it was felt that if an excess did exist that the services of
Assistant Manager 3. A. Walker be dispensed with. It was pointed out that Mr. Walker’s
work was satisfactory and it was recommended that he be retained in a clerical capacity
at the Branch after December 31, 1936. Before the year was out, Mr. Walker made
another business connection.
President Newton also recommended at the June Board meeting that the
position of assistant cashier at the Birmingham, Jacksonville, and Nashville
branches and the position of assistant auditor at the New Orleans Branch be abolished.
The Board concurred and so voted.16
The designation of L. M. Clark as vice president to handle the non-statutory
functions of the Federal Reserve Agent has already been noted. The appointment was


made official by resolution adopted by the Board on August 14. At the same time, W. S.
McLarin, Jr., Assistant Vice President, was promoted to Vice President, effective
January 1, 1937 upon the retirement of Cashier M. W. Bell. Mr. McLarin was assigned,
among other duties, those appertaining to the office of cashier.17
In addition to his other duties, Vice President Clark was also designated, on
September 11, Secretary of the bank and given custody of records relating to
incorporation, title deeds to the bank premises, the corporate seal, the minute book, and
the capital stock records.
On December 1, 1936, Chairman H. Warner Martin tendered to the Board of
Governors in Washington his resignation as a Class C Director, to be effective January
1, 1937, at which time his designation as Chairman of the Board and Federal Reserve
Agent would expire. This action was announced at the December 11 Board meeting and
elicited universal expressions of regret and wishes for future success and happiness. 18
Among the significant changes effected in the Federal Reserve Act by the
Banking Act of 1935 was the adoption of new by-laws for the parent bank and all of its
branches. Insofar as the Atlanta bank was concerned, a committee was appointed on
January 10, 1936, to prepare a draft of revised by-laws. On March 13 President Newton
submitted to the Board a copy of the revised by-laws, as prepared by General Counsel
in collaboration with the Executive Committee and senior officers of the bank. On
motion of Director Hall, seconded by Director White and unanimously carried, the
revised by-laws were adopted.19
The Building Committee of the Atlanta bank, long headed by Director 3. A.
McCrary, had not had a great deal to do since the remodeling and enlargement of the


building some years previously. In May 1936, however, Chairman McCrary reported that
within the past year approximately $21, 000 had been spent in renovating and altering
branch bank buildings and that $2, 595 had been spent to insulate the roof of the
Atlanta building. At the June meeting the Chairman reported an expenditure of $198. 01
for renovating the Director.’ room and for an installation of Venetian blinds. In August he
reported $1,640 for painting all of the iron and steel work on the building. At about the
same time the Federal Reserve Board levied an assessment upon all the Federal
Reserve banks to help defray the cost of the new building in Washington for the Board
of Governors of the System.20
The sank and Public Relations Department continued td function during this
rather hectic period of the bank’s history. After a brief review of the work by the
Secretary at the December meeting, the Directors went on record as preferring to have
visits made to member and nonmember banks by officers of the parent bank and
branches rather than by field representatives selected for this purpose. It was decided
that this policy would be continued and that suggested itineraries for the visiting of
banks would be prepared by the officer in charge of the Bank and Public Relations
Department and furnished each of the other officers.21
Both the Savannah and Havana Agencies became the subject of much deliberation during 1936, the question being the feasibility of their discontinuance.
First was Savannah. In January the suggestion was made that the Agency might
be discontinued without undue inconvenience to anyone and would result in a
considerable saving- -$6, 500 to $7, 000 per year. In November the matter was
discussed at length. A committee of the Board was appointed, chaired by Director


3. A. McCrary, and authorized to visit Savannah and go into the matter with bankers
and businessmen of that city. The Committee met in Savannah on January 7, 1937. In
its report to the Board, the Committee concluded:
“... Your Committee did not agree among themselves on all details as to
policies, but they are in unanimous agreem3nt that, so long as this Bank continues
to operate an agency in the Republic of Cuba at an annual loss of approximately
$30, 000 a yea r, it would be very unfair to deny our own people the continuation of
a service which at best costs not exceeding $6, 000 a year.
“Reserving all other questions for the future, your Committee recommends
unanimously that, until the Cuban agency shall have either bean closed or the cost
thereof assumed proportionately by the several banks of the System, no further
consideration be given to the discontinuance of the Savannah agency.
“If the recommendation of this Committee should appear to the judgment of this
Board, we think it proper to add that the Savannah banks are willing to assume the
expense of better and safer quarters of the agency. The details of this were gone into by
your Committee and should they become a matter of importance, the brief statement
made here can be supplemened orally at the Board meeting.

Respectfully submitted
J. A. McCrary, Chairman
Fitzgerald Hall
W. D. Cook.”

The report of the Committee was adopted and the Savannah Agency remained in
operation. 22
Time was growing even shorter for the Havana Agency. In February 1936


Director McCrary called attention to the fact that the Agency had entailed a loss of
approximately $30, 000 during 1935. Also, that the bank derived no substantial benefit
from the operation of the Agency but, on the contrary, was maintaining it for the benefit
of the Cuban Government, the Cuban banks and others doing business in Cuba. He felt
that the Agency should be discontinued as soon as such discontinuance might be
effected without unduly affecting the banking and business interests of Cuba and
offered a resolution to that effect, which was adopted.23
Apparently, no action was taken, for in September Director Clay offered a similar
resolution, seconded by Director McCrary, and unanimously adopted. It incorporated a
suggestion to the Federal Reserve Board that instead of the entire loss in the operation
falling on the Atlanta bank, that it might be prorated among all of the Federal Reserve
banks. 24 No immediate action was taken. The Agency had two years to run.
Meanwhile, on April 4, 1936, occurred the untimely death of A. H. Alston,
Assistant Manager of the Agency. He had been employed by the bank in 1921, starting
as a clerk in the Discount and Credit departments. He was a faithful and able employee.
On April 7, Robert G. Mayo was appointed as Acting Assistant Manager of the Agency.
At years end, on December 31, 1936, the Federal Reserve Bank of Atlanta had
total resources of $400,687, 055. 37. Net earnings for the year came to $254,261.86. 26

Chapter 25



The Life History of the United States, II, pp. 168-169.


Garrett, Atlanta and Environs, II, 937.


Time Magazine, February 3, 1936, p. 11.


Pages, 59-6 0.


Minutes, Directors, IX, 2557.


Ibid., 2563.


Minutes, Directors, 2580, 2592-96.


Ibid., 2612-2614.


Ibid., 2641.


The Walsh letter follows:
“Reference is made to your letter of May 1 in which you express a desire to be

advised as to the duties to be performed by you as Chairman and Federal Reserve
Agent on an honorary basis from the period from May 1 to December 31, 1936. It is
assumed that you refer to duties and responsibilities other than those of a director with
which the Chairman is charged in common with other directors and those which
ordinarily attach to the position of presiding officer.
“As you know, there is in process of deve1o~ment a plan for the transfer from the
Agent’s department to the operating department of the Federal Reserve bank of the
functions which are not required by law to be performed by the Chairman and Federal
Reserve Agent. As soon as such a plan becomes operative with the approval of the
Board of Governors the responsibility for the functions transferred will be shifted to the
President of the bank and the Federal Reserve agent will be relieved thereof. In view of
this plan and the fact that the Banking Act of 1935 specifically provides that the


President shall be the chief executive officer of the bank, the Board does not
contemplate asking the Chairman and Federal Reserve Agent to assume
responsibilities not placed upon him by statute although there may be occasionally
some special matters as to which the Board will desire his cooperation and assistance.
“The duties for which the Chairman and Federal Reserve Agent will continue to
be responsible under the laws are substantially as follows:
“1. The Federal Reserve Act requires the Federal Reserve Agent to act as the
official representative of the Board of Governors of the Federal Reserve System for the
performance of the functions conferred upon it by the Federal Reserve Act, to make
regular reports to the Board of Governors, and to maintain a local office of the Board on
the premises of the Federal Reserve bank. In this connection, as you know, he is
specifically authorized, subject to the approval of the Board of Governors of the Federal
Reserve System, to appoint one or more assistants.
“2. Section 30 of the Banking Act of 1933 provides for the issuance by the
Federal Reserve Agent of warnings to directors or officers of State member banks to
discontinue violations of law or unsafe or unsound practices and for his certifying the
facts in such cases to the Board of Governors.
“3. The Federal Reserve Act charges the Fe~era1 Reserve Agent with
responsibility for the issuance and retirement of Federal Reserve notes and Federal

Reserve bank notes and the custody of collateral therefor. In addition, he may also be
required by the Treasury Department to act as joint custodian with the Federal Reserve


bank of money and bullion.
“4. The Federal Reserve Act requires each Federal Reserve bank to keep itself
informed of the general character and amount of the loans and investments of its
member banks with a view to ascertaining whether undue use is being made of bank
credit for certain purposes; and the Chairman is required to report to the Board of
Governors any such undue use of bank credit, together with his recommendation.
“5. The Chairman is also charged by the Federal Reserve Act with the
responsibility for the conduct of the nominations and elections of Class A and Class B
directors of the Federal Reserve Bank.
“The customary requirements of the Board with respect to the furnishing of surety
bonds by Federal Reserve agents will continue in effect.
“As you will recall the Board has expressed the view in connection with the bylaws of the Federal Reserve banks that the Chairman of the Board should also be a
member of the executive committee of the Reserve bank, which shall be composed
exclusively of directors. The Board is also of the opinion that the Board of Directors
should require that reports of all audits of the bank be submitted to it and presumably
this would be done through the Chairman.
“The Federal Reserve Agent will be expected of course, to exercise such general
supervision over the operations of the department as may be necessary to satisfy
himself that they are being performed properly, but it will be necessary for him to give
his personal attention only to matters of unusual importance. As a practical matter the
ministerial duties of the Federal Reserve Agent, such as those which relate to the
issuance of Federal Reserve currency and the holding in custody the collateral therefor,


will be performed by or under the direction of an Assistant Federal Reserve Agent who
should be a careful and conscientious person of unquestioned integrity.
“The Board trusts that the foregoing outline will answer your question
satisfactorily and greatly appreciates your willingness to remain in the capacity of
Chairman and Federal Reserve Agent for the remainder of the year.

Very truly yours,



Minutes, Directors X, 2670-2672.


Ibid., 2674


Chairman Martin resigned effective Jan. 1, 1937,
Minutes, Directors, IX,


Ibid., IX, 2648; X, 2659-2660.


Ibid., IX, 2648.


Ibid., X, 2666.


Ibid., 2714-2715. Mr. Martin spent his remaining years, until his death
in 1945, in retirement.


Minutes, Directors, IX, 2558-2559, 2606. The revised by-laws follow:

PAGE 2611½)
President Newton submitted to the Board a copy of the revision of the by-laws as
prepared by General Counsol in collaboration with the Executive Committee and senior
officers of the bank, stating that copies bad previously been mailed to each director for
Upon motion of Director Hall, seconded by Director White and unanimously


carried, the revised by-law were adopted, and the Secretary was instructed to spread
the same upon the minutes of this meeting of the Board.
ARTICLE I- Directors
“Section 1- Quorurm:
A majority of the Directors in office at the time of
holding any Directors’ meeting shall constitute a quorum for the transaction of business
at such meeting, but boa than a quorum may adjourn the meeting-from time to time until
a quorum is in attondance.
“Section 2 – Vacancies: As soon as practicable after the occurrence of any
vacancy in either the Class A or Class B membership of the Board, the Chairman of the
Board shall take such steps as may be necessary to cause such vacancy to be filled. in
the manner provided by law.
“Section 3 - Meetings:
There shall be a regular meeting of the Board. on the
Second Friday of each month at 10:00 o’clock A.M., or, if that day be a holiday, on the
first preceding full business day. The Chairman of the Board may call a. special meeting
at any time and shall do so upon the written request of any three Directors or of the
President of the Bank. Notice of regular and special meetings may be given by mail or
by telegraph. If given by mail, such notice shall be deposited. in the mails at Atlanta at
least three days before the date of the meeting. If given by the Telegraph, such notice
shall be dispatched from Atlanta at least one day before the date of the meeting. Notice
of any meeting may be dispensed with if each of the Directors shall in writing waive
such notice.
“Section 4 -Powers: The business of the bank shall be conducted under the
supervision and control of its Board of Directors subject to the supervisory authority
vested by law in the Board of Governors of the Federal Reserve System.
“Section 5 – Election of Officers: An appointment of officers of the shall be made
by its Board of Directors at its first meeting in January of each year, at which time they
Board shall fix (subject to the approval of the Board of Governors of the Federal
Reserve System) the compensation to be paid the officers, respectively. The Board,
however, shall have the power to appoint at other meetings and from time to time such
additional officers as the Board may determine to be necessary or appropriate for the
conduct of the business of the Bank as is elsewhere in these By-laws more particularly
set out. The Officers, other than the President and. First Vice President, shall be
appointed at such first meetings in January.
“Section 6 - Special Committees: The Board of Directors shall have the right to
appoint from time to time special committees as to the Board may seen advisable or
appropriate, which committees shall consider such special or particular matters an may
be referred to them by the Board, and may exercise such other powers as the Board
may delegate to them.
ARTICLE II- Executive Committee

“SECTION 1- How Constituted: There shall be an Executive Committee
consisting of the Chairman of the Board of Director and three Directors to be elected
semi-annually at the regular meetings of the Board held in January and July of each
year. The Chairman of the Board shall serve as Chairman of the committee, and, in the
absence or disability of the Chairman, the Committee shall elect one of its members as
Chairman protem. Members of the Board of Directors who are not elected to serve as
members of the Committee and who are not engaged in business in Atlanta. Three
members of the Committee (including ex officio members) shall constitute a quorum for
the transaction of business, and action by the Committee shall be upon the vote of a
majority of those attending the meeting.
“Section 2 - Meetings: The Committee shall hold regular meetings
called by the Chairman of the Board. It shall be the duty of the Chairman to call a
meeting of the Committee whenever requested so to do by the President, and, in the
absence or disability of the Chairman, the President shall have the right to call a special
meeting. The officer calling any such special meeting shall endeavor to give notice
thereof to all members of the Committee, but, unless the Committee shall by its own
action direct otherwise, a meeting may be held provided a quorum can be assembled
from those members to whom notice may have been given.
“Section 3 - Minutes: Minutes of all meetings of the Executive Committee shall
be kept by such person or persons as the Committee may from time to time designate
for that purpose. Such minutes, or a digest thereof, shall be submitted to the Board of
Directors at the next succeeding meeting of the Board and shall be read to the meeting
if requested by any member of the Board.
“Section 4 — Powers: Subject to the supervision of the Board of Directors, the
Executive Committee shall have the following powers:

To conduct open market operations in accordance with direction of and
regulations adopted. by the Federal Open Market Committee.


To establish from time to time, subject to review and determination of the
Board of Governors of the Federal Reserve System rates of discount to be
charged by the bank for each class of paper, such rates to be established
each fourteen days or oftener if deemed necessary by the Board of Governors
of the Federal Reserve System. At each meeting of the Board of Directors
there shall be submitted lists or schedules showing the rates of discount or
interest established since the next preceding meeting of the Board..


To apply for and provide for the security of such Federal reserve notes and
Federal reserve bank notes as may, in the discretion of the Committee or of
the Board, be reasonably required in connection with the note issue functions
of the bank.


To approve bonds furnished by the officers and employees of the bank.


To consider applications for loans by established industrial or commercial


businesses and. applications made by financing institutions for commitments
in respect of such loans or participation therein, and. to authorize such loans,
participations or commitments; to consider end authorize any other loan:,
advances and extensions of credit made pursuant to any applicable, provision
of law; and to authorize any other proper disbursement of funds.

In general, to conduct the business of the bank subject to the supervision and
control of the Board of Directors and., between sessions of the Board, to take
or authorize such corporate action as the Committee may deem to be
necessary, desirable or appropriate.
ARTICLE III — Discount Committee

“Section 1- How Constituted.: There shall be a Discount Committee, Consisting
of the President, the Assistant Federal Reserve Agent, the Vice Presidents and one
other person, who shall be a director. At each monthly meeting of the Board of Directors
one member of the Board shall be elected to serve on the Discount Committee until the
next regular meeting and another member of the Board shall be elected to serve as his
alternate. In the absence, disability or inability to attend of both Directors, so elected,
any other Director may serve as a member of the Committee. Members of the Board of
Directors not elected to serve on the Committee and not engaged in business in Atlanta
shall serve as ex officio members of this Committee whenever they are in Atlanta. The
President shall act as Chairman of the Committee. In his absence or disability, the First
Vice President shall act as Chairman, and in the absence or disability of both a Vice
President designated by the Committee shall act. Any three members shall constitute a
quorum for the transaction of business. Acts of the Committee shall be upon the vote of
a majority of those present. The Discount committee shall make a report of all discounts
and advances to the Executive Committee for review by the latter at its next meeting
following the discounts and advances so reported.

Section 2 -Minutes: The Discount Committee shall meet daily and minutes of
all meetings shall be kept by such person or persons as the Committee may from time
to time designate for such purpose.
“Section 3 -Powers: The Discount Committee, shall have the following powers:
(a) To conduct open market operations in accordance, with the direction of
and regulations adopted by the Federal Open Market Committee.
(b) To consider applications for discount or rediscount and other advances or
extensions of credit made by member banks, and. to authorize such
discounts, rediscount or advances or extensions of credit.
(c) To buy and soil securities belonging to the bank, provided that any
open market operations shall be conducted in accordance with law and.
specifically in accordance with the provisions of Section 12A of the
Federal Reserve Act, and regulations adopted by the Federal Open
Market Committee.
Article IV - Officers


“Section 1 -Election: The Board of Directors shall appoint a President, a First Vice
President and one or more additional Vice Presidents as to the Board may seem proper
or advisable, a Cashier and such other Officers as the Board may from time to time
determine to be necessary or advisable for the conduct of the business of the bank. The
Board of Directors shall have the right to define (consistently with law) the duties of such
officers and, as provided by Law, to dismiss the same at pleasure.
“Section 2 — President: The President shall be the Chief Executive Officer of the
bank, and. his appointment by the Board of Directors shall be with the approval of the
Board of Governors of the Federal Reserve System and for a term of five years. 1.11
other executive officers and all employees of the bank shall be directly responsible to
him. The President shall have power to make any and all transfers of securities or other
property of the bank which may be authorized to be sold or transferred by the Executive
Committee or by the Board.. He shall have the power to proscribe the duties of all, other
officers and. agents of the beak in cases where such duties are not specifically
proscribed, by law or by’ those By-laws or by action of the Board of Directors. The
President may suspend or remove any employee of the bank.
“Section 3 — Chairman of the Board: The Chairman of the Board shall preside at
all meetings of the Directors and perform such other duties as may be imposed upon
him by the Federal Reserve Act or by the Board of Governor, of the Federal. Reserve
“Section 4 - Deputy Chairman: As provided by law, the Deputy Chairman of the
Board of Directors shall exercise the powers of the Chair— man of the Board when
necessary, and any provision of these By—laws relating to the Chairman shall be
construed as having reference to the Deputy Chairman when that officer is, whether
because of the absence of disability of the Chairman or for any other cause, exercising
the powers of2tb. Chairman.
“Section 5- First Vice President: The First Vice President shall be appointed in
the same manner and for the same term as the President, and, in the absence or
disability of the President or during a vacancy in the office of President, shall servo as
Chief Executive Officer of the bank, exersing the powers and. performing the duties of
the President. At other times he shall have such powers and perform such duties ‘as
may be required or conferred by the Board of Directors, the Executive Committee or by
the President.
“Section 6 — Other Vice President:
The Vice President or Vice Presidents
elected or appointed annually by the Board of Directors shall have such powers as may
be conferred and perform such duties as may be required by the Board of Directors, the
Executive Committee or by the President. Bach Vice President (the First Vice President
included) shall, have the right to sign and contract, conveyance or ether document the
execution of which has been authorized by the Board of Directors or by the Executive
“Section 7 - Secretary: The Board may appoint a Secretary, who shall keept the
minutes of all meetings of the Board and, perform such other duties as may be assigned
to him from time to time by the Board of Directors, the Executive Committee or the
President. If no Secretary be appointed pursuant to the above and foregoing, the Board

shall appoint from time to time a person, to be designated ‘Secretary of the Board’, who
shall keep the minutes of all meetings of the Board. The Board of Directors may, in the
absence or disability of the Secretary or (as the case may be) in the absence or
disability of the Secretary of the Board, or upon any other occasion when, in the
discretion of the Board such action may be deemed to be desirable, appoint a secretary
protem. Any person who may act as recording officer of the proceedings any meeting of
the Board may, in the regular discharge of his duties or upon the direction of the Board
of Directors, the Executive Committee or the Officers of the Bank, certify copies of such
minutes or excerpts therefrom and, in such case, affix the seal. of the bank to such
certified copies.
“Section 8 - Cashier: The Cashier and at least one other officer or designated by
the Board of Directors shall have the joint custody of all monics and investment
securities of the bank subject to such rules as the Board may adopt for their safety’ and
in the absence of a rule adopted by the Board, as the President may prescribe. He shall
have the custody of the seal of the bank, with power to affix the same to cortificates of
stock issued by the bank and upon authorization of the Board or of the Executive
Committee or of an Officer acting in the proper exercise of his duties, to such other
instruments as may from time to time be required.
He shall perform such other duties as may be assigned to him from time to time by the
Board of Directors, the Executive Committee or the President.
“Section 9: Any two offices may be held by one person in the discretion of the
Board, except that the President may not hold more than one office.
“Section 10 – General Counsel: The Board shall annualy elect a general
counsel, who shall have general supervision of all litigation in which the bank may be
interested and of any other matter or matters of a legal nature or in connection with
which the attention of counsel may be required or requested. The general counsel shall
act as counsel to the various Branches of the bank and shall represent the Branches in
such matters as may be assigned to him, and shall approve all legal documents. He
may appoint local counsel for any one or more Branches with the approval of the Board
of Directors or of the Executive Committee and upon such terms as may be approved
either by the Board or by the Committee. An officer of the bank, having what the Board
may deem to be adequate legal training and experience, may be designated by the
Board as general counsel and. in such event shall discharge’ the duties of general
counsel in addition to the duties of such other office held by such officer.
Article V - Certificate of Stock
“Section 1 — Signatures: All certificates of stock issued by this bank shall be
signed by the President or a Vice President and the Secretary. If, at the time of the
issuance of any certificate of stock, there be no person filling the office of Secretary or in
the absence or disability of the Secretary, such certificates of stock shall be signed by
the President or a Vice President and the Cashier or an Assistant Cashier, Such
certificates snail, bear the corporate seal.
ARTICLE VI - Business Hours


“Section 1 - The bank shall be open for business from 9:00 o’clock a.m. to 2:00
o’clock p.m. on each day except Sundays and. Saturdays or day: or parts of days
established, as a legal holiday. The business hours on Saturdays shall be from 9:00
o’clock a.m. to 12:00 o’clock Noon.
ARTICLE VII – Amendments
“Section 1 - These By-laws may be amended at any regular meeting of the Board
by a majority vote of the entire Board, provided, however, that a copy of such
amendment shall have boon delivered to each member at least ten days prior to such
Upon motion of Director Cook, seconded by Director Hall and. unanimously
carried, the following vacation schedule, for the Federal Reserve Bank of Atlanta,
branches, and agencies was adopted:
“All officers of the parent bank and, Branches at Birmingham, Jacksonville,
Nashville and 11ev Orleans — three weeks vacation:
‘Officers of the Savannah Agency — two weeks vacation:
“All employees of the parent bank and branches — twelve, business days or
less, subject to the following conditions:
“Employees in the service of the Federal Reserve Bank of Atlanta and branches
on or before January 2, 1936 to be granted six days vacation, plus one additional day
for each full month’s employment during the year 1935, provided, however, that the
vacation of an employee will in, no case exceed twelve business days.
Manager and Assistant manager — one months vacation. All full time
employees other than guards and porter —three weeks vacation with an
allowance of $60 for travel in; expenses to and from Havana-Atlanta, provided
such expenses are actually incurred by the employees.
“The Secretary stated that at the March meeting, prior to the adoption of the
amended by-laws, the Chairman requested that he read a letter dated March 9, 1936,
writer to the Chairman by Director W. H. Kettig. The letter was read and the subject
matter discussed but, through error, the letter was not incorporated in the minutes of the
March meeting. The Secretary requested permission of the Board to copy the letter at
the foot of the minutes of the meeting of March 13, 1936, as an amendment or
supplement thereto, and in response to the request the following resolution was offered,


duly seconded, and carried:
“WHEREAS, at the meeting of the directors of this bank held on Mardh 13, 1936,
and just prior to the consideration at that meeting of a draft of by-laws then proposed for
adoption, there was read to the board a letter dated March 9, 1936, written by Director
Kettig to the Chairman of the Board; and
“WHEREAS, the letter was read as requested by a copy was not spread upon
the minutes of the meeting,
“THEREFORE, BE IT RESOLVED That the minutes of the said meeting of March
13, 1936, be, and they hereby are, amended by adding thereto the following:
‘Prior to the consideration of a motion to adopt the revision of the by-laws
presented to the meeting, the Chairman stated that he wished to have the Secretary
read to the board a letter dated March 9, 1936, written by Director Kettig to the
Chairman. This letter was then read, the sane being as follows:
‘I received your kind, letter Of Feb. 25th and. thank you very much for your good.
Wishes I an getting along very well but do not feel able to attend the meeting this week.
‘I have a copy of the new proposed by-laws. They seem to be all right, but I want
to make a suggestion about the meetings of the Committees. I note that the new bylaws provide for two meetings of the Executive committee each week. I believe that one
meeting a week would be sufficient for the business of the Bank.
‘Then again it provides for a meeting everyday of the Discount Committee. I
believe that one meeting a week for the Discount Committee and one meeting a week
for the Executive Committee should be sufficient for the present business of the bank.
‘I have recently had some correspondence with Mr. McCrary and Mr. Newton
and called their attention to the enormous expense to the Bank of Directors’ fees and
Committeemens’ fees. During the year 1935 these fees for the Federal Reserve Bank
and its Branches amounted to around $12,000.00. I believe, considering the present
business of the Bank, that this is rather expensive and would suggest your looking into
‘I do not know how many meetings they held in New Orleans last year but the
expenses down there amounted to about $3,000.00. These are matters, however, for
you and the other Directors to decide and I merely make this suggestion in adopting the
new by-laws.
‘Thanking you again for your kindness and with all good wishes, I am.’
“BE IT FURTHER RESOLVED That this resolution be spread upon the
minutes of this, the regular meeting held in August, 1936, and that the same be copied
at the foot of the minutes of the meeting of March 13, 1936, as a supplement or
amendment to the minutes of the meeting as heretofore approved.”
I, L. M. Clark, Secretary, certify that the above and foregoing is a true and
complete copy of an excerpt from the August 14, 1936, meeting of the Board of
Directors, Federal Reserve Bank of Atlanta, Atlanta, Georgia.


S E C R E T A R Y.

Minutes, Directors, IX, 2633, 2642; X, 2661, 2651.


Ibid., X, 2707-2708.


Ibid., IX, 2576, 2578, 2606; X, 2699-2700, 2711, 2730, 2731.


Ibid., IX, 2588-2589.


Ibid., X, 2681-2682.


Ibid., IX, 2622-2623.


Twenty-Second Annual Statement, December 31, 1936.


Chapter 26

On the national and international fronts, 1937 witnessed a number of notable
events. Japan began its undeclared war on China and bombed the U. S. gunboat Panay
in Chinese waters. Congress defeated President Roosevelt’s Supreme Court
reorganization plan while upholding a variety of New Deal measures, including the
NLRA and Social Security Act. The auto industry was largely unionized by sit-down
strikes. The first Walt Disney full-length cartoon, Snow White, made its debut; the N. B.
C. Symphony Orchestra was created for Toscanini, while Joe Louis won the heavyweight boxing title he was to hold for twelve years. A sharp recession, beginning in late
1937 and extending well into 1938. interrupted gradual business recovery.1
Locally, E. D. Rivers was inaugurated Georgia’s Governor and William B.
Hartsfield began a tenure of 23 years as Atlanta’s mayor. He found the city $3, 000, 000
in debt and near bankruptcy. Free school books were voted; stocks were abolished in
Georgia prison camps. Margaret Mitchell won the Pulitzer prize for Gone With The
Wind. Techwood Homes, a successful experiment in low-cost housing, marked its first
year. A model city budget was adopted which rescued the minicipality from financial
chaos. 2
The passing years had always marked changes in the Atlanta bank’s official
family and 1937 was no exception. In November 1936, Messrs. Ryburn G. Clay and 3.
A. McCrary were re-elected Class A and Class B Directors, respectively, for three-year
terms beginning January 1, 1937. An election for Branch Directors and Managing
Directors, held in December, resulted in the choice of several successors to Directors

whose terms expired with 1936. E. E. Soulier, Vice President and Cashier of the First
National Bank, Lafayette, Louisiana, succeeded 3. D. O’Keefe on the New Orleans
Board; General John C. Persons, President, the First National Bank, Birmingham,
succeeded W. E. Henley on the Birmingham Board. George J. Avent, of Jacksonville,
was re-elected, and F. M. Farris, President of the Third National Bank in Nashville,
succeeded C. A. Craig on the Nashville Board. The only new Managing Director of a
Branch was P. L. T. Beavers, formerly Assistant Cashier of the Atlanta bank and an
employee since 1918, who succeeded John H. Frye, retired, at the Birmingham
At its meeting on January 8, 1937, the Board paid appropriate tribute to Messrs
H. Warner Martin and 3. P. Allen, retiring Directors whose terms expired with 1936. Also
to H. Lane Young, of the Federal Advisory Council, retiring after three consecutive
terms. At the same meeting, Frank H. Neely, successor to 3. P. Allen as a Class C
Director, was welcomed. Deputy Chairman W. H. Kettig called attention to Mr. Neely’s
fine record of achievement in business and civic activities and stated that he felt certain
that Mr. Neely’s services would be distinctly beneficial to the bank.4
They were destined to be both beneficial and of long duration- -until he retired on
December 31, 1953. Mr. Neely was born in Augusta, Georgia in 1884 and graduated
from Georgia Tech in mechanical engineering in 1904. His field was scientific
management. After connections with the Fulton Bag & Cotton Mills and the
Westinghouse Electric & Manufacturing Company, Mr. Neely formed a
connection with Rich’s, Inc., in 1924, rising to President and Chairman of the noted
department store. His civic interests have been legion. His services to
the Bank were to become especially notable in the development of research and

personnel functions and for revision of administrative practices.5
Officers of the Atlanta bank. elected to serve for 1937 were Oscar Newton,
President; Robert S. Parker, First Vice President and General Counsel; H. F.
Conniff, Vice President; W. S. McLarin, Jr., Vice President and Cashier; L.
M. Clark, Vice President; V. K. Bowman, C. R. Camp and S. P. Schuessler,
Assistant Cashiers; E. P. Paris, General Auditor; and L. M. Clark, Secretary.6
At the same time a rather spirited election for Federal Advisory Council
member, to succeed H. Lane Young, resulted in the choice of Edward Ball, of
Jacksonville, Florida, a noted industrialist and banker.7
As the year progressed other official changes took place. In February, 3. Frank
Porter, President of the Tennessee Farm Bureau Federation, was appointed a Director
of the Nashville Branch for an unexpired portion of a term ending December 31, 1939.8
In April, Donald Corner, of the Avondale Mills, Birmingham, Alabama, was appointed a
Director of the Birmingham Branch for an unexpired part of a term ending December 31,
In June, W. H. Kettig was appointed Chairman of the .Board and Federal
Reserve Agent of the Atlanta bank and Frank Neely Deputy chairman for the remainder
of 1937. Howard Gray, of Huntsville, Alabama, was appointed to the Birmingham Board
for an unexpired term ending December’ 31, 1939, and Alexander Fitz-Hugh, of
Vicksburg, to the New Orleans Board for an unexpired term ending December 31,
In July, 3. Frank Porter, the recently appointed Nashville Branch Director,
resigned to become a Class C Director of the Atlanta bank. At the same time, Henry G.


Chalkley, Jr., of Lake Charles, Louisiana, was appointed to the New Orleans Board for
an unexpired term ending December 31, 1939. Edward L. Norton and W. E. McEwen
became Directors at Birmingham and Nashville, respectively, in August, both to fill
unexpired terms.11
On October 6, New Orleans Managing Director Marcus Walker wrote to
President Newton and announced his intention to retire, under the Bank’s retirement
system, effective December 31, 1937. He said, in part:
“…My relations with the New Orleans Branch have always been most pleasant. It
is true, I have seen some very strenuous times during those years of service, but
having at all times received one hundred per cent consideration and support from my
Directors and the officers and Directors of the parent bank, the situation was not as
difficult to handle as it might have been ...“
Mr. Walker had indeed served long and ably- - since the Branch opened on
September 10, 1915. 12
President Newton recommended the appointment of Vice President Lewis M.
Clark for the important New Orleans post. He reasoned that Mr. Clark was a native of
that part of Mississippi lying within the New Orleans zone; was thoroughly familiar with
business and economic conditions in the zone, and had a wide acquaintance with
bankers in that territory. Mr. Clark was appointed Managing Director of the New Orleans
Branch on November 12, 1937, effective January 1, 1938. His salary was advanced to
$10, 000 per year.13
It was also at the November Board meeting that W. D. Cook and Fitzgerald Hall
were re-elected Class A and Class C Directors, respectively, for an additional three-year


term beginning January 1, 1938.14
In December the Sixth District Federal Reserve Bank lost, by retirement, two of
its long-time and most valuable associates, Rudolph S. Hecht and William H. Kettig.
Mr. Hecht had served for two decades on the New Orleans Branch Board. He
received his early banking education in Europe, and in 1903 came to the United States
to study American banking methods. He found American business and social life so
congenial that he became an American citizen and had lived in this country ever since.
He became President of the Hibernia National Bank in New Orleans in 1918 and, since
1933 had served as its Board Chairman. In 1922 he was awarded the Times-Picayune
Loving Cup for having accomplished the greatest good for New Orleans during that
William H. Kettig, as of December 1937, was one of only two original Directors of
the Atlanta bank still serving, the other being 3. A. McCrary. Since May 27, Mr. Kettig
had served as Chairman of the Board and Federal Reserve Agent. His official
retirement date was December 31, 1937, though the Board chose its January 1938
meeting as the time and place for a fitting tribute. On this occasion Mr. Newton said in
“Mr. Kettig’s long tenure in office has extended over the entire life span of the
Federal Reserve System. As a director of this bank he saw the System enter upon its
career of usefulness amid the chaotic conditions brought about by the beginning of that
titanic struggle which has been termed the ‘World War.’ The difficulties of inaugurating
successfully the Federal Reserve System under such conditions are matters of history.
Scarcely had the banks begun to function when the United States was drawn into that


maelstrom and immediately the Federal Reserve Banks became charged with vastly
increased responsibilities and vital duties in connection with the financing of America’s
participation in the war. It is needless to comment upon the post-war conditions and the
attendant economic difficulties, nor upon the period of expansion or inflation which culminated in the crash of 1929, nor the black depression which threatened the Nation’s
entire banking structure. Such matters are also recorded in the enduring chronicles of
human events, and are well remembered, as are the work of rehabilitating the Nation’ s
banking structure, which followed the nationwide suspension of banking business in
March 1933 and the sweeping legislative enactments of 1933 and 1935 which brought
about many changes in the law affecting banks and invested the Board in Washington
and the several Federal Reserve banks with substantially augmented powers and
important new duties ...
“Every officer and every director who has served the Federal Reserve Bank of
Atlanta since its organization would acknowledge without reservation the essential value
of Mr. Kettig’s sound counsel, at once conservative and constructive, and would pay
willing tribute to his devotion to duty and his unswerving adherence to what he has
conceived to be right. Sometimes we like to use familiar metaphors and your committee
feels that it can best describe Mr. Kettig’s contribution to the Federal Reserve Bank of
Atlanta by saying that he has always been a ‘tower of strength.’
“All those who have come in contact with him have loved him. Always cheerful,
kindly, considerate and gentle, he has been counted as a cherished friend by his fellow
directors, the officers of the bank and its employees ...
Following Mr. Newton’s remarks, Mr. Kettig was presented with a watch. He


responded as follows:
“The time has arrived for me to retire as a Director ~f the Federal Re-serve
System. I have served for over 23 years under five different Presidents of the United
States. There is an end to all things, and I am satisfied and content to retire.
“In this connection, I want to offer my sincere thanks to the Board of Governors of
the Federal Reserve System in Washington who have repeatedly elected me to this
high office. I appreciate their confidence and support. I also want to thank all the
members of the Board of Directors of the Federal Reserve Bank for their many
evidences of kindness and support. I do not want to forget the bankers in the Sixth
Federal Reserve District who have given me friendly and cordial cooperation. I also
remember those members of the Board who have passed on. For all these I hold a
cherished memory. Some of them were my warmest friends.
“One of the first Governors of the Federal Reserve System was W. P. G.
Harding, of Birmingham. Mr. Harding represented Birmingham at the hearing given by
the Committee for the location of the different banks in 1914 when the Federal Reserve
Law was adopted. His vast knowledge of financial affairs attracted the attention of the
Committee and it resulted in their offering him a position on the Federal Reserve Board.
Mr. Harding was an able man and he had a particular knowledge of finances. In the
pioneer days of the Federal Reserve System he was invaluable in giving his advice. He
was not a good politician or mixer, as the term goes, and for this reason he was
misunderstood. There is no doubt whatever about his patriotism and his ability. After
Harding came George H. James on the Federal Reserve Board. Mr. James had
particular charge of the Southern end of the System. It is to him that we owe our


numerous branches in the South. He was an efficient businessman and, like Harding,
was not given much to politics. Both these gentlemen have passed on. The Country
owes Messrs. Harding and James a debt of gratitude.
“The Federal Reserve System has erected magnificent buildings all over the
country. This has not cost the taxpayer a single cent ... The System financed the
country during the World War and has been the main assistance to the Government in
financing ever since. It financed the banks during the late depression and has always
been the financial backbone of the country during the last 23 years. One beauty about
the System is that it is not in politics. Every officer and employee of the Federal Reserve
Bank of Atlanta holds his or her position through merit and merit alone. While the
System is a large part of the Government, yet it has been operated along non-political
lines. God forbid that the System ever gets into politics’! It would be unfortunate if an
applicant for a position in the Bank would have to get the endorsement of his
Congressman or if a person wanting a long from the Bank would have to have political
“As stated above, I have served the System for over 23 years. I have had all the
honors that the Federal Reserve Bank could give me. I have been a Chairman of the
Birmingham Branch for many years and have been Chairman and Deputy Chairman of
the Federal Reserve Bank of Atlanta. What more honors could any man desire? In
retiring I feel the greatest gratitude for all the favors that have been shown me. I wish
everybody connected with the System happiness and contentment in life. I am retiring
fully satisfied and content. 16
Mr. Kettig, then 74, was born one month after the Battle of Gettysburg in 1863.


He died, after less than two years of retirement, on August 3, 1939. 17
A number of actions concerning employees and other personnel were taken
during 1937.
Effective July 1, salaries in the lower brackets, $2, 400 and under, were generally
upgraded. The policy of retirement at age 65 was reaffirmed, exceptions
to be approved only under exceptional circumstances. The rule did not apply to
President s and First Vice Presidents who were appointed for 5-year terms.18
In August the Board, after recommendations by President Newton and First Vice
President Parker, arrived at the concensus of opinion that the sponsorship by the bank
of gatherings and social occasions was desirable and that reasonable expenses would
be approved by the Executive Committee. 19
Less unanimity was exhibited in September on the subject of the employment of
married women. Director Kettig offered a resolution providing that hereafter no married
woman be employed by the bank if her husband is capable of supporting her; that
present female employees who marry shall be separated from employment after a
reasonable time (no more than 3 months); that the policy would not apply to presently
married female employees but that in the event it became advisable to reduce the work
force they would be the first to go. The resolution was seconded by Director Ryburn
Clay and carried. Directors Frank Neely and George J. White voted in the negative.20
An examination of the Federal Reserve Bank as of July 10, 1937 raised
several questions, among which were the doubtful necessity of the Executive
Committee meeting twice a week. Indeed, it was pointed out that in most of the Federal
Reserve Banks it met only semi-weekly. The matter was duly considered by the Board,


with the result that in October the by-laws were amended so as to provide for weekly
meetings of the Committee. 21
The age of air conditioning caught up with the Atlanta bank in early 1937 and
gave the Building Committee and its veteran chairman J. A. McCrary much food for
thought during the remainder of the year. In February, Mr. McCrary announced that
estimates were in preparation for air conditioning the parent bank building.
After consideration of several proposals for the work, the Board, in November
approved a program of improvements involving air conditioning of the parent bank in an
amount of $275, 000, under the general direction of Architect Henry J. Toombs. The
Federal Reserve Board in Washington interposed no objection. 22
The Building Committee was also engaged on other projects during the year. In
April Chairman McCrary reported that he had inspected the Jacksonville building and
was pleased with the alteration that now permitted the loading and unloading of money
within the building, such alteration having been accomplished at reasonable expense.
Maximum safety was now provided for both employees and money.23
The Committee next turned its attention to “safety” in the Atlanta bank building
and recommended the installation of three guard turrets in the lobby by the 0. B.
McClintock Company. The project, to cost $7, 448, was approved in June. 24
On October 20, eighteen directors of the Atlanta bank and its branches, in
addition to President Newton and First Vice President Parker, traveled to Washington
for the ceremonies incident to the official opening of the new Federal Reserve Building
there. 25


The Auditing Department of the Atlanta bank was surveyed during the
examination of July 1937, after which an Auditing Committee was appointed and
the President was authorized to transfer duties of an operating nature from the Auditing
Department to operating departments of the bank. Since 1926, as a result of the
Campbell case, the General Auditor had been charged with the function of approving all
expense vouchers. He and the Auditing Department were relieved of this chore as a
result of the 1937 action.26
Prior to the examination of the parent bank and branches in July, there had been
rumors of poor employee morale in New Orleans. After the examination, Director Ernest
T. George reported to the Board. He said that it was the belief of the directors of the
branch that there was no general discontent or unrest among the employees, but that
such indications of discontent and low morale as were observed had been the result of
agitation inspired by a very few of the temporary employees. He further stated that he
and the other directors, as well as the officers of the branch, felt that the recent salary
increases granted would improve the situation. Director George also stated that it was
felt that closer personal contact between the employees and officers of the branch was
desirable and that much could be accomplished along this line through occasional
outings or social gatherings. 27
On August 20, 1937 the Atlanta bank lowered its rate on rediscounts and
advances from 2% to 1-1/2%, 28or a near record low. Commented Time on September
“A milestone in Federal Reserve history was passed last week. Fol1o~wing the
example of the Federal Reserve Banks of Chicago. Atlanta, Minneapolis and Richmond,
which cut their rediscount rates from 2% to 1-½%, the Federal Reserve Bank of New


York last week cut its rate from l-½$ to 1%. This is the
lowest fee for loans to member banks ever posted by any central bank in the
world. Sample rates in Europe today: Bank of France and Reichsbank, 4%;
Bank of England and Bank of the Netherlands, 2%; Swiss National Bank, 1-½%.
Lowest previous rate in the U. 5., 1%. Highest rate (1920) in New York, 7%.
“Reasons for the New York Reserve Bank’s action were two -- to forestall a rise
in the current low open market money rates, and, more important, to persuade banks to
borrow from the Federal Reserve rather than sell large holdings of Government bonds
as they have been doing lately to meet increased demand for commercial loans. As a
device to end bond selling, the reduction of the discount rate was not immediately
successful. Still under pressure, ‘Governments’ continued to slump as much as half a
point a day.”29
At year’s end total resources and liabilities of the Federal Reserve Bank of
Atlanta stood at $394, 827, 288. 83. Net earnings for 1937 came to $246, 763. 09.



Ibid., 2764, 2772.


Ibid., 2828.


Ibid., 2801.


Ibid., 2798.


Ibid., 2802.


Twenty-Third Annual Statement.


Chapter 27


The last full year of peace before the cataclysm of World War II~ was marked
by a number of events leading to the war. Hitler took over Austria; the Nazis took violent
anti-Jewish measures in Germany and that country presided over the dismemberment
of Czechoslovakia.
In the United States, on the political front, the House Committee on UnAmerican Activities was established; the second AAA, and the Fair Labor Standards Act
marked the end of New Deal reform legislation, and President Roosevelt suffered
humiliating defeat in his attempt at purging conservative Democrats in the
Congressional election.
On other fronts, commercial production of nylon was begun, the CIO was
formally organized, and the Civil Aeronautics Administration established.1
In Atlanta, during 1938, the noted Reed Report was made public. A thorough
study of city and county governmental affairs, it was in the years to come to have farreaching effects on the area. After a long, dry hiatus, legal liquor sale began in April 25
and , under the prodding and leadership of office building owner Charles F. Palmer, the
Atlanta Housing Authority was commissioned in June. A month before, in May, the
Terminal Hotel fire took 34 lives, deadliest in the city’s history up to that time. 2
The official family of the Bank, as in all former years, changed somewhat in


1938. John S. Coleman, President of the Birmingham Trust & Savings Company,
succeeded John G. Farley as a Director of the Birmingham Branch, effective January 1.
George J. White, President of the First National Bank of Mount Dora, Florida,
succeeded C. G. Ware as a Director of the Jacksonville Branch, and Oliver J. Lucas,
President of the National Bank of Commerce in New Orleans, succeeded long-time
Director R. S. Hecht on the New Orleans Board.3
In January, First Vice President R. S. Parker was designated as the officer to
supervise the bank examination department.4 Fred L. Williamson was appointed Acting
Assistant Manager of the Havana Agency at $3000 per annum,5 and Donald Comer
resigned his Class C directorship because of the fact that he was a director of the First
National Bank of Birmingham and did not wish to sever that connection to qualify as a
Class C Director. 6
To succeed Mr. Corner, the Board picked Dr. Rufus Carrollton Harris,
President of Tulane University, a winner of the Purple Heart in World War I, and a native
of Monroe, Georgia, born in 1897. From 1923 to 1927, Dr. Harris had served as
Professor of Law and Dean of Mercer University, an institution he was later to head. He
was destined to serve the Federal Reserve Bank long and ably.7
In February, E. W. Palmer accepted appointment as a Nashville Branch
Director for an unexpired three-year term ending December 31, 1940.8 At the same
time, George Neal Bass, Cashier of the First National Bank of Franklin County,
Decherd, Tennessee, was also named to the Nashville Board, succeeding Frank J.
Haik, whose term had expired. 9
Howard Phillips, of Orlando, became a member of the Jacksonville Board in


late February.10 On March 11, M. L. Shaw was elected Assistant Cashier at New
Orleans at a salary of $3, 000, having previously been Chief Clerk in the Discount
Department of the Branch.11

During the same month, W. W. French, President of

the Moore-Handley Hardware Company, of Birmingham, was elected a member of the
Industrial Advisory Committee to succeed A. R. Forsyth, retired.12
In April, Robert H. Gamble, President of the Florida Brick & Tile Corporation,
joined the Jacksonville Branch Board;13 James A. Goethe, Assistant Manager at
Savannah, resigned and was succeeded by Earle M. Looney, previously head
bookkeeper in the Atlanta Accounting Department. 14 Albert P. Bush, who served as a
Director of the New Orleans Branch from its opening in July 1915, until December 31,
1936, died on April 7, 1938. Resolution of sympathy and respect were adopted by the
Atlanta Board. 15 The grim reaper hit again in New Orleans on July 2. William H. Black,
veteran cashier of the Branch, died after a long illness. He was succeeded by Morgan L.
Shaw. 16
The most notable personnel acquisition of 1938, amply proven by the passage of
time, was of a young economics professor at the University of Georgia in Athens.
Malcolm Honore Bryan was born at Watseka, Illinois, in 1902. After earning f his
A. B. and M. A. degree at the University of Illinois, he did graduate work at the
University of Chicago. He spent the next decade, 1925-1936, as professor of economics
at the University of Georgia. During 1937 and early 1938, at the behest of his friend
Ronald Ransome, Mr. Bryan did some work in the field of economics for the Board of
Governors of the Federal Reserve System in Washington. It was during this time that
the expertise of the young economist came to the attention of Frank H. Neely, Chairman


of the Atlanta bank. 17
Indeed, at the Board meeting of June 11, 1937, Chairman Neely stated that, in
his opinion, the Federal Reserve Bank of Atlanta should retain the services of an
experienced and recognized economist, since it seemed to him that such services might
be beneficially utilized in many ways, including the furnishing to the directors and
officers of the bank of current and accurate information, clearly summarized, as to
business trends generally and particularly as they might relate to the Sixth Federal
Reserve District. He further stated that he believe that such an economist might be
employed on a part time basis, with the that understanding he would be available to
appear before the directors at their meetings.
After some discussion, a committee composed of Frank H. Neely, R. C. Clay,
and Oscar Newton was appointed to study the matter and report to the Board at its next
regular meeting. 18
At the July Board meeting, Director Neely, Chairman of the “employment of an
economist” committee reported that he was recently in Washington and while there
talked with Dr. Goldenweiser and some of the members of the Board of Governors
concerning the employment of a recognized economist. Mr. Neely stated that those with
whom he talked in Washington expressed themselves as being in thorough accord, and
that Dr. Bryan, who has been suggested as one capable of supplying the directors with
pertinent information, had been requested to prepare a memorandum covering the kind
of information, as to money, finances, etc., that might be presented to the Board from
time to time. Neely asked that further time be given in which to submit the name of a
candidate for the pose of bank economist. 19


Further study was given the matter during the remainder of 1937. Then, on
February 11, 1938, the special committee appointed on June 11, 1937, made its report
which, in part, follows:
“…Your committee has reported to the Board from time to time that it had the
matter under consideration, but had not found it feasible to submit definite
recommendation for several reasons, including the fact that the committee had in mind
recommending the retaining of Dr. Malcolm H. Bryan, a professor of political economy
at the University of Georgia on leave of absence and temporarily attached to the staff of
the Board of Governors.
“On February 1 and 2, 1938, representatives of the various Federal Reserve
banks met in Washington with members of the Research staff of the Board of
Governors to consider ways of obtaining additional information about current and
prospective developments in business for the use of Federal Reserve authorities in
formulating policies. At this conference the Federal Reserve Bank of Atlanta was
represented by President Newton and Mr. D. E. Moncrief, who is in immediate charge of
the bank’s Statistical Department.
“At this conference an agreement was reached as to a general program ...
“Your committee submits the following recommendations:
1. “That this report, which was submitted to and approved by the representatives of the Federal Reserve banks at their conference of February 1 and 2 be
approved in principle and adopted as embodying an advisable and workable basis for
the broadening of the research and statistical work of the Federal Reserve Bank of
Atlanta and other Federal Reserve banks.


2. “That the Chairman of the Board of Directors of this bank be authorized, in
collaboration with the bank’s officers, to negotiate with Dr. Malcolm Bryan with a view to
the securing of his services on a full time basis, it being understood, of course, that the
Board of Governors would be consulted as to when they might conveniently relieve Dr.
Bryan of the special work in which he is currently engaged.
3. “That if the negotiations with Dr. Bryan are successfully concluded, he be
appointed a vice president in charge of the bank’s research and statistical work and its
work of compiling information as to business conditions, under the direct supervision of
the President, Dr. Bryan to be paid at the rate of $7, 500 per annum, or at such rate not
in excess of $7, 500 as might be agreed upon between him and the Federal Reserve
4. “That the officers of the bank be authorized to furnish Dr. Bryan with such
clerical and other assistance as might be determined to be necessary or desirable for
the proper performance of his duties, supplying such assistance, in so far as possible,
from the bank’s present personnel.
“... Our recommendation of the appointment of Dr. Bryan implies, of course,
our opinion that he is fully qualified for the work. Your committee would like to add,
however, that they know Dr. Bryan and have had the opportunity of forming a first-hand
opinion as to this ability and his fitness to fill acceptable the office for which he is
recommended. Our investigation and our knowledge of Dr. Bryan and his work enabled
us to recommend him without hesitancy or reservation.
Respectfully submitted,
(signed) Oscar Newton


R. C. Clay Frank H. Neely
Committee.” 20
The report was approved. Bryan was employed and the action was confirmed
by the following letter:
February 10, 1938.
“Mr. Frank H. Neely, Chairman,
Federal Reserve Bank of Atlanta,
Atlanta, Georgia.
“ Dear Mr. Neely:
“This will reply to your letter of January 28 in which you set forth the plan of your
Board to organize a department of research and statistics at the Federal Reserve Bank
of Atlanta and to appoint Mr. Malcolm H. Bryan, now employed by the Board here, as a
full time officer of the hank and in charge of this work. I am advised that Mr. (Ronald)
Raitsome has discussed this matter with you quite fully over the telephone, and that this
letter is in the nature of a confirmation of what he conveyed to you.
“The Board of Governors is in full sympathy with the aim of you Board to
strengthen its organization by the appointment of an officer trained in the field of
economics. While Mr. Bryan is at present engaged in important work here, the Board
will interpose no objection to his appointment by your Board as an officer of the Federal
Reserve Bank of Atlanta, and is willing to approve a salary at the rate of r to exceed $7,
500 per annum, if fixed at such rate by your Board. it is understood that Mr. Bryan’s
appointment is to take effect at such time as may be worked out to the mutual


satisfaction of the Board of Governors and the Atlanta bank.
“In giving approval to the plan of your board of directors for the organization of the
new department, the Board of Governors wishes to make it clear as a matter of record
that it does so with the understanding that the administration of this department will be
subject to regulation by the Board, that the selection of the officer in charge from time to
time will be subject to the Board’s approval, and that such officer would make such
reports and conduct such studies as might be called for by the Board of Governors in
addition to his work at the bank, including occasional conferences in Washington,
providing, of course, that any such studies and conferences would not unduly interfere
with the work regularly required for the bank. The Board of Governors would in fact
expect to retain supervision over the administration of the department of research and
statistics in the same manner as it does over the examination department and the
agent’s department at each Federal Reserve bank.
With king regards, I am
Yours sincerely,
(signed) M. S. Eccles, Chairman. “21
At subsequent Board meetings during 1938, Vice President Bryan reported on
economic conditions in the Sixth District and in mid-October informed the Board that
since the September meeting, the bank had employed a librarian and that the work of
assembling and organizing library material was already under way. 22 He was, as time
went on, to create a model research and statistical operation.
A couple of matters concerning Boards of Directors of Federal Reserve banks
were settled by the Board of Governors in Washington during 1938. In January,


regulations with respect to appointments were amended so that “no director of a
Federal Reserve bank shall be appointed to serve as a director of a branch of the bank
during the period of his service as a director of the Federal Reserve bank.”
The regulation applied to future appointments and did not affect any current
directors. 23
In June the question arose as to whether an officer of a Federal Reserve bank
could serve as a member of a board of education of a local school district. It was
decided that so long as the membership was free of party politics an officer could so
serve. 24
A precedent was set on October 14, 1938, when the Atlanta and New Orleans
Boards held a regular meeting at Jackson, Mississippi. Up to this time, Mississippi had
been the only state in the Sixth District in which the Board had not previously met. 25
Later, L. M. Clark, Managing Director of the New Orleans Branch, wrote
Chairman Neely to the effect that the joint meeting in Jackson was a success. Further,
that a large number of bankers served by New Orleans thought that it was a fine
gesture to hold a Board meeting in the only state in the Sixth District not
having a branch of the Federal Reserve Bank. 26
One of the oldest standing committees of the Board was the Building Com-.
mittee. It had been set up shortly after the Bank’s organization and as soon as a move
from rented space was contemplated. Chairman for the nearly quarter century of the
committee’s life had been Director J. A. McCrary.
When, in the order of business, at the January 1938 Board meeting, a call was
made by the Chair for a report of the Building Committee, Director McCrary stated that


he saw no further need for the Committee. He pointed out that his views were based
upon the fact that buildings have been erected in Atlanta and all branch cities; that
recently the Branch Bank buildings had been renovated and put in a good state of
repair, and that plans were practically complete for the renovation and modernization of
the bank premises in Atlanta. Director McCrary said that in his opinion the Executive
Committee could deal with all problems which might arise concerning buildings and if a
need arose a “Building Committee” could be appointed. On motion, the Building
Committee as a standing committee was discontinued. 27
Before the year was half over some matters arose within the purview of a
building committee. A letter was written to Managing Director C. S. Vardeman, Jr., of
the Jacksonville Branch by the Manager of the Jacksonville Loan Agency of the
Reconstruction Finance Corporation concerning the possibility of installing one or more
air conditioning units for the benefit of the occupants of the third floor of the Jacksonville
Branch building. It was decided by the Board to give consideration to air conditioning
the entire building in Jacksonville in addition to the branches at Birmingham, Nashville,
and New Orleans. A committee composed of Directors Clay, McCrary, and Neely, with
Clay as Chairman, was appointed to look into the matter. 28
In October a sum not to exceed $60, 000 was authorized for the renovation
and modernization of the Jacksonville Branch. Chairman Neely report ~d in December
that architect Henry J. Toombs had made a preliminary investigation as to renovations
needed at Birmingham and Nashville and would soon do so at New Orleans. 29
Special note was taken in connection with the completion of the air conditioning
and remodeling of the Atlanta bank building in November. On the 11th, the Atlanta


Board met, together with the Board of the New Orleans, Nashville, Birmingham, and
Jacksonville branches, the officers of the Atlanta bank, and Marriner S. Eccles, Ronald
Ransome, M. S. Szymczak and Chester C. Davis, of the Board of Governors in
Washington, and Edward Ball, of the Federal Advisory Council. 30
During the course of the meeting, Director Ernest T. George introduced the
following resolution, which was adopted by a rising vote:
“The Board of Directors of the Federal Reserve Bank of Atlanta has followed
with unflagging interest the many urgent repairs and necessary improvements to the
head office building, begun in January, 1938, and continued with intensified vigor until
the reopening this date for a reception in honor of the Board of Governors of the Federal
Reserve System, Washington, D. C., through whose hearty concurrence the changes
were authorized.
“The entire plan of renovation and modernization was conducted under the
supervision of Messrs. Frank H. Neely, R. G. Clay, and J. A. McCrary, members of the
Executive Committee, with the fullest possible cooperation at all times of President
Oscar Newton, First Vice President Robert S. Parker, Vice President and Cashier W. S.
McLarin, Jr., and other officers, all rendering important service. The Executive
Committee and officers met often and consumed considerable time for the purpose of
deciding questions concerning the work, much of which C developed as hidden parts of
the old building were uncovered.
“Mr. Neely was the enthusiastic, cheerful, and directing head from the
inception of the movement. His exhaustive study of facts, his broadminded approach to
each problem as it arose, his skill as an inspired leader, combined to make him the man


of the hour, with vision and perservering courage.
“BE IT THEREFORE RESOLVED: That so difficult a plan, with the minimum
of inconvenience to the officers and the large personnel of the bank, could not have
been executed without interruption to the conduct of the business in all departments
each day had it not been for the wide experience, the eminent gifts of mind, the excellent judgment and the tireless energy of our fellow member and Chairman of the
Board, Mr. Frank H. Neely, ably assisted throughout by Vice President McLarin in many
“BE IT FURTHER RESOLVED: That the Board, for itself and for the organization as a whole, wishes to pay this tribute and to express deep appreciation for
the able, devoted and unselfish service rendered by our honored Chairman and assure
him and his associates that they will always be held in grateful remembrance. 31 Quite
an accolade, particularly to the energetic Mr. Neely.
A perennial subject came up for consideration in the late summer of 1938,
the collection by the-Federal Reserve Bank of Atlanta of non-cash collection items. It
was placed before the Board by both the Nashville and Atlanta Clearing House
Association and a former Director of the Atlanta Federal Reserve:
“The undersigned commercial banks of Atlanta feel very deeply the competition of the Federal Reserve Bank of Atlanta in the collection of non-cash collection
items, usually referred to as bills, notes, and commercial paper, and more particularly,
drafts with bills of lading, or other documents attached. Being definitely of the opinion
that it was not the intention of the original framers of the Federal Reserve Act to provide
a par clearance system for other than bank checks, and not bills of lading, drafts, et. al.,


we do not feel the Federal Reserve Banks should encroach on the business of the
commercial banks to that extent.
“Bills of lading, drafts, and other non-cash collections are a definite expense to
the collecting agency, whether it be the Federal Reserve Bank or a commercial bank,
and, therefore, should pay its way with some reasonable margin of profit by carrying a
reasonable charge for services rendered in making the collection. We cannot see the
fairness of the Federal Reserve Bank handling this business without cost in direct
competition to the member banks and absorbing the expense of so doing, and at the
same time putting the commercial banks to the trouble and expense of helping the
drawee lift the drafts.
“Practically all of this business coming into Atlanta is from outside the Sixth
Federal Reserve District, therefore, the country banks within the Sixth Federal Reserve
District would not be penalized by such policy or ruling of the Federal Reserve Bank of
Atlanta. Furthermore, practically all, if not all, of the bills of lading drafts created within
our District come to the commercial banks for handling any way and those that do not
come to the commercial banks could do so without penalty due to the fact that such
banks have accounts in Atlanta which will clear these at par.
“It is needless for us to say to you that the Federal Reserve Banks are owned
by the member banks, therefore, the member banks are interested in seeing the
Federal Reserve Banks make enough money to pay expenses of operation and the
usual dividend, and we believe, without question, that the officers of the Federal
Reserve Banks want the commercial banks to show reasonable earnings. The
commercial banks cannot show reasonable earnings if such unfair and unreasonable


competition as this is offered by the Federal Reserve Banks, and we strongly urge that
you cease handling this class of business and let it go to commercial banks where it
rightly belongs.
“We are not going into a lot of details in this letter, but a committee from this
Association would welcome the opportunity of appearing before you to argue the details
and fairness and righteousness of our contention.
Yours very truly,
(signed) H. L. Young,
First National Bank
(signed) J. S. Kennedy, Vice President.
Citizens & Southern National Bank
(signed) H. L. Young, Vice President and Executive Manager.
Fulton National Bank,
(signed) R. G. Clay, President.
Trust Company of Georgia
(signed) Robert Strickland, President. 32
After a full discussion, motion was made by Director Hall, seconded by Director
Clay, that the Federal Reserve Bank of Atlanta discontinue the collection of all non-cash
items. The motion failed to carry by a vote of 3 to 5, Chairman Neely not voting.
As a matter of fact, the Federal Reserve had no particular feeling in the matter
of non-cash collections. Most of the collections came in from banks anyway and the
whole question appeared to be a conflict among banks. Generally the country


banks favored handling by the Federal Reserve while the big city banks wanted to
make a commission on the collections. 34
Nineteen thirty-eight marked the end of the line for the storm-cradled Havana
Agency. Indeed, from 1934 on, the activities of the Agency showed a steady decline. As
previously noted, on several occasions in 1934 and 1936, the Board of Directors of the
Atlanta Bank, realizing that the value of the Agency to Cuba was diminishing, requested
the Board of Governors in Washington to authorize its discontinuance. However, at the
insistence of the Cuban government that the removal of the Agency would adversely
affect economic conditions in Cuba, and intervention of the United States State
Department supporting Cuba’s claim, no action was taken. Finally, on August 3, 1938,
the Board of Governors adopted the following resolution:
“WHEREAS, the Federal Reserve Bank of Atlanta has maintained and operated
an agency in Havana, Cuba, for a number of years past and is now operating the said
agency pursuant to a resolution of the Federal Reserve Board (now the Board of
Governors of the Federal Reserve System) adopted January 27, 1927, as modified by
subsequent action of the said Board, and under the terms of an agreement between the
Federal Reserve Bank of Atlanta and the other eleven Federal Reserve banks which
became effective on June 1, 1935; and
“WHEREAS the Board of Governors of the Federal Reserve System, in the light
of the volume of business, operating expenses, and other factors involved in the
maintenance of such agency, has determined that the necessity and desirability for the
continuance of the agency no longer exists; and


“WHEREAS the Board of Directors of the Federal Reserve Bank of Atlanta
adopted resolutions under dates of June 8, 1934, February 14, 1936, and September
11, 1936, requesting that the bank be authorized to discontinue the operation of the
agency at Havana, Cuba; and
“WHEREAS it is the opinion of the Board of Governors that the operation of
such agency should be discontinued and that the request of the Board of Directors of
the Federal Reserve Bank of Atlanta should be granted;
(1) That the Federal Reserve Bank of Atlanta be and said bank is hereby
authorized and directed to discontinue the maintenance and operation of the said
agency at Havana, Cuba, as soon as practicable and in no event later than the close of
business December 31, 1938, except to the extent necessary to wind up and liquidate
any commitments theretofore acquired or entered into;
(2) Upon the discontinuance of the operation of the said agency pursuant to the
terms of this resolution, the Federal Reserve Bank of Atlanta shall no longer be
authorized to exercise through the said agency any of the powers which it has
heretofore been authorized to exercise by the Board of Governors of the Federal
Reserve System, except that it shall have and retain all such powers as may be
necessary and appropriate to wind up and liquidate the business and affairs of the said
agency as provided in the preceding paragraph of this resolution;
(3) That the Federal Reserve Bank of Atlanta is directed to proceed diligently
with the liquidation and winding up of the outstanding business and commitments of the
said agency to the end that the affairs of the said agency may be finally concluded at


the earliest practicable date.
Although under the Board’s resolution the closing date was set not later than
December 31, 1938, the Federal Reserve Bank of Atlanta decided to close the Agency
on September 30, 1938. This earlier date was chosen because of the enactment by the
Cuban Congress of legislation creating a Bank Employees Retirement. System. Under
the provisions of this new law all employees of the Agency would have been brought
under the Cuban Retirement System and the Federal Reserve Bank would have been
required to pay into this retirement system all the accumulated contributions of the
employees and the Bank paid to our own retirement system up to that date. Therefore,
to avoid the virtual confiscation of the employees’ and bank’s contributions, and
because of unfavorable experience of other retirement systems operated by the Cuban
government in the past, action was promptly taken to close the Agency onSeptember
30, 1938. Following is a statement issued by the Federal Reserve Bank of Atlanta
relative to the closing of the Agency:
“In view of the fact that the purposes for which the Havana, Cuba, Agency of the
Federal Reserve Bank of Atlanta was established have been served and there is no
longer substantial reason for continuing the operation of the Agency, the Directors of
Federal Reserve Bank of Atlanta, with the approval of the Board of Governors of the
Federal Reserve System, have directed that the Agency be closed on October 1, 1938.
“For several years there have been relatively few currency exchanges or other
transactions effected by the Agency, and only a few transfers of funds to and from Cuba
have been made through the medium of the Agency. Commercial transactions between
business interests in Cuba and the United States have been consummated almost


entirely through commercial banking channels. Accordingly, the maintenance of the
Agency for these purposes and for the exchange of currency has become unnecessary.
Therefore, the Directors of the bank have concluded that the expense to the Federal
Reserve System incident to the continued operation of the Agency is not justified.”
When the Agency closed on September 30, 1938, the staff consisted of Messrs.
H. C. Frazer, Manager; Fred Williamson, Acting Assistant Manager; Miss Jaisy V.
Holcombe, stenographer-clerk, six guards and one porter. Two of the guards were
eligible for and elected to take special retirement under the Retirement System of the
Federal Reserve Bank. The remaining guards and porter were separated from service
at the closing. Messrs. Frazer and Williamson returned to the Atlanta bank and Miss
Holcombe was transferred to the Jacksonville Branch as currency sorter.
By resolution of the Board of Directors of the Federal Reserve Bank of Atlanta, H.
C. Frazer, Manager, was authorized to remain in Havana after the closing to dispose of
the noncash assets of the Bank. Furniture and fixtures were sold on a competitive bid
basis and Mr. Frazer negotiated the sale of the vault doors to the Cuban government, at
a price of $10, 000, for use in a silver vault then under construction in the Cuban
Treasury building.
At the close of the year 1938, the total resources and liabilities of the Federal
Reserve Bank of Atlanta stood at $429, 148, 661. 28. Gross earnings for the year came
to $1,502,188.82. Expenses totalled $1,388,134.69, leaving a net profit of $114, 054.
13. 36


Chapter 27

Life History of the U.S., Vol. 11, pp. 168-169.


Garrett, Atlanta and Environs, II, 957-962.


Minutes, Directors, X, 2844, 2845.


Ibid., XI, 2847.


Ibid., 2851.


Ibid., 2864.


Ibid., 2865, 2869; Biographical Records of the Bank.


Minutes, Directors, XI, 2865.


Ibid., 2874.


Ibid., 2880.


Ibid., 2882.


Ibid., 2887.


Ibid., 2892.


Ibid., 2893.


Ibid. , 2898.


Ibid., 2922.


Biographical records of the Bank; Malcolm Bryan to Franklin M. Garrett,
personal interview, August 17, 1966.


Minutes, Directors, X, 2777-2778.


Ibid., 2786.


Ibid., XI, 2872-2874.



Ibid., 2879-1/2.


Ibid., 2910, 2919, 2927, 2934, 2958.


Ibid. , 2867.


Ibid., 2920.


Ibid., 2951.


Ibid., 2971.


Ibid., 2851.


Ibid, 2902.


Ibid., 2913, 2952, 2970-2971.


Ibid., 2961.


Ibid. , 2963.


Ibid., 2942-2943.


Ibid., 2948.


Malcolm Bryan to Franklin M. Garrett, telephone interview, August 31, 1966.


Frazer, “Havana Agency”, 3 1-35; Minutes, Directors, XI, 2848,
2935, 2954, 2972.


Twenty- Fourth Annual Statement.


Chapter 28
As they had done in 19 14, the year the Federal Reserve banks opened for
business, the lights of Europe again went out in 1939 as Germany invaded Poland in
September and World War II began its six-year course of death and destruction.
During the same year scientists informed President Roosevelt of the possibility of
making an atomic bomb and of the very real danger that Germany might be developing
such a weapon. Germany never did, but research went feverishly forward in this country
and the result was to ultimately end the war at Hiroshima and Nagasaki. 1
Here in America the war brought economic boom and an end to unemployment
and all traces of the depression. The Golden Gate International Exposition opened at
San Francisco and the World’s Fair at New York. The Hatch Act prohibited Federal
employees from participation in politics and John Steinbeck’s Grapes of Wrath was
published. 2
In Atlanta the year was especially significant in the religious life of the
community. The co-cathedral and school of the Church of Christ the King were
dedicated in January; the World Baptist Congress was held at the ball park on Ponce de
Leon Avenue in July, and, in November, Methodist units in Georgia effected a complete
union during a conference at Wesley Memorial Church. Nunnally’s on Peachtree, a
glamorous fountainhead of years gone by, closed in June and, on December 15, a
never-to-be-forgotten day in Atlanta’s history, the world premiere of the motion picture
Gone With the Wind was presented with great fanfare at Lowe’s Grand Theater. 3
As the year ended a writer for the Constitution wrote:


“It (1939) was a good year on the whole… Many are richer in hard cash in the
pocket because jobs were a little more plentiful, wages a little higher, electric rates a
million dollars lower, and freight rates on many commodities were trimmed to fairer
levels… “ 4
As was usual at year’s beginning, elections were held for officers and directors
of the Atlanta bank and branches. All were re-elected except Nashville Branch Director
C. W. Bailey, whose term expired on December 31, 1938. He was succeeded, in
January 1939, by E. B. Maupin, Cashier, the Peoples National Bank, Shelbyville,
Tennessee. 5
The Bank and the financial community at large suffered a severe loss on
February 13 in the death of Oscar Newton from a heart attack at 62.
Board Chairman Frank H. Neely paid Mr. Newton a high tribute when he said:
“... His passing means a personal and important official loss to everyone
concerned with the reserve system. A quiet, retiring and very modest gentleman of rare
ability, Mr. Newton held a place in the first rank in reserve banking. His service as a
member of the important open market committee for the entire reserve system drew
wide recognition.
“His long experience, fine ability and deep knowledge were unfailing sources of
“He was a man of sympathy and keen human interest, beloved by all of his coworkers, from officials to the lesser employees. All of us feel a personal loss in his
untimely death…” 6
In reviewing Mr. Newton’s career, the Board of Directors, in special session on


February 18, resolved, in part, as follows:
“In 1919 he was elected a Class “A” director of Federal Reserve Bank of
Atlanta, to take office January 1, 1920. On January 1, 1925, Mr. Newton began the first
of more than ten years of continuous service, as a Class C director, with the designation
of Chairman of the Board of Directors of the Bank and of Federal Reserve Agent. He
remained in that important position until January 15, 1935, when he succeeded Eugene
R. Black, of blessed memory, as Governor of the Bank. The Banking Act of 1935 having
been enacted and provision having been made for the appointment of a President of
each Federal Reserve bank, who should be the chief executive officer of the bank, Mr.
Newton was appointed President by the Directors of the Federal Reserve Bank of
Atlanta with the approval of the Board of Governors of the Federal Reserve System, for
a term of five years, beginning March 1, 1936.
“As President of the Federal Reserve Bank from the effective date of his
appointment until February 10, 1939, when he was stricken at his post of duty, he
displayed well directed energy, balanced judgment and splendid gifts of leadership. His
unfailing interest and earnestness were an inspiration to his colleagues and to every
member of the Bank’s organization scattered over the entire Sixth Federal Reserve
“Mr. Newton was honored by election to membership on the Federal Open
Market Committee effective March 1, 1938. This election was by unanimous vote of the
Directors of the Federal Reserve Banks of Richmond, Dallas, and Atlanta. Undoubtedly,
those who served with him on that Committee soon recognized the clarity of his mind
and grew to be even more appreciative of the singular combination of firmness and


gentleness which characterized his participation in matters of public concern.
“As a citizen, Mr. Newton was outstanding; in his social and church life, without
a blemish; in his home he was an ideal husband, father and friend. He was a student of
men and affairs. His mind was strong and tenacious. His interest in life and in people
and their doings was keen; in fact, his whole life was one of faithful and conscientious
service. He was modest and unassuming and showed as much of courtesy to the
immature youth or to the man of humble position as to those in high places.
“Few men have the gift of winning confidence so easily as Oscar Newton, or of
binding friends to himself. It was his habit to speak well of his fellow men, and to buy
their faults, if he saw them, in silence. The goodness of his heart was apparent in all
that he said and did; he shirked no labor; he forgot no obligation. He was a most
companionable man, of kindly heart and great breadth of human sympathy. The serious
and lighter sides of his nature, each equally marked, were singularly and most happily
blended ...“ 7
At the same special session, on February 18, Robert S. Parker, long general
counsel of the Bank, was elected President to succeed Mr. Newton for the balance of
the unexpired five-year term, ending February 28, 1941. His salary was fixed at $20,000
per year for the remainder of 1939. 8
President Parker was born at Dalton, Georgia in 1884 and was educated in the
public schools of Atlanta and at Emory College and the University of Georgia, securing
his law degree from the latter in 1907. He began practice the same year in association
with Brown & Randolph. In 1923, as a member of the firm of Randolph & Parker, he
began to participate in the legal affairs of the Bank and, in 1930, became General


Counsel. Meanwhile, he had become a member of the law firm of Colquitt, Parker,
Troutman & Arkwright, but withdrew in 1935 to devote full time to the Bank, of which, in
1936, he also became first vice president. 9
To fill the position of Counsel, and upon recommendation of President Parker
and of the Executive Committee, John Pollard Turman was elected to the position,
effective May 1. He was to function under the supervision of President Parker at $4,000
per annum. Turman, 28, was a native of Atlanta, an Emory law graduate of 1935 and a
rising young Atlanta attorney. He was to fill an important niche at the Federal Reserve
Bank of Atlanta. 10
In August, Director George J. White, who for some time had served both the
Atlanta Bank and the Jacksonville Branch in that capacity, resigned the latter post. He
felt that the dual service was contrary to the present policy of the Board of Governors.
He was succeeded at Jacksonville the following month by J. C. McCrocklin, Executive
Vice President of the First National Bank in Tarpon Springs. Also, in August, the official
staff of the Jacksonville Branch was augmented by the election of an assistant cashier.
The post went to Winslow E. Pike, and employee of the Branch since 1923. 11
One of the real comers at the Bank, though his rise was slow and solid, rather
than meteoric, was W. S. McLarin, Jr., originally of Fairburn, Georgia. On October 13,
1939, he was moved up to First Vice President, succeeding President Parker in that
position. 12 The tope spot for McLarin lay less than two years away.
An early order of business for 1939 was the clarification and spelling out of the
duties of various committees of the Board of Directors, all looking to a smoother and
more efficient operation. As a window through which the bank operations can be more


clearly seen, the outline of committee responsibilities is herewith set forth.
1. Consideration of the recommendations of the officers in respect of all salary
increases or decreases and the submission of such matters to the Board of Directors
with the Committee’s recommendations.
2. Consideration of the actions of the officers in respect of additions to the
employee personnel in all departments and the submission to the Board or (if deemed
appropriate) to the Executive Committee of suggestions concerning additions to, or
reductions in, the employee personnel in the bank as a whole or in particular
departments or at the Branches.
3. Consideration of the recommendations of the officers in respect of changes
in, or amendments to, the Personnel Classification Plan applicable to the various offices
of the bank, and the submission of such proposed changes or additions to the Board or
Executive Committee with the recommendations of the Salary and Personnel
4. Consideration of the recommendation of the officers covering sick or other
leaves with pay to any of the officers or employees and the submission of such matters
to the Board or Executive Committee with the recommendations of the Salary and
Personnel Committee.
5. Consideration of the recommendations of the officers in respect of dismissal
wages to be paid to officers or employees involuntarily separated from service and the
submission of such matters to the Board or Executive Committee with


6. The study of the various departments of the bank (main office and
branches) and of the functions and duties of such departments.
7. The study of the bank’s employee relations activities; the employee
organizations, their aims, ideals and activities; the bank’s policies on entertainment,
recreation and other activities intended to strengthen the employee morale and to build
up employee good will; and the submission of recommendations as to any of such
matters to the Board or Executive Committee.
8. The review and consideration of such activities as may be in contemplation
or as may be authorized or carried on for the comfort, health, wellbeing and recreation
of the employees (including the library, game room, infirmary and nursing or medical
9. The consideration of employment standards, salary or wage limitations and
ranges, vacation assignments, the policies of the bank as regards sick leaves; and, in
general, a study of the bank’s policies toward its employees and of the consideration
shown to the employees by the officers.
10. The making of periodical surveys of the personnel in each department of
the bank’s various offices, the salaries paid therein, and the duties of employees
assigned, respectively, thereto; causing organization charts to be made indicating not
only the personnel in the several departments but also the amount or volume of work
done therein.
While the Salary and Personnel Committee is charged with the responsibility of
studying the personnel of the bank, its various departments and offices, and other
matters referred to above, submitting timely suggestions and recommendations to the


Board of Directors or (as the case may be) to the Executive Committee, it is not
contemplated that there is to be any limitation or curtailment of the powers of the
Executive Committee which, under the by-laws of the bank, is under the duty “to
conduct the business of the bank subject to the supervision and control of the Board of
Directors and, between sessions of the Board to take or authorize such corporate action
as the Committee may deem to be necessary, desirable or appropriate. 13
1. The review and consideration of reports made to the directors by the
General Auditor concerning the activities of his department and the extent of auditing
work performed during the current period, including important exceptions encountered;
status as to frequency of examination of each account, date of latest examination of
each account, and other matters of interest to the directors.
2. Consultation with the General Auditor as to the form, nature and content of
his reports to the directors, and as to the extent and frequency of examinations made by
3. Periodical meetings with the General Auditor to insure to him that availability
of the advice and counsel of the members of the committee.
4. The bringing about of a closer relationship between the General Auditor and
the Board of Directors which would facilitate the maintenance of the independent status
of the Auditing Department and also result in a better knowledge on the part of the
directors of the performance of the auditing function.
1. To establish from time to time, subject to review and determination of the


Board of Governors of the Federal Reserve System, the rates of discount to be charged
by the bank for each class of paper, such rates to be established each fourteen days or
oftener if deemed necessary by the Board of Governors of the Federal Reserve System.
At each meeting of the Board of Directors there shall be submitted lists or schedules
showing the rates or discount or interest established since the next preceding meeting
of the board.
2. To apply for and provide for the security of such Federal Reserve notes and
Federal Reserve Bank notes as may, in the discretion of the Committee or of the Board,
be reasonably required in connection with the note issue function of the bank.
3. To approve bonds furnished by the officers and employees of the bank.
4. To consider applications for loans made by established industrial or
commercial businesses and applications made by financing institutions for commitments
in respect of such loans or participations therein, and to authorize such loans,
participations or commitments; to consider and authorize any other loans, advances or
extensions of credit made pursuant to any applicable provision of law; and to authorize
any other paper disbursement of funds.
5. In general, to conduct the business of the bank subject to the supervision
and control of the Board of Directors, and between sessions of the Board to take or
authorize such corporate action as the Committee may deem to be necessary, desirable
or appropriate.
This was a new Committee, the perview of which was:
“To cooperate with the officer of the bank in direct charge of the bank’s


department of research, statistics and business information, to the end that such
department may best serve the officers and directors of the bank, and within proper
limitations, function for the benefit of banking and other business interests. 14
In connection with the above, Vice President Malcolm Bryan referred to the fact
that in each of the past several weeks he had mailed to each of the Directors
mimeographed sheets containing “Summaries of Fact and Opinion” and “Review of
News and Developments,” which had been prepared under his supervision. He stated
that in view of the fact that each of the Directors was now receiving the daily
“Newspaper Review” of the Federal Reserve Bank of New York, the “Review of News
and Developments” would be discontinued.
Mr. Bryan outlined to the Directors the changes which had been made in the
bank’s monthly business review and discussed with them certain other changes which
were in contemplation. He stated that since the last meeting of the Board the member
banks of the District had been offered the use of materials available in the technical
library in the bank and that a number of bank’s had availed themselves of the
Mr. Bryan outlined briefly the contents of the “Monthly Outlook and Summary”,
dated January 11, 1939, and stated that the practice had been begun of mailing this
memorandum to the directors of the branches. His report was followed by a general
discussion in which all of the directors participated. 15
At this period of the bank’s history, on the eve of World War II and as of
January 1, 1939, there were 419 employees on the regular payroll. In addition, there
were 313 employees whose salaries were reimbursed by Governmental agencies. 16


In April, the Bank, in step with the times, changed its policy with respect to the
employment of married women. Director Clay stated to the Board that he had been
informed that the application of the Bank’s policy had operated in restraint of marriage in
the case of several women employees. He suggested that a reconsideration might be
in order.
After a full discussion and upon proper motion it was voted to rescind the
action of September 10, 1937 and to leave to the discretion of the bank’s officers the
employment of married women and the continuance in the service of women employees
who may hereafter marry. It was understood, however, that the former policy would
continue to apply relative to the marriage of two persons employed by the Bank. 17
The employees of the Bank, through the Federal Reserve Bank Club of
Atlanta, provided, by contributions, for the presentation of a portrait of the late Oscar
Newton. The gift was acknowledged by the Board on September 8 in a letter to J. R.
McCravey, Jr., President of the Club:
“The Directors and Officers of the Federal Reserve Bank of Atlanta accept with
real satisfaction the excellent portrait of their late beloved President, Honorable Oscar
Newton, which now hangs on the wall of the foyer leading into the Directors’ room.
They desire to express gratitude for this thoughtful and generous gift, coming as it does
from the voluntary contributions of the employees through their splendid organization,
which is ever alert to the best interest of the Federal Reserve System, as oftem
exemplified in many helpful ways.
“We also wish to extend congratulations on the selection of the gifted and
unexcelled Southern artist, Mr. Lewis C. Gregg, of Atlanta, who has placed on canvas,


for the inspiration of his former co-workers and numerous friends, the features and
lifelike expressions of goodwill and nature of one who served long and faithfully this
institution and his fellow men from the least to the greatest.
“Please convey to your fellow officers and members of the Club our heartfelt
appreciation together with best wishes for continued and increasing usefulness and
advancement of the entire personnel.” 18
Renovation and air conditioning of the Atlanta bank and its four branches were
all accomplished during 1938-1939, which, with the installation of considerable new and
improved furniture, contributed signally to employee morale and efficiency.
Work on the Atlanta bank building was completed in the autumn of 1938. At its
January 1939 meeting, the Board passed resolutions of thanks to Henry J. Toombs,
architect, and to the Barge-Thompson Company, contractors, for a skillfully performed
job, executed under trying circumstances with a minimum of inconvenience to bank
Decisions to renovate the Branch buildings were all made in 1938 and, in
October, as previously noted, $60, 000 was appropriated for Jacksonville. In January
1939, $50, 000 was approved for Birmingham; $15, 000 for Nashville; and $125, 000 for
New Orleans. 20
Work on the Jacksonville Branch building was completed in July at a cost of
approximately $65, 000. To mark the event a joint meeting of the Atlanta and
Jacksonville Boards was held in the Florida city on July 14-15, followed by an
evening reception at the renovated Branch building. 21
By mid-November the work of modernizing the New Orleans Branch had been


completed. The occasion was marked by a joint meeting of the Atlanta and New
Orleans Directors, followed by a dinner. Meanwhile, in September, a resolution was
received by the Atlanta Board from the Federal Reserve Bank Club at Nashville
thanking the officers and directors for modernizing that Branch. 22
As it had come up periodically in the past, the matter of whether or not to
continue the operation of the Savannah Agency was again discussed in January 1939.
In attendance at the regular Board meeting that month in Atlanta were five
representatives of the member banks Located in Savannah: Mills B. Lane, Chairman,
Citizens and Southern National Bank; H. Lane Young, Executive Vice President,
Citizens and Southern Bank, Atlanta office; Charles S. Sanford, President, Liberty
National Bank and Trust Company; George H. Smith, President, Citizens Bank and
Trust Company; and John J. Cornell, President, Savannah Bank and Trust Company.
The gentlemen from Savannah argued cogently and persuasively for continuance of the Agency. Members of the Atlanta Board favoring the closing also
advanced cogent arguments supporting their position. When the matter was finally put
to a vote, Savannah won again, six to three. 23 The Agency remained open for six
more years.
The subject of industrial advances came up for both discussion and action in
June. Several of the directors expressed the view that the Board should share with the
Executive Committee responsibility for the making of large industrial advances. Indeed,
it was pointed out that a particular director might have particular knowledge of a line of
business wherein application for an advance was pending. After full discussion it was
voted that all applications for industrial advances wherein the responsibility of the


Federal Reserve Bank would amount to $100, 000 or more, be submitted to the
directors in advance of action by the Executive Committee. 24
With war clouds gathering in Europe, some thought was naturally being given
to the effect an actual outbreak of hostilities might have on the Federal Reserve
System. At its April meeting, the Board considered the following letter, dated April 7,
from the Board of Governors, addressed to President Parker:
“You will recall that, at the beginning of the Conference of Presidents held on
September 20, 1938, consideration was given to the possibility of at least a temporary
disturbance in the money market in the United States in case hostilities should break
out in Europe. While the Board is not in possession of any information relating to
developments in Europe other than that reported in the press, it has thought it advisable
to be prepared in sufficient time to act promptly and in a manner to reassure the public.
“In order to have all the questions of immediate policy settled in advance, so
that such action as may be determined upon may be taken and announced without
delay, the Board suggests that you take up with your directors the following questions:
“1. In making loans on Government securities will you Lend at par:
to member banks” to nonmember banks” to others? (The last two under section 13,
paragraph 13, page 90, of the Federal Reserve Act.) Your Board may wish to make a
distinction between a temporary emergency policy and a longer time policy in this
“2. Do you wish to propose any changes in:
(a) The bank’s regular discount rate?
(b) The rate charged for loans on United States Government securities to


nonrnember banks and to other lenders?
(c) The rate charged on 10(b) advances?
“The Board will appreciate it if you will inform it as soon as possible regarding
any decisions that your directors may reach on these matters or any other allied
matters.” 25
In answer to which the Atlanta Board replied:
“At a meeting held today the Board of Directors of this bank reached the
following conclusions:
“1. Our Board sees no reason why the Federal Reserve banks, even though
hostilities should break out in Europe, should not continue their present practice of
lending at par to member banks. They think that a similar policy should obtain as
regards loans to nonmember banks. As regards loans to individuals, partnerships, or
non-banking corporations ... it is believed that the policy should be to lend on the basis
of 90% of the market value, not to exceed par.
‘‘2. We would not wish to propose any immediate change in:
“(a) the bank’s regular discount rate;
“(b) the rate charged for loans on Government securities to nonmember banks
and to others under the provisions of Section 13, paragraph (13); or
“(c) the rate charged on 10(b) advances.
“However, we would not object to some increase, if that were deemed
advisable, in the rate charged for loans on United States Government securities made
under section 13, paragraph (13) to nonmember banks and others, inasmuch as the
rate now fixed by this bank for such loans is less than similar rates in force at some of


the other Federal Reserve banks.” 26
With the invasion of Poland by Germany in September, the cataclysm to be
known as World War II began. At the Board meeting that month, on the 8th, Vice
President Bryan spoke at length concerning the outbreak of the war in Europe and what
effect it might have on the economy of the United States. He stressed particularly the
contrast between the banking system today and the condition which existed at the
outbreak of war in 1914. 27
At the November meeting, Mr. Bryan discussed the contents of his confidential
memorandum, dated the 9th, entitled “Review of the Sixth District.” He referred to the
recent action of Congress in repealing the arms embargo and discussed what might be
the effect of the war abroad on our own national economy. He outlined in some detail a
considerable number of studies in which his department was presently engaged. He
also commented upon the increased use which was being made of the bank’s research
library, particularly by the member bankers of the district. 28
As a result of Malcolm Bryan’s economic expertise, the officers and directors of
the Bank were benefitting from a clearer and more concise picture of business
Both total assets and net earnings of the Federal Reserve Bank of Atlanta
showed an increase from 1939 operations over those for 1938. Assets at year’s end
stood at $461,015,751.69. Net earnings Caine to $381,976. 74, of which $14, 809. 65
was paid to the United States Treasury; $272, 229. 32 represented dividends paid, and
$94,937.77 was transferred to surplus. 29


Chapter 28



Life History of the U.S., Vol 11, pp. 168-6-19.




Garrett, Atlanta and Environs, II, 966-997.


Quoted, Ibid., 997.


Minutes, Directors, XI, 2983-2989, 2995.


Atlanta Constitution, Feb. 14, 1939.


Minutes, Directors, XI, 3017-3018.


Ibid., 3020, 3022.


Biographical records of the Bank.


Ibid.; Minutes, Directors, XI, 3040.


Minutes, Directors, XI, 3070, 3076.


Ibid. , 3087.


Ibid., 299 1-2992.


Ibid., 2999-3001.


Ibid. , 3001.


Ibid., 3006.


Ibid. , 3034.


Ibid., 3080-3081.


Ibid., 2999.


Ibid., 2996.


Ibid., 3022, 3032, 3056, 3061.


Ibid., 3080, 3084, 3087, 3090, 3095.


Ibid., 2985-2988.



Ibid. , 3057-3058.


Ibid. , 3033.


Ibid., 3040.


Ibid., 3081-3082.


Ibid., 3095.


Twenty-Fifth Annual Statement, Jan. 22, 1940.


The Forties, War and
the Aftermath of War

Chapter 29

The future of the free world never looked darker than in the spring and early
summer of 1940. Hitler’s war machine seemed irresistible. Norway, Denmark, the Low
Countries and France were overrun. The beach at Dunkirk became a symbol both of
heroism and defeat. Then, in August and for the next 10 months Britain became a lonely
symbol of strength as it withstood repeated German bombing attacks.
Across the ocean, away from the guns and bombs the U. S. monetary
system had become a refuge for the world. In its 10th anniversary issue Fortune
published a pithy discussion of the U. S. dollar and in the process, outlined the progress
of the Federal Reserve System from 1914 to 1940:1
“The U.S. dollar can be taken as a symbol or as a fact. As a symbol it is
familiar, the way the flag is familiar, or the eagle stamped on the vanished gold piece.
As symbol it stands for- the ideals of a people who, more than any other in history, have
embraced and dignified the business of trading their wealth and energies. As symbol it
represents the genius by which a coal town became Pittsburgh, the prairie became Des
Moines, the sagebrush became Dallas. It is the emblem of the dollar makers who united


a continent and erected gigantic buildings into the skyline of New York.
“As fact, the dollar is the basic unit of the U. S. monetary system. Defined
as 15—5/21 grains of gold nine—tenths fine, it commands $17,800,000,000 of gold held
at the Mint and in the Assay Offices and buried at Fort Knox. One third of this
accumulation of metal represents European capital that has come to the U. S. in the last
five years for security --an expression of faith in the stability of the dollar. Yet glamorous
as that heap of gold may be, and prophetic as it may be for the U. S. future, it is not the
active dollar. The active dollar is something else.
“The active dollar is the pennies that pay the sales taxes, the nickels that
clack through the subway slots, the dimes that go into the cigarette machines, the two—
bit pieces, the half dollars, and silver cartwheels beloved of San Franciscans. There is
about $600,000,000 of these coins ringing over the counters of Woolworths and Grants,
through the cash registers of the A & F, into the tills of the 140 Class I American
railroads, and so on to the delicatessens, the drug stores and the hock shops. The
active dollar is also a motley array of paper money including $500,000,000 of $1 bills
whose passage from hand to hand is so swift that they wear out in about nine months;
$34,000,000 of $2 bills (poison in a Harlem crap game); and $6,200,000,000 of larger
bills rising, in denomination from $5 to $10,000.
“This coin and this paper money are the currency of the country, the
tangible dollar. But last year all the transactions of the U. S. totalled an estimated
$700,000,000,000, and of this almost immeasurable sum the tangible dollar accounted
for only 10 or 20 percent. The balance was contributed by the intangible dollar, the
credit dollar, in the form of checks drawn on the $30,000,000,000 of demand deposits in


the banks. The U. S. is the most checkbook—minded country in the world. It is by check
that the corporations talk to each other, by check that the government takes from
Wendell Wilkie’s Commonwealth & Southern its Tennessee Electric Power Co., and by
check that a substantial portion of the grocery, butcher and gas bills is paid. The total of
check transactions last year (1939) has been estimated at around $600,000,000,000.
“The U. S. dollar, whether in its tangible or intangible form, is the blood
stream of U. S. business. But its management is also a business. It is the reason for
15,100 banks employing more more than 200,000 clerks and about 60,000 officers
(probably a higher percentage of vice—presidents than any other business in the
country). It is the progenitor of about 280 clearing houses, of which the New York
Clearing House is the oldest. To the organization of dollar exchange is devoted more
than 6,000 miles of wire in the Federal Reserve System, over which the regions of the
U. S. daily settle their balances —— Richmond drawing on Atlanta, Atlanta drawing on
Boston, Boston drawing on St. Louis, Chicago drawing on New York, in a telegraphic
flow of money that totalled one estimated $100,000,000,000 in 1939.
“The sheet mechanics of the American dollar constitute one of the great
achievements of economic man. Always its evolution has been characterized by a spirit
of risk, individualism, and experimentation. It was part of the American dream that any
man could become a banker, and any pile of capital could make a bank. There have
been over 17,000 bank failures since the Civil War; there have been seven panics. The
record of suicides of men in charge of money in the U. S. and of men and women who
have lost their savings is almost as fabulous as the money gone with the wind. In this
and all its other manifestations, the dollar is profoundly descriptive of the American


character, and its history provides a succinct history of the U. S. itself. The debate at the
Constitutional Convention over the right of states to issue currency; Hamilton’s struggle
to found the First Bank of the U. S.; Jackson’s scuttling of the Second; the Civil War and
the ‘greenbacks; the outcry against the money trust; the cross—of—gold speech; the
peace that descended on Wall Street with the election of “Hard—Money” McKinley; all
these were milestones in the development of the nation. They signalized the dynamic
struggle between state and federal government between state and individual, between
business and government for the control of money.
“From every collapse the U. S. dollar has come back. It came back after ‘73.
It came back after ‘93 —— albeit Cleveland had to borrow the gold from Morgan and
the Rothschilds while Pulitzer’s World screamed. It came back after the crisis in March,
1933, when the people stood outside the bank doors with that curious look of disillusionment in their eyes, and a paralysis descended upon the land. And then on March 12 the
voice came clear and cool over the radio, the voice reminding people that bank money,
check money, is based on credit and a kind of Faith, the voice saying that what had
happened in the U. S. in the early days of March was that millions of ordinary citizens
had lost their nerve.
“That evening of March 12 was in many ways a turning point in the history
of the American dollar. It was the beginning of the recovery from the worst depression
the U. S. has suffered. It was the signal of the violent transfer of money power from New
York to Washington. But it was also the beginning of policies that have given to the U.
S. monetary system a new and baffling character. Instead of being the true mirror of the
commercial life of the country, U. S. money today is a mirror with a distorting twist in it.


At the end of 1929 the U. S. had only $4,300,000,000 of gold by way of monetary
reserves; it had $4,900,000,000 of currency in circulation, and $55,300,000,000 of bank
deposits. Today its monetary reserves are over four times as great, its currency in
circulation about one and a half times larger, its deposits about the same: Surely a man
from Mars visiting the U. S. and looking only at its money might go home saying that we
were in the midst of a great boom. Yet what he would find would be an economy with
9,000,000 dispossessed workers and a national income estimated for 1939 at only
$68,500,000,000 as compared with the record $82,700,000,000 of a decade ago.
“To the age—old mystery of money —— a mystery that has deepened as
man turned from barter to silver and gold and finally to credit —— the U. S. has added
some mysteries of its own. And for the last six or eight years most of us have spent a lot
of time arguing about them. Argument, indeed, has become the most characteristic
reaction to any mention of the dollar, and the fact that the shear mechanics of the
system of the dollar represents one of the great achievements of man is quite
Commenting on the Federal Reserve System, Fortune, in the same article
“On December 23, 1938, the twenty—fifth anniversary of the signing of the
Federal Reserve Act was celebrated in the chaste white building that stands opposite
the War Department in Washington, D. C. It was a historic occasion and the drama was
not lessoned by the fact that when Marriner Eccles unveiled a bronze bas—relief of
Carter Glass, the old Virginia Senator broke down and wept. What Carter Glass was
thinking as the ceremony proceeded (and to the eulogy of Chairman Eccles


there was added the eulogy of President Roosevelt describing Senator Glass as
‘defender’ of the Federal), no man knows. Perhaps he was thinking of his fight to found
the Federal in the face of the bitter opposition of the New York, Boston and Philadelphia
banks. Or perhaps he was thinking of what has happened in the past few years to the
Federal as the arbiter of U. S. credit.
“The Federal Reserve was a heroic enterprise. The need for it is difficult to
recall, so much today are its operations an unconscious part of the average American’s
life. The need can be imagined if we remember that prior to the inception of the Federal
the correspondent relation between banks was the only binder of the American banking
system; that the business of check collection, which the Federal makes smooth and
easy, was then incredibly inefficient; that nonpar points were so prevalent that many a
manufacturer would not accept payment in funds unless they were drawn on Chicago,
New York, or other centers; that with varying seasons of the year New York and
Chicago ‘change’ went to a discount or premium depending on how flush the city
bankers felt: so that it could be said that the U. S. had real ‘inland’ exchange rates; and
that finally and most important, as the panics of 1893 and of 1907 showed, the banks
were by no means capable of supplying the country with enough currency at the right

“The first and most obvious contribution of the Federal was the mobilizing of
member—bank reserves in such a way that they could be used to support any bank in
the system with maximum efficiency. Although the system consists of twelve regional
banks, they are under the supervision of a Board of Governors at Washington; and for


simplification the system can be thought of as a central pool of - -liquid funds. These
were created in the first instance as banks joined the Federal in 1914, turning in a
substantial part of their gold holdings and some of their currency. In exchange they
received credit (reserves) on the books of the Reserve banks.

“Thus the Federal is in one sense simply a gigantic banker’s W bank playing

the same role to its members as the big New York banks play to their country

correspondents. But the Federal is different from a private bank in many particulars. For

one thing its operations are on a vastly larger scale. Again the Federal is not only

banker for the banks, it is also banker for the U. S. Government. These days the
Treasury carries a balance running from about $300,000,000 to about $1,000,000,000
and U. S. Treasurer Julian is the greatest check drawer of them all (last year
112,600,000 checks). But the main reasons why the Federal is different from other big
banks are, first, that it is involved in supplying the U. S. with currency, and, second, it
can in theory exert enormous influence on credit conditions.
“Let us have a look at the currency supply first. Here we find the Federal acting in
two different capacities. To some extent it is just a middleman or handler of cash for the
U. S. Treasury. Of the $7,300,000,000 of currency outstanding almost $600,000,000 is
in the form of small change, such as pennies, nickels, dimes, quarters


and half—dollars. Another big item is $1,500,000,000 of silver certificates. The Federal
gets both kinds of money from the Treasury as member banks ask for them. Suppose
the Case National Bank, for instance, finds its depositors crying for nickels. It goes to
the Federal of New York, and if this institution does not have enough nickels it can
immediately ‘buy’ them from the Treasury and ‘sell’ them to Chase. The result of this
operation is that the Federal of New York debits Chase’s account for, say, $200,000
and credits the account at the Treasury for $200,000. Much the same procedure occurs
when silver certificates go into circulation.
“But the Reserve Bank is not only a middleman of money. It is also an issuer of
the largest percentage of currency in circulation in the U.S. — nearly $5,000,000,000 of
Federal Reserve notes. The Federal Reserve notes get into circulation in somewhat the
same way as the nickels and the dimes and the silver certificates. Thus we may
conceive of the Chase coming into the Federal Reserve of New York and asking for a
flat $1,000,000 in cash. The Federal docks the Chase’s account $1,000,000 and if the
Chase doesn’t want any coin, the Federal can hand out a $1,000,000 of Federal
Reserve notes. But in this case there are no transactions directly affecting the U. S.
“At this point one may well begin to think of the Federal Reserve as something of
a magician. Certainly it is pleasant for it to print up Federal Reserve notes at its
convenience and to hold the reserves of the member banks. But does it not have to
have some kind of asset against both? Yes, it does. It does not, to be sure, possess
gold, for the gold was taken away from the Federal by the Treasury in 1934 in the
amount of about $3,500,000,000. But the Treasury gave the Federal gold certificates


and, as we shall see, it usually continues to do so whenever gold enters the banking
system. Hence if we take a birds—eye view of some of the big items of the consolidated
balance sheet of the Federal Reserve System, it looked like this in November, 1939:

Loans to banks
Gold certificates
Government securities

$ 6,500,000

Federal Reserve notes

$ 4,800,000,000

Member reserves


U. S. Treasury account


“The important points to note about that balance sheet are two in number. In
the first place the law requires the Federal to have only a 40 percent gold—certificate
cover (plus other collateral for the remaining 60 percent) against its notes outstanding,
and a 35 percent gold certificate or lawful money cover against the reserves it holds for
its member banks or any other accounts entrusted to it. With $14,900,000,000 of gold
certificates on hand, the Federal is therefore overstuffed with them. The second and
much more important point is that the $11,600,000,000 of reserves of member banks is
about $5,000,000,000 above what member banks are required to carry against their
deposits, which at present amount to about $39,000,000,000.2
“Those excess reserves are important because they interfere with the .most


important function of the Federal —— namely credit control. The reserves of a bank
have happily been called ‘high—powered’ money. They are high—powered because it
is with his eye fixed on his reserves that a banker decides whether to extend his loans
and his investments. If his reserves are big, he will do so; if small, he will be more
cautious... It therefore follows that the control of bank reserves can have a crucial
influence over the total amount of deposit money or credit money in the system.
“Now there was a day when such control was extremely easy for the Federal
to exert. At the inception of the system reserves of member banks were lean. At certain
seasons of the year a banker would find that his depositors were drawing out cash to
such an extent that his reserves with the Federal were going below requirements. At
this point he could come into the Federal and get additional reserves by hocking some
of his commercial paper. This process was ‘known as ‘rediscounting’, and what it
implied was that the Reserve bank was lending to the banker in much the same way
that the banker lends to a customer. But given this indebtedness at the member banks,
the Federal had tight control over their actions. By moving its ‘rediscount rate’ up and
down it could effectively influence credit conditions. This was the type of control
dramatized by Governor Strong at the Federal Reserve Bank of New York, for instance,
during the twenties.
“A second control is the open market operation. If the Federal wishes to
reduce member—bank reserves under this procedure it will begin to sell government
securities in its portfolio. Suppose the purchaser gives the Reserve a check on a
member bank such as the Chase. The Reserve then debits the Chase’s account, and
the Chase’s reserves are decreased.


“The third and most recent method of control as used by Governor Eccles in
1936 and 1937 is to hike reserve requirements.
“But today with $5,000,000,000 of excess reserves outstanding, all methods
of control are difficult. Since practically no member banks are borrowing at the Federal,
the use of the rediscount rate is completely academic. If the Federal should sell all of its
$2,600,000,000 in governments there would still be more than $2,000,000,000 of
reserves outstanding (to say nothing of the distressing fact that the Federal would have
parted with practically all of its earning assets). And finally reserve requirements have
already been boosted up to almost the limit allowed by law. All this distresses the
Federal authorities, and in its 1938 report the Board hinted that it would like to see its
power over reserves increased. To date, Congress has taken no action.”
So stood the money situation as 1940 began.
The war in Europe, as noted previously, was not going at all well for our allies—
to—be. Congress was busy.
The Pittman Resolution authorized the sale of arms to the nations of the
Western Hemisphere; a destroyers—for—bases deal was made with Britain; an
embargo was declared on iron and steel scrap; selective service went into effect, and a
National Defense Research Committee, Office of Production Management was created.
In November Franklin Roosevelt defeated Wendell Wilkie for an unprecedented
third term as President, and defense spending began its rise from an annual $1.5 billion
to $8.13 billion.3
Atlanta entered the new year and decade with a population of 302,288 — the
national figure reached 131,669,275 — and a ten—inch snow fall crippled traffic, power


and communications. Local civilian defense workers mobilized; Roy LeCrow unseated
Mayor William B. Hartsfield in September; Eugene Talmadge was again elected
Governor, and local railroads began to substitute Diesel for steam power.4
Some changes in the official personnel of the Federal Reserve Bank of Atlanta
took place at years’ beginning, others as 1940 progressed.

At the November 10, 1939 Board meeting Ryburn G. Clay was elected a

member of the Federal Advisory Council succeeding Edward Ball, who had completed

three successive terms. The following month, Mr. Clay?s term as a Class A Director

being about to expire he was succeeded by Thomas K. Glenn, Chairman of the Board

of the Trust Company of Georgia, a veteran Atlanta banker and business man. At the

same time Bert C. Teed, First Vice—President of the First National Bank in Palm

Beach, was elected a Director of the Jacksonville Branch succeeding George J. Avent,

whose term had expired.5
At the January 1940 meeting Director Frank H. Neely was named Chairman
and Federal Reserve Agent and Director J. F. Porter as Deputy Chairman for the year.6


As the meeting progressed Chairman Neely expressed his pleasure and the
pleasure of the other directors at having in attendance at the meeting Thomas K. Glenn,
recently elected a member of the Board. Chairman Neely spoke of Mr. Glenn as a
public spirited citizen and as a man of wide experience in business and banking, and
stated that the Directors were anticipating with pleasure their association with Mr.
The Chairman also referred to the fact that Director J. A. McCrary had
recently been re—elected and that he had served continuously since the bank’s
organization. The veteran Director was congratulated upon his long and faithful
In connection with the annual election of officers, and also at the Board
meeting of January, 1940, President Parker stated that since the election of W. S.
McLarin, Jr., to the office of First Vice—President, there had been a vacancy in the
office of cashier. He further stated that the ordinary duties of the office of Cashier were
now being satisfactorily performed by other officers of the bank and there now
appeared to be no reason to fill the vacancy. President Parker referred to the fact that
three of the officers of the bank held the title of Assistant Cashier and suggested that
their titles be changed to Assistant Vice President. On motion, unanimously carried,
Messrs. V. K. Bowman, C. R. Camp and S. P. Schuessler had their titles changed
accordingly. 8
President Parker also stated that since the election of H. C. Frazer as
Assistant New Orleans Branch Manager circumstances had developed which made his
services there no longer necessary. It was recommended that Frazer be assigned


duties at the Atlanta bank.9
In February Trust Examiner J. E. Denmark was appointed an Assistant
Vice—President and assigned to the Bank Examination Department. At the same time
President Parker was elected a member of the Open Market Committee for the year
beginning March 1, 1940, with Hugh Leach, President of the Federal Reserve Bank of
Richmond, as alternate.10
The next three personnel changes involved the Birmingham Branch. In April
Leo W. Starr was elected Assistant Cashier of the Branch at $3,300 per annum, while in
September Frank M. Moody resigned as a Director because of ill health. He was
succeeded the same month by Gordon D. Palmer, Executive Vice President of the First
National Bank of Tuscaloosa. In November General John C. Persons was granted a
leave of absence as a Director on account of military service.”
Matters concerning personnel, both official and rank and file came up with
great regularity during 1940. Salaries and classification were early candidates for
In January there was a general discussion of the Personnel Classification
Plan which was then in operation at all twelve of the Federal Reserve banks. In
response to a question by Director W. D. Cook, First Vice—President McLarin said that,
of the 224 employees of the bank proper at the head office, only 37 were being paid the
maximum salary allowable under the plan, and that of the 37, 12 were guards at $1,380
per annum, and that a small number were secretaries to senior officers.
Director Harris, Chairman of the salary and Personnel Committee, raised the
question whether the maximum salaries presently allowable under the Classification


Plan were low. He said that he had studied the functional expense reports compiled by
the Board of Governors and reflecting comparative unit costs of operation for the
various functions performed by the Federal Reserve banks. Harris observed that the
Atlanta bank appeared low and that in his opinion it would be unfortunate if a low unit
cost of operation should be obtained as a result of the payment of unduly low salaries.
Chairman Neely agreed and said that in his opinion low unit costs should be obtained
by efficient administration with the maintenance of reasonable salaries.
After further discussion Mr. McLarin was requested to obtain information as
to the maximum rates of salary allowable under the Personnel Classification Plan in
effect at other Reserve banks of comparable size to Atlanta, in addition to information
as to the number of employees at each bank who were being paid the maximum salary
President Parker referred to the fact that increases in the salaries of a
considerable number of employees of both the bank and its branches had been made in
the recent past, particularly at New Orleans. He stated also that the general level of
salaries in effect in commercial banks located in cities where an office of a Federal
Reserve bank is situated should be taken into account when considering salaries to be
paid Reserve bank employees.12
In March a new vacation schedule was adopted, applicable to all officers and
employees of the Atlanta bank and branches. It provided, briefly that each officer is
entitled to three weeks except the President who was allowed a month; all employees
were entitled to 12 business days after a year’s service; no vacations were given for
less than six months service although six business days were allowed for employees


entering the service between January 1 and March 1 of any calendar year. The new
schedule also provided that all vacations should begin on Monday with holidays, other
than Sunday, being treated as a business day. Employees entitled to 12 days could split
their vacations into two equal parts. Those entitled to less were required to take the

entire vacation at one time. Resigned employees with vacation time remaining were to

be paid for the time on a per day basis.13
As the war situation waxed ever warmer it became necessary for the Federal
Reserve System to formulate some rules concerning military leave. At the November
Board meeting President Parker reported that the Board of Governors had approved the
payment of up to one month’s unearned salary to employees entering military or naval
service, as prescribed in the report of the Committee of the Presidents’ Conference.
After discussion the Board voted to adopt a policy to be followed with respect to
employees of the Bank who may enter the military service of the United States.
“The benefits mentioned will be accorded, subject to the conditions stated, only
to employees of the bank, other than those in temporary positions, entering upon active
service in the military or naval service of the United States on or after January 1, 1940.
“A. Under the Selective Training and Service Act of 1940 (including v
volunteers thereunder) or
“B. As members of the National Guard or, any other reserve component of the
Army under the Joint Resolutions of Congress approved August 27, 1940, or
“C. As members of any reserve unit of the Navy or Marine Corps which is called


up for an indefinite period of service;
but such benefits shall not be accorded with respect to military and naval service
completed prior to the adoption of this procedure.
“While such an employee is in military service he shall be deemed not to be
in the active service of the bank within the meaning of the rules and regulations of the
Federal Reserve Retirement System
“1. At the expiration of such military service he will be reemployed in the position
he left, or one of like seniority, status, and pay, provided;

He presents to the bank a certificate showing the satisfactory
completion of such military service;


He makes application for reemployment within forty days after he is
released from such military service;


The Bank’s circumstances have not so changed as to make such
reemployment impossible or unreasonable;


That upon his application for reemployment he submits to a physical
examination and establishes to the satisfaction of the bank that he is
still qualified to perform the duties of his former position.

“2. When reemployed he will be restored to membership in the Retirement
System and, provided he has not withdrawn his accumulated contributions, he will retain
all benefits based on creditable service rendered prior to entering into military service
and in addition will receive full service credit for the period of military service without
additional cost to him.


“3. Under the rules of the Retirement System, any employee so reemployed who
has withdrawn his accumulated contributions credited to his account in the Reitrement
System will be entitled only to the same benefits under such System as if employed for
the first time.
“4. Upon furnishing the bank with evidence that he has taken out National
Service life insurance made available to him by the United States Government because
of such military service, the bank will reimburse him for the cost of premiums on such
insurance for his period of military service in a principal amount up to —
“A. The multiple of $500 which is equal to or next above the equivalent of
two years salary, or
“B. $5,000, whichever is less.

“5. If after being reemployed by the bank following his return from military or

naval service he is subsequently retired for disability, the disability allowance which he

would otherwise receive from the Federal Reserve Retirement System may be reduced

by the amount he receives, if any, from the Government for disability incurred in the
military or naval service.
“The foregoing statement is subject to modification or revision, within the
limitations of law, whenever deemed necessary by the bank.”14
It occasionly happened that the Board of Governors in Washington did not


see eye to eye with the Atlanta Board on certain matters. An example was action taken
by the latter on July 12, 1940 to increase, from $20 to $40, the per diem fee paid
directors for attending meetings of the Board. The Atlanta directors felt that the $20 fee
was relatively small and not commensurate with their responsibilities.
Not so, the Board of Governors. Its thinking was set forth in a letter from
Governor M. S. Szymezate to Chairman Frank Neely, dated July 26:
“This is just a note from me to you and refers to our telephone conversation
subsequent to receipt of a letter from you dated July 15th, in which you advised our
Board that your Board of Directors has voted unanimously, subject to the approval of
the Board, to increase the fee paid to Directors at the Federal Reserve Bank of Atlanta
from $20 to $40.
“You know, Frank, that, as I told you over the telephone, I appreciate fully
the fine spirit with which your Directors serve the Federal Reserve Bank of Atlanta and
the System as a whole. Other members of the Board (of Governors) feel the same way
about it.
“However, as you and I understand it, the fee of $20 is more in the nature of
an honorarium than actual compensation for services rendered. For, if we were to
attempt to adequately compensate directors for services rendered, many, if not all ——
and particularly the chairman--would be inadequately compensated, even if the fee
were $40. Again, I am fully aware of the amount of time that the directors and the
chairman devote to the responsibilities with their banks.
“If the fees of the Atlanta Directors were doubled, however, it would no
doubt be necessary within a comparatively short time to make a corresponding increase


in the fees paid directors at the other Federal Reserve Banks and also at the Branches.
If this were done, the total cost of director’s fees would increase by approximately
$75,000 per year. On the other hand I think I am correct in understanding that the
members of our Board feel that any out—of—pocket expenses incurred by directors
when attending directors’ or committee meetings should be reimbursed to them by the
Federal Reserve Banks, and, if you now have any such cases, I shall be glad to submit
any requests that you may have to our Board for consideration and action. However, I
don’t think under the circumstances that you would want me to take this matter of the
increase in fees from $20 to $40 to our Board for formal consideration and action ——
at any rate, not until after you have had a chance to consider what I told you over the
telephone and what is contained in this informal note.
“If you would like to go into this matter more fully, I would be glad to hear
from you by telephone or by letter. In the meantime please accept my greetings and
salutations and remember me to Mrs. Neely.”
Following the reading of the letter, Chairman Neely stated that it had been
written at his suggestion to confirm the telephone call referred to in the letter.
Thereupon the Board voted to table the matter of increased directors’
Since his assignment to the Atlanta bank from New Orleans in February, H.
C. Frazer had functioned as Senior Bank Representative, concerned chiefly with bank
and public relations. At the July Board meeting he presented a report of these activities.
Mr. Frazer stated that the primary aims of the bank and public relations
activities were (1) to promote and maintain a close and friendly relationship between the


Federal Reserve Bank and the commercial banks of the district, and (2) to create a
better public understanding of the Federal Reserve System and its purposes and
functions. He outlined the program as follows:
“(1) The visiting of member and nonmember banks in the district.

Attendance at annual conventions and periodic group meetings of members
of State Bankers Associations.


Addresses by officers of the bank at meetings of civic and educational


Entertainment of visiting groups and individuals at the bank’s head office
and branches.”
Mr. Frazer then reported on the extent of the work since the first of the year

and to some extent his own activities. He said that his reception at member and
nonmember banks had, without exception, been cordial, and that the member bankers
were in every case pleased with the services performed by the Federal Reserve Bank.
He pointed out that the principal objection to membership in the System on
the part of nonmember State banks continued to be the resultant loss of income from
exchange charges. He illustrated the relative importance of this problem as between
Federal Reserve districts by a chart which indicated, among other things, that in the
Sixth Federal Reserve District there was a comparatively small number of par—
remitting nonmember banks which, on the basis of statutory minimum capital
requirements, were eligible for membership in the Federal Reserve System.16

Only a month before, in June, the family of M. B. Wellborn, had presented to the


Bank a new portrait of the former Governor which had been accepted and hung in the

Board Room in lieu of an older portrait.17 Indeed, it served as something of a reminder

that the same problem as to nonmember State banks had existed during his tenure

from 1914 to 1928.

A review of the Federal Reserve System’s experience with insurance, other

than group life, was laid before the Atlanta Board at its August, 1940 meeting. It was

noted from a summary that the System has paid insurance premiums since its

establishment of approximately $17,200,000 and that claims collected have aggregated

$5,100,000, making an excess of premiums paid of over $12,000,000. In 1935, the last

year for which figures were obtained, premiums totalled $553,800 as against claims

collected of $139,300, a difference of nearly $400,000. Indeed, the ratio of claims


collected to premiums paid for all types of insurance, other than group life, had

averaged approximately 30%. Also, the Govern— ment’s experience under the losses

in shipment act had been favorable.18

Substantial savings seemed to be in order and a committee of the Board was

appointed to work with President Parker in working out a plan whereby insurance now

carried against certain losses may be discontinued and such losses absorbed by the

Federal Reserve Banks under contractual agreements entered into with each other.19
The rapidly expanding war in Europe and the economic and monetary problems
which presented themselves almost daily during 1940 brought forth considerable
comment from governors, directors and officers of the Federal Reserve System. Indeed,
the discussions and observation of these men provide us with a vantage point from
which the System’s problems can be viewed.
In February the Federal Advisory Council held a meeting which was
attended by Sixth Reserve District Member Ryburn C. Clay. Mr. Clay reported to the
Atlanta Board that the Council had adopted a resolution expressing the opinion of the
Council that purchasers of foreign silver by the Secretary of the Treasury should be
discontinued. The Council went on record also as being opposed to the passage of the


bill introduced by Senator Mead which would enlarge the powers of the Federal
Reserve Banks to make direct loans to industry. The Council holding the view that, if the
Congress should deem it desirable to facilitate the making of direct loans to industry by
the Government, such loans should be made by an agency of the Government and not
by the Federal Reserve Banks.
Mr. Clay told the Board that the Council had discussed informally a number
of other monetary and banking problems, including the gold policy of the United States,
means of controlling the volume of member bank reserves, the affect of the possible
liquidation of American securities held abroad, the advisability of the continued sale by
the Treasury of United States Savings Bonds and the possible liquidation of a
substantial portion of the Federal Reserve System’s holdings of Government
An April Conference of Federal Reserve Bank Chairmen, held at Sea Island,
Georgia was productive of much meaty discussion. Chairman Frank Neely reported to
the Atlanta Board on May 10, that the theme of the Conference was the relationship of
the directors of the Federal Reserve Banks to the Board of Governors in Washington.
On the first day of the Conference the Chairman of each of the twelve banks read a
statement of his views, and, on the second day, with the staff of the Board of Directors
excluded from the meeting. These had been an informal discussion between the
Chairmen and the members of the Board of Governors.
It was the consensus of the Chairmen that the directors of the Federal
Reserve Banks feel that they have little of importance to do, and that the Board of
Governors, rather than the directors, determine the policies and directs the operations


of the banks. The Conference considered possible ways in which the Chairmen might
be of greater service both to their respective banks and Board of Directors as well as
the Board of Governors.
The Conference discussed at length the trend toward the centralization in
Washington of powers affecting the Federal Reserve System. It was pointed out that
within the past few years the Federal Reserve Banks had had practically no occasion to
exercise their lending function, and, consequently that the day to day operations of the
Federal Reserve Banks had become more or less routine, calling for a minimum of
supervision by the directors. This development naturally had tended to magnify the
importance of actions taken by the Board of Governors in the exercise of its powers.
It was emphasized at the Conference that, under the law, it is the Board of
Governors that in many cases must accept ultimate responsibility for actions taken, and
that oftentimes decisions must be made quickly. The result is that if the opinions of the
directors are to be of value to the Board of Governors problems must be recognized and
discussed by the directors well in advance of the time when action by the Board of
Governors is required. By way of illustration, the gold problem and the probable
consequences of the European war upon monetary and credit policies were suggested
as being worthy of consideration by the directors.
It was pointed out also that by reason of its size and location and by reason
of the importance of its transactions with foreign banks and of its activities in the
conduct of the System’s open market operations, the Federal Reserve Bank of New
York had occupied a position of somewhat greater importance than any of the other
eleven Federal Reserve Banks. Historically, the Federal Reserve Bank of New York,


more than any other bank, had expressed its opinions freely in Washington. The
Conference agreed that it would be desirable if the other Federal Reserve Banks should
make known their views to the Board of Governors more freely.
Chairman Neely reported that on the second day of the Conference, with the
members of the staff of the Board of Governors excluded, Chairman Owen D. Young, of
New York, and certain other of the Chairmen, suggested that the members of the Board
of Governors should be careful to insure that the policies of the Board were determined,
not by the staff, but by the Board members themselves. It was felt that there was a
natural tendency on the part of the staff to perpetuate itself, whereas the membership of
the Board of Governors was changing constantly. The feeling was expressed that many
of the rules and regulations of the Board of Governors restricted unnecessarily the
autonomy of the Federal Reserve Banks, and it was suggested that the staff was
primarily, if not ultimately responsible for such rules and regulations. The recent
requirement that the Board of Governors approve in advance the payment of all counsel
fees in excess of $1,000 was cited as an example of needless and irritating regulation.
Chairman Neely said that the Board of Governors had made available to each of
the Chairman a comprehensive report of a study of the subject of membership in the
Federal Reserve System and recommended that each Director examine the report. The
exchange problem was an important factor affecting membership in the System and
was one concerning which the Board of Governors would like to have the
recommendation of the directors.
Chairman Neely stated that no one at the Conference recommended the transfer
to the Federal Reserve Banks of any of the powers now exercised by the Board of


Governors. Some of the Chairmen did, however, voice objection to the extent to which
the Board of Governors had issued regulations in the exercise of its powers.
The Chairman reported that in his statement to the Conference he had sought to
emphasize the idea that each of the Federal Reserve Banks should make its views
heard in Washington, and that the directors should be prepared to discuss intelligently
the central banking problems faced by the System and to express informed opinion
concerning such problems. In response to a question from Director Fitzgerald Hall as to
whether the Federal Reserve System was a central bank, Vice President Malcolm
Bryan replied that the System was at least a substitute for a central bank.
At Chairman Neely’s invitation Governor Ronald Ransom spoke of the
impressions gained by other members of the Board of Governors at the Sea Island
Conference. He began by expressing an opinion to the effect that much had been
accomplished toward a better understanding of the problems which confronted the
directors and Board members.
The Governor referred to the question raised by Director Hall as to whether
the Federal Reserve System is a central bank. A definitive answer to this question
would, in Governor Ransom’s opinion, simplify a great many other important problems.
He referred also to another question raised by Director Hall as to how the Board of
Governors could possibly be informed concerning conditions in the country as a whole.
He admitted that there was need for better information, but stated that the Board of
Governors’ knowledge of condition in the country as a whole was dependent to some
extent on the Federal Reserve Banks’ knowledge of condition in their own districts.
Ransom said that the Staff of the Board of Governors was the best in


Washington, being made up of able career men not under the civil service. The danger
of bureaucracy was, of course, always present. The Board however, and not the staff,
was ultimately responsible for the regulations of the Board. The centralization of
economic power, in Governor Ransom’s opinion, was dangerous because it tended
toward the invasion of the field of individual liberty. He referred to the present situation
in England and France as evidensing the fact that the problem of bureaucracy was
world wide, involving a great deal more than the Federal Reserve System.
Mr. Ransom stated that as one result of the conference the Board of
Governors was having a survey made of its regulations to ascertain whether any could
be dispensed with. He pointed out the necessity of cooperation between the Board of
Governors and other Governmental agencies in the formulation of policies, citing as an
example the stabilizing of bond prices in the fall of 1939. In this situation it was
necessary to act promptly and there was no time to seek the opinions of the directors of
the twelve Federal Reserve Banks.
Governor Ransom pointed out that the operation of a Federal Reserve Bank
are today largely mechanical, but suggested that the Reserve Banks ought not to be
satisfied with the efficient handling of routine business. In his opinion the Reserve
Banks should be a principal source of business and economic information concerning
their own districts. He thought it advisable also that the Reserve Banks maintain the
closest possible contacts with the member and nonmember banks of their districts.
With reference to current legislative proposals to provide aid for small
business, Director Hall suggested that the term “small business” was used to include
any business that found itself in need of money.


Referring to the Sea Island Conference of the Chairmen, Governor Ransom
said that in his opinion it would be advantageous for the members of the Board of
Directors from time to time to meet with representatives of the directors of the twelve
Federal Reserve Banks other than the Chairmen, believing that closer contacts between
the Reserve Banks was desirable.
Regarding the centralization of authority in the Board of Governors, Director
W. D. Cook said that he had observed that the Board members were uniformly
sympathetic to the views of the directors, and that any fault there might be was
traceable to the law itself and not to any unreasonable attitude adopted by the members
of the present Board of Governors.21
With the war in Europe a year old in September, a program of National
Defense was taking shape. Cognizance of this situation was taken at the Bank’s
September Board meeting.
Chairman Neely referred to the fact that Vice President Bryan had made
some investigation of the possibility of having located within the Sixth Federal Reserve
District new plant facilities which would be required in connection with the program of
National Defense.
Following some remarks on the subject by Vice President Malcolm Bryan,
Governor Ronald Ransom, down from Washington for the meeting, voiced his opinion
that no group was better qualified than the Directors of the Atlanta Bank and its
branches to develop information on the matter. Further, that the problem presented an
unusual opportunity for the Directors to perform a genuinely useful service. After more
discussion it was unanimously


“RESOLVED, that the bank’s department of Research and Statistics, under
the direction of Chairman Neely, President Parker and Vice President Bryan, be
directed to proceed in making a survey and study of the proper steps to be taken toward
locating permanent industrial plants and related businesses in this area in connection
with the defense program, and that a proper appropriation be authorized for that
In November Vice President Bryan, in reporting to the Board on economic
conditions, called attention to the fact that practically all business indicators were
moving upward. Also, that the business situation is, and for some time will be, heavily
influenced by expenditures of the Federal Government for national defense. He
commented on the fact that member bank loans and investments, both in the Sixth
Federal Reserve District and in the country as a whole, have shown an increase in
recent weeks.
Bryan commented also on the decrease during recent weeks in the System’s
open market portfolio, pointing out that the adoption of a more flexible open market
policy would probably detract from the significance, in the mind of the public, of minor
changes in the volume of United States Government securities held by the Federal
Reserve Banks.
He concluded by reporting on the nature and extent of the work which the
Department of Research and Statistics had been called upon to perform for the National
Defense Advisory Commission. He also presented a chart showing the size and location
of the several military and training establishments within the Sixth Federal Reserve
District. 23


In December President Parker reported to the Board that the Bank had
recently retained the services of W. C. Cram, as industrial consultant, at a fee of $500
per month. He pointed out that Mr. Cram was by profession and training a mechanical
engineer, having had wide experience with the Georgia Power Company and other
Southern industrial organizations. He said that at present Mr. Cram was in Washington
to obtain information as to materials required by the Army and Navy. Also, that Mr.
Cram would endeavor to assist southern manufacturing plants in obtaining national
defense contracts and advise on technical problems of production.
President Parker also informed the Directors that, as a result of conferences
in Washington between Chairman Neely and certain officers of the Navy, the Bank was
now engaged in making a survey of facilities available on the South Atlantic and Gulf
Coasts for the repair, maintenance and construction of ships.24
By the summer of 1940 a statement of policy as to foreign accounts of
Federal Reserve Banks appeared timely. On July 10 Allen Sproul, First Vice President
of the Federal Reserve Bank of New York wrote to President Robert Parker of the
Atlanta Bank and enclosed a copy of a letter he had written on the subject to R. R.
Gilbert, President of the Federal Reserve Bank of Dallas:
“…I am glad to state what we believe to be the relationship between the Federal
Reserve Bank of New York and the other participating Federal Reserve Banks with
respect to the foreign accounts carried on our books.
“Due to the war, with the invasion of various countries by Germany, and the
consequent interruptions, delays and dangers affecting communications, it has been
impossible for certain foreign central banks to continue giving instructions to us, in the


usual manner, regarding their accounts. Some of these banks have moved from the
places where they were previously established, and have had to conduct their
operations from other places, mostly outside their own countries. Others have not
attempted to move, or have not succeeded in moving, from territory occupied by the
Germans and there may be some question as to their freedom of action. Furthermore,
emergency laws, decrees and regulations have been enacted and issued in foreign
countries affecting operations of banks and their nationals, and particularly the control
and disposition of foreign assets. The interpretation and effect of these emergency
measures, even when the texts are available in authenticated form and in official
English translations have involved questions of foreign law which could not be
determined here with any satisfactory degree of certainty. The situation has of course
been further complicated from our standpoint by the promulgation of the emergency
orders and regulations in this country, in effect ‘blocking’ funds and other property held
here belonging to governments and nationals of invaded countries, and instituting a
system whereby licenses issued by the Secretary of the Treasury, or under authority
delegated by him, are required for transactions involving such funds and property.
“In the circumstances, many foreign central banks and foreign governments
have deemed it necessary or advisable to grant new authorities for the operation of their
accounts here, to the Ambassadors or Ministers of the respective foreign countries, or
to other persons available to sign in this country, or in some instances to persons not in
this country. Our problem has been to satisfy ourselves as to the validity and
effectiveness of such new authorities and to obtain such evidence, authentication, and
confirmation thereof as has been possible. Each case has been affected by different


circumstances or a different combination of circumstances, so that each case has
involved new problems.
“As the best available means of obtaining adequate protection in acting on these
new and unusual authorities, we have sought to obtain such evidence, authentication,
and confirmation of the authorities as we could through diplomatic chanels. If we had
insisted in all cases and receiving from abroad the complete and duly authenticated
record supporting the new authorities, long delays would necessarily been involved
during which it might not have been possible for anyone to operate the accounts in
question. Such delays would have been embarrassing to all concerned and might have
resulted in financial injuries to the owners of the accounts and possible consequent
liability therefor on our part. In the circumstances it has seemed to us necessary to
devise a method whereby, with adequate protection to ourselves, we could recognize
and act upon the new authorities before the complete supporting documents were
available. Whenever it has seemed appropriate we have suggested through the
Treasury Department which has been most cooperative with us, that the Ambassadors
of Ministers of the foreign countries address letters or notes to our State Department
covering the relevant points necessary to support the authorities in question, and that
these communications be forwarded to us with such confirmatory comments as the
State Department might be willing to make. This correspondence protects us, we
believe, against liability in connection with possible future claims that the new authorities
are not valid and binding upon the owners of the accounts.
“The important principles of law upon which we have relied, under advice of
counsel, are, stated briefly, that if the duly accredited representative of a foreign


government makes representations (a) as to the authority of certain individuals to deal
with property of his government or of the central bank of his government, (b) that certain
property or accounts are owned by our subject to the control of his government or the
central bank of his government, (c) that his government has enacted or promulgated
certain laws or decrees having a certain effect, or (d) that his government or the central
bank of his government has taken certain valid and binding action, such representations
are binding and conclusive upon such government and any successor thereof and upon
such central bank; and that if such representations are made to, and recognized and
accepted by, our State Department, they are conclusive evidence in our courts as to the
existence and validity under foreign law, of such authority, ownership, laws or action.
“While, as previously indicated, each case has involved different circumstances or
combination thereof, and has presented special problems, we believe that we have
been able to handle the foreign accounts maintained with us in such a manner as to
protect ourselves against risk of substantial loss and liability.
“During this period since the commencement of the war, the question has arisen
from time to time as to our authority to carry accounts for foreign governments as
distinguished from foreign central banks, there being some instances where it has been
or is desired to transfer accounts from the names of foreign central banks to the names
of their governments. It has always been our view that our authority to open and
maintain dollar accounts for foreign governments is dubious, except when such
authority is granted to us as fiscal agent of the United States by the Secretary of the
Treasury. We have accordingly refrained from opening and maintaining dollar accounts
for foreign governments except in cases in which we have received such specific


authority from the Secretary of the Treasury.
“The question of the respective rights and liabilities of the other Federal
Reserve Banks implicit in their participation in the foreign accounts carried on the books
of the Federal Reserve Bank of New York has never been formally determined, so far
as I know. It is a fact, however, that ‘the profits and losses resulting from the ordinary
operation of such accounts have been shared pro rata between all participating Federal
Reserve Banks. The question which you intend to raise in your letter is, I assume,
whether the Federal Reserve Bank of Dallas and each of the other participating Federal
Reserve Banks would incur liability for a pro rata share of an extraordinarily loss or
liability that might result from operations in such accounts; for example if it should be
established in litigation against the Federal Reserve Bank of New York that it had
disposed of assets held by it for foreign account pursuant to invalid ‘instructions. I think I
can do no more than to state that it is our conception that the Federal Reserve Bank of
New York is in effect the agent of all participating Federal Reserve Banks in the
operation of foreign accounts, and that the common law rule of agency applies.
Consequently we believe that if, in connection with our foreign accounts, a loss should
be incurred which is not attributable to our own negligence it should be shared by all
participating Federal Reserve Banks, but that if we should suffer a loss caused by our
own negligence it should be borne solely by us. “25
As 1940 ended the Atlanta Federal Reserve Bank, based upon