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Federal Reserve Bank of St. Louis
I
I
M05T OF U5 TEND TO v,e.w BANK5 A5
THEY ARE PORTRAYED HERE. ••• AS FINANCIAl5UPERMARKET5 5ERVICING OUR INDIVIDUAL FINANCIAL-NEEDS. BUT BANK~ PLAY A MORE IMPORTANT RO~E
IN OUf< E=CON0MY ~y ACTING A5 FINANCIAilNTERMEDIARIES... GO-BETWEENS LINKING 5AVER.t;
AND BORROW~R5 ,AND, AT THE= SAME. TIME:,
PERFORMING A VARIE:TY OF 5ERVICE:5 FOR PEOPLE
AND BU51NE.SSES PAYING AND
RECEIVING MONE.Y.
SCRIPT BY
ARrBY
At. WENZEL
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Federal Reserve Bank of St. Louis
C . .:,:, PARNOW
2
1984
WHAT DO YOU MEAN
NO LOANS FOR MONKEY
BLJ51NE551
3
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Federal Reserve Bank of St. Louis
TWO MAJOR TYPES OF BANKING BU51N1=55E5
l=XIST IN THE U.5.-- COMME::RCIAl 8ANK6 AND
THRIFT IN5TITUTION5. "THRIFTS" INCI..UDE
SAVINGS AtJD LOAN A550CIATION5, MUTUAL.
SAVINGS BANKS AND CREDIT UNIONS.
. I
,oAND'MAKING LOANS FOR HOME: BUIL-DING AND MORTGAGE4i.
· PEOPLE WANT THEIR CASH WELL PRO·
TECTE:D, AND BANKS, WITH THEIR VAULTS,
GUARDS AND ALARMS, OFFER GREATER
SAFETY rHAN KEE:PING MONE=Y AT HOME.
WHEN
9ANKG I-END,, THf:.Y CREATE NEW CHECKBOOK
DOLLARS AND ADD THE:M iO A 80RROWSR'5
CHECKING ACCOUNT. BECAUSE COMMERCIAL
BANKS CREATE At.MOS, ALL. NEW DOLLARS,
THEY PLAY A 5PECIAL ROL..E IN OUR
FINANCIAL 5Y5TF;.M.
•
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Federal Reserve Bank of St. Louis
4
Re VARIOUS TYPE
NG ACCOUNTS. DEP
ING ACCOUNT"S MAK
FTHE U.S.MONSY 5
T 15 CURRENCY AND
SIMPLY BY WRITING A CHE=CK, WE TELL THE BANK TO
TRAN'SFER MONEY FROM OUR CHECKING ACCOUNT TO
SOMEONE ELSE:.
8ANKER5 HAVE LEARNED THAT IF
THE:Y KEEP A S'MALL FRACTION OF
DEP051T5 ON RESERVE= TO MEET
WITHDRAWALS, THEY CAN LEND THE
RE5T. BANK5 EARN ENOUGH FROM
LOAN5 TO PAY DEPOSITORS FOR
11,
·1
s¥[I ~~~E~Rp~g~Tf.Af\lD,
THE:
FWJD5 ARE DEPOSITED AND WITHDRAWN FROM 8ANK5
ALt.. THE: TIME:. HOWEVER, ONLY A SMALL FRACTION
IS WITHDRAWN ON A GIVEN DAY,
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Federal Reserve Bank of St. Louis
5
GUPl'OS5 WESTSIC>f= BANK, WITH 'DEPOSITS OF
$1000, KEEPS A Re5ERVE OF 15 PERCENT OR $1~0.
IT HAS THE DIFFERENCE:·-$85O--TO L.ENP.
.
ECAU5E OF THE ''FRACTIONA
E5ERVE SY5TEM, BANKS, A'S
A WHOLI:, CAN t=XPAND OUR
ONEY SUPPL.Y Sf:VERAL
EG·-BY MAKING L
I HOPE: THI:. PAYMENTS WON'T
BE TOO WRENC~INo.
WHEN WSST51DE t..eND5 JAKE. THE PL.UMBER $850, THE
FUNDS ARE PUT INTO A NEW OR EXISTING CHECKING
ACCOUNT FOR JAKE..
JAKE WRITES A CHECK FOR $8SO TO SLICK USED TRLJCK
CO., WHICH PUTS JAKE'S CHECK IN ITS CHECKING AC·
1 - - - - -.... COUNT AT EAST51DE BANK.
EASTSIDE GAINS $850 IN DEPOSITS AND
HOLD5 A RESERVE OF 150/o OR $127. ,50,
LEAVtNG $622.5() TO LEND TO HEl-fSN'S
BEAUTY SPA. _ _ ___,
THAT'S
WHAT I NEEDED··
"PERMANENT"
CAPITAL!
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Federal Reserve Bank of St. Louis
AS THE: PROCESS CONTINUE5, WITH BORROWERS'
FUNDS ENDING UP IN DIFFERENT BANK'S, THE=
ORIGINAL $1,000 PEPO?IT CAN S.XPAND
TO MORE THAN $6,000.
L-OAN5 TO BU9INE5SES
HELP CREATE JOBS,
STOCK S-HELVES, BUILD
FACTORIES AND BUY
NEW SQU/PMENT.
ACE DEPARTMENT
STORES
1 RECEIVING
J
<,ff:.ED~
TRUCKING CO.
LOANS TO INDIVIDUALS HELP THEM
BUY WHAT THEY WANT.
HOWEVER, MONEY CREATION MUST BE CONTROLLED. IF TOO MUCH MOtJf:Y IS PUMPED
INTO THE ECONOMY, we GET INFLf-\TION.
THI: PURCHASES MADE POSSIBLE BY LOAN5
HELP Kf=EP OUR ECONOMY ACTIVE=.
WITHOUT eNOUGf-4 MONEY, ECONOMIC ACTIVITY
SLOWS AND UNEMPLOYMENT RISES.
I WONDER IF
THEY NEED SOM.EON6
TO PAINT TH15
FENCi=!
PUMP
MONEY
SUPPLY
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Federal Reserve Bank of St. Louis
7
BANK RESERVES ARE USE=D TO
HELP CONTROL THE GROWTH OF BANK
CREDIT. WE:.'LL- LOOK MORE CLOSELY
AT HOW CREPIT 15 CONTROLLED
LATER, BUT, FIRST, LET'S see
HOW BANKING EVOLVED.
8ANf<ltJG 8E6Aij THOUSANDS OF YEARS AGO. THE
ASSYRIANS, BABYLONIANS AND ANCIE:NT GREEKS ALL
PRACTICED SIMPLE FORMS OF BANKING--SAFEKEEPING, EX:CHANGIN6 FOREIGN COINS AND MAKING
L-OANS--MAINLY IN CONNECTION WJTH TRADE.
ANCIENT ROME HAD TWO TYPES OF BANKERS
·-THOSE WHO MADE LOANS ANO THOSE WHO
EXCHANGED FOREIGN MONIES.
BANKING GREW RAPIDLY IN THE MIDDLE:. A&E:5,
WHEN TRAPE BEGAN TO FLOURISH. ONE OF THE
OLDEST BANKING SY5TE=M5 WAS IN ITALY
WHERE BANKS WeRf= e5TA8LISHED IN VENICE
IN I 171, AND IN GENOA IN 1320.
BRITISH BA~KING BEGAN Al.MOST BY ACCIDENT IN THE MID-1600'5 WHEN KIN6
CHARLES :r HELPED HtMSELF TO THE: MONEY
THAT MERCHANTS LEFT IN Hl5 PROTE:CTION
IN THE. 70WER OF LONDON.
ALTHOUGH THE KING LATER RETURNED THE.
MONEY, THE MERCHANTS DIDN'T TRU5T HIM
AND HAD THEIR CLERKi, PROTECT THE: MONeY.
BUT, 60Y5
BROUGHT
8
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Federal Reserve Bank of St. Louis
THE GOLD5MITH5 PAID A LOW INTEREST RATE
FOR THE BORROWED MONEY AND l..l:NT IT AT
A HIGHER RATE.
BUT THE CLERKS OFTEtJ STOLE OR SECRETI-Y
BORROWED THE MERCHANTS" MONEY AND
LENT IT lO GOLD6M.ITH5.
DON'T FORGET-I'LL NEE=D IT FRIDAY,
AND IT'Ll- COST
YA 4o/o!
P55T. HAVE IT
BACK BY FRIDAY A~D
I.'l..t.. ONLY CHARGE
YOU 2o/o!
SORROWING AND t.ENDING THI$ WAY WAS SO
PROFITA8LE, THE 60LD5MITH5 f:XPANDED THEIR.
OPERATIONS BY 501.-ICIT/NG MONEY FROM THE:
PUBl..lC.
I't..L. HOI-D
YOUR 5TASI-I AND
PAY YOU CA5H.
THEY PROMISED sAFETY A~D AN
...,__....
INTEREST PA
I(
,.jL
~
THI= GOLDSMITHS GAVE. DEPOSITORS RECE:IPTS
FOR THEIR FUNDS. THESE RECEIPTS, WHICH
COULD Bf: USED A5 MONEY, WERE:. THE BEGINNING OF MODERN-DAY CHECK5.
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Federal Reserve Bank of St. Louis
-.--.r----t
GOOD AS
GOL.D. ~""""''
• 9
51flJCE THI= RECEIPT5 WERf: ACCE:PTED A5
MONEY, THI= 00l-C>5/t\lTHS SOON MADF; J..OAN5
WITH RECEIPTS IN5Tf=AD OF 60t.D. THEY
WERE "CREATING MONEY," A J08 WHICH MADE
THE.M BANKERS RATHER THAN GOLDSMITHS.
HERe.'5 A RECEIPT FOR
20 GOLD PIECES TO TIDE:
YOU OVE:R, MOE. .
BANKING A5 WE KNOW IT TODAY STARTE:D IN
AMERICA WHEN THE: BANK OF NORTH AME:RICA
WA5 FORMED IN PHIL.ADELPHIA IN 1781 TO HE1-P
FINANCE THE REVOLUTION.
,
W~ ' - - - - - - - - - - - - LET~
NEED 6UN5,
BUT WHERE
- GTART A
POWDER AND
WII..L- WE GET
BANK!
V..~GONS!
THE M0Nf=Y1
OTHER BA~KS GRADUALL.)' 5PRANG UP AROUND THE
COUNTRY. THE: BANK OF NEW YORK WA5 ONE OF THE:.
FIRST, OPENING IN 1784 WITH A CHARTER DRAWN
UP BYALE)<ANDER HAMILTON,
HAMILTON BELIEVED AMERICA'S HOPE FOR
THE: FUTURE WA5 INDUSTRIALIZATION, AND
THAT THE COUNTRY NEEDED A STRONG
BANKING SYSTEM· TO HELP BUILD
INDU5TRIE5. # - - - - WE DEPEN
ON FORE./G
WE OUGH
10
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Federal Reserve Bank of St. Louis
THE BANK 155UEP A MUCH NEf:DED PAP~
CURRENCY AND HELPED SUPPLY THE CREP1T
NEEDED 8Y BUSINESS AND THE GOVERNMENT,
BUT CRITICS DEFEATED ATTEMPTS TO RENEW
ITS CHARTER, AND THE BANK CLOSED.
CONGRE55 APPROVED A 5ECOND BANK OF Tt-fE.
UNITED STATES IN 1816 BECAUSE OF ECONOMIC
PROBI.-EM5 AFTER THE WAR OF 1812, BUT IT, TOO,
LAPSED AFTER 20 YEA~.
1.-IKE ALL BANKS SACK iHEN, THE TWO BANKS
OF THE UNITED STATES ISSUED THEIR OWN
PAPER CURRENCY AND EXCHANGEP CURRENCY
FOR ,ILVER OR GOL.D.
WHEN CUSTOMERS PEPOSITED NOTES IS5UED SV
STATE CHARTERED BANKS, THESE NOTE'S WERE
QUICKLY RETURNED TO THE ISSUING BANK
AND REDEEMED FOR PRECIOUS ME.TAl.-.
11
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Federal Reserve Bank of St. Louis
WESTERNERS IN FRONTIER STATES, SUCH AS KENTUCKY
AijD TEtJNE55t=E, FELT THAT STATE BANK NOTES WERE
REDEEMED TOO QUICKLY, LEAVING TOO LITTL.E MONEY
FOR TMEU~ EXPANDfNG ECONOMY. -----_-___-______.
PR~IPf:NT ANDREW JACK~ON FORCED THE
CLOSING OF THE SECOND BANK OF THE. U.5.
IN 1836. THE NUMBER OF STATE BANK'S, AND
THE AMOUNT OF NOTES THEY ISSUED, EXPANDED STEADILY AFTERWARD5.
THESE BANK5 PLAYED AN IMPORTANT ROU:
IN AMERICA'S RAPID GROWTH. STATE BANK
LOAN5 HELPED FINANCE THE. PURCHASE OF
FARM L-AND, SEEDS, TOOJ..S AND LIVE5TOCK.
THEY ALSO HELPED BUILD FACTORIES
,.
JUST THINK, MARTHA,
SOME DAY THIS WIUALL. BE OLJR5.
PRODUCING SUCH NEW TOOLS At; THE: COTTON ~
GIN,THE STEEL- PLOW AND THE REAPER.
-
12
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Federal Reserve Bank of St. Louis
BA K5 AL-50 HELPf=D RNANCE TH~ RAILROADS ANQ?TEAMBOATS THAT BROUGHT.
FARM PRODUCTS TO THE= CITIE5 AND MANUFACTURED G0005 TO THE FAAM5.
~~ /7,
~~
~ - ......--I
= - - ----
-. ------
--
--
- --
- --
-- - -- - ---
WHEN THE CIVIL WAR STARTED, AMERICA DIDN'T
HAVE A UNIFORM NATIONAL CURRENCY. •
SEV~RAL THOUSAND DIFFERENT NOTf:5 CIRCU·
LATED. THEY WERE DIFFERENT SIZES, COLORS
..__ _ _ _ _ AND DESIGNS. - - - - - - - 1
rLL GIVE
- - - - - - , - - - SORRY, .
YOU THREE PINK FIVE"5
I'VE ONLY GOT
AND ONE: YEIJ..OW FIVE
BLUE: TENS.
FOR TWO GRE:i=N
TENS.
TRUST WAS AL50 A PROBLEM FOR BANKS. THEY
WANTED TO BE SURE THEIR NOTES WERe AC·
CEPTED AT FACE VALUE, AND THAT ANY NOTES
THEY ACCEPTED FROM OTHER BANKS WERE
WORTH FACE VALUE.
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Federal Reserve Bank of St. Louis
AROUND THIS TIME=, THE GOVERNME"NT WAS
MAVING TROUBLE GETTING INVESTORS-MAINLY 8ANK5·-TO BUY BONDS BEING SOLD
TO FINANCE THE WAR. - - - - - - - ~ - 1
13
IN 1863, THE TRE'A5URY
SOLVED 60TH PROBI..EM5
WITH FEDERALLY CHAR.TERED NATIONAL SANKS
THAT WOULD BE ALLOWED 10
15GUE. THEIR OWN NOTES
BASED ON THE AMOUNT
OF GOVERNMENT BONDS
THl=Y HELP-
AT FIRST, 'SOME STATE BANKS WERE INOIF·
FERENT TO THE IDEA, BUT SOME SIGNED UP
A5 NATIONAL BANKS WHEN CONGRESS INCREASINGLY TAXED STATE: NOTES.
TAXES, TAXES!
OKAY, I 1 L.L51GN UP!
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Federal Reserve Bank of St. Louis
THE NOTES WOULD ALL LOOK ALIKE, EXCEPT FOR.
THE NAME OF THE ISSUING BANK. AND SINCE
THEY WERE BACKED BY GOVERNMENT BONDS,
PEOPLE WOULD HAVE FAITH IN THEM.
WEL-1.. AH'LL BE--NO'THERN MONEY
t.:OOK5 JES' LIKE SOUTHERN MONEY/
ALTHOUGH TI-IE5E
NOTES WERE TAXED OUT
OF CIRCULATION, MANY
STATE. SANK~ FLOURISHED,
LARGELY BECAU5E THE
u~e OF CHECK~
REDUCED THE
IMPORTANCE OF
BANK NOTE5.
1890
1900
1910
NATIONAL BANKS HELPED STRENGTHEN OUR BANKING
SYSTEM AND CRE'ATED A NATIONAL CURRENCY, BUT THERE
WERE STILL- WEAKNE$ES.
14
'SOMETIMES, WHEN THE: SMALLER BANKS
TRIED TO Gf=T THEIR RESERVES BACK TO tJSE
IN THEIR OWN AREAS, THf=.Y FOLJND THAT THE
BIGGER SANKS HAD LENT THOSE FUNDS ANP
THERE WOULD BE A DEJ..AY. _______..,.
ONE PROBLEM WAS THAT SMALLER
BANK5 AROUND THE COUNTRY $ENT
THEIR RESERVES TO MAJOR MONEY
CENTER 8ANK5, WHf=RE THEY
WERE LENT TO
BU5INE~5f:S.
THIS I-ED TO SOME OF THE SMALLER BANKS
RUNNING OUT OF CASH AND HAVING TO CLOSE
THEIR DOORS.
THE CLOSING OF ONE BANK 50METIMES t.E'D
DEPOSITORS AT OTHER 8ANK5 TO DEMAND
THEIR MONEY, FORCING YET ANOTHER CLOSING. SOON MANY BANKS CLOSED.
WE WANT
OUR. MONEY!
AXES WENT UP TO
THREE CHICKENS. HOW
ABOUT A SAW?
THE WORST OF THESE ECONOMY-SHAKING
''BANK PANICS'' HAPPENED IN 1907, WHEN
CURRENCY ALMOST COMPLETEL.Y Dl5APPE:ARED
FROM CIRCULATIO"'.
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Federal Reserve Bank of St. Louis
15
CONGRESS, AFTER LONG
STUDY AND DEBATE, E5TA8t.15HED THE FEDERAL.
RESE~Ve: SYSWM IN 1913
TO DE=AL.. WITH THe CALI.SES
OF THE51= PANICS.
THE SYSTEM WA5 TO INCLUDE 12 REGIONAL
RESERVE BANKS AND A BOARD OF GOY·
ERNOR5 IN WA5HINGT0N, D.C.
5TATE-CMARTER~D8ANKS,8ECAU5E
CONGRESS DECIDED THAT, 51NCE NATIONAL
BANK5 WERE CHARTERED BY THE FEDERAL
GOVERNMENT, THEY WOULD HAV~ TO JOIN
THE:: SYSTf=M •
AUTMORITY CAME=. FROM THE STATES,
WOULPN'T 8E REQUIRED TO JOIN BUT
COUL..D BECOME MEMBERS JF THf=Y
WERE QUALIFIED.
RESERVE BANKS WOULD HOt.P Mf:MBER BANK',' RE5t:RVES.
•
~~ ~
MINNEAPOLIS
DALLAS
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Federal Reserve Bank of St. Louis
16
-•••
•• ••
••
:::
■
THEY WOUL.D ALSO ISSUE A NEW CURRENCY·FEDERAL RESERVE BANK NOTES.
THE NOTES SOON MADE UP THE BULK OF THE
IJATION'5 PAPER CURRENCY, Al>JD THE CURRENCY-ISSUING POWER OF PRIVATE BANKS
WAS ON ITS WAY OUT.
AMERICA WA'S NOW ON IT5 WAY TO
THE FEDERAL RESERVE WOULD ALSO sµPERVISE ITS MEMBER BANKS, 15.SUE REGULATIONS
AIMED AT PROMOTING SOUND BANKING PRAC·
TICES AND MAKE LOAN5 TO 8ANK5 IN
.,_.._ _ _ TEMPORARY NEED.
A REASONABLY SOUND BANKING
SYSTEM. BUT ANOTHER
HARDSHIP FOLLOWED.
17
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Federal Reserve Bank of St. Louis
MAMY SANKS DIDN'T REC>PEN AND TfiOUSANOS
OF PEOPt-~ LOST Tl-iEfR l-lFE SAVINGS.
M THE EVER DEEPENING DEPRESSION
THREATENED i:veN SOUNDLY MANAGEO SANKS,
NEWLY ELECTED PRESIDENT FRANKl-ltJ P.
ROO&EVeL.T, IN MARCH, 1q33, CL05EP THE
I HAD
A CHRl5TMAG
CLUB GOIN'!
NATION'S BANKS LlNTIL ORPER WA5 RESTORED.
CONGRESS MOVED QUICKLY
TO FIND OUT WHAT THE
PROBL.EMS WERE AND TO
CORRECT THEM.
A MAJOR. STEP WA5
THE ESTABLISHMENT
OF THE FEDERAL
DEP051T INSURANCE
CORPORATION TO
f~URE CUSTOMERS'
OEP051TS, UP 10 A
CERTAIN AMOUNT,
AND. REPAY THEM
IF A BANK FAILED.
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Federal Reserve Bank of St. Louis
MEMBER FDIC
/ / _y·/
FREElOASTER
WITH EVER'(
i
@
4_~EW _~ ~
18
1
•
: J-9]
AF=TER WORLD WAR.JI CONGRESS
5PELLED OUT THE NATION'~
ECONOMfC OBJECTIVES ltJ THE.
EMPLOYMENT ACT OF f946.
THESE GOALS HAVE EVOI..VeD ,
IN1'0 •..
THE AMOUNT OF MONEY
"CREATED" BY BANK5 HAS A
MAJOR INFL.UE:NCE ON THE ECONOMY.
MONf:TARY POLICY INFLUENCES THE:
TOTAL. AMOUtJT OF CREDIT AND ITS
COST. BE:CAUSE THE FEDERAL RESERVE
SYSTEM CAN AFFECT BANKS' ABILITY
TO CREATE MONE:Y, CONGRE55 GAVE
THE SY5TEM THE= JOB OF RELATING
''MONETARY POL.ICY" TO
NATIONAL ECONOMIC GOAL~ .
... SUSTAINING BALANCE IN
OU~ TRADE AND FINANCIAL DEALINGS
WITH OTH~ NATIO~.
19
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Federal Reserve Bank of St. Louis
THE FEPERAl RESERVE DOES IT5 J06 BY
EXPANDING OR CONTRACTING THE AMDUNT
OF RESERVES BANK~ AND THRIFTS HOLD.
SUPPLYING MORE RESERVES ALLOWS THeM TO MAKE
MORE !.OANS. FeWeR RESeRves MEAl-t 1-ess
1.eNPftJG. FOR EXAMPt.E, A BANK WITH A IOo/o
RESERVE ReQUIREMENT MUST HOLD$f0 OUT
OF eveRY 4'100 OF DEPOSITS. IT HAS $90 OF
1.ENDING POWER.
HOWEVER, IF THE= RESERVE: REQUIREMENT
1$. RAIGeD TO 20o/o, THE: BANK MUST HOLD
$20 OUT OF EVE~Y $100 OF DEP05fT5. IT
THE:N ·HA5 ON1-Y$60 OF LENDING POWER.
THE FB>ERAL RE5ERVE AL.50 8LJY5 ANO 5EL-LG
U.. S. GOVERNMENT SECURITIES. BUYING APP5
iO RESERVES. S'ELl-1~ LOWERG RESERYES.
RESERVE BANKS CAN ALSO CHARGE A HIGHER
THf FeD CAN AL90 MAKE IT EITHER fASIER OR
MORE PIFFICULi FOR THEM TO GET LOANS.
OR LOWER INTEREST
~
ON lHf: TEMPORARY
LOANS IT MAl<ES TO SANKS AHc:> THRIFTS.
20
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Federal Reserve Bank of St. Louis
8At.JKING TODAY IS VASTLY
DIFFERENT THAN IT WAS 100
OR EVEN SO YEARS AGO, WHEN
BANKS SERVED ONLY THE BU5fNE55MAN AND THE WEALTHY..
TODAY, BANKS SERVE A WIDE
RANGE OF PeOPL-E FROM ALL.
ECONOMIC LEVELS, AGES AND
OCCUPATIONS.
,
.
MORE ELECTRONIC DEVICl=S ARE Bf:ING USED
IJANl<S ANP THRIS:ts NO LONSeR SIT SAOI< AHC,
WArT FOR FUNPS TO COME IN. THEY ACTIVELY
COMPETE FOR SUSIKE9S ANP CONSUMER PfPOSITS
BY OFFERING HIGHER INTEREST RATES AND BET·
R SEINIC
TO IMP~ove SERVICE~. SOME= 13ANK'5 use
COMPUTERS TO TRANSFER FUND5 INSTAN·
TAtJE:OU5LY BETWEEN SAVINGS AND CHECKING
ACCOUNTS OF INDIVIDUALS AtJD BUSINESSES.
MAGAZINE5
EVEN THE: GRANTING OF CREDIT HAS CHANGED
DRAMATICALLY. BANK CREDIT CARD5 NOW
GIVE IMMEVIATE CRSPfT FOR AMOUNTS Tl-{AT
A FEW YEARS AGO TOOK c:>AYS TO APPROVE.
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Federal Reserve Bank of St. Louis
THE STRUCTURE OF BANKS AND THE WAY TH~Y
OPERATE HAS AL50 CHANGED. ALTHOUGH THS.
NUMBER OF BANKS HAS FAt.LEN ;1Nce 1934,
THE MUMBE:R OF BRANCHES HAS 6ROWN.
1934
1944
1954
1964
1974
1984
21
J
EACH STATE 5ET5 ITS OWN RULES REGARDING
BRANCHING WITHIN ITS BORDERS. SOME ALLOW
WIPESPREAD 6RANCHING. OTHERS ALLOW A
BANK ONLY ONE= OFFICE. FEDERAL LAW PRO. HIBIT5 BRANCHING ACROSS STATE 1-/NE:5.
AT THE SAME TIME, LARGE= FORl:IGN BANK5
HAVE OPENED U.5. OFFICES.
UtJDER FEDERAL RESERVE: REGULATIONS, BANKS
AND THEIR HOLDING COMPANIES HAVE DIVERSIFIED INTO BU51NE5SES RELATED TO BANKING;
S-UCH AS LEASING OR PROVIDING DATA PROCE56ING 5ERVICES. - - - - - - - '
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Federal Reserve Bank of St. Louis
'SOME. OF THE I..ARGER CITY BANKS
OPENED OVERSEAS BRANCHES A'S THl::fR
CU5TOMER5 8ECAMf3. MORE ACTIVl:l-Y fN·
VOLVED IN INTERNATIONAL-TRADE. A Fl::W
BANK'S HAVE OFFICES AROUND THf=
GLOBE.
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Federal Reserve Bank of St. Louis
BANKING HAS UNDERGONE
VAST CHANGES IN RECENT YEAR~
IN TERM$ OF IT5 STRUCTURE, MARKETS,
HARDWARE= AND -SERVICJ:5. HOWEVER,
DE5PIT~ THESE CHANGES, AND THOSE
THAT MIGHT COME IN THE FUTURE:,
BANKS WILL. CONTINUE THEIR
FUNDAMENTAi- ROJ..E AS THE GO~
BETWEEN FOR SAVERS AND BORROWERS,
AND THOSE PAVING AftJD THOSE
RECEIVING MONEY.
I
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Federal Reserve Bank of St. Louis