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Federal Reserve Bank of St. Louis

INSIDE THE FEDERAL RESERVE BANK

Additional copies of this booklet may
be obtained without charge from the
Bank and Public Relations Department,
Federal Reserve Bank of Richmond,
Richmond, Virginia 23213.

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Federal Reserve Bank of St. Louis

OF RICHMOND/BY ARTHUR V. MYERS, JR.

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Federal Reserve Bank of St. Louis

This is the story of the Federal Reserve
Bank of Richmond. The Richmond Bank is
one of the twelve regional banks that, together with some 6,000 commercial banks
and the Board of Governors in Washington,
make up the Federal Reserve System.
As the central bank of our nation, the
Reserve

Federal

System

operates

very

much like the central banks of other advanced countries. Broadly speaking, the
System has two important functions. First,
it tries to provide monetary conditions
that encourage high levels of employment,
a growing economy, and a sound dollar.
Second, it renders a large number of essentia I financial services to the publicprimarily through the commercial banks.
This
which

booklet
the

describes

Federal

the

Reserve

services
Bank

Richmond and its branches in Baltimore,
Maryland, and Charlotte, North Carolina,
provide for the people of Maryland, the
District
Virginia,

Columbia,

North

West

Carolina,

and

Virginia,
South

Carolina.
To help understand our various service
functions, let's tour the Federal Reserve
Bank of Richmond.

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Federal Reserve Bank of St. Louis

MONEY
Perhaps the best place to start is in our
Money Department. You might say that we
are wholesalers of money. When your home
town member banker finds his supply of
currency and coin running low, he will
write, wire, or call our Money Department
which will ship the money by armored car.
At the same time the bank's account with
us will be reduced by the amount of the
shipment.
On the other hand, when local merchants
and businessmen make large deposits of
currency and coin with the bank, your
banker is likely to find that he has more
cash than he needs to satisfy the demands
of his customers. When this happens he
is likely to return the surplus currency and
coin to us for credit to his account.
It is the function of our Money Department to distribute currency and coin to
banks so that it is available when you
and others need it.

NOTE ISSUES
Chances are that one of the dollars in
your pocket or purse bears a green seal.
If so, it's a Federal Reserve note-the kind
of money the Reserve Banks issue. The
notes of our Bank bear the identifying
number 5 and the letter E.

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Federal Reserve Bank of St. Louis

PROTECTION
Money is indeed important, but it
wouldn't be important for long if anyone
could just come in and take it. To protect
it and other valuables, we have a highly
trained and well-equipped guard force on
duty around the clock.

CHECK COLLECTION
Checks are so easy to use that we never
give a thought to the behind-the-scenes
work that makes them such a smoothfunctioning part of our economic life. The
clearing of checks (getting the funds transferred from one bank to another) is a
mammoth task which the banking system
performs with amazing speed and an air
of casual competence.

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Federal Reserve Bank of St. Louis

Suppose, for example, that you receive
a dividend check for $10 drawn on a New
York bank and you cash the check at your
local bank. In order to get his money, the
banker wi 11 promptly send the check to our
Transit (check collection) Department. We
will add $10 to your bank's account with
us and send the check to the Federal
Reserve Bank of New York, which will
route the check to the bank on which it
is drawn. Through a series of bookeeping
entries, the New York Reserve Bank will
pay us the $10 and collect $10 from the
drawee bank by reducing its account with
the New York Reserve Bank. The bank on
which the check is drawn will reduce the
account of the corporation paying the
dividend by $10 and send the cancelled
check to the corporation at the end of
the month.
The Transit Departments at our three
offices clear over one million checks daily,
thus helping the banking system to serve
its customers more efficiently.

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Federal Reserve Bank of St. Louis

NONCASH COLLECTION
Reserve Banks also collect for member
banks,

so-called

noncash

items-notes,

bills of exchange, and similar items not
payable on demand. Such items are processed

in a separate division

of our

Transit Department.

ACCOUNTING
After seeing the volume of work handled by our Money and Transit Departments,
one can easily understand our need for
an Accounting Department. This Department keeps a running tally of our assets,
liabilities, income, and expenses. It also
pays our bills and prepares financial statements

for

our officers,

staff members.

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Federal Reserve Bank of St. Louis

directors,

and

BANK ACCOUNTS
There was a time when shifting funds
from one part of the country to another
could turn a banker's hair gray overnight,
for gold or currency frequently had to be
bundled up and shipped from one location
to another. Now, moving funds is a simple
matter. If a corporation in your home
town, as a customer of one of our member
banks, wanted to transfer part of its bank
account to a west coast bank, its banker
could do it in minutes by wiring our Bank
Accounts Department. Through our leased
wire system our Bank Accounts Department would telegraph the Federal Reserve Bank of San Francisco, which would
in turn notify the corporation's west coast
bank. The whole transaction would be
handled through bookkeeping entries in
a matter of minutes. No actual currency
would be moved anywhere.
This Department also keeps track of
member banks' deposits with us and
checks to see that such deposits are
maintained at the levels required by
System regulations.

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Federal Reserve Bank of St. Louis

DISCOUNT AND CREDIT
Banks are subject to unforeseeable reductions in deposits and increases in loans.
To meet such demands banks may draw
down balances with other banks, sell securities, or borrow money. One place to
which a member bank can always turn
for a temporary loan for appropriate purposes is its Reserve Bank. Our Discount
and Credit Department handles such loans.

SECURITIES
Your home town member bank owns
large quantities of bonds and other securities. Chances are it keeps at least part
of them in our vaults to use as collateral
when borrowing from us; to secure deposits the Federal, state and local governments have made at the bank; or to safeguard the securities until they mature or
are sold. This Department takes care of
such securities for banks and clips the interest coupons when they become due. If
a bank wants to buy or sell securities, this
Department will handle the transaction.

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Federal Reserve Bank of St. Louis

FISCAL AGENCY
Our Bank acts as a financial agent of the
United States Treasury Department. When
the Treasury wants to borrow money from
banks, other financial institutions, corporations and the public, it sells bonds or
other securities through the Federal Reserve Banks. When the time comes to pay
off the bonds, we handle the payment too.
Such work is handled by our Fiscal Agency
Department. It also performs many related
tasks, such as transferring (usually by
wire) and exchanging securities. One of
its more familiar tasks is issuing and redeeming savings bonds through home-town
banks and · other qualified agents. Other
important jobs are assisting the Treasury
in tax collection and handling its deposits
at

the Reserve Banks and commercial

banks. Perhaps the most unusual responsibility is burning in our incinerator certain

issues of United States currency

which are no longer fit for circulation.

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Federal Reserve Bank of St. Louis

DATA PROCESSING
All the information which this Bank collects would be worthless if it were not
processed properly. This massive job is the
responsibility of the Data Processing Department. To the hum of a computer and
related equipment, millions of statistics
are processed and recorded here daily.

TELEGRAPH 8c SWITCHING CENTER
Money and security transfers sent by
our Bank Acounts and Fiscal Agency Departments to other Federal Reserve offices
go through our Switching Center, which is
the hub of the entire Federal Reserve
System

leased

wire

network.

For

ex-

ample, if a bank served by the Boston Reserve Bank should want funds wired to a
bank in the Dallas District, the message
would travel from the Boston Reserve Bank
through our Richmond center and on to
the Federal Reserve Bank of Dallas in
much the same way that telephone calls
are routed through a central switchboard.

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Federal Reserve Bank of St. Louis

AUDITING
Our auditors are kept busy checking on
hundreds of millions of dollars of currency,
coin, securities, and other assets and liabilities. In addition, the Auditing Department checks to make sure that the management of the Bank follows the restraints
imposed by law and System policy. This
Department occupies a unique position
within the Bank. Rather than being responsible to our President, the General Auditor
reports directly to our Board of Directors,
since the Auditing Department acts as
"watchdog" over the entire Bank, including
even the top officers. The Richmond Reserve Bank is also examined carefully each
year by men sent here from the Board of
Governors of the Federal Reserve System
in Washington, D. C.

EXAMINING
Banks, as institutions of public trust
and depositaries of community funds,
have many responsibilities. In this country
they form the hub around which our
economic life revolves, and people everywhere have a stake in the soundness and
effectiveness of their banks. This public
interest in banking has long been safe
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Federal Reserve Bank of St. Louis

guarded by laws and regulations which are
enforced by examining authorities. Every
year a group of experienced, well-trained
men from our Banks make unannounced
examinations of State member banks. They
appraise the assets and liabilities and the
quality of the bank's management.

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Federal Reserve Bank of St. Louis

RESEARCH
Congress has charged the Federal Reserve System with carrying out monetary
policy. Our actions in this important area
have a tremendous impact on the economy
of the country and, consequently, must be
based on careful evaluation of business
conditions. The main job of the research
staff is to assist our management in appraising business conditions and the impact our actions wi II have upon the
economy.
Other duties include collecting and processing statistical data; publishing statistical reports, the
Monthly Review, and
special pamphlets; briefing our Board of
Directors on business conditions; answering requests for information from the
public; and making frequent talks on
economic matters.

LEGAL
The Legal Department handles letters
to and from member banks and others
covering legal questions, such as interpretations of the Federal Reserve Act and
other banking laws and regulations. It
also advises the Bank's directors and officers on legal aspects of the Bank's
operations, approves all contracts and
other documents to which the Bank is
a party, and conducts any litigation involving the Bank.

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Federal Reserve Bank of St. Louis

PLANNING
If this Department had a motto, it
would be "Can do." Serving any Bank department that requires help, our planning staff assembles information about
cost and efficiency of operations, studies
work procedures, and acts generally as the
Bank's troubleshooter in clearing hazards
and bottlenecks in daily operations.

EMERGENCY PLANNING
We hope it never happens, but nevertheless we must be prepared for a nuclear
attack by an unfriendly nation. Our Emergency Planning Department assists commercial banks in making arrangement for
the protection of employees, records, securities and money in the event of such
an emergency. In addition, Emergency
Planning performs the same service for
our own Bank and its employees.

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Federal Reserve Bank of St. Louis

PERSONNEL
The most important part of our Bank is
its people. And to these people one of the
most important departments is our Personnel Department, which handles employee relations. Staff members of the Department interview job applicants, evaluate
and classify jobs, pay us regularly, administer our retirement program, operate
our health service and cafeteria, and do the
thousand and one things that are so important to those who earn their living here.

GENERAL SERVICE
As the name implies, General Service
performs a variety of duties all over the
Bank. This Department buys furniture,
equipment, and supplies; operates the tele- .
phone switchboard; maintains a central filing system; and stores old correspondence.

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Federal Reserve Bank of St. Louis

BUILDING AND EQUIPMENT
Having come this far on the tour, you
can see that our facilities are very large.
Our head office building, for example, occupies eight floors, covers half a city
block, and houses over eight hundred employees. The Building and Equipment Department is staffed with carpenters, electricians, engineers, plumbers, and others
who maintain the building and service
most of our equipment.

PRINTING AND SUPPLIES
Each week your home-town bank receives a notice that the United States
Treasury wi 11 auction Treasury bi I ls. It may
also receive an announcement that the
Treasury will sell bonds, or it may get
a letter about a revision of a Federal
Reserve regulation. You, yourself, may be
receiving our Monthly Review, which contains various articles of interest to the
business community. All of this material,
including this booklet, is printed in our
printing section.
The supplies section of this Department
stocks and issues the hundreds of itemsfrom paper clips to paper towels-that are
necessary to keep any such organization
in motion.

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Federal Reserve Bank of St. Louis

BANK AND PUBLIC RELATIONS
In the Fifth Federal Reserve District
there are hundreds of banks. One way
that we stay in touch with the many banks
in the District is through the men in this
Department who visit and get to know the
bankers. These men discuss mutual problems, learn about economic conditions
in the area, and in general try to find
better ways in which we can serve our
member banks and-through • them-the
public. It is also their job to explain to
bankers Federal Reserve System policies
and objectives.
The Bank and Public Relations Department also furnishes information to colleges, universities, other schools, and the
public through the use of publications,
films, news releases, speeches, and correspondence. The Department also arranges personal tours of the Bank for interested people.
If you would like to know more about
our Bank or the Federal Reserve System,
just get in touch with our Bank and
Public Relations Department.

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Federal Reserve Bank of St. Louis

Full text of Inside the Federal Reserve Bank of Richmond

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