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0 1985

Quick Change
Test your "knowledge" of banking.
Read the following statements and
indicate whether you believe a
statement to be generally true or
generally false. An "answer key"
follows the last statement.
T F

If a nineteenth century
banker could time travel to
a modern bank, he would
find few major changes.

T F

Nineteenth century bankers worked relatively short
days, while factory hands
routinely worked 12-hour
shifts. Even today most
bankers still work "banker's hours," 9:00 a.m. -3:00
p.m.

T F

Banks offer limited career
opportunities because
they employ only tellers,
guards, and loan officers.

T F

Many people who work in
banks earn less than minimum wage because most
banking jobs require relatively little skill and
training.

T F

State and federal regulations require all male bankers to wear three-piece
suits.

T F

·"Banker's Spread" is
another term for interstate
banking.

Answer Key: All six statements are
false, although the last statement
may be closer than any of the
others to the truth.

.

~

''\!

.

'$.a

·ii

Teller windows at the Union Trust Company, San Francisco
Courtesy of Wells Fargo Bank, History Room, San Francisco

In the popular imagination,
banks are genteel establishments
staffed by low-salaried tellers, lowsalaried guards, and low-salaried
vice presidents. The stereotypical
banker works a short day and retires with a gold watch after 40
years or more of faithful service to
the same employer.
Old notions die hard, and many
of the old notions about banking
linger on. In recent years, however, deregulation and electronics
have ushered in a multitude of
changes. Gone forever is the age of
"3-6-3 banking" when bankers
took deposits at 3%, made loans at
6%, and hit the golf course by 3:00
p.m. Present-day bankers must
scramble just to keep abreast of the
latest developments; banking is
faster-paced and more competitive
than ever before.

What follows are some reminiscences by an old-fashioned banker,
interspersed with observations on
contemporary banking. The reminiscences, which originally
appeared more than fifty years ago
in a series of Saturday £vening Post
articles Ouly 2, July 9, and Ju1y 16,
1932), not only put today's changes
in perspective, they also contradict
some of the most deep-seated,
popular misconceptions about
banking.

... Only the merest handful of us are
left, whose banking life spans the sixtyodd years of money joys and money
troubles from the booms and depressions following the Civil War to the
booms and depressions that have been
our part since the Great War [World
War I]. These six decades have been
studded with stirring years of great

Federal Reserve Bank of Boston Vol. 10, No. 1 - March 1984

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wealth and great misery. I have seen
men by the hundreds drunk with
money. I have seen men by the
thousands crazed by fear, as in the awful panics of 1873, 1893 and 1907. So
often have I seen the most solid and
respected fortunes swept away, so often
have I watched the cycle from shtrt
sleeves to shirt sleeves, that I am inclined to regard money riches as a restless visitor who seldom sits down ...
Many things have come and gone.
Many things have changed. But men
have changed very little.
So much for the popular myth
that banking is a dull business. It
wasn't true a century ago, and it
certainly isn't true today. Rapid
advances in communications and
computer technology now allow
bankers to conduct routine transactions in a way that would have
astounded a turn-of-the-century
banker.

For better or worse, specie clerks
have gone the way of green
eyeshades, inkstands, $20 gold
pieces, and silver dollars. Technology has created a wide variety _of
banking jobs that didn't even eXIst
a generation ago. Whereas banks
once seemed to employ only tellers, clerks, guards, and loan officers, most banks now employ computer operators, program~ers,
systems analysts, econ~m1sts,
financial analysts, commuruty relations specialists, marketing experts, and other types ~f skille~
professionals who acqmre their
training in technical schools and
colleges rather than "on-the-job."
The days are all but gone wh_en
someone like the Saturday Evening
Post's old-fashioned banker could
start as an errand boy and work his
way to the top.

Ours was a bank. We received deposits, paid checks, discounted negotiable paper, and made loa~~ on coll~t~al. We did not sell securities, administer trust estates, or mind babies. And
since a checking account was considered a privilege reserved for those who
had money, and an account in our bank
implied a certain standing, a new
account was not opened unless t_he
prospective depositor had a proper introduction.

Of course, we did all our bookkeeping
by hand and wrote all our l_etters by
hand. There were no typewriters . . .
but we had several clerks who could,
when called on, turn out letters as fine
as though engraved. The account
books, too, were works of art. I c~n
today tell how far back a banker:s training goes by the character of his handwriting. The old banks could not tolerate sloppy penmanship.
Nowadays, one could more
accurately judge how far back a
banker's training goes by how
much the banker knows about
computers. Present-day bankers
have seen so many technological
advances in such a relatively short
period of time that some bankers
who began their careers a mere 10
or 15 years ago might well feel a~ if
they have more in common with
bankers whose careers began in a
much more distant era.

When I entered banking ... my first
job was to run errands and make myself
useful at $200 a year . . . Among my
ports of call as an errand boy was a
small bank which ... was in lower Wall
Street, [where] I came to know the president, the cashier, the tremendously
dignified specie clerk, and the tellers
. . . The tellers I knew as disagreeable
ogres who were always ~rying to catch
me in mistakes. The specie clerk was the
one person in the bank whom I profoundly respected. He was a ponderous
man with big whiskers and a
tremendously important air. I felt
somehow that he was really the bank.
For if the man who had charge of the
gold or silver was not the bank, then
who was?
page 2


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systems analysts - the two hi6hestpaying occupational groups m the
survey.")
Technology is also putting to rest
the old notion that working in a
bank does not pay. Banks must
now compete with other employers for the services of skilled
personnel, and as the competition
for trained personnel increases, so
do salaries. (According to a 1983
survey by Hewitt ~ssociat~s, base
salaries for people m banking and
finance rose by more than 8%,
while the average increase for all
salary levels in all industries was
6.4%.) Furthermore the demand
for skilled personnel encourages
many employees to seek "greener
pastures;" fewer and fewer bankers are "retiring with a gold watch"
after spending an entire career at
the same bank.

Technological advances have revolutionized banking.

Gone too, are the days when
banking was an almost exclusively
male preserve. More and m?re
woinen are finding challeng~ng
jobs in banking, and a growing
number of those jobs are in management. In 1982 the federal Equal
Employment Opportunity Commission surveyed 150 of the nation's largest commercial banks.
Approximately 440,000 of the
650,000 people that those banks
employed were women, and nearly 60,000 of the. ~omen were
categorized as "officials and managers." (Progress notwithstanding, a 1981 U.S. Department of
Labor survey of 2,223 banks in
several large metropolitan areas r~vealed inequalities in pay and position. According to that study,
"Women, who made up 85% of the
workers in the occupations studied, held 97% of the clerical positions ... women accounted for 31 %
of the loan officers and 32% of the

Technology and ba~g dere_gulation (fewer geographic restrictions, more deposit instrum~nts,
and other financial innovations)
are also changing the banker/customer relationship. Bankers can no
longer afford to wait for business to
walk through the door. Bank~ are
offering a wider range of services,
and they are mark~ting. those services more aggressively m order to
meet the competition from other
banks and from nonbank financial
services companies.
Just how much things have
changed in recent years is reflected
in the following excerpts from an
article in the Federal Reserve Bank
of Atlanta's Economic Review
(September 1983):
Customers who are accustomed to the
improved communications provided by
technological advances are demanding
the best financial deals available. There 1s
no way laws can prevent customers from
going where they think they can get !he
greatest economic reward . . . Banking
especially is taking advantage of changes
in communication that have had a dramatic impact on our world.

The article goes on to quote Ronald
G. Steinhart, president of one. of
the nation's largest bank holding
companies. According to
Steinhart:

"The greatest factor ~as been the t~chnological change that increases the ability
of the banking system to serve its customers."
Steinhart said he sees a parallel change in
customer attitude associated with improvements in providin~ service . !~creased mobility is breaking the traditions that bound Americans to one section of the country. Generation after generation of a family no longer grow up
within miles of each other. As people
move across state lines and across the
country, they take with them increased
banking knowledge and a demand for
banking services . . .
Steinhart said that an investor in Clifton,
Texas (a small farming and retirement
community) can buy the morning Wall
Street Journal and know the current rates
offered by money market funds in New
York before the local bank opens for business.
"And they' ve already called the 800 number of New York and transferred money
around. No longer does the rural customer look to the traditional relationship with
his banker. Now he is looking to a very
impersonal relationship with a telephone
and with a banking institution that might
be located on the East or West Coast."

Even customers who do all their
banking at local institutions are
moving toward a less personal
banker/customer relationship .
Debit cards and automated telfer
machines (ATMs) now make it
possible for bank customers to conduct several types of transactions
at any time of day or night, and as
more ATMs appear in gas stations,
groceries, and retail stores, customers will probably see less and
less of their bankers.
Of course there may be a limit to
just how much change customers
are willing to accept. A large New
York bank experimented with a
policy that allowed only cus~omers
with large balances to deal with human tellers; customers with smaller balances were restricted to automated teller machines. Customer
outcry soon forced the bank to
abandon its experiment. And not
too long ago bankers and the financial press were predicting the imminent obsolescence of cash and
checks. Customers, however,
don't seem to be ready for either
the cashless or the checkless
society.
The rapid pace of change poses
extraordinary challenges for today's bankers, but bankers and
their customers have always had to
cope with change. And while no
one can predict exactly how banking will change in the coming
years, one thing is certain: banking
is not, and probably never was, a
dull pursuit.

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New England Update
CONNECTICUT
The Greater Hartford Center for
Economic Education at Central
Connecticut State College will host
the third and final program of its
1983-1984 Distinguished Speakers

Series.
Tuesday, April 24, 1984
7:00 p.m.
Henry C. Wallich
Member, Board of Governors
of the Federal Reserve System
Theme: Foreign Debt and

American Banks
The talk is free and open to the
public; admission is by ticket only.
For ticket information, please call
(203) 827-7318.
MAINE

The Maine Council on Economic
Education will host a career day on
April 13 in Bangor for area high
school juniors. For details please
contact: Robert Mitchell, Executive
Director, Maine Council on Economic Education, 22 Coburn Hall,
Orono, ME 04469; (207) 581-1467.
MASSACHUSETTS
The December 1983 issue of the
Ledger, listed the addresses and
telephone numbers of New England's state Councils and Centers
for Economic Education. The Massachusetts listing did not include:

Dr. Richard J. Ward
Center for Economic Education
Southeastern Massachusetts
University
North Dartmouth, MA 02747
(617) 999-8432
SCHOLARSHIPS AVAILABLE
FOR YOUTH EDUCATION
PROGRAM

Instead of playing video games
during the week of August 5-10,
over 150 Massachusetts high
school students will be learning
what it takes to manufacture, market, and distribute products such
as those games. This is what Business Week Challenge, sponsored by
the Small Business Foundation of
America, is all about.
Business Week is an intense,
fast-moving educational experience focusing on the facts of business and the private enterprise system. All teachers and guests speak-

ers are prominent people from the
business community who donate
their time to share knowledge and
expertise with the students.
This summer's program will be
held on the Bentley College campus in Waltham, MA. Experiencing life on a college campus for a
fuil week provides an extra learning opportunity for the students.
All participants in Business
Week will receive scholarships provided by companies, individuals,
or business and civic groups. The
only cost to the student is a $35.00
registration fee.
Students completing their sophomore or junior year in 1984 ma_y
obtain applications from their
school Social Studies Department
Chairman or by contacting the
Small Business Foundation directly
at: 84 State Street, Boston, MA
02109; (617) 720-0073. Applications
must be received no later than April
1, 1984.

Fed Update
The Federal Reserve Bank of Boston makes several 16mm film s
available on a free loan basis to
New England schools an_d or_ganizations . We are considenng
transferring those films onto
videocassettes so that borrowers
can make their own copies. But
since not all videocassette recorders have the same format, the October 1983 Ledger,included a survey
card that asked readers the following questions:
1) Does your school or organization have access to a
videocassette recorder
(VCR)?
2) If so, which format (Beta or
VHS) is the VCR?
3) Does your school or organization have video equipment that allows you the
capability to duplicate an
existing videocassette?
Here are your responses . The
majority of you (171 out of 280)
have access to VHS format videocassette recorders. The Beta format
is not as popular (40 out of ~80) .
Many of you have access to VIdeo
equipment that can duplicate an
existing cassette (174 out of 280).
Thank you to everyone who took
the time to return the survey cards .
page 3

ENTERPRISE offers an extraordi-

Multi-Media
e THE KYOCERA EXPERIMENT
(Update)
ENTERPRISE explores Japanese

management techniques by examining Kyocera, the San Diego
subsidiary of Japan ' s fastestgrowing company, Kyoto Ceramics . It's a story of the delicate,
difficult human job of creating a
new kind of company that combines the best business practices of
two very different cultures.
e WILDCA TIER (Update)

A master of marketing launches a new product: chicken frankfurters . ENTERPRISE
shows how he does it on an episode called
"Perfectly Frank."
Courtesy of WGBH Boston

One of the most refreshing
things about ENTERPRISE, public
television's award-winning series
on how business works, is that its
producers don't have an axe to
grind. They take neither a "probusiness" nor an "anti-business"
stance. The ENTERPRISE cameras
simply focus on interesting business stories : a manufacturer's
attempt to diversify from bluejeans
to · moderately-priced, massproduced men's suits; a "chicken
king's" effort to manufacture and
market chicken franks; or a Texas
real estate baron's big plans to lure
moviemakers away from Hollywood by building a $1 billion
soundstage in Dallas. Each week a
30-minute segment offers viewers
a perspective on business that they
might not get from watching the
nightly news or from reading
annual reports and economics textbooks.
ENTERPRISE, hosted by Eric
Sevareid, is a production of WGBH
Boston, in association with several
public television stations and foreign networks. Programs air weekly on many public television stations; please check local listings.
e PERFECTLY FRANK
ENTERPRISE tells the story of

Frank Perdue, the man who turned
chicken into a brand name item.
Now the chicken king of the Northeast is using his merchandising talents to launch a new product,
chicken franks, by taking advantage of his distinctive face and
celebrity status.
page 4

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Foot by painstaking foot, a tough
oil and gas wildcatter drills a well in
Louisiana's Cajun country. ENTERPRISE follows the drilling as it
happens, until the wildcatter discovers whether he's struck it rich or
drilled another dry hole. A small,
intimate look at an industry seen
by most as huge and impersonal.
e REAL ESTATE

Thursday, March 22
WGBH-TV, Channel 2, Boston
Can Texas move Hollywood to
Dallas? ENTERPRISE looks at a
Texas real estate baron's big plans
to woo production business to the
Lone Star State by building a $1
billion soundstage and office complex that will rival anything Hollywood can offer.
e NOT BY JEANS ALONE (Update)

Thursday, March 29
WGBH-TV, Channel 2, Boston
Levi Strauss, the world's largest
clothing manufacturer, tries to diversify away from jeans by marketing a new moderately-priced,
mass~produced men's suit. ENTERPRISE is there as Levi tests the
market, refines the concept, manufactures the product, develops an
advertising campaign-and gambles millions.
ewoRKOUT

Thursday, April 5
WGBH-TV, Channel 2, Boston
It's the war over women's bodies,
fought by thousands of health
clubs and exercise salons, and the
Gloria Stevens chain is in danger of
becoming a casualty. ENTERPRISE follows the struggle of Gloria Stevens, an early industry leader
fallen on hard times, as it tries to
find a formula for survival in a volatile $6 billion-per-year business.
e THE DIAMOND GAME (Update)

Thursday, April 12
WGBH-TV, Channel 2, Boston

narily rare glimpse of the intensely
secretive diamond market . The
pr_ogra~ follows the trail of newlymmed diamonds-worth literally a
fortune-as they are graded,
cleaved, sawed, polished, traded,
designed, and sold as jewelry in
fashionable Fifth Avenue showrooms.
e TAILS PIN (Update)

Thursday, April 19
WGBH-TV, Channel 2, Boston
What was the real story behind the
nation's first airline bankruptcy?
ENTERPRISE is there as Braniff's
chief executive tries desperately to
restructure his billion-dollar company's operations in a few short
months, and as the airline struggles to fly again.
CHICKENOMICS, produced by
World Research, 16mm color film,
20 minutes
CHICKENOMICS tells the story of
the famous San Diego Chicken and
explains why he has become such a
successful entertainer. The chicken's antics helf to identify five
basic aspects o the U.S. market
economy: 1) private ownership of
resources, 2) consumer sovereignty, 3) markets, 4) self-interest motive, and 5) competition. The film is
available on a free loan basis from
the Federal Reserve Bank of Boston
(borrowers pay return, insured
postage; lending is limited to New
England schools and organizations) . Write to: Public Services Department, T-3, Federal Reserve
Bank of Boston, Boston, MA 02106;
or call (617) 973-3459.

the LEDGER
Editor: Robert Jabaily
Graphics Arts Designer: Ernie Norville
Photography: Wilson Snow
Johannah Miller
This newsletter is published periodically as
a public seroice by the Federal Reseroe Bank
of Boston. The reporting of news about
ec on o mi c edu cati on prog rams an d
m aterials should not be cons trued as a
specific endo rsem ent by the Bank. Further,
the m aterial contained herein does not
necessarily reflect the views of the Federal
Reseroe Bank of Boston or the Board of
Governors. Copies of this newsletter and a
catalogue of other educational materials
and research publications may be obtained
free of charge by writing: Bank and Public
Information Center, Federal Reseroe Bank
of Boston , Boston , MA 02106 , or by
calling: (617) 973-3459.