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Federal Reserve Bank of St. Louis

eral Reserve Bank of Boston's Economic Education Newsletter


Ben Franklin Gets a
U.S. Will Issue Redesigned $100
Note in Early 1996

The design enhancements on the 1996
series notes will help to deter that threat.
Here's a summary of the new features. (See
photo of new bill on page 2.)

• A larger, slightly off-center portrait. In
this , the most noticeable change , the larger

Benjamin Franklin will still appear on

portrait will incorporate more detail, making it

the front, but his portrait will be bigger and

easier to recognize and more difficult to coun-

shifted to the left. Independence Hall will still

terfeit. Moving the portrait away from the cen-

grace the back, but the sky around it will be

ter, the area of highest wear, will also reduce

composed of concentric fine lines.

wear on the portrait.

These are only some of the new securi-

• A watermark to the right of the por-

ty features that have been incorporated into

trait depicting the same historical figure as the

the U.S. $100 note. The redesigned $100 notes

portrait. The watermark can be seen only when

will begin to enter circulation in early 1996.

held up to the light. In addition , the borders of

Redesigned lower denominations will then be

the note have been simplified so that the wa-

introduced at the rate of about one per year.

termark can be viewed more easily.

As older notes reach the Federal Reserve

• A security thread that will glow red

in cash deposits from banks, they will be re-

when exposed to

placed by the redesigned notes . But the peo-

ultraviolet light in

ple at the U.S. Treasury and the Federal Re-

a dark environ-

serve are taking great pains to emphasize that

ment. The thread

there will be no recall and no devaluation of

will be in a unique

any U.S. currency. Federal Reserve Board

position on each

Chairman Alan Greenspan has noted that "the


United States has never recalled its currency
and will not do so now. Old notes will not be

• Colorshifting ink that

recalled or devalued . The United States always


honors its currency at its full face value, no

green to black

matter how old."
The purpose of the redesign is to maintain the security and integrity of U.S. currency by staying ahead of advances in reprographic


The purpose of
the redesign is
to maintain the
security and
integrity of U.S.
currency ...

when viewed from different angles. This feature
appears in the numeral on the lower right-hand
front corner.

• Microprinting in the numeral on the

technology, such as color copiers and elec-

note's lower left-hand front corner and on the

tronic digital scanners. Advanced reprograph-

collar of Benjamin Franklin's coat.

ic technology improved dramatically during

• Concentric fine-line printing in the

the 1990s. Some of the advanced equipment

background of the portrait and on the back o,f

is capable of accurately reproducing the colors

the note.

and fine-line detail of security documents and
poses a potential threat to currency.

Although all denominations will have
enhanced security features , the number of feaThe Ledger • Spring 1996


The Ledger

Your Money Matters

Editor's Note

Security Thread
A polymer th read is embedded vertically in the paper
a nd indicates , by its uniq ue position , the note's
denomi nation. The words "USA 100" on the thread
can be seen from both sides of the note when held
up to a bright light. Additionally, the thread glows
_ _ _ __
red when held unde r an ultraviolet light.

The Ledger's New Look
After more than 20 years ,
The Ledger has a new look.

A watermark depicting Benjamin
Frankli n is visible from both sides
when he ld up to a light.

Instead of a long lead article,
the new format features a va•
riety of short pieces, which
we hope will hetter serve the
needs of a wider audience.
Bob Jahaily, Editor
The Ledger
Public and Community
Affairs Department
Federal Reserve Bank
of Boston
P.O. Box 2076
Boston. MA
Or phone:

(617) 973-3452
This newsletter is published
twice a year as a public service by the Federal Reserve

Because t hey're so small, microprintcd
words are hard to replicate. On the
front of the note, "USA 100" is
with_i n t he number in the lower left
corne r a nd "United States of America,,
is on Benjamin Franklin's coat.

The enlarged portrait of
Benjamin Frankl in is easier
to recogni ze. while the added
detail is harder to duplicate.
The portrait is now off-cente r,
pro,·iding room for a watermark and reducing wear and
tear on the portrait.

Concentric Fine Unes
The fine lines printed
behind both Benjamin
Franklin 's portrait and
Indcpendence llall
a re difficult to repli ca te .

Color-Shifting Ink
The number in the lower
right corner o n the front
of the note looks green
when viewed straight on.
but appears black when
viewed at an angle.

Bank of Boston. The reporting of news about economic

tures will vary by denomination . The $100

1996 series currency. They are perfect for

education programs and the

note will have a full package of deterrent fea-

classroom use, and they are ava ilable, free of

tures, while the $1 note will have fewer and less

charge, to teachers in the First Federal Reserve

sophisticated features .

District. To obtain these materials, write to:

materials contained herein do
not necessarily reflect the
views of the Federal Reserve
Bank of Boston or the Board
of Governors.

Other changes incorporated in the new


design include a modified serial number and a

Public and Community Affairs Department

Copies of this newsletter and

modified Federal Reserve seal. But despite all

Federal Reserve Bank of Boston

a catalog of other educa -

the changes, the new currency is still distinct-

tional materials and research

ly recognizable as American. Many elements

publications may he obtained

remain the same, including:

• size of the bill;

P.O. Box 2076
Boston, MA 02106-2076
or fax request to: 617-973-3511
or e-mail at:

• ink colors -

102521 .

free of charge by writing:

Public and
Community Affairs
Federal Reserve Banlf.
of Boston

P.O. Box 2076
Boston, MA

Federal Reserve Bank of St. Louis

black on the front and

And starting in January 1996, represen-

green on the back;

• paper -

cotton and linen with red

Boston's Public and Community Affairs De-

and blue fibers;

• texture of the paper -

tatives from the Federal Reserve Bank of

will still feel

the same;

• historicalfigures and back illustrations - with slight alterations; and

partment will be available to deliver free educational presentations on "Currency, Coun-

terfeiting, and the New .$100 Note" to groups of
teachers and students anywhere in the First

• motto - "In God We Trust."

Federal Reserve District. You can either come

The Federal Reserve Bank of Boston has

to the Boston Fed for the presentation and a

color posters, pamphlets, and information kits

tour, or we can travel to your school. For more

that provide easy-to-u nderstand information

information on the presentations, ca ll ( 617)

abou t the changes and new features on the

973-3451 or (617) 973-33 71.

"Find what is good, and praise it"

"Economics for Leaders" Summer
Program Is Worth the Trip
Smokey Murphy begins the "Trading Ac-

University of Hartford.

tivity" by handing each participant a brown pa-

The Foundation for Teaching Econom-

per bag. Only he knows what's inside. It could

ics, based in Davis, California, was founded in

be anything from an ordinary #2 pencil to a

1975 to promote economic literacy and excel-

coveted souvenir T-shirt.

lence in economic education. FTE has

Participants are instructed to open their

conducted Economics

bags , peek inside , and rate the enclosed item

Jar Leaders summer

on a scale of one to five. A "five" means you're

programs since 1991

very satisfied with what you received ; a "one"

at college campuses

means you hate it. Murphy tallies the individ-

across the country.

ual ratings to calculate the group's overall "Sat-

And the program is

isfaction Rating. "

free. Participants pay

Participants are then told they can trade

only their transporta-

with people in their immediate group (the sur-

tion costs to and from

rounding five or six people). When trading ceas-

the site.
During the sum-

Rating, " results show that the total has jumped

mer of 1995, more

from 116 in Round One to 149 in Round Two.

than 400 students and


are told they can trade with anyone on their

Economics for Lead-

side of the room, then with anyone in the en-

ers sessions at seven

tire room, and , finally , that they can trade any-


thing they brought into the room with anyone

Houston, University of

else in the room. After each round, the "Satis-


faction Rating" rises:
Round Four -

Round Three -

171; Round Five -



When asked his thoughts on how
to cope with the inevitable pain and
pettiness of everyday life, both on and
off the baseball diamond, a major
league ballplayer said, "Find what is
good, and praise it."
This section of The Ledger

es and Murphy recalculates the "Satisfaction

During subsequent rounds, participants

"Find what is good, and praise it"


endeavors to do just that. We will try
to find and praise the good work that
people are doing in economic education. If you are aware of a quality economic education program or resource,
let us know about it.



Barbara, Mt. St. Mary's College (Los Angeles),
University of Washington at Seattle, Universi-

Murphy , a high school teacher for more

ty of Hartford (CT), Northwestern University

than 25 years, is clearly enjoying himself as he

(Evanston, IL), and University of Colorado

watches the people in the room engage in live-


ly commerce. The expression on his face says

Students and teachers spend the first

that he is one of those fortunate people who

half of each day participating together in eco-

loves what he does for a living.

nomic education activities and presentations

He originally began using the "Trading

that are lively, innovative, and instructive. Af-

Activity" to illustrate the benefits of trade for

ter lunch, students engage in activities in-

his students in Sacramento, California. But this

tended to promote leadership and teamwork

time , he's part of a talented and enthusiastic

skills , while teachers attend workshops de-

team of instructors who are conducting one of

signed to further develop and improve their un-

the 1995 Economics for Leaders programs

derstanding of economic concepts and to pro-

sponsored by the Foundation for Teaching Eco-

vide them with new teaching strategies. The

nomics (FTE). Thirty high school seniors and

FTE also provides a variety of support materi-

30 high school economics teachers have come

als, simulation exercises, and lesson plans for

from as far west as Texas and as far east as

teachers to use when they return to their own

Poland to attend the week.long program at the

Federal Reserve Bank of St. Louis

The Ledger • Spring 1996


Students and teac he rs come back to-

creased by nearly 40 percent du ting the program.

gether after dinner for discussions of ethical

Gerhart points ou t that FTE takes the

and moral dilemmas , a simulated poli tical e lec-

eva luation process very seriously. The evalu-

tion , sessions on leadership skills, and

ation methods, the five-page evaluation form ,

Murphy, a high
school teacher
for more than 25
years, is clearly
enjoying himself
as he watches
the people in the
room engage in
lively commerce.

4 Spring 1996 • The Ledger
Federal Reserve Bank of St. Louis

even a few recreational and social ac-

and the 1995 Report Card on Economics for

tivities. In fact, the easy interaction between teache rs and students charac-

Leaders, were all developed by Eva L. Baker,
professor at the UCLA Graduate School of Ed-

terizes every aspect of the Economics

ucation and Information Studies, who says she

for Leaders program.

"continue[s ] to be amazed at the FTE's abili-

The days are full. The program is
intensive, and , by most accounts, very
effective. Steve Gerhart, Vice President

ty to create suc h a pos itive educational experience in the field of economics ."
Teachers and students who would like

of Administration and Program Affairs

to know more about the Economics for Lead-

for FTE, is proud of the fact that Eco-

ers program should write to:

nomicsfor Leaders invariably receives

Foundation for Teaching Economics

outstanding eva luations from students

Attn: Department B

and teachers. Questionnaires adminis-

260 Russell Blvd., Suite B

tered at the conclusion of each 1995

Davis, CA 95616

session indicated that 208 of the 219 students

or call Ms. Marylou Alquizalas,

who participated in the program would rec-

FT£ Program Recruiting Coordinator,

ommend it to their friends , and teachers were

at (800) 383-4335.

equally enthusiastic. In addition,

pre- and

post-tests indicated that student learning in-

FTE's £-Mail address is

Shared Knowledge

The Chronic Colonial Money Shortage

Shared Knowledge

by Robert J. Haas

"The Chronic Colonial Money

For the early American colonists, the

associated value. For

Shortage" was submitted by Robert J.

trading of goods and services was mainly a sys-

example, some Native

Haas of Boyertown, Pennsylvania. This

tem of bartering. Bartering is when one per-

American tribes traded

piece is geared to upper elementary

son agrees to give you "something," and you

wampum belts (made

and middle school students who are

give that person 'something" in return to com-

of beads), as we today

studying the colonial period.

plete the exchange. The "something" could be

trade pieces of paper

Mr. Haas graduated from Indiana

the exchange of products (an item you had

with the word "dollar"

University of Pennsylvania with a B.A.

made , grown , or previously obtained) or a ser-



in economics and obtained teacher

vice (any work or task performed on behalf of

used tobacco or tobac-

certification from the University of

the other party). But bartering has certain

co credits as a form of

Kutztown (Pennsylvania). He teaches

drawbacks. First, you must find someone who

money. A product such

eighth grade social studies at Upper

has what you want; then you must have

as tobacco was easily

Perkiomen Middle School in south-

something that the other party wants. Finally,

recognized and had a

eastern Pennsylvania, and just from

you both need to agree on what constitutes a



talking with him over the telephone, he

fair swap. It's an inefficient, time-consuming

associated with it that

conveys the sense of someone who

way to do business.



does his job with great energy and en-



A monetary system, the outgrowth of a

and, more importantly,

maturing economic society, soon replaced the

accepted. One of the

If you have an economic educa-

basic barter system in the colonies. The use

most important attrib-

tion lesson plan, teaching technique,

of money enabled people to complete a trans-

utes of currency is that

or article that you would like to share

action with the specific demand occurring in

people must be willing

with our readers, please write to:

only one direction. That's because in a barter

to accept it in exchange

Editor, The Ledger, Public and Com-

system each party must want or need the oth-

for their product or ser-

munity Affairs Dept., Federal Reserve

er party's product or service, but in a curren-

vice . They must also

Bank of Boston, P.O. Box 2076,

cy system one party can give some form of

believe that others will

Boston, MA

accept it as well .

(617) 973-3452. We'd love to hear

money instead. The replacement of the bartering system was an indication of economic
growth and diversification in the colonies.
A crucial part of a monetary system is
the existence of
Federal Reserve Bank of St. Louis

an item with

In early colonial

02106-2076; or call

from you.

America, there was no
established system of
money . evertheless, there was some money!
Ships' passengers and crew carried English
money with them to the

ew World. But the

colonial supply of English coins was very limited, and what few coins there were, generally
returned to England as payment for goods that
were not available in the colonies. (As a rule,
English merchants accepted payment only in
English currency.)
On top of that, the English government,
in an attempt to ensure continued strong demand for English money, enacted laws that
prohibited the production of colonial coins.
This prohibition, combined with the chronic
The Ledger • Spring 1996

Federal Reserve Bank of St. Louis

shortage of English coins, created problems for

During the early colonial period, most

the colonial commerce and difficulties in trade

economic transactions were accomplished

between colonies.

through the barter system. But as the economy grew and diversified, the use of money soon


replaced barter.

The many different things that have

The problem was that money was al-

served as money over the centuries, have

most always in short supply in colonial Amer-

shared two common traits: they have been

ica. Most coins went back to England to pay for

relatively scarce and widely accepted. And

goods that were not available in the colonies.

throughout history, money has served three

The money shortage was also made worse by

important functions. It has served as: 1) a

the fact that the English government enacted

medium of exchange, 2) a means to store

laws that prohibited the colonists from mint-

wealth, and 3) a way to measure value.

ing their own coins.

DEFINE the following words and terms:
monetary system
medium of exchange
means to store wealth
measure of value

1) Do modem American adults barter
with one another? Are there times when
they work for something other than
(Answer YES or NO and use examples to
2) What are some of the things that today's teenagers sometimes use as substitutes for money?
3) Where's the one place that elementary and middle school students use the
barter system every day, Monday
through Friday? Why?
(HINT: "Bologna?! Again?!")

Back to Basics

1983, and 1984. In each of the 3 years, about

What Is the CPI?

4,800 families from around the country provided information on their spending habits in

The Consumer Price Index (CPI) is a

a series of quarterly interviews. To collect in-

measure of the average change over time in the

formation on frequently purchased items, such

prices paid by urban consumers for a fixed mar-

as food and persona l care products, another

ket basket of consumer goods and services from

4,800 families in each of the 3 years kept di-

A to Z. The CPI provides a way for consumers

aries listing everything they bought during a 2-

to compare what the market basket of goods

week period.

and services costs this month with what the

Altogether, about 29,000 individuals and

same market basket cost a month or a year ago.

families provided expenditure information for
use in determining the

Is the CPI a cost-of-living index?
No, although it frequently and mistakenly is called a cost-of-living index. The CPI is

importance, or weight,

Back to Basics

of each item in the in-

Every month, news reports focus

dex structure.

on fluctuations in the Consumer Price

flect the changes in buying or consumption

constraints, the Bu-

Index (CPI). But what exactly is the CPI

patterns that consumers probably would make

reau of Labor Statistics

and what does it measure?

to adjust to relative price changes. For exam-

(BLS) used data from

''What Is the CPI" offers a basic

ple, if the price of beef increases more rapidly

only the first 2 years of

explanation of what the CPI is all

than other meats , shoppers may shift their pur-

the Consumer Expen-

about. It is drawn from the pages of

chases away from beef to pork, poultry, or fish.

diture Survey to select

"Understanding the Consumer Price

If the charges for household energy increase

the items to be priced .

Index: Answers to Some Questions,"

more rapidly than for other items , households

In addition, BLS up-

an informative (and free) pamphlet

may buy more insulation and consume less

dates the sample of

published by the Bureau of Labor Sta-

fuel. The CPI does not reflect this substitution

stores and service out-

tistics (BLS).

among other items as a cost-of-living index

lets in roughly 20 per-

would . Rather, the CPI assumes the purchase

cent of the urban areas

of the same market basket, in the same fixed

priced for the CPI each year.

proportion (or weight) month after month.

troduced with these new samples.

an index of price change only. It does not re-



ew items are in-

About every 10 years the market basket is thoroughly updated to allow for the introduction

What goods and services does the CPI cover?

of new products and services and to reflect

The CPI represents all goods and ser-

more current spending patterns . In addition,

vices purchased for consumption by urban

the CPI does not reflect taxes that are not di-

households. BLS has classified all expenditure

rectly associated with the purchase of specific

items into over 200 categories, arranged into

goods and services. In other words, the CPI ex-

7 major groups. Major groups and examples of

cludes taxes such as income and Social Secu-

categories in each are as follows:

rity taxes.

• food and beverages (cookies, cereals,
cheese, coffee, chicken, beer and ale, restau-

How is the CPI market basket chosen?

rant meals) ;

The CPI market basket is developed

• housing (residential rent, homeown-

from detailed expenditure information provid-

ers' costs, fuel oil, soaps and detergents, tele-

ed by families and individuals on what they

visions, local telephone service);

actually bought. For the current CPI, this information was collected from the Consumer
Expenditure Survey over the 3 years of 1982,
Federal Reserve Bank of St. Louis

• apparel and its upkeep (men's shirts,
women's dresses, jewelry);
• transportation (airline fares, new and
The Ledger • Sprinj\ 1996


used cars, gasoline, car insurance) ;
• medical care (prescription drugs , eye
care, physicians' services, hospital rooms);
• entertainment (newspapers , toys , musical instruments, admissions) ; and
• other goods and services (haircuts, col-

the number of consumers represented by each
area priced for the CPI. Next, another sample
of about 24,000 families serves as the basis for
a Point-of-Purchase survey that identifies the
places where households purchase various
types of goods and services.

lege tuitions , bank fees) .
In addition , the CPI includes various
user fees such as water and sewerage charges,

the media?

auto registration fees , vehicle tolls, and so forth.

Each month , BLS releases thousands of

Taxes that are directly associated with the price

detailed CPI numbers to the press. However the

of specific goods and services (such as sales and

press generally focuses on the broadest, most

excise taxes) are also included . But

comprehensive CPI. This is known as "The

The CPI is an
index of price
change only.
It does not
reflect the
changes in
buying or
patterns that
probably would
make to adjust
to relati'Ve price

Digitized for 8FRASER
Spring 1996 • The Ledger
Federal Reserve Bank of St. Louis

Which index is the "official CPI" reported in

the CPI excludes taxes not directly

Consumer Price Index for All Urban Con-

associated with the purchase of con-

sumers (CPI-U) for the U.S. City Average for All

sumer goods and services (such as in-

Items , 1982-84=100." Often, the media will re-

come and Social Security taxes).

port some or all of the following :

The CPI does not include investment items (such as stocks,
bonds, real estate , and life insur-

a .) the index level (for example, July

ance) . These items relate to savings
and not day-to-day living expenses.

b.) the 12-month percent change (for example, July 1991 to July 1992 = 3 .2 percent) ;

How are CPI prices collected?
Each month , BLS field repre-

c.) the I-month percent change on a sea-

sentatives visit or call thousands of

sonally adjusted basis (for example, from June

retail stores, service establishments,

1992 to July 1992 = 0.1 percent);

rental units , and doctors' offices all
over the United States to obtain

d.) the annual rate of percent change so

price information on thousands of

far this year (for example, from December 1991

items in the CPI market basket. For

to July 1992 if the rate of increase over the first

the entire month , they record the

7 months of the year continued for the full year,

prices of about 90,000 items. These

after the removal of seasonal influences, the

90,000 items represent a scientifi-

rise would be 2.9 percent) .

cally-selected sample of the prices of
goods and services sold to urban

consumers throughout the country.

How is the CPI calculated?
The CPI is a product of a series of interrelated samples. First, using data from the Census of Population , BLS selects the urban areas
from which prices are to be collected and
chooses the housing units within each area
that are eligible for use in the shelter component of the CPI. The Census of Population also
provides the data which allows the assigning of


Money, Banking, and
Monetary Policy

ANA Offers a Wealth
of Information

Money, Banking and Monetary

In addition to functioning as a

Policy is the sixth publication in the

medium of exchange, a store of value,

"Everyday Economics" series from the

and a measure of value, coins can also

Federal Reserve Bank of Dallas. As is

serve as a "hook" for getting students

the case with the other five publica-

interested in history, economics, mon-

tions in the series, this one is informa-

ey and banking, or even the classics

tive and well-designed. It discusses the

and mythology. Coin collecting is one

properties and characteristics of mon-

of the oldest and most popular of hob-

ey and touches on a variety of other

bies. Walk into any elementary school

topics, including how banks create

classroom, and you will encounter sev-

money and how the Federal Reserve

eral enthusiastic collectors.
The American Numismatic As-

conducts monetary policy.

sociation (ANA) offers some excellent


f' 0

,.....,. __,,_,

materials to help educators use coins
and coin collecting as a teaching tool.

lie Radio and heard on more than 500

!any of the scripts are avail-

able for use by classroom teachers.
The American l\'umismatic Association , a nonprofit educational organization chartered by Congress , is
also the world's largest organization for
collectors of coins, paper money ,
medals , and tokens .
For more information on the
A.1\JA and its educational materials ,
please write to:
Education Director
American Numismatic Association,
818 North Cascade Avenue
Colorado Springs, CO 80903-3279

For example, there's a 30 minute video
narrated by James Earl Jones , Money,

History in Your Hands. The video
shows historical coins and currency

Currency in U.S.

and explains how coins and paper

•• 1



For a free copy of Money, Bank-

ing and Monetary Policy, write to:
Public Affairs Department
Federal Reserve Bank of Dallas

money are made, with an emphasis on

Currency in U.S. History offers

the United States. It is available for

readers an interesting look at eight

teachers to borrow free . There's also

types of paper money , from state bank

a free pamphlet called Coin Collecting:

notes and Confederate currency to

A Fascinating Hobbyfor Young and

fractional currency and Federal Re-

Old , which talks about how to start

serve notes . The story of currency is

and catalog a collection, care for coins,

interwoven with snippets of U.S. histo-

and decipher mint marks. It also con-

ry, and the photos of old notes are fun

tains sections on numismatic trivia

to look at.

and a brief summation of the terms
used to describe the various recog-

U.S. History, write to:

nized conditions of coins.
In addition, the


For free copies of Ci, n·ency in

A produces

Public Affairs Department

2200 N. Pearl Street

educational scripts for Money Talks,

Federal Reserve Bank of Kansas City

Dallas, TX 75201-2272

a daily, two-and-a-half minute radio

925 Grand Boulevard
Federal Reserve Bank of St. Louis

program distributed by

ational Pub-

Kansas City, MO 64198-0001

The Ledger • Spring 1996



Economic Education Councils and Centers
Have Much to Offer Teachers



Council in your state will be able to
put you in touch with the Economic

Connecticut, Maine, Massachusetts, and Rhode Island have active and

Education Ce nter nearest you .

thriving Economic Education Councils and Centers that offer teachers a variety
of educational opportunities and tools ranging from in-service classes and specialized workshops to print materials and videos. For more information , teachers in those states should contact:

If you live outside New England
and you would like to find out the address of your state's Economic Education Council , you should write to:

Connecticut Council

Economic Education Council

on Economic Education

of Massachusetts

University of Connecticut at Storrs

University of

U-55 One Bishop Circle


Room 104

West Campus

Storrs, CT 06269-4055

Lowell, MA O1854

Phone: (203) 486-2327

Phone: (508) 934-4622

Maine Council

Rhode Island Council

on Economic Education

on Economic Education

University of Southern Maine

Rhode Island College

National Council on Economic
1140 Avenue of the Americas
New York, NY 10036
Phone: (212) 730-7007

or 1-800-338-1192

P.O. Box 9715-159

Providence, RI 02908

Portland, ME 04104

Phone: (401) 456-8037

Phone: (207) 780-5926

New England Educators Attend "A Fed Sampler"




Education , the Economic Education

forts, Mr. Swanson won his very own
copy of The Federal Reserve Act.)

school teachers and administrators

Council of Massachusetts, and the

from all six New England states came

Rhode Island Council on Economic

Mr. Swanson's prize-winning

to the Federal Reserve Bank of Boston

Education jointly hosted the daylong

performance led into the real core of

on ovember 3 to attend A Fed Sam-


the program : background presenta-

p ler, an economic education work-

First on the agenda was a ses-

tions by three Federal Reserve Bank

shop. The workshop's primary pur-

sion on "Central Bank Basics," during

of Boston Vice Presidents . Stephen

pose was to give First District educa-

which Robert Swanson of Sanborn Re-

Trebino, Vice President of the Feder-

tors a thorough introduction to the

gional High School in Kingston ,


al Reserve Bank of Boston's Loan and

Federal Reserve System. The Federal

Hampshire, managed to win himself a

Credit Department, explained the in-

Reserve Bank of Boston, the Con-

prize by correctly answering six out of

tricacies of reserve requirements and

necticut Council on Economic Educa-

seven tricky true/false questions on the

"discount window" lending. He was

tion , the Maine Council on Economic

Federal Reserve System . (For his ef-

followed by Stephen McNees, a Vice

10 Spring 1996 • The ledger
Federal Reserve Bank of St. Louis

President and Economist in the

Editor, The Ledger

Boston Reserve Bank's Research De-

Public and Community

partment, who drew on his many

Affairs Department

years of attending Federal Open Mar-

Federal Reserve Bank of Boston

ket Committee Meetings to demysti-

P.O. Box 2076

fy monetary policy.

Boston, MA 02106-2076

or phone: (617) 973-3452

After lunch , Gera ld Giaccai ,
the Boston Fed's Vice President for
Marketing and Customer Services ,

For next year's workshop we are

presented a n overview of check imag-

considering a workshop on foreign

ing and other technological innova-

trade . That was the topic mentioned

tions that are changing the U.S. pay-

most often when we asked this year's

ments system. Ile also explained the

participants to tell us what they would

Federal Reserve's efforts to foster the

like us to cover in fu ture workshops.
In add ition to workshops for

innovations .
All the presentations triggered

teachers, the Boston Fed distributes a

excellent questions from the teachers

broad range of free ed ucationa l pub-

in attendance. And the program

lications , we offer free group tours of

evaluations indicated that the work-

the Bank (by appointment) , and we

shop was a very positive, worthwhile

conduct free economic education pre-


sentations on money, banking, and

If you are a secondary school

the Federal Reserve . For free copies of

teacher or administrator in the First

our Public Information Materials

Federal Reserve District, and you did

Catalog and Speahing of Money, a de-

not receive notification about A Fed

scriptive broch u re abo ut our eco-

Sampler, please let us know and we

nomic education presentations, con -

will add your name to our mai ling list

tact our publications coordinator (see

for future programs. Write to:

page 2 for address).


Boston Fed Hosts
College Instructors
The Boston Fed's Public and
Community Affairs Department hosted its third an nual luncheon seminar
for college economics and business instructors on Friday,

ovember 10.

More than 50 college faculty members
from across the region came to hear
Jeffrey Fuhrer, Vice President a nd
Economist in the Bank's Research Department, discuss Inflation: Theory,
Recent Behavior, and Near-Term Outlook. Mr. Fu hrer's presentation was followed by an interesting and informative
round of questions and answers.
The luncheon seminar is a free
annual event open to any college economics or business instructor in the
First Federal Reserve District. If you
would li ke us to add your name to the
invita tion list for next year's program ,
please write to:
Angelo Veneziano, Public and
Community Affairs Department,

Federal Reserve Bank of Boston,
P.O. Box 2076
Boston, MA 02106-2076




The Boston Fed Has
Found a Home on the
World Wide Web


Guests to the site will be able

• The new series 1996 U.S . currency

to find up-to-date information on

• Treasury Information

what's new at th e Boston Fed , read

• Community Affairs

a n d dow nload Public & Commu nity

• Economic Education programs

The Federal Reserve Bank of

Affairs and Research publi cations ,

• Boston Fed tour information

Boston has established a site on the

and learn more about the Federa l Re-

World Wide Web (WW\1/). The new

serve System and its operations in

"home page " is a gateway to infor-


mation on the functions and purposes of the Boston Fed and the Federal

The following are featured on
the new WWW s ite:

World Wide Web address:
£-mail address:

Reserve System.
Federal Reserve Bank of St. Louis

The Ledger • Sprin~ I 996


Fed Points

the nation's payments system.

America's Central

i.e., Reserve Banks hold the Treasury's

Banking, of course, has changed

checking accounts ;nd handle the is-

since 1913 and so has the Federal Re-

suance and redemptfori ofh'reasury se-

serve System. Today, most deposito-

curities; 3) it is ~:S.-µpervis.o.r:..anq:regu-

The Federal Reserve is the cen-

ry institutions are subject to reserve

lator of bankipg instituti~:w s; an~:4) it

tral banking system of the United

and reporting requirements, so the dis-

States. It was created by Congress in

tinction between member banks and

makes and implements
U.S. monetary
~--- .

1913 to serve the financial communi-

nonmember banks is not as sharp as

The Federal Reserve's monetary

ty, the government, and the public.

it once was. Furthermore, all depos-

policy-making body, the Federal Open

Under provisions of the Federal

itory institutions are now allowed

Market Committee (FOMC), meets

Reserve Act , the United States was di-

access to such Federal Reserve

regularly at the Board of Governors in

vided into 12 Federal Reserve Districts,

services as check processing and

Washington, D.C. During these meet-

each with its own Federal Reserve

electronic funds.

ings, the 12 voting members of the

Bank, and the entire System was

however, are



presided over by a seven-member Fed-

priced ; even

eral Reserve Board ( now known as the


Board of Governors). All nationally-

banks must

chartered commercial banks were re-

pay to use

quired to become members of the Fed-

them .

The services,


As the

ber bank was required to deposit

nation's cen-

reserves with its District Reserve Bank.

tral bank, the




Fed Points
This Fed Points gives a capsule
description of the structure and functions of the Federal Reserve System.
Future Fed Points pieces will focus on

eral Reserve System, and each mem-

In return for holding reserves ,


specific aspects of the Federal Reserve, such as the selection process for
Reserve Bank Presidents or the role of
a Reserve Bank's Board of Directors.


Memof the

Board of Governors,



Reserve Bank
of New York,
and four other

member banks were allowed free ac-

serve has four

Reserve Bank

cess to a variety of banking services, in-



cluding the Federal Resen1e's check

tions: 1) it provides banking services

who serve on a one-year rotation)

processing network. This helped to

to depository institutions; 2) it serves

make decisions that affect the supply

bring order and increased efficiency to

as fiscal agent for the U.S. Treasury,

and the cost of money and credit.


The Ledger

First Class
U.S. Postage Paid

Boston. MA
Permit So. 59702

Public and Community Affairs
Federal Reserve Bank of Boston
600 Atlantic Avenue
P.O. Box 2076
Boston, MA 02106-2076
Federal Reserve Bank of St. Louis

23669/LD3/GSRJE/25MAR96/ 8100004
Federal Reserve Bank of St. Louis
411 Locust Street
P.O. Box 442
St. Louis MO 63166