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Unfinished manuscript on the history
of the Federal Reserve Bank of Kansas City

Jess Worley


Clan A.
GORDON JOllES 1 Denver, Colo. (_l YEAR) Suooeeclec1 l:;i 1916 b7
. , .
J. o. Ull'CHELL,hDmver, Oolo. BB-elected er:f'eatin Jan. ~ -1919-.f2&.


J. BAII.Et, J.t~scm. »ms. (2 TUBS) la-eleo'" ettecttn 19t1-2JJD. •

o. :&. BrrmmAU. Jlottollce Jlobr. (3 Y:&tBS) lilt-eleoted •~•ati~ ,:1,9lf"~l:.

Be signed. e!teot1Ta 1921. Suooeede4 b¥ E. E. .l!1Ll.A1raf I R1ll 01 cy I Kana.

· · .- . . _. {> • • -~• ~ - ·:·: "': .•

c•. :mmx, ~ , · Jiebr•
( l YEAR) Bl-eleotet ettNtlyt
.11. I.. JloOLU.R!, Jta.naaa C1~ 1 lt>.(2 nABS)~l.ote4 ef:t,otfi~ ·1tl'(-tl92~t= :: ')~ · ~-· . ... ,'~. : . . .
1. .A.. n.tscs, .. Xl..Beno, OJaa.
(3 ~ )ll:wed· tram _Di~;ri~_( . . _.;'b -::SY..) j ( ' ~~>:, :-.~..
Deoembc-• lg 16, Saooeedod by - •
•.- :· .,. -~ __ ., . . .. . , ~-~
H. w. Gl!SO?l, l!ask:Dgee, Okla., Be-elected e!t"')OtiTa 1918-1921. .,
... ~ - • ~ •


.,_ •.

( 1 Y.E:'.:a) :ne-aypai:lt&d 1n 191.5-19189 Sa.ooee4e4
R. H. UA.IDm:, J:lenver, Colo.
' .:.
~ .:: . : :;• .•. . ~ ... . , •) ·. • 1
in 1921 by i.- ., ,":\- · .:.
~ ROBD, (JEqtral City, liebr.
A.SAE. &.:&Y, ~ e , Okle..(2 m.:as) Vio&-Oha11'Dml· 8114
Deputy Agent ~t1l resigned. 1n October l9l5r 8ao1Medf4 'b:, - .
FBED W. l'IElllm, Kansas City, z., lie--8.~pointed 1n lll7 and 1920. •.. .
J. z. 14I.LI.EB, .ra., Kansas 01ty, ~. (3 YEABSJ Cho.1~ rm4 •. ..
. . ..
Fadaral Beeerva. !gmlt until ha b&oa1:1e Govs-nar- 1.n _191.6 : : r .,
Buoceeded 1n 1916 by • •


.... \..,...-~

BAiiSAY. Kansas City, ~-· .Appointed. a!!oo~. J.~l.8-1:.~!1. •. · ·;:. .. ·-~,.·-~t~;.:'..:-: ''~'._;,: .
. . -:

,. .





.. .:.-...~, .. _ : -·;. ~ ·2 ·

. . ...

••• !

.- •

·· ·• .

·r ~:. = :






. or
Even\1 re~ti:Dg to--~~ ~ ,:~. ~
And Federal Beserr:e .Bank ot

l Beaene Act
01 ty.


• • • • • •





,,. ..~ : -.:1;1::. ;
,., ·•--·· .... .. ....
DiDD.etroua pa:aic miah began to ~lwmoe timmo1al legiala t1 an

..._";t•3. ;

.:-• "\'·

1n Uaited States.


Paee 10.

•· ·- ··'



. ,·:

.. ·,.

~ ~... :i·

·; ::i..cS ~. ~:.:2-~~


t~ __:,.·:.P~t~- :


Panio duri.Dg sanrnor an4 •:ta11: 41ar.~ :llt;l.1ah- timif'.' bi;¥i,11t1U'i una)il
. , to pq P:,. caah and had tQ iRs,m cl'8ri.Dg ~
howso:.: Offt1_~~oa~•~··:·~~
; ~'le.__to . •• ~ ., -~-· •
·, • ,, .. assist DBteria~ on aooomt of hav'il:Jg 't'a:n41 :·.,clepoa1·.te4.,1,n·-t1gb.t pl&oiat :· Jiottff8l-•
~..;·· ·1 t transf81'red bonds f'rOm depoai t aoocnmt~. to oinnila-t icm acaomta an4· ·anib•t1 ~tea
._>:,.: .::,-ncm-aatlcmal bonds behi:nd public deposits.

·., .: >=:: :·:~~~~~:_\ ~:.:~~Zi

Sept.. 25 an4 26 Americm,. :Bnnlmrs .A..aso011at1cm -heri-r a logiale.tion oomitt~e. . • •


C()llgN ss met



,, "~-d.1aauaaed:·~

. . : ._ "'. J"~ '


-.ieg1"81&.t1'.c:m. .:.a;~···



.Beoresentative Fowl.or . and ·:&ei:a.~1!.-~'tah--tatherecr & ·1'14r1oh ,, ••
b1il. Bepreeentat1ve Vreeland ·- ISD.:lnl t ~ Jli•~bl'lil-• 1 !~ !heee bU:l~ .
-:,were oomprcm1se4 int~ - the _
. ll4ridh-Vl"e~:~u.-·- --tbiia .,...! ,:· ••
called t bt "
CUrrencJ B111..• · . . •Pagel .'2,S -mxl .,....- •


·~ ~--·
Oo:cgrese appointed the_ Jht1oml Mme~ 00111D1em.on. Page 6 . • •
; .


-~~ ~-~ ---~~)~
·- ' - ~f


Jul:¥ 'I

• J.1Jg. 18


: ... . .:


Decemnr 16.

J.C. lfi tobell suocoecls Gordon Jones.


Pa.gv 61.


Janr,a,.rj 4. Chairam, Xillsr beooims Govexnor. Pae'o 61. Charles ~
Sa.wJer Gloated as 1ode?'31. &servo ~ t . Col. Fred -a. Flenine appointed

to ,irucoeed Ur. lamaa¥•

FebruD.1'7 10.
Mr. Thralls rea1gns. Sucoeoded by Arab. ll. Julc'!.ei'.'80.U:.
Pages 62-63.
J.L. Cross· eleeted assistruit to the Governor. ?age 66-B.
J~. l.5~. First dividend ~thor.ized. .k' 55.
September 28. Governor Rardizg Dakes f'irst visit. .?age 65·.
October ~. Director 'ililson resieno. Pago 66.
December 19.. Second dividend authorll8d. ?n£;e 66.
December.. n.1;1. Gibson suooeads Direotai.· w'ilson. .?age 66-B.

~us.17 u.
February 21.
June 1.

J'IJM ;r4.
J ~ 29·.

Oot9ber 12.
December 6.

J.L. Cross e-Jt3cted Deputy Govemor. ~ 61.
Bank adopts Grou:p In.surame fo:t- employes.. P&t• 68.
First Liberty Loon lmmch.ed.
Pase 69.
~sury authorizes Participation Certificai&s. l,age 70-A
Cma.ha bankS reqm st 'branch. ?af,"e 70.
. WorthiDgton modo ti.saist-a.:lt. cashier. ?age -Z2.
M.A. ThoapS.On elected .Assistant C3.sh1er" Page ·'14.
Board. authoru:es nrat extra canpemsation toz, .
empl<>'38es and JUD.ior ott1oen cm aooomt· ot high
ll.TiDg ooata.
Page ~ •.


L ~ who bad. rea1g:ned aa clan "~.41.reotor
in 1916• WU reappointed l,y P'ederal llaseffl Joa.1'd
on Decsnbel" 6, 191'7, and attended hie firs~ JDN.tJDg
after his rettlrll. to the bank~ 'Pedaral Baaerve •
Suopeeded llr. Sawym-. First. mantion zm4a ot mnr·· •
ba#Jt balld.iDg.
Page ,5
s.· A. w~u. Aotmg Andi tor, elected Auditor to
~oceed IL J. lilllellla.
Paga 71 •
!ae.rd determ1necl on 10th & Grand. Avmue tor ·•!t.e.,
_., bank bu1141Dg.
_.Page :·~ i
· ·( ·
X. P. ~ el.~~'4 Ao~ -~ ~•-~ tJ~~~er· - ~ . ~
~ A• .~ m·n ·res1gna.;_. H..~l~ ~ .n ,~. _ ~ ao ' ·
-3. W. llelJa.: ·J.. .H. ~hart.__p.ct ·Jolm,~h1111pa, Jr_-... ~- .•
. appoizitecl ,J.cting .Assistant· Ca~rs. '
?see 80
Death ~ L .~ Y , ' il):•• during epldemio
o-t Intl.nenffl.
• •
Baaoln.tian .toerd. rednc.m g l:>ana.
' 83
:: - .

.June z,
.r~ 2.5

Oat. 25

Jrov. 14



•,. ,: .





M. 13


Jrmploy:eea d1nner - :rmin bSDlt an.d brancbes.
Baaigmltlon ot J. L. Cro~, Deputy Govemor.
C. A.. Worth1ngtan designated Assistant 'to
Govemor. Beaignat1on ot Arch w. Anderscm Sec. & Cashier
PRD"A• A . ~

J'ebe 27

rromot1cm ot the :tollow11:Jga J. w. Helm, o. x. - ~
John Phillipa, Jr., O. E. Ialiel, G. B. Barley 'a n4
G. H. Pipkin. .
Page 86

J.pril 24,
J ~ 24

X. w. E. Park mde Assistant Cashier
Page 88
Board bears applioatione tor branch bank trom LinoolD,
1lebraalm. 1 City, Oklahona, !al.Ba, Oklaho:m and
i'iohita, B'mlaaa.
Page 8S
Board approves bonus :tor anployeea.
Page 98
Federal Beaerve .Beard annaunoaa 1n :tavor ot Oklahoma
01 Q" tor .Branch bank.
Page 90

,. I





Dea. 17


Jan. e
.IIU'oh 25

A. G. J'ro at made Assistant Oaahier.
PBge 94
o. T. Ba.atmen .resigns aa mazager ot the Cneha. Branch,
and L. H. Pm-hart 1a appointed his spooeeaar. ·Page 93

April l3

00JJ8l"OBS iassed legialatlon permitting progrea~1"1
discount rate.
Paet 108
Chapter a:p. progressive rate
Pages 96 to 10'1.
o. E. nmiel elected ~ger of Okl.BhoI?a City bre.noh
and G. H. Pipkin end fa -~ UoAdana appointed Assistant
Cashiers - main bmk.
l? 94






.Baslgmtion of Director Bnrnmm. BUOoeecled by
I. Ee .111lltmq



Ju.q 14

23 .

A.UgaSt 15


Po.go 108

Direators decide to require betff1 borrowara
Page 110
to liquidate portion ot their ntdisoouhta.
Dea. th ot hl.ther Dralm, Direotar of Qnaha
branch. Eleot1on ot •• J. Coa.4 as -his
Page 111
Page lll
Oon,,er-stone ot new banlc builclixlg plaoed.
L1veetook oontenm:oe at Washington
Page 116
11nat bonus to emplo,eea an~or1zed,
Aooidental 4ea. th 'b7 drowning ot lnlle.ut
Pr.tee' 118
Bam~ • ~on ot hdezal ·• • ~ • Agent.
D1Notor1 author1me ,purollaae Qt lote 1n
Olclahc:.aa 01ty nnd Dec.var and oonstruot1on
o:r perniemant homes for these bre.noh banks.
,. Gordon Sanden elected Assistant Au41 tor.
Wm. Phillipa elected Aaa1st.ant Oaahier of
<baha Bmneh. Direct.ore autborlze · abeorption
ot Fiaoal AgeDOJ' Depir~mt .after, J ~ lat. ~ 120
Direotars endorse. pend!ng _'Pcs1on Bill r~
hdem 1 81lployees •
Page 121
011 men confer with D1reot.a r1 on req-aeat tor
more libe:ral rediaaount privileges •
Paees 122 to l.2~
Blml!:: B'Qllpmds prognaslve,rate •
Page l.26
!gm t Jaiu,a7 te1t1tiea bet ere I • . Ot o. OZl
grain rate hearlng. •. _
Page lZ6
Jlebraalta banker ■ l!-ppeal tor oanoo1a1om for
ta.rmara and atookgl'Owera. l the _Ji>Xelvie iiq.oident) Pagt 127-180

.. -


• ·::t~






Y J.,.,!


" (,




-- ..,




mu. le

the hi story of the Federal Reserve Bank or Kansas City, like

that of each of the other eleven banka., begins with the date of its opening
November 16., 1914., so closely are the national a11d local


or the preced-


■ 'UIIIDB:ry

ing fevr years related to this history that a brief

of these preceding

events is not out or placo as an introductory of the ·actual history of the _

It can be aaid in fact t.hat the history of Ula Federal Reaerva i:.. systsm


bad ita indirect beginning during the financial panio or 1907., for

it waa that panic that caused 1:arikcrs· end legialatore t.o foresee the neoeaaity
of a new banking system that would ba at onoe botJ1, oo-operat:ive and : pro• ·
tectlve. ~iontt syatsaa.

ftl.ere had been previous attempts on the part of


bank associations to eat.abliah emergency currency measures to tide over the
crop-moving periods.
.. ..J1i. ia well rememberetitte banka or the oo~try during the summer


and fall of 1907 were unable to males more thab meager payments of ea.ah and ati 11

maintain , their lawful reserves.

They were forced to issue clearing house cert!-

fioa.tesJand not a fn, 'tnnkera in Kansas City 1n the yeara that tallowed the
criai a pondered frequently over the miraoulous escapee tram failure during that
stressful poriod,


The mention· ot clearing house certu'icates recalls

numerous business men and bmkers in district ·· the oau:ae of prematurely gray
hairs over the financial 1r0rriea of the eventful year of 1907.

'fhe Treasury

at that time was unable to help the banks ot the co,mtry b~o.uae i ta tunda bad
been deposited. in tight plaoea.

However-. the Treaaury 4id tranate; where poa-

ai bl~ bonds from de?<)si t aooounts to circulation aooounta.
non~na:t.ional bonds behind the: inibl"ic 'd epo ■ita .


















<• - • -

... ..


e.1 1 0

While tbesif~surei(w~~e:(~r - _

•~ • ••





·-.· .- -.-. ·.--. ..,....
. ·. ·.: ' . _;, . : :







.• T •











: •

l : ,.: _£:_ /_


some relief nationally, the Kansas ··City banking territory was forced to depend more apecifically upon the resourcetulneaa ~f -the members of the Ianaa1

City Clearing House Association.
the "l'eteran bankers who were


It 1 a noteworthy therefore that aome of
instrumental in preserving innumerable in-

st1 tutiona trom financial ahipwraok d.Ul'.'in;s that memorable year were among the
active mon ,rho asalat.ed in obtaining for Kansas City one of the twelve Federal
Reserve Banlca and alao in opening this bank to the public.
concerning aome of

the ■e

Interesting !'acts

men will be found elsewhere in this volume.

Inolaatlcity was the glaring fault of the banking system in vogue
prior to 1914.

The oondit.J.on may be here .roviswed most brief~y. by ,ta.ting
• combined capit~l., surplus and deposits .

a very few facts.

The l~~-~ !?! :url\of' the banka of this country prior to

1914 was enormous when the figures were vined on paper as the following table

will shaw:

No, of

Capital & Surpl~•

Bank ■


Nati one.\_
state and
Trust Co. __
_ _ __


..-:r.f ' /


Total &;. l 1



t1 ,ooo ,ooo .ooo $9 ,ooo ,ooo·,ooo

_ _.,....000_....,fXX)
_ _ _ 12 ,ooo ,oc,o .ooo 14 ,ooo ,ooo ,ooo

28 .ooo

84,000 .ooo .ooo

tl9 .ooo ;OCXJ ,000 $23,000 .ooo .ooor


amount (?f .mon~y __eonbert'ed in
A• the11e figures show, the averageJ rC I p 6 2 a . ..._ J131;-;,•• bankt ---

•!IMru waa approximately $821,422, which doubtlea~ aeamed at tha.tUme a


11uff'iciently large average.

But the




block to tinanoE.AJCLdibalu11iwast

lay in the fact that banko,.,..eltll11e•··11ot co-operate except in aa.aea where stock
ownership in state bank•

-!:f I 1,

prc,-vJa relief for those lltate banks ao oo-

fl-le 'b.uiks of' one l~oa.iity_mi_g ht . ■ave that commmity but they could. .

.not· dra:. on their·

r~~erve-■ '• ti, ·a sei2 at- n~igh'b~ring~•
- ·

;.· - . • , r:,.. ; .. ::,11": ,. , _



r:. '·::· . • _· ..: .






and ccmmmi


~-e ■.~:: ::./

, ;=: •· •. rese'rveii ,.of ·the 7,600 national banka _.mi ght have been quite ~ -equate
.!'..~,•: ~; : '•





~:=- · ana· l~_: ·:.~,

> i.~,r• 11'·E,f'A-. .,:,;;

many caaea 1t has been ainoe learned they ware much more than required by law-_
but these reserve a UDder the national bank act were bottled up within the bank

where they could not be

or any aervioe to the cammni t7 or to the oountey,


ha• been stated of'f'iciall7 that during the latter part of the panio of 1901
somo banks whf ch were required by law to carry only l61o reserTa■ were actually
/..I AJAU)v1L4--



oarryingAbetqen ~ and 591 of thei• deposits while in 1914 the reeeM"81 of
same banks amounted tp 79%•

In fact. 1 t la stated authentically that d.uring


the atringericy of 1914.A. i!lduoed largely ·by inability to mow crops. ,~ •.'.. , i., banka
were carrying 200 millionrdollara in cash in their vault.a and with their re,..
serve agenta/\in exceaa of their regular requirements.
flle ~ct that. this 200

millions of dollars might easily have averted the atrin.genay if' it had been
usable, sh01'8 up the fallacy of the old banking ayatem. ·
The logical result of the panic of 1907 • and t.hia pan1o left

it ■

mark ppon the Kanau City banking territory for aeveral auooaeding months ·- was
that t.ho opening or Congraaa on December 7 of that year found Currency the paramount subject tor legislation.
Representative ■

Senator Aldrich and a member of the House ot

fathered a currency bill afterward known aa the Aldrich bill.

At the SBJne aeaaion Representative Vreeland subnitted a bill alao aimed at the
8ld. ■Ung

correction of the system.

Later during the same



two bills wara oom:i;rom\.sed into the Aldrich-Vreeland b~ll, ac:netimea called the

"Clearing Houae +

noy Btll.n

In thia connection it may be well to

publi ■h tor

what ia believed

to be the first time some "inside history" oonoarning the· formation ot the

Aldrich-Vreeland Aot. which inf-o:rma.tion ma::, surpriH many read.era who lieUan4
•- ,

,.. .


. .,. ..r .'



. __:,.


they knevr the first-hand faots concerning t.hia measure.
The American Bankers Aasooiation at its 1907 meeting held. at
Atlantic Cl ty on September 26 and 26 heard a report from t.he prniou1111"
of the association.
appointed Currency Camm1ssion/ It then appointed a Federal Legislative ComState ■

mittee of five representative banking men of the United

with inst.ruct-

ions for them to center in t'ashington with Senator Aldrich and the Hause member
who -.s aasooie.tad with him in the formation of his currency bill.

The ocn-

mittee was made up ot the following mena
Arthur Reynolds, Prosiden't.4f- De:sMoinee National Be.nk. Chairman.
E. "i. Swin-l'ley, President4-F~rst National Bank, Kansa,i City, 18.1111ouri,
Joseph A. McCord, Vic,~esidentJ-.Third National Bank, Atlanta, Georgia,
~. v. Cox, PreQidento-'~~eoond Natitnal Bank, Washington, D. c.
John L. Hamilton, "Vicij-Praaiden~Bami.lton~ &: Cunningham, Hoopeston, Ill.

1hese men pr~eedesl to '!°'8.mhin&t,on and)af'ter a ~onsultation nth Senator Aldriolf ~
hie associate,returned to their home~ feeling that their advice had been beaded
and their counsel would be accepted.
however than

~J•• •' • received

No sooner had they arrived at their homes

l, telegram6f'rom

'\\'-a.shington atating that tne

Bouse membor with wham they had conferred waa playing fal•e with the and with
the cowit.ry at large in connection with the bill.
return to Washington at. onae,. which they did,


telegr&llfiadvi■ ed

t.ham to

E. F, Swinney, 'President ot the

First National Bank of Kansas City, one or the mambersof thlt committee,reaently
told the remainder of the st.ory a.a follon:
"On reaching Washington we ignored the House member referred to, held.

a consultation and decided to appeal to Speaker Cannon
. We, told Speaker Cannon our


or the House for advice •


present.a.ti ves who whersled i.n his chair and shoutCJd to a messenger• 'Boy.
to get Vreeland and bring him ln hara.


'F.hon the messenger returned with Re-·

preaentative Vreeland of ?lew Yofk, Uncle Joe enlightened the Representatin
about. like this:
"' )4f.

Vreeland, these are my boye and the boy■ do the banking

'buaineea o.f this country anci the ones we ouyit. to listen t.o in making up our
banking 1slation.

I know every one o&· these fe).lcnra and th$)' knO'I' what


I want you to get together 11d th them,tind out what they want and.



then you and Senator Aldriah get this thing t.o working.'"
~\nd thia was the manner in 'Whi oh the £0roru11ner of the Federal Rap
serve Act received its name, the Aldrich-Vre&lo.nli Bill.

It waa "Uncle Joe"

Cannon ,rho started Representative Vreelsuid ou hia work which was afterward.
__ e_rged nth the result of Senator Aldrich 'a e.i'f'orta.

7h11 bi 11 was in e.t'fect

only an omergenoy currency ~11 and as auch it furnished relier to the ba.nka
of Kansas City as well e.s elsewhere during the of' crop moving in 191:5 and

Cuf'rency resulting frib this bill was commonly called "Aldrich ourrenoy"

or •Aldrich-Vreeland currency."
In ?larch, 19Q8, Congress appointed the national m~netary c()Ill:lission
of nine members from the House and nine from the Senat.Er
,, , -_
·,/whose duti ea were to inveatiga1',t the banking systems c·r va.ri oue countries and
report to

Congre ■ s

with reoonnenciations for a now banking law for this country.

Financial even ta aubaequent to t.pat date were ~ot, or consider al>le importance.
the re~ort propo sing t o ' incorporate the Natio~ab .~9serve· Associati on or_t ~e Uni t:ed States.
'lbia coz:mlasiorl-· made !.ta ~epor-t. 5Jan'hary ~• 1912_,,~
Dlo following A'.pr11 the
su~om:nittee of the Howle banking and currency committoe, with Representative


it.a·"Chairmali, began the framing of the future bank• ,,,
. . -, ,-. ,.:,
.,. . .
- ..
lng law~ •the result.· of l1b1 ah -1111 the present led~ Re serve Aot. The f raming -,,., ••

.. . Carter

or Virginia




': - ,


. ,.,

: • f~ <...



C-1 : .:,

-sof ttwi Act constituted in effeot t.he re-framing of the Aldrich-Vreeland bill

and the writing into it or financial idoas and plana gleaned from American and
tbe meantime the "Puj·o Uomni ttee" of the house m.d investigated the methods
European sources by the mnnetary caimniasion." of bankir:ig in the United States
dur:i.~ 1911 and 1912 and also made a report.
The aucceading evert'a perto.1.ning to the enactment of' a ne:r ti.nanoial

> In

law can be grasped from t.he following chronology in brief:

J,me 18. Comnittee lep:,rted the proposed bill to t.he Houae.
July 7, The House began o,onsio.era:tJ.on or the bi 11.
S"3pt;ember ( early}, Bill report.ed to the House Damooratio cauoua.
Septe:nber 9, Bill ratified by the oaucua and r~rmally reported to the House.
September lOt Deba'te bogun in the House.
September 18. Bill passed by t.ha Rouse and reported to the Senate.
Ootober 25, Senate hea.ringa enddd and bill sent to ccmrni.ttoe.
December l, Committee reported bill to the Sen~te and debate 'IJIB.8 begun.
December 19. Senate sent. bill to conference.
Decamber 22. Reported out of conference. PaSBed by Rouae. vo••\·; - Teas 290,.
!tllY3 , 60~


Decomber 21, Passed in Sena.te. Vote - Yeaa 43. Naya 26. Act signed ~J
President ~oodrO'llt ~ils0ri.
As 1f paving the way for the acceptability of the new financial act
that was then 1n proce19 of formation., events looally in the Kansas City bank•

ing territory during the two years prior to the enactment of' the banking law
hra such as to thoroughly convince any be..nker of· the need for the Federal R~:
serve Act.



consider first the events of 1913.

The late summer a.nd

fall of t h a t ~ ~ ell.max of' the ewr 4iffioulty enoouitered
in_moving the crops in tJ:1111 western territory.

Funds ,rere not availabl1 from

to start the crop moveme~t and this s1 tuati on automati oo.lly ti ghtene4

finance in bot.h the East and Weat.

Times ~re he.rd and deposi ta reaultingly
• I ~

: ~• ~:•.• ! : :--:~~ • ! ~.•


... . -

.. .

. 19\Y ~d rapidly shrinking • .

... 1

- - . -· .




~- ' ,. J'


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' j _ ;_·:,

As •a temporary preventive _measure the Tr eo.suey 1 aaue4 on·::.Auguaf



"'.; .. . /

.18~"':. :,-:: '· •


{lUthori,:ig2:-f'L" ~
► dit:dJii+is»+:1 y +eudc:rka-:••!• ■itl

1913. Id. department .circular No. 18 ,.
fund ■

in nationll banks located in auch of the principal cit!ea
of the Tfiee.sury .
of the country e.a the Seoi:e~;m~t. designate •
of Government

..._111119 \lied,* 11gma.---,-.u
-.a,Uiliu'rna b"iiii l1ael

m&t,...,, t I mc:dtmnp eIP'iiX9lf'ldJ:rtoc:rnHl1!:xts>a ....,..,..~_,,

-.y, 1

Since 1 t waa tor the Go-vermpant to

extend deposi ta to smaller towns and oi ti&s I the depori. ta.riee selected" ere
expected to function as mediums of distribution in _¢.urniahing funds to the
locall tie a in need of them tor transporting a4d. marketing the o rope •


seauri ty for such depos1 ta the deposi tariea placed ll'i th the Treasury United.
3tates Government bonds of any iesue, equal in amount to at least 10t of the

Treasury deposit.

1he remaining 00~ or the depoai t was

■ ecured

either by

high claH state or municipal bonds approved by thi, Secretary and accept~. _af,

76,; bf their market value• or l,y prime commercial or businesa paper_ approved




~e bank offering it.._ and accepted at 76% or its face value.

It rill be seen that u,e application· or the above temporary mes.sure.

at least inao.f'e.r aa the offering o.f' commercial paper as collateral for Govern-;n.s conegrned
ment deposi tsJ was in reall ty putt~ng into pra.otioe the primary pha.H ot the
rediscount privileges contained in tho newly signed. Federal Reserve Act.


tryout of the relief measure was hiffllly suocessf'ul e.nd saved tho country from
what might have been a very severe stringency ciuring the erop-moring period.
It ~s used locally during the winter or 1913 and. throughout the year of 1914
up ~til the opening of the Federal Reserve Bank of Kanaa.s City.

It wa.11 at.

first . timed to end when the Federal :Reserve banks should opon but later waa
~rt.end.sci t.o · June 30~1n -order to pro"!ide ,for ,any possibl• f~lura
,~e :P,~~r~ ..,,.




- Reserve Act to me1\~t -~ ~-~~ -:~ ~s• _,


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: .,,,

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Th~s· ·re~.lef me~~~-was oarri~ ,on ~~, '·"

-athe Kaneaa City Clearing House Association and a seourlUes commit-tee or
five local bankers wi~ a Government repreaentatiTe.

The members or the

first committee wore as followsi
:E. F. SWiilni,y, President or the 11.rst National l3ank.
p. w. Goebel, President of the Commercial Natl. Bank: 11 Kansas c1~.1Canaa11
and also President of the Kansas Ci ey Clearing Howse Aaaoc•

F. P. Neal, Chairman or the Boerd, Southwest National Bank of Commerce.
Geo. s. Ho-ny, President of the National !;a..--uc.

'Wm. T.. lamper, Preiident ot the Commerce Trust Company.
Geo. stevenson~ ·Jr., Government Rspreaenta.tive.

So auoceutul wa.s the rolief work ·or the eoaurlt.1es COirl:littee 1n

1918 that tlle !?reasury varied tJ:d.a measure and enla.rgod 1 ta aoope in 1914.
On August 4 of that :,ear was emended the Aot originally approved.~ 30, 1908



amended by an Act of Deoecbar 23, 191S, the outcome or these

Acta and amandmonta

~eaolving into a sen.ea of what were ca.11"6. national cur~

rency assooiation1.

The aaaocia. tion a.ffeoting Kansas City was called "b
Kansa.■ City

National CUrrency Association of

and st. Joa~ph."

The territory

covered by this association embraced the then n&tural banking territory of

both Kansas Cit.y and st. Joseph.
assoo1at1on ■


work was carried on by the cl&llrlng house

of Kansas City &nQ st. Joaoi;h under the direction of on Executive

·Committee composed of the

J. F. Dollning, Pr8ffi~ent of the icJW En~land National Bank,;.:
c.s. Jobea, President: of the Security National Bank.
Gao. s. Hovey, . Presiciont ot t210 ~tars tats National Bs.nk.
J. o., President of the' German-Amorioan (later .American
Jl'ational) Bank or St. Joaeph.
P. w. Goebel. President of· the Cammarclal National Bank.
o. M. Smith, Pretiicient of the Com:nonvraalth National Bank.
An indicat1,·n of the tensity of the financial situation in Kansas



0 - • • • • a •• • -







a , •


,.,, _,, -·-., .


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: .1

City duri ng the latter pa.rt 0£ 1g14 ie lound in the minutos~p-t ~~"-1?':~-~~,; 9~ti,. , ., ;· ' '·
• ••

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· • •·-· -:·,.1~:·:-:~.-t
.~: r.::::·.< ..t.:.:r_'G~~~-.z. On tha~.~.~ ~t~ ~~,-~~~,.~.~g·;

, ,. • : Cle~~ .1:'g Bouse Aa~ociation unaer of' August

l" "•Yrh~T:":'




House Aaaoc1ation ad~pted.,..?o,r reaoluti.-on•
a •·, .,•: Jhe
first of :t.heso ahthor•
. •_ - . . .


. .




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ized the issuance of •c1earing House oertif'i0atea 11 for the settling of ba.lancea
each_day between the membera of the association. such oert.ificatea to bo accept,•
ed by all creditor bank■ and given by ail debtoi-, bank• at tho close or t.he o.q'•
•. .
The cert,U1.catea were issued only an aollatenl and a.t. 15% ot the
value or th6 collateral.

They bore interest at 81 per annum and were redeem•

1.ble by tho bank to wtiom 1 asued whenever t.bat bank chose to red.emn them.


waa stipulated that a clearing house conmd.tte" should upon collateral and.
that any loas arising from the isaue ot c ertifioatea ahould be borne by the

signer ot the resolution.
The other resolution that is now e. memorable one demanded. a restriction of the amo\fflt of cash to be paid out by ba.nke.

So necessary was the con-

eervation of cash that clearing house members signed an agreement that each
bank: should restrict its payment


eurroncy over it.a ccnmtors to a me.x1..mum


$100.• 00 a day to any one parson and. that the aggregate paymonts to any one
person should not exceed $300.00 par weak exoept for payrolls and for the further
exception that where a •ustomer deposited only currency a apecia.l account cover• auoh deposit might be made anci if deemed aci'Viaa.ble a like amount of o urren07
might be pa.1~

to aaid ouatoiner.

The clearing house banka further agreed to

make 1hipnant11 or currency to tho country only in special or exoeptional oaaea
and report daily the shi.pnents made.

ibe state of the public mind during that

trying time was ao inflammable that tJ1e final clause or thi • resolution bound

of the aHociation to an agfeement that no information shoula be


given to the public press except by the President.
af the Clea.ring House Aasoa•
iation, _

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:-. •

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• ••• • Die ~or:egoing .r ,aoJ'.~tiona wer" _ae,oJ}tfi41'? .. ~.•,' .Au~t. i.·. .•_But • -: :



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camjif·neoeaaary to enatft."1.1\liiil the 11.rat ahipnent'; ot the "Aldr1Gh _:- '.~~;:-~,. ....,.

the following Thurscay
currency" was roceiveci/by Mr. Stevenson. the tiovernment Representative. and
the day was saved.

The resolutions ':Iara e.llowed to stand as emergency


Thus -th~ maxim "It is


ill wind that. 'blows

no good"

might haw

been intended to apply to the origin of the ll'ed.ere..l Reserve Act. so applicable ie it to tha paido of' 1907 as a. f'actcr in establishing a Federal Reser'V'Q
System and in6.ireot.l7 the Federal Raoerva Eani..-: of' Kanas.a City.
No history or the redera.l Reserve


cc:mplete or just without

credit bo1ng gi. ven Senator Rdbert L. Owen or Cklahoma for hla untiring effort.a
to bring a.bout most of the 1.lppo~tqnt foaturea embraced in the measure.
efforts began soon after the panio of' 1893 when Mr. <Ren



Prosident of' the __

First !iationa.l Bank of Kuskoget., which bank he established. in 1890.


austainod enormous losses in doposits. this 1:nnk turn1.shed 14'.r. Owen with an

object lesson in finance and through his political party h• began in 1896 an
attempt to put into the na.tiona.l platform maa.suros designed to prevent panics.
Ha failed in this but two years later went to Europe and

subject in London,

Pari ■

and Berlin.


the financial

Subsequently as a member of

Congres ■,

Mr. Owen presented propoaal■ embracing what he believad to be the most pra.ctioabi{ •

points of European finance for the .American



Chairnian of the Senate Ccmzd.ttee on banking and 0urr_451nc;y~ :senator

Onn untiringly fought tor the correctin financial principle■ in Which Jie be• - .


• 1 -~ .

lieve<i, and 1 t is fitting to state here that muoh of the euooosa of the red~ ....
.,,. ...,.
Reserve Act la doubtleH due to thia :Sen~tor,····_,_':J'"~
was formerly a bank,r ln
what later became the Tenth Fecieral Reserve .Di strict.
...:. .,


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1"(◄7,\IC'& 'C~LA_

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No sooner had Prssident 1:V!.laon signed th~ P'ed.eral Rea8"8 Act on

Deaamber 23. l91S. than Clearing House Assoo1ationa in every city of import•
ance in tha United Statos appointed the?!lselvos "auxiliary cmmni ttees" to

assist in carrying out the provisions of Section 2 of the Act.

Saction 2 pro•

vided that -

"As 100n u practicable the Secretary of the Treasury.
Sectatary or ,~iculture !1Ilci the Comptroller of the Currency.
acting as the reserve bulk organization comnittee', shall
designate not less t.'li.&.n eight nor :::nore than 'twelve cities to
be known o.s Federal Reserve oitias,. ond shall divide the continental Unitoa St.ates. excluding Alaska, into ciiatricts. each

district to contain only one of' suoh Federal Reserve 01.tiiH•
The determination 0£ said organization com::d.ttee shall not be
subject t.o revin except by tha Federal Reserve Board when or- .
ganized: Provided, Jio.t the dist.riots shall, be apportioned
ri th due regard to the oonveni enaa and. customary course or
buainesa and shall not necesseJnly be eo-terminous with ary at.a.ts
or st.a,as, ate.•
Karly citioa were in tbe fight for the Fedoral Reserve ~-ank even be•

fore the publi ea.ti on of the Act, for they had been tiell advised by their r•'.9 ..
pi,eaentativea in Congress as to the approximate wording 01' the organization •eotu:,n
of the Act.
So early was the start of numerous eastern cities in the fight for re•
cognition as roserve centara that there was prevalent early in Jaft31&%"Y a reel- •
ing throughout tho,, country that Kansas City would not, get one of the banks.

strong was this feeling as it was expressed in the East and repeated to the ear•

or Kansas Ci tians that a spirit_ ~r. ~een de_t.~rmi.nati on took hold or the Kansas City




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,.,,,.. . be.nkera and made their fight for · recognition a ,tranuou• and a sueaesafuLone. ,, . ,.

11 ~ ~ - ~~-•

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~~.:',:::::i' .'.':,';,~·,·;:..~~~-~ ''ffie central reserve o~mters at that t.ime were Bew~Yo.rk, ¢hic:ago~~



J ~Hi-:!",: ·,~ · -...·. ~.J....1.:UC<i-~

, :.:,>,,.-'...c·


It was ~.rtua.lly- certain that. tnos;· throe': cities would beeome "?e4-


·, r-.:1•- ~-


-12/eral Roaerve oitiea.

So olose to st. Louil was Kansas City that it was

generally believed the latter oity should attempt to booome a branoh of one
of the Federal Reserve &Lnks yi ich would undoubtedly be located at -St. Loui1,
~i'th this arrangm:nent in mind a com:nittee from the St, Louis Clearing llouse
Aasociation came to Kansas City direotly aftor .the signing of the Federal Re•
serve Act and held a session with a 11paoie.l o~ttee of the Kanaaa City Clear•

ing House AHociation with a view to enlisting K~\Daas Ci tian• 1 aid in behalf ot
st. Louis, tha latter city to compensate by assuring Kansas City of tJ,e location
The committee from tha Kansas City Clearing House Ta.a

of a branch bank.

E, F.
p; . 'N •
J, .F.
F. P.

Swinney. President First National !anlc,
Goebel. President Kansas City Clea.ring llouse.

Downing, President New England National Bank.--._ 2:.
Neal. Presidant Southwest National Bank:.
..,,,. -· '
rr. T, Kemper• President Comrnaroe Trust Company. ----The st. Loui• bankers made a strong plea but f·ailed to convince:, the

Kansas City mon that Kansas City was not entitled to one of the twelve Federal
Reserve Banks.

The attitud_e of tho ccmm.ttee was, "le have nothing to lO,~:d and

something to · gai.J:I."
James A.

Senatorl.(Reed we.■ al■ o prejudiiled again at the chances of Kansas City


until he he°ld a co'1ference with the committee at their requeat.

This conference

lasted all one Sunday forenoon and at its close the junior Senator fran W.sao~

Wa• himself convinced that

City ns logica).ly 1uited for a bank aepa.rate

hn ■aa

from the one that might be located at st. Louis,

'fhe aenior Senator, Joe~ "E.

Stone, was _1. 11 at his home in st. Louis and ·was unable to take an active pa.rt in

t he "matter, but Senator Jw.~. -~J-t~~;d·:~ 'w;;htn.g.t-on a tirm


,... :.a~'-•

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. _I

, ,._ - . - .

P'eder.•l Reaek~'-~ttt/









. •




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• -

heUever in :'ii{i,i~~c.if!.t,.
F2;/l,l"t!'.;: 1: -"'I

iict!v!:ti~~ :be"gan'.:upon hi.a


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·Karly 1n January the press announced an itinerary arranged

'bJ t.ha

newly appointed Federal Reserve Organization Committee oomprieed of w. G.

Me.ruioo, 3eorttary of the Treasury, D. F. Houston. Secretary of Agriculture,and
John Skelton ~illiams, Compt.rollor of the CUrrenoy.

moat of the important cities of the country except

t'hia itinerary included
Kan ■ a•

City and the first

eldrmieh in the tight for Kansas City waa to obt.ain a. promise from the Committee
to make at least a day 1a atop in Kansas City in order to give an opportwiity
for the Kansas City bankers to present their oaae.

Principally through courtesy,

Secretary McAdoo finally wired that the Committee would spend part of Jriday,
January 23~ in Kanaaa City.

On· that day he and Seoretary Houston arrived and

gave the day over to a. hearing in the Federal court rooms.

So well had the

oaae of 11w1saa City bean prepared by tha ~ n g Bouse Aoaooiation tJ,at it has \
been ,said sin ca that the two members


the organization commi tteo who were in

Ian ea.s c_~ty completely changed their mind.a before the hearing ended..
here prejudiced against ICansaa City



a reaerve bank canter, they . left tirtually

convinced that a bank should be located here.


testimony introduced oomprieed a rather exhaustive treatment at

the merits of greater Kansas City as a business and banking center, a compilation
that grew in its impre11sivene11a even upon t.he mind.a or the local mn who prepared the ca•••

Kembera of the special cmmnittee ofte1Lramarked afterward. that

the more they- investigated Kanaa.■ City 1a morita over othor contending
for banks the more thorough was their conviction that they wre right in their
• .-

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__ claim •.. . In fact, F. P. Nea-1.Cluu:rman ·-ot -the ■peaial committee_o'f Kansas Ci.Uaiii~'

• the prophecy on that da.y to the cabinet members l'lho conducted.
"I must say to you now, Mr. Ma.Adoo and iar. Houston. that the

t.he hearing:

bank which you will esta.bliah in Kansas City will prove to be one of the moat
important, useful and 11uoca111tul of the twolw ret-eral Reae"e Bank■•" •
Among those who toat:U'ied at the hearing ware Mr. Neal who minutely

hi ■

argument that the territory contl ~ou11 to ltanea1 City demand.-

lld a p~ey bank instead of a branoh bankJ



Goebel, President of the

clearing house":~~ke 1n behalf' of that organi1a.tion J M.L.

McClure, of the

Drumm Ccmmd.ssion Com.piny at the stook yards, on the live at.oak marketJ Leon



of SmithWcCord-To;msend Dry Goods Company,/apoke tor the Kansas City wholesale
trade territory;

Mr. g. L• Copeland, Treasurer of the

Atchi ■ on,

Topaka and

Sant.a Fe Rail'.vay, who spoke on railroad and clearings in Kansas C!tyJ

Mr, R. A. Long:. on tho l~be?' narketsJ Kr. Frank G. Crowell on tJie Board



and grain markotsJ Mr, J. F. Martin, Presidont of the Kansas City Motor Car Deal•
ers Association, on the moto~ t-ar industry;


n. o.

Moore on the implement,

vehicle and hardware busineas; Messrs, Frank Phill~ps and R. L• Beattie, of
Bartlesville - on the oil industry;Mr, J. B. Reynolds on insuranceJ

Mr. Charles Koith on the coal industry;

Mr. Ben


the industrial and commercial developementJ

Johnaon of Chickasha.., Oklahoma., on

Mr. Louia H. lr.ulfekuhler pf'

Leavenworth. Kansas, on acoeasibillty of territory and Mr, E.E. Jacobs of Cartha@P,
Kia ■ ouri,

on shipments from tr1 butaey points.

In addition to the testimony of

these witnesses inquiries were frequently directed by membera of the com:zittee


to Mr, Goebel, Governor

Secretary of tho


J, Bailey of Atchison, E:anaas 11and



w, Bowme.n~qf Topeka,


Kan ■ as


Bankers ,Aeaocia,Uon,
(. -;'•.



. ' r: ....

.Aa the Comptroller oft.he Currency did not accampany to Kansas City

t.he otter two members of the organization committee, the next problem lay in
presenting the

oa■e to


The Kanaas City committee the_refore printed a pma•

);hlat containing their various argmenta backed up by maps, cha.rt■ and statiatica
•,vhich they had uaed at the · hearing on January 2~.

things figures on the

Kan ■aa volme gave among other

City territory, the number of banks and their aap•

ital,aurplus and deposits by 11'.e;t.aa and parts of st.a.tea, atatamr.ita of banks ot
■ inoa


City as of January 6, 1914, the bank clearings of Kanaaa City

1876 in five year periods and their comparison with olearjnga in other

principal cities, also tho bank transactions of the clearing house banks and.
many other busineaa i,eoords made in Kansas City and ita trade territory,


preface of this book was the following letter directed to the orga~ization committee:
Kansas City, Mo., ~anuary 25, l9l4.
Tot.ha Reserve Bank Organization Committee;

Gentlnuma- We believe it ia the purpose of your honorable body,
aa well aa the intent of the Fec5.eral Reserve Act., that the Federal ReaerTa banki1
provided tor under ■aid Aot 1 ahall be established at point.a Where they will bes(
aarva . the conti guoua f.erri tory.
Kansas City, with her splendid railroad facilities and excellent mail
eervice, has become the natural market,. financial and diatrlwting center of. the
richest arid most rapidly developing agricultura_l and. mineral district of America.

A large number ot the National ~ banks and. trust aompanie■
throughout t.hi ■ great territoey have 11gn1tled their intsntion of becoming
member■ of a Federal Reaerve bank at the earliest po ■aible date~ and have expre■■their desire to help in every way to make ·the plan a ■uaoes1.
On behalt of theie
institutions. and the banks and trust. compo.niea of Kan ■aa -Ciey (Kansai
City, Mi.eeouri, and 1Can1111.1 City, Kansaa), n respeotfully aubnit,, for your earneat.
oorieideration,. •the appll.oation--c-f,.:thi.• ·city ·for the locatioq .ot. one ,of the 1'eciera1..
Reaerve banks.
We bell•T• a lteaerve 'bank located bore ·c ould · aerve ·ffl0r"! '
advantageously than l~~ ;i.O:"\ed ~iii ~~ ,:Other.· o(t.:,J.:~ . d·i atrlct/ lncluii~{f~th•::..,:· ,.,
Stat.ea ,.ot: ,Kan ■aa., 1ielri:ikii., "Nn llexiao· anif Olclah*·,~the ·western part , ot· ·the ·Stat. : .
· •.

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1,i• 1,• •t:·•~ ·:!~Z::-·t--:-\t_,•1• t.! •A ~

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or ftssouri. a smail part of the St.ate• r:6 Arkanaa■ and Iowa, the northern part
ot the state of Tema • and that part of the St.ate ot . Colorad.o of the Rookie•
We are aul:mitting .hermth data which provsa Ianaa.1 City' ■ ■upremacy in thi■
territory and which we hope·will enable your honorable bpdy to plaoe lt■ at.amp
of approval upon thi ■ appl,iaation.
' • • The P'edaral Re■ erve Bank of Kana~;-irtth the cH ■ trlct as above out•
lined, would be a commanding institution, with ample capital and depod.ta to
protect and properly care for the legitimate buaine ■ e nee41 or thi ■ 61st.rict.
If any t-.arthor information is desired, we wS. 11 be glad to turnlsh 1 t
at your commai\4.
. Wi ■bing your honorable 4?0D1nlttae success in the important work of
organizing this great ayatem· ot Federal Reserve 'bank ■ .,and usuri~~ you It our
l!!O■ t hea~ty ~ r t at 'a ll time•• we are.


Sincerely yours.
ffle Aasocia ted Fa.nka ot Greater Kansas City.

For the presentation of the case to Comptroller Williams the

Kan ■ a1

City Clearing House Association appointed. a •~cial committee comprised of ·"• T.
Kemper. Jerome Thralls

manager of the clearin ~ e , and F. P, Neal, inatruot-

ing them to go to Washington and interview Mr. 1~lllama and others who 70Uld be
of service in obtaining the bonk.
Wa1hi ngton.

. This com:ni ttee 11pent an eventful nak 1n

'l'hey suooeeded ln obtaining tWD lnter~m with Co:nptroller Willia1111t

Their f'irat reception 1D the Comptrol~r•s office wa.a ao cool that one

or the

cozmni ttee a.f'tanrard remarked that he knew just how 8ommandar Peary felt luring
hia conquest in the N0 rt.h Pole.

All the arg\Dl\9nt11 they were enabled to a6-

vantp• appeared to have ll t.tle effect upon the Treasury official and they virtually


retired under fire from tho first aeasion.
Di ■appointed

but "not diaoouraged the comciitteo aou@;h.t •ut Senator

Reed and Congressman r.. P. Eorland. Kanau Cit,y Repteaentativo in the Houae, for
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furl.her advice and a1&iatanoe. :Although Senator . Reed wu_ti~t. .. ltrictly·'. an ad~:::.~; '
;~:?: <:_·, -.. :: ,£Lt ;~~~ L..
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'. -• . • -,. "~ .•.... r
. ,. :: • • : -~~~;rat.ton 'Democrat. at. ~me·:he .llaii,aa a favor to Seoretary"MoAA~i~~r~~eci-::t


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·, '. !-::, 1._. ~;,' ;::1:1-"i .. ,..,."'

in behal£ of Com~ller Wi lllams when the Comptroller 1s first app:,i:ntment we.a

being held up in the senat.a.

Thie gave him an inroad to the Treasury

on the Kanaaa City queaUon.

While Congreaaman Borland eould not do much on

aooount ot the f'act that the matter n.s. chiafi;y a senatorial one. he



ly instrumental in ob'tain1ng f'or the oammttee a second interview with Comptroller

Summing up their forces for the final attack. this committee moved
up its heavy artillery and backed it up with machine gun fire that wu ao rapid ·
it 41d not allow the Comptro~ler time to assert and propound bi ,;theories.


result ot this session was the winning over of John Skelton Williama eo that the
vote of the organization commi.ttae was unanimous in favor of placing a Federal

Reserve lank at Ka."laaa City.
With the main point aettled the next question that arose in th_e

location problem was the matter o!' territory.
it was requested 0£ the Organization committee. would have included the follow-

ing territory,

t'he western 14: 00W1tias o£Arkansas. the eastern 33 counties of

Colorado. the southwestern l 7 counties of Ia,na• all of Kansas,. the nstern 46
counties of Mi"'sourl; all of Nebraska., New Mexico and Oklahoma, and 112 counties

of Texaa, comprising 622 counties in all.
Colonel House, the noted Texas politician who was at that tim~ personal
adviaor of' President Wilson, stepped into the location controversy at thia point.
Always loyal to hia ..ta.ta, the Col~l was

■ omewbat

inoenaed at the attitude of

the org;am.zation •eoimd.ttee tending to overloolc the atate of Te~ in the location
The portion of Texaa wdch waa sought by the Kansaa Cfty
of a primary bank•



• •







r .


actually a plrt pf, the. Kansaa -Clty trade and ~ing ,,t,,~ ,;-rttory,. r


• •


• .

t.hroug;h the intercoasio:n

.. ..• _





• •






• __




, ,.<; " i








•-' ••



r 1v ,:: .• •::: . ,..: - . ,,,.!' c.

Bouse the.-caimid.t~a. ,deoided&•io-·ptaae :.: 'P$?11C'

;Jl.'t ;::;.,::," ,:.,. :;.:~4~~~;;::.:~~'A~ CU.J. '
:.:-,'~' . : at ~~1a•• r.. .. .As means of_ gatting .. f.err!tory tor the Dallaa ~ ~ ~_,,it.,~~~-f li~
~ :: __1\ ~"7.- 1 1' " :-:• •. . :

,_,:·n,;.•n~;.:- ~,.,...

( :;' ,_

\ : •• .' ~-


' ~~ r'.:•• ,::. -.) ,._

-- ,-•~--- ~-_:; ¥ V: t_\._:_ · '__

away from Kanaaa City the 112 Texas counties. allot New Hex1oo but the north
lQ count!. ea and the S3 aouthern counties of Oklahom..
The bankers in that part of 'i'ezas claimed by Kanaaa City had requested that they be incorporated in tie Kanae.a Cl ty dlatrict.

ba."lkera association• had made this !•quoat.

Aleo the Cklahoma

But in the oomprcmiaa Kansu City

lost, besidea th• Texas and. Arkansas count.iea. the south 33 counties of Okla•
~ . 17 trom Ntnr Mexico. 26 tram W.asourl • 17 from Iowa.. and gained the western
half of Colorado and all of the atata of ~ n g whi~ naturally oontri but.ed to
Nebraska and Colorado.

~ instaad



Thl.o left the Kansas City.: with 565 countie1


52_2'. ~. A readjustment wa• later mad~ in the otate ..,r

Ka.naaa. Ci 'ty rer;ained from na.\ias 26 of the :53 Oklahoma cotmt.l.oa

b:, which

~ only t he

1tda 'ta" expla.tned.

8 aout.hea.stsrn counties of the at.ate in the DalW district.
~~-~/ !.~-~-~~ -~g_9lli!.P.W:-T·

The campaign waged by the associated bankers of greater Kana,i.s City
for tho location of the Federal Roaorve funk rill always one of the mosi
brilliant aocompliabmente of bankera in the history of American banking • .,'l'he
apparent miafortune of being aituated in the aame at.ate with St. Louie. a. city

already destined to become a r~ere.l Reservv oenter by virtue of' former



acquisition, was overcome and &Ubsequent axparienaa fully proved the wisdomj in

Mr. Nea.l I s prophecy to Seoretary MDAdoo and Sec rotary Houston.

The a r ~ t

of t.he campaign of f'e.cta vo.a that. the financial and trade advantage held by
Kanaaa City in its trade territoty- was ao great that it demanded a primary bani:
rather than a bra.nch bank.




,•• ,. : .i....· - .. -..

. .. ,.


,., f. ·~· ;
:' ;_



The organization cammi ttee '• announcement of the bourdary of the
Tenth Federal ReaerTe Di strict ,ra,s almost imme6.iatel7 the signal for a

eerie ■

of objections. complaints and recOlll!l9Ddation• made by the banks of several

within the district.


These objections were soon concerted into actions

taken by two factions in the diatriot.


First. numerou1 banks in southern

hams. ' who were included in the Dallas diatrict by the first decision by the orga."lizat-

ion committee began to peti ti.on for transfer from the Dallas district
Kansas City district.



Their reason a were mainly that the terri tor;y waa a part

of the natural trade territory of Kansas City.

Second, numerous banks in Neb-

raska and Wyoming contended that they should be placed in the· Chicago district
The Act pro'Vi.ded that "The districts

rather than in the Kansas City di strict.

shall be apportioned Yi th due regard. to the convenience and customary course of
business and shall not neceuarily be coterminous nth any state or 1tau,a.

districts thus created MAY BE .READJUSTED and nevr


may from time to time


be created b;y the Federal Reserve Board, not to exceed tirel'ft in all."

Aa the

organization committee had already decided upon and named the tllfelve dietricta,

contention ■

of the bankers in these two factions within the Tenth Dbtriot

'Were for rea.cljustment of districts.
On September 16, 1914, two months before the opening of the bank at

City. a petition a.nd brief were filed with the organization committee 1n

behalf or the bank a of southern Olclahoma who wi. shad, to be transferred



Dallas district to the Kansas City district.
Oklahoma entered the •te,~_-, ori-,t h;·-~:~t,_ J~~ ~ -e, Canadian hl.ver tl'i~ ' t'i•,;::;;,

, -,,. ,
t'·' I -






·;".;,,: ~'~.,::~~ ~igzag c~~i:~•
V itlt,


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,•.~!: ~ :: t~' r.-

-:"'li•r· :-~~- ~ .,;.~

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>" l'Y'""" •

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t. o • •~,~:)•

l•~--- . ..-.'-! !',·:); { r;....:'tf.!:~:C, .!..l··:• D:OtlliSiil




bouddaey between diatriot ten and district elevan ·tor a majori.ty ot the•

the 1tate.

Bank ■

1ituated in the Dallas dist.riot followed up the petition

to the organization committee by making act.ual demonstrations of the

lnaooe ■a1bilit.y

of Dallas for th9ir purpo1e1 a11 aoon aa the banks began operation,

Wire trans-

fer ■

were largely in1trumental in 1howing up an impraatioable di1tricting of thoee

bank• most of which were on direot lines to KB.Ilsa.a City,

1outhern Oklahoaa

bank ■ wa1

A o6nferenoe of the

held in Oklahoma City,

On October 27 the Fet1'ral Re•ene Bmk of Dallu was notified that the

pri.iti on and brief had been f'i lad in behalf of the

■ outhern

Oklahoma. banks and
On Deo-

wa.11 requested to designate a repre1entative to appear in 1 ta behalf.
em.ber 16 the petition and brief were m.iled to Federal Reserft Agent
Dalla• with the request that they be referred to the

repre ■entatiff

Teni. ■ on


Yben deaignat•

On December 26 permiaaion wa.a granted by the Federal Reserve Board to file .
a reply brief as late aa January 27, 1918.
The hearing wa1 ■et for February 10,


at irhioh time the Boan\ held that "All of the · Oklahoma. oountlaa lying with the

district with the exoeption of theeight 1outhea1tern ccnmtl•• of Oklahoma,

whioh oontri buted to aom• extent to the

Dalla ■ di ■triot,

•hould be ti-anaferred to

the Kansas City di•tr1at."
The follorlng are the twenty-.ti ve Oklahoma count.lea that beoame after

February 10 a part oft.he Tent.h diatriot:•
Beokhaa, Caddo,, C01111U10b•, Custer, Garvin, Grady, Greer• Harmon•
Haskell, Bu?P••• Jackaon, Jefferson, Kicnra, Latimer, Le Fore, Love, lloCWn, Murray,
Pittsburg, Pontotoc, Roger Mill ■, stephens, Tillman and !'iaahita,

. :·..

Omaha, which had made·,11 ~:•t.rong 'ple& tor one of the lederal
,• ., ... .,,. ,

J.~\t~Ll"'I !::.t':;LJ~~i:-

,,_/:·.:• . • at the outset pf ..~
: .., : .....

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t ' •

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Re ■ erTe




-· - .:• : · ·

, ,

- • • .fi'\r't!'-Ji:{).' ff!Jr

, ~!'~-1~~~~ ~ ,.'!~~t~~ !~ _.~;le;-'~~ :t.M . working aenter ,. for a

H •.!...-,:,"' ""

· "· ~.: ·

-- ~r?•: , !T ti:-•~ '\""'J.t't...t..i, .....

·:auba...,~quent campaign intded t o plaoe-·lle'bruka and'. lit,,the'.':chdca""go··~:r.;:~~;.,:.,.

~- , :.•.:) rr~·, r r ;:r r:,r .rr r





_,, \

triot. on the cont.ention that they were in a direct line with Chicago and preferred
to do their banking business with that metropoll■ rather




tfuul rlth Kan ■as


On Kay 4 the Federal Ieserve Foard pa.saed a resolution d~nying the
petition of the Nebraska. and Wyoming banks.

Thia 1'8.s the final arlion of the

Boa.rd which determined the boundary or the Tenth diatriot which remained in



operation during the first years of the bank's existence.
;'hen in June• 1916, the transfer of the southern Oklahoma countiea
from the Dallas district to the Kansas City district was authorized Governor
Van7.andt of Dallas visit9d the Kansas City officers and conferred on methods of
transfeAng the capital, reserves and rediscounta of those banks concerned in the
change or territory.

A committee of' Messrs. iawyer, Wilson and Ramsay was appoint•

ad to vhi t Dalla.a. inspect the loans that had been made to the Oklahoma bank and

settle upon a method of tra.~sferring the accounts in such ~~er Rs to cause the
Dallas bank: as little expense as possible.

In effecting the transfer the Kansas

City bank paid the insurance and postage on gold certificates from Dallas to the
sub-treasury at St, 1ouia covering 80% of the paid in capital and raaervea or the
member ba.nke which were transferred.

Of .the remaining 20%,exchange at par or at

the least rate ~btainabl8 was accepted and the Kansas City oank: also accepted a
por~ion ot balancea held by tha Southwest. National Bank of' Commerce in Kansas City

ito the oredit of tha Federal Reserve Banlc of Dalla.a •



: ; .. ;- :· :



• : ..:



The three

Cla ■ s

A and the fibr•e Class B directors having been elect-

ed by the benlcs of these alaases and the thrH

appointed by the Federal

Clas ■

C diraetora having been

Board at Washington, the first meeting of

Re ■ erve

these directors was held at the aall or Chairman J,


Miller. Jr,• in the dir-

ector ■ 1 rooma of the Comnerce rrust Com.pan~ on Friday, October 16, 1914, a.t

2130 o 1oloak.

At this meeting all the director ■ e11eept C.E. lurnham of lorft>lk•

Nebraska, were proaent.

'fha first matter or business was the discussion of a list of questions
th·1.t had been submitted by the Federal Reserve Boan! concerning the opening of
the bank,
While these question■ and their answer■ need not be repeated here, the

decisions were in brief as

That the earliest data the Kansas City


bank would be ready to open was November 16; that the personnel and size of the


bank's executive

Dommittee· ■hould

quarter ■

be at least four instead of threeJ that

were aw.ilable in the Commerce Building unt.11 permanent

were definitely decided upon; that the at.arr or the mnk


conaiat or the

Chairman, Viae-Chairman, Governor, Cashier and one other officer to be

that all

function ■

quarter ■

■ elected;

of the bank contemplated by the Act. including the clearing

of check ■• were to wgin an the opening dq$. that crop movement■ ln the Tenth

I' •


District should furniah 1ufficiant funds for liquidating all reserves ri~out
being compelled to convert emergency currency into Jedaral Reserve Notes.

•- -

... · - ..

. - ..••

It was decided, upon •th:• .. uiotion .,of:E:11:'eotor Gordon .J.09~■ .ancL.1~0.Qr:adod.. -~•


..... -.-·


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..... . .






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•-~• ~•...-•r

.::., , _ _ ~ • •




- 1.,olb- •

_. .:. d ...:· ...

.... -.! ...::.


. ~ ·-11-.-,

ot a oommi ttee




attend an announced meeting in Washington beginning October


The ramo.inder of the session was devoted chietly t.o t.he
a Governor and the determination of the amoW'lt of his aalarY,•


Thia discuaaion

preaenta certain taota ao enU.ghtlning in their relation to the bank 1 a earl7
administration t.hat it 111 titting to quote occasional


from it.

It was explained by Cbainun W.ller that there could not be an election of a Governor but merely a aeleation by the direatora to be confirmed by the

7ederal Reaerva Board.

But aa th~ Pederal Reserve :Board had requested that the

"Governor and a committee or three" were invited to attend a meeting in Washington.

it waa preferable to

choo ■ e

the Governor at thia meeting.

At the opening ot .the

question of Governor,. Director Byrne raised the question as to the amount or
salary ". paid.

Following are extraote from the discuaaiona that ensued:


,,. rr 801~0"1: :;a,;::;,.s:mu: .



.N,c..l:.;;:o1- ,:.:.: .·.,_- a, 1,\ ,i1....__• 4" : .....-.a·,.:.....,.;.

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. _,-)

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n· u· r H Q!::a\"1"1C?-;,4• ,r.;-v.-.:cq..n:
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The Govermnent fixes the salary ot the Chairman; and the
Vioe-Cbt.1:rme.n, the Governor and all other o:tfioera are fixed by us, subject, hOV'fever, to the approval of the F ~.
Reserve Board.

Mr. Byrnes

What Salary shall

The Obairmazu

That 11 to be decided.
1a $'1,500.00 per ammrn.

Yr. Jon8S1

The Salary of this Board?

The 0ha1rmana

I think $15,000.00.

Kr. Baileys

Al:ld. what 11 the aalary of the Governor there?

Mr, Ramaa:,z



Yes, Sir; llr. Strong quitl a $50,000.00 aalary, am it waa
said that he made about $80,000 more.
That is the situation
of that bank. I did not knOi'I wba.t the aalary of 'Iq position
was to be When I was 1n Washington,- o~ learned it when I
got back and received the letter which they had mailed to me
before I left there.
In f'aot, I asked them two or three t1mea
about the matter, but could not get arq aatls:taotion.

Mr. Ba11eyi

I thi?Jk this Board ought to ask ~the 1ederal Re ■ erT'e Board to
pa:y the Chairman of this bank'°4{0,ooo.oo at least.

Mr. McClure:

So do I.

Vr. Ka.lone,

So do I.

Mr. Byrne,

I think so too.

'?he 0bairnan~.

Gentlemen, I will j11.1t say this, I did mt ask for thla plaoe,had no more idea o:t beillg appointed to this podtlon than ot ' ·.: :- •
goitlg to China, . I waa on ri:v ~ h 1n !ems, and I reoa1v·acL ', : ·
over .a 'phone wire 1tretohed !l!P~ ol4polea down there a message from Kr. Kemper. aayhig tha~ Mr, Slrinney had received ~ •
telegr_am from Washington ~king whether ar not I ,rould 'be a
auitable person to app9int ~ Oballman, am whether I wmld
l did not get the telegram tor two or 'three
Jlea.Drhile, Jib-. Kemper took the liberty or aq1J:Jg to Jlr, 91r1Jinv .
that I 1r0t1ld aooept. • ·1 went down to Wa■hiigton, that ~. l ·:·.
started, within two or three hours after reoeipt or that ·.aeoont
telegram in aooorda.DCe with a oall aver another wire, aDl Jlr~' ••
Ramsq am. I at13¥ed there a pa.rt ot two ·da;ya,- ••t of one c1a;r
and all of the other. We talked with ditterent ·Reaene Joan\.·· .•••
members am. e¢eav:or~ :to get a general ·:outline am. just .:.~ i,f~•dutiea ot the cba1rDBnah1p wauld 'be, aDl the;y had a grea• .4-aa1.-·t· -~
to aq on that mb',eot.
I aa1tad ab011t ~ 1&1.al7 the oJ:labman .. •
would get.
Jlr. Delano gave me a typewritten memo:ran4u111 he bad
prepared ~or the parpoae o~ sellding out to oertain people that

we fix?

88l&17 :tixed for the Ohairma.D

Wbat'a the salary o:t the H• York


were under cona1dera.t1on am about to be appointed, stating
about wbat the d'1ties would be and about the sa.lary.
read that while in Washington, and it stated the salaries
would be from $8,000 to $12,000.
I thought they would mke
it about $10,000.00 hare, but when I got home I .folllld they
had nade it $7,500. •••••••••••••••••••••••••••• ~••••••••••



Jho. Chairman, I think ff'lery one appreciates the aacritioe 7ou
have made, aJld I ofter the motion that the Jl'ederal Res8"'e

Board be requested to agree to a salary 01' $10,000 for each
of the Chairman and the GOTernor of this bam.
I doubt it
we can get a qualified man tor Governor without paying that
'lhe Chairmans

I would make the auggeation that 7ou do not pit this in the
ahape ot a motion.
I do not thilJlt 1t would aooompliah _the .
I am telliDg you all thi ■ onl,y to ah.ow you that the
Govermnent 1 ■ the ■ en'ioea 01' people who will _e nter
its aerYioe with the general understanding that theu are . .
aotua-ted b7 patriotio motives and are willing to do somethi~
tor their 0012ntry.
I do not believe it 11 the time to
the subjeot up at all.
I want to go through with this ~ - I
do not want to mar zey- inoumbenoy with arq suggestion at 'this ·
A little later on if' the thiDg comes out .rofJY' and we
get ourselves on a good pqtng basis, it might be touohed.

Mr• Joness

You would accept it, would you notT

The Chai~z

I am not going to suggest it nwaelt, am I will not let zeyf'riems suggest it if I oan prevent.

Mr. Joness

I know we were all disappointed in your se,lary •

The Cha11'!11&1u

As to the salary of the Governor, I told the Board,- .Mr.
RarnBS¥ was present at the time,- I told the Board that regardless of the asJ.ary they fixed for the Cba.1rm&n that l
would not f'eel
ot th11 bank a
to JI\V'Belf'.
take the plaoe




it wais quite the fair thing to pq the Gov~rnar
larger. ■alary than that paid t _o ·~• 0bairlran~
414 not mow o:t a.rq iaan. 1n t~•- town who. muld

at all.•••••• ••••••••••••••••••~••••••••••• ••

I am confident we all appreciate the sac:r1:tloe you ~e made,
am there 1s not al\V' one here whO will not baolc you up ,i n the
undertaldng 7ou ha.Te started.
l'e mow :,our att1 tud.e am YOUZ'
aelit1menta on the subject,-· and I mean jut What I say, we
will all back you up.

The Chairmans

!?hat' s Ter-j nioe of you.

Jlr • .Byrne a

I do not think we should emba.raass you, attar y\ltl ha.Te aooepted the position regard].eaa· ot aala17, b7 ma.king reoonmemationa
to the Reserve Board at .thia time.
I believe that thia bank' bj
the harmmJ;y &lJ4 strength ot thu Boa.rd ia goillg to be very • .
We ms:, not be able to keep it within the aim of
the pe~le,- we mist keep 1t as a tru~ reserYe bank. I be-

118'f'a that 1s the 1ent1mant or ever,y man on the Board..•••
'l'he Chairman,


Mr. l'l:11 son:


I just made those remarks about the salary because ·l don't
think I could teal just right with a~bo~ who might aooapt
that plaoe drmvi11g a larger salary than I draw ■
It I am
making a aaorif1oe he, too, ahould make a saorit~oe; otherwise, he would not quite measure up to the ·standard the
Government 1 ■ demaDling.

I think the Bederal Boa.rd is ma.king a serious mistake 1n
handicapping this Board.
I have bean and am favorable to
the seleotion ot Mr. Goebel as Governori. but .he will not
accept the position_ tor leas than $10,000~
1 haTe known b1m
for y-ears; I know. his ·a bility, and I know the bank WOllld be
sate with him aa Governor.
He will not take it at · $7,500 a
He bas told me to say that to thia Board.
I think
thia Board should try to exeroise 1ts 1nfluenae to raiae the
•salary of J4r. lliller to t10,ooo,· so we could secure a man of •
high order as Governor. t•• ••••• •• •••• ••••••• .. ~•• .. •·•• .. •.. • ......
I appreciate all Mr. J4iller has said, am oomur · 1n what llr.
Byrne has said relative to our working in harmoIG"; and no man
will work harder for the suooess of the pank than will I. But
it does seem to me that 1.t we will uss 0Ul" 1nU.uenoe with that
Board at Washington we o~ ad.Just this thi,.................... ~• -•
I agree with nearly all that has been said on this

subJeot ■


The first talk I had with Mr. Miller I said right off the reel
that · I thought it was umriae.. On the other band, I do

sympathize fu.lly with what Mr, l!iller bas said regarding the
sacrifices he has, and I feel like res-peot1Dg his wishes
relativ.e to the Governor's salary not being greater than his


lfr. Malo11e1




J!r. 1100 lure:




... ,:;-.I__

When I went before -the Board in Washington:;. I was there· in the

room when these two gentlemen through the room and ·were
1 41d not know they· were members of the Xanaaa City
Board, ao I w~t in with the Cleveland folks.
The Board' aak:..
ed. them what was · about the pr1oe the presidents were gettillg
in bSJlks_in Clevela.Dd, and I · thinlt they said from $12,000 to .
$15,ooo,~ thought one waa ··get'ting more but did not .know. They
asked them what they could get one tor, a?Jd. -they prelfllllled
"So-am-So" would go for ·112~000.
And t).e Board ._ said •they •
ought to work tor us ~or leai; "We want -some one to work toJ" :
patriotism and the honor and good of the GOTerment 1'3.ther.·
for fina.noial oompensation.n And those Cleveland menw~ • ..
awq with the thought of getti!lg this iarty· for $8,000. They
all seemed to be united and agreed tbat .some one man waa the man •
.I think 1t was Mr ■ Warburg who said~- "After you have talked to
hilil can you persuade him to oome down here and let us talk to·
And they went _away with tbat idea in mim.
The impression left on·~ was honor rather than oompenaation .

How would it do for us to go on reoord ·aa beillg in favor of Jtr.

Goebel prov1d1Dg the salary proposition could be arranged
satisfactorily, and let the Board at Washington try to help
us in the matter?
The Chairmans

Mr. l'lcClure, I rather think that question 1s not ·so wch be-

tween Washington and the Board here as it would be )?etwean
this Boa.rd and the Chairman.
The Cba.irnan' a salary is tb:ed
and they are not going to oba?Jge it.
I am presenting 't bat
quel!ltion to you.
You might, possibly, get by the WashiDgton
Board, but I hardly think it possible or at all likely.
do not hardly see how I could maintain and keep _rrq cnm aelfrespeot am let Mr. Goebel, or SJlYboccy- else in this town, come
right 1n and pertorm a leas service at a greater rate ot compensation.
Jlr. -ilo'Olures

I believe the Board at Washington would concede tbat point to

The Chairman:

The question has been thorougbly tested out.
That question
should not be presented to the Board a.gain.
It has been teateel out not by me alone, but Mr. J. w. Perry happened to be in
Washington the day we were there am he had a con.terenoe with
two or three of the Board.
Re told them he was surprised that
I would accept the place, and the qciestion of salary waa disouss&i with him and they 1·eiterated. just what they had to me,that they were not baying anybody's time for its oonmeroial value;
that everybody had. to sacrifice something for the good of the
Semtor OWen was here yest~ and dropped in to
see me.
I went over this same thing with him, and he told me
the !'.!Btter had been pretty well discussed out and that he himself', long before he knew nw name would be presented as Chairman,
bad informed the FederE1l Rese:rv& Board the salaey here should
be at $10,000.



. J


If Ur. Miller feels that way I don't see wey ,re should allt him
to stultify himself••••••••••

The Cbainm.n1

It is a matter largely of auste.ihing the dignity of the ballk
and its ot!1cers.

Mr. Jral.011es

Mr. Sawyer has been suggested.

Kr. Bailey1

Mr. G-oebel said to me that he would like to oome before the •
:Soard a?ld. present his idea.a.
I don't knOw whether that W<Xlld
be .proper or not.
Is Yr. Sawyer in town,

The Chairmans

I think not.

Jfr. JloCluret

Wll1' could

Ile is a candidate aJJtl I would
suggest that we talk 't o him and bring hi' before uel

we not adjourn u11til morning and have Mr. Goebel

or Vr. Sawyer come 1nT
Mr. Jonea1

O011ld we get Jlr. Saw,ye to come?

!he Chairmans

I don't know.

Jlr. Baile;ys

It thia Board agrees that not OTer $7,500 ii to be paid to
the Governor, that el1mimtea Kr. Goebel,- that•• the qu.eation
to settle right now.

'?he Cha1rm&nJl

Well, gentlemen, let'a get it before the house.
think about it?

Kr. Jonea1

I made a mot ion but it was not seconded.
I •~/tbat '1(.the expreaaion of thia _Board it. el1m1natea Kr.

Mr. :Malones

I suggest that the secretary distribute the ballots and that
we proceed to vote,- or I will make 1 t a motion it y011 prefer

The Chairman:

I think that's better.


The qu.eation 1s, What will you tJ8:3


:Mr. Joneas

I moved ■ome time ago that the ocmmlttee goillg to Washington the Board ••••••

1fb.e Chair~ns

Bo, no,- not that.

Mr. Byrnes

I move that the salary 11.mi t ot the Governor be limited. to
$7,500 tor the preient.

~e Chai :rman1

All in favor .of the motion J011 have juat heard will aa:i' 8¥h• ••
oontrar,v m.
fhe motion ia carried. • (Kesan. BailEV, JfoCllll"a
and Jone■ voted in ~he nept1Te.)

• Jtr. Joneas

I fqte 'no' · but I ~~t to ·qua1117 that. Toiie.
I will not
vote tor the Gare:z,ior. to ·.r',oeiTe a greater a.alar;y' tban :lll'. •
.Ill.lier; and yet it 1 ■• not fair to us tor the :Pederal Board to
sq that we ahall not . employ whom!• pleaae, withl~ reason.
It's no retle~tion

1!4e Chairmaas

What do you


I'm into this ~cnr

o~.Mr~_Jlille:r ;t h~~-I


up to: D\V' eyes 'au1·,•1•m .gol~ ' t~ugh "" /

Jlr • Bailey I

A.lid we Yill _support you all --~he time. •.

The Chairmans

Bow than~ r;ent'iemen, ■t:pe~ that el1m1Dates .Jrr •. Goebel,without retleo,tioJi _upo~ Kr.-· Goebel' &iid· ~'be ·to the 'detriment
of' ·the _b&nlt,~· ~1noa ~~~t·,_1a ~•t~l~,a·,~date to ,~-....... _~: -~

. •. . ·




suggeett· 'fe_haTe, one ·o.~ lier .oanl1clat~.- ':~ 700: 'l iave been _ad - -~---_: . :· :.'.:.·
vised..· Jlr • •.Ball~,-.-40- 7~1-~
~ ;• '5awt~t. :. ,· .
• · - :· .,·,~::-·.. •
. ..
. ..

m1as1oner of Xanaaa, ~ ha1 made a good Commissioner.
The resolution ot thia Bc>ard has eliminated Jlr, Goebel. I
thi:nk it 1a a mistake; but 1n vin ot the tact that he 1 ■
el1m1nated, I mare that Mr. Charle ■ B. Sawyer be elected. the
Governor of this bmik.
Mr. Malonea

I second the motion.

The Chai:nmns

Yatl have limited the salary to $'1,600.
I do not know irr.
Sawyer,- know Jlr. Goebel better,- and I want Kr. Bams~ to
bear me out that Kr. Goebel has had no one trom hare or as;y
trom here who has given him a higher compliment &ild~omnandation than I have.
That' ■

The Chail"JIBnz


Ba.a Mr. Sawyer indioated that he would aooept the place at

Mr, Joneas

What is ha gett 1ng now?

Mr, Baileys

Nothing,- $2,500.

:Mr. MoClurez

I will say that I have a telegram from parties at Wichita
asking me to 1Upport Mr. Sawyer.

The Chairmans

Do you know Mr. sawyer, 11r. Jone1?

Mr. Jonea1

By reputation, very wall,- but I do !eel that tor the larger
ba:nks Mr. Goebel was the first ohoioe.

I will say this: Kr. sawyer' ■ name had not been suggested,
but I bawe a.nawered one or two telegrams in his behalf, have
wired Washington, am have visited ever:, bank 1n Kansas City
in his behalt.



Kr. Wllaons

. ..

I understand he has given Kansai a Tflr1 ettioient sarvioa.
I ,rill •~ this t One ot the thi:a:igs the WaahiJJgton Board indicated was. that we,- ea.oh director and friary · ott1o1al in
the bank,- ahould endeav·or to the beat ot h11 ab111iJ' to induce the state banks to oome in.
llow aloDg thoae l1nea, l
th1Jllc Jlr. Sawyer would serve us Tery well. •Bal.t the ba.&1;.,
nus this ba1lk will get 11 goii:ig to oome. from lramaa.
other 1tate1 will oontimie to do their businea11 with Omaha am
Denver,- only the IU.l'plu1 will oome doma hara,• half ot the
1tate banlal, I mean.

I would like very moh to bave seen Jlr. Goebel the GOTernor
of this bank.
I regard him very highl.y and have ~ mc,h
h'1endah1p tor him as a~· man 111. Xanaas City; but l .~n•,t .
think· it would be do1Dg ~tioe to Jir. Milier to have··el.acted him a.t a higher salary than the' Chairman reoe1vea •





Kr. Goebel has praot1oally elimimted hlmselt by the
position he assumed.

I am ua.otly like Jlr. Wilson.
Jlr. SB.WjTer will till a ditterent position than Jlr. Goebel
would haTe filled.
Jlr. Goebel 11 a natural axeaut1Te

llr. Malone:

When be told ua this morning that tbat elimimted him, l
do not aee that it was poaaible for ua to do mare than we dona.
In every aue where! bave talked, llr. Sawyer
has bean the second choice.

The Chairmans

J:q further remark•~ .

Jlr. Wilsons

What 1 ■. the question?_

~e Chairmans

Governor Baile, ha.a nominated Kr. SawJer.

Jlr. ~ •

We agree that his be mbmitted to the Board.

The Chairmans

Ur. Sawyer is a good man.
it known by saying "~e".

All in favor of

Mr. Sawyer make

The vote ,rHch elected Mr. Sawyer as Oovernor closaci a discussion
on that point and the directors immediately took up the matter or eleoting a
member to represent Kansas City on the advisory council.

The ff.rat name

mentioned Ya.a that of l!r. E. F. Slfinney, President of the Fiaat National Bank,
and a man who had gi Ten his time and influence toward obtaining the b~or
Kanaaa City.

Eis name was placed in nomination by Director J!cClure and he

waa unanimously elected on the second ballot.

The other candidates were

J.c. Mitchell of Denver nomi.nat.e d by Director Jonea and Luther Drake of Omaha
nominated by Director Byrne.

It ya~ on motion


D~r.ector BELiley and others

that the election of' Mr. Swinney was made W1animous.
After a disouaaion on the subject of salary of the Vioe-Chairman
(Director Ramsay) it wa.s mo·:ed by Director Jones that this aalary be fixed at

The motion, which waa aeconcied by Director l'Tilson, was p.1t\ ta a •

.vote and carried.
The first meeting of the Board of


was adjourned at 6:45

subject to the call of the Chairman.

!* "I



.,_, I



At the second meeting of' the directorJ held in the directors' rooms
of the Commerce Tnist Company on Saturday. October 31, 1914. all the directors
Governor Sawyer wa.s absent,

were present.

When the mee'Ung convened a.t

10 o'clock in the morning it was decided to immediately scijourn in order to p1rmit an inspection or buildings being considered as sites tor the new Federal Reserve Fank 1e permanent quarters.

!here were under oonsid era tion the following

The Kanaas City Southern Rail~ay Building, northeast corner or

Eleventh and l,','alnil* streetsJ the United States

& Mexican

·Trust Company location ·

in the Bryant Bu-Llding. southwest corner Eleventh itreet and Grand. avenue; the
Fidelity Trust Company, northeast corner Ninth street and Grand avenuaJ the Bew
Y5rk Life Insure.nee Buiiding at Eighth and -Wyandotte streets and the ground floor -of the R. A. Long Building. northeast corner of Tenth street and Grand avenue.
Prior to the masting of October 31 all the locations had been inspected except
those of the Fidelity Trust Company and the R. A. Long Buildin~, and the directors
inspected these buildings during their adjournment.
After re-convening the first matter taken µp wa1 the election or a
temporary secretary, Chsi rma.n Ki. ller·•s secretary• l!r, -Hitter, having kept the
minutes of the


pr:evious me,etihg •.. , • . On motion by Director Bailey, Director

L.A. Wilson was made temporary secretary.
A!'ter .full and exhaustive discussions involving the convenience of
location, the opportunity of securing additional space when required, the annual
rental, etc •• upon motion oi'Director Ma.lone, seconded by Director Burnham, the

Boa.rd !1.c~ep+.eci the proposal
. .... .

'1¥ T,;.. t.'. Jan~ !'or ..uee of the rooms on the ,ground noor
,... t



.- - ..


. .:..· ,

of the R. A. Long Building for the new bank.


Sub:zeuantl7 a oontr~ot
t \
{oe,00 ~ entered into with R. A. Long tor the &I"O
floor!\.otf the T~ng Build-

ing far a period of five year• at $7,600.00 per annum with the privilege of

extending the

fof five years longer at a rental of $12,000.00 per a1u1um.

In the afternoon of this meeting a achedule of amounts for bonding
employees or the bank waa adopted as follows :
All officers of the bank•••••••·25,000.00
Teller■•••••••••••••••••••••••• 26,000.00
Discount Tellers .•••••••••••••• 5,000.00
~oolckeeper■ ••••••••••••••••••••
:oth'1" help not enumerated
not lass than••••••••• 2,000.•00
Power to modify and adjust this schedule was vested in the Bxeoutive Committee.
The b7-laY1 of the bank having provided for an ·Exeoutiw Committee to

be compoaed or the Govern•r, the Federal Reaene Agent and one or more directors


A or B, upon motion of Director Bailey. seconded by Dierctor Burnham,

~ireotora Jones and Wilson ,rero aelected as the two members of that cOJ!Clittee to
The f' irst duty of the Executive

act with Chairman 111.ller and Governor Sawyer.

Committee•• daciided ta be the cam.plating or udetail ■ for gettin ·•; the bank ready
for operati~n, to ••play 1uoh help as neoes1ary, to fix


and all lea.sea and contracts • 11


The oompenaation

and to 1ign any

aalary or the Cashier and Secretary. however,

wa.s fixed by the Directors of tbla meeting.


o f ~!hral~; •in that polliition

■ alaries

It -.aa decided that the compensation

be $6,000.00.



■ ettled

upon as follcnra:-

For a full meeting of the Board $25.00 per day and actual• xpensea;

for aerving upon the E:xecuti'" Comr.ui. ttee wh,re the tull time__ ,~! D~~.e c~!'!' . l,■. r~~·-··

~ ••













• •






.:.r., • • • • ,_










,,. .. ••y;-, ~'.•, ••


' '

. ,

. - ."";,'

• , · qutred t 20.oo per day and e::s:penaeaJ tor .attending. ~ • ~ eeting of the Executive ··

















•. ~



.. .. \ •

J.. ~:

.•i "}






•• .·a- 1 tt'ee· ·,,here an hour or two are.,.conaumed $5. oo.


' •


tr .. : .


After authoriiing ~ ~ a n d C a ~ b i ~ • u a representative
ot thaE:cecutive Committee of the Boe.rd to go to Washington to attend a meet-

ing tor the

purpo ■ e

of providing uniform supplies for

bank ■,


■ econd


ing of the direotors waa adjourned.
So important has grown the work of the Exeauti ve Cammi ttee of the
ba.nk that it is well to note the powers of thi11 mall group of men who represent
The Eicecutin C·;mmittee

the directors.


constituted at this early meeting

was composed of theGovernor, the Federal Reserve Agent and "one or more directors."
At the meeting of' August 12, 1916, an amendment changed thi11 ruling so that only
one director was provided for and also made it possible in the absence of the Federal Reaerge Agent for the Deputy Agent to act in his place and for the Cashier
to act in the place of the GovernonJ.n caae of his

ab■ ence.

!'he ruling was alao

made that at no meeting of theExeoutive Committee should the Agent and the Deputy
Agent act at the


time or· theGovernor or Cashier act at the same time.


subsequent amendment was made, howewr, on June 22,. 1916, by which the Federal
Reserve Agent and the Deputy might ait in the Executive Cammittee at the same time.
The powers of the Executive Committee were designated as follcnrs:•


To upon all CODDlleroial pa.per subni tted ior discount.
To initiate and conduct. open market transactions.
To reocmmend to the Boa.rd of Director ■ tram time to time
change ■ in the disco1mt rate.
To buy and ■ ell aeourltiea.
To apply for and provide for the eecuri ty or such Federal
Reserve Iota ■ as may, ln the judgment of the committee or
of the Board., be neceHary for the general requirements ot
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 approTe bonds· turnished by the officer ■ and employees of -,
the bank and to provtde · rortheir -oustody.
:.·;: ~- - __:_ •
In general, t.o .oonduot the business "of tJ,e' bank, • ■ubjeat to
the supervi ■ ion and control . of the Boe.rd. of' Directors • •- - ...: :

At a meeting on January 14 of the following year parag~aph "6"
wa1 amended to read "to fix t;ram time to time changes in the discount rate,
and to put 1ame into operation on receipt at approval of the ll'ecleral Raaern
The importance of selecting able and experienced men for directors

can readily be aeen in
the faot that ea.oh director
has an opportunity to
hi ■



share of time on the Emouti Te CCIIIIDittee whiah, in the light of the im•

port.ant powers vested in it, forms the vital influence of the bank.

At the out•et of the election or a Cashier it developed that the directors were divided between two menJ one ar them himaelt a director, the other,



who was at that time · mamagor of the manias C11~• clearing

~• 'lbrall1 was fitted by experience for an •~cellent eeoretary but he

desired the position of aashier


The principal

then..., bank.


in 'h.•

half' of ta. Thralls for Cashier was made by Director ~l!Y who said,· "I shall
support Mr. ntralla for Cashier• and that for the reason nearly every bank
in town b

aupporting him for that position and expsots him to have it.

that this bank must court the favor of the banks of Kansu City.

I feel

They did not

get their first choice for Governor and I believe it would. be a mistake to ignore

their preference in the of Caahi er.

I move that Mr. Thralls be made

Secretary and Cashier."
'lhe Chairman at thi• point mentioned the ta.ct that Director WS.laon had
been mentioned and cii scuased for the position of d',ashier.

When his name wu

brought up Director Wilson made a talk outlining his position witll relation to
·the obligations he felt due
"h!m tc, t he
a or Cklahoma
who ~lected b1-m_-~.,
.. .
. 'banker
. •"'
. .
. .
...-~ ":
'• '

' :---





1 - .,: 1r..:


Director ot the ban1c·. • ·Be declared hi• allsgiana• .-to -thll Oklahoma.


.. ...







: ; : ·.: .






.r.!' .! ~• i


).!;.: . ,i't.~l..\.

-39disclaimed his having sou,;ht the office,

After requesting that if electing

him Cashier would Interfere mth h11 obligation to the ~lahoma. bankers be
wi ■hed

to be eliminated -from the oonsideration, Mr. Tilson ratirec:i and the di•~

cuasion was continued.
name was first propoaed

Chairman Milbr explained that when Director W11aon '•
Cashier he. the Chairman. requested the officials in


Washington 1£ there was anythin~ in the law to prevent a director from becoming
an official or the bank.

He added 't.hat to date he had received no advices.

Finally Director Burnham asked if it were not possible to make llr. Wilson

a tenative proposition.

Director Jones said: "I doubt the ~sdom of ma'!

Mr. ~ilson a tenative propositiont

Ur. 'Th.ralls is the choioe of the bankers

of Kansas CityJ they have asked that

:ur. Thralls be made Cashier.

can fill a place that Mr,Wilson cannot fill.

Director Burllha:a:; "I was not making this with any idea of suggesting

Wilson for Casldei or Secretary.

I had in mind th9 position or Vice-

Director Bailey:

"I think Mr. Wilson, a.s the has said, ia

just the man to ,;o out· and educate the bankars • but I do moat earneatl;y move the

selection of M r ~ as Secretary and Cashier."
Dir ':letor Burnham:

"I second tha~ motion."

The Chairman cont.ended -hat t.he duties ot Cashier and Seoretary were

not aimilar• that eaah position l-ad ita own f\mctiona, and that electing Mr.
Thralls Cashier would be in affect putting an expert iecre~ry into the position
of an executive instead of a secretary.

After stating further that he 1:olieved

_, l _i_mnn.
rte.nae ·;..·
~4· ,re~
,o·t• •W/,A°T'1.- .. :.:":. po
· -.··•·u·o-n·.'
.•'. th·-8 ·cha
.L lol4
-r-- ai~litv
i rmaJl •.put.·- ·.-~:..
~,·. ·"·'

-40 ..

motion that, was before the Board.

The vote re3ulted in the election of Kr.

Thralls as Cashi 9r and Secretary.
!he session which determined upon the R. A.Long ari.4ding as the site
of the new bank also appointed Cha.inna.n Miller a committee or one on the orgaoization of a workin 6 force £or the new institution.

The first off'ioia.l ali"t or Chair-

:man Miller ro llowing this !!1'3eting was the selection of roam number


CQm!:11.eroe Building ae temporary quarters of the organization.
indi reot organi satt on ,rork:. however, had alreaciy begun
following the Chairman 1s appointment as director by


r or

in the
Chainan' ■

on Oo to ber 8, the ciay

Federal Reserve Boa.rd.

the Kansas City business men approanhsd him with the name of a young man who was,
in the wordo of the business man, ''Worth $500.00 a month as a saoretary but would

A few days later R. P.Ritter, the yomig man who had been re-

work for $15().00. ''

commended, was put to work by the Crud ?'!llB.n.

Thus the first employs/ of the Fed-

eral Reserve Pank e.nt&~ated the opening of the bank more than one month and help-

ed to perfect the organization in the temporary quarters.

Mr. Ritter served

through the early erlatenoe of the bank until August 20, 1919 1 when illness oonArter sereral months of sickness he died on Januart 16 1

fined him to his bed.

1917. at hi1 h0l!le in Kansas City.
A.s 1t


the purpose of this work to 'tJ~oat or coincidences as "'811 aa

facts · it is proper at this time to relate the inoicient or the employing of
Buchanan, Jr •• who wa.a the seoond employee of the institution.

Jame ■

Mr. Buchanan,

a sta.iwart 1 healthy youth of about eighteen years, was in Kans ,,s City seeking

He lea.rne,j or the cont8!1lplated opening of the Fede-ral Reserve Bank

a.nd· • ■ought out Chairman Miller

: -c ·,,..,- .~~~;•- - ;~~

.• '
.~• •



•, ,.;. IV- r:! ' "ll " t.'I



at hii 1orrice

- -: :z:r:r

~;~ ·:? U

in the Commerc~.J ~iµ ldirig; ·· :, . The ;,;:::/

"·,': . :-::.::~ ·_• . _: _

acouitamed ·:to prompt.l:y ' tonn"ng ':opini<ins :cit<young
'·man . and
r. .


-41determined. to riak employing hbi. s total stranger in some clerical pod tlon.
''There is your home yomtg ma=i." he asked and was tole he had come from California., llia.s ouri.
Charles Buchanan1"

"Have you a re::,lati ve in that pa.rt of the
"That 'a my Uncle Cr.arlie."

wns Ur. Miller's immediate reply.
man recounted how he



■ tate


you have a job., 11

In expl~1nin~ the incident later the Chair-

in St. Louis University some thirty years before and


he and Charles Buchanan were rivals for the honor or high grades and that both
finished with the same final grades and the sa:::ns nu:cber of honor merl ta.
"The first dicl'f erence seamod to be," said ?Jr. Mill'3r


recounting the

colleg;a days., ''that Charlie BilChanan never seemed to havo to study his les~ons
while I used most of the recess pJriods, :~la.y hours and holicia.ys in 6etting mine

and that I couldn't for t.he lii'e of me see wfr, I coulcin 't surpass him with the
a.mount of work I was doin@:."

James Buchanan after a. few years in tha 'lxl.."lk finally went to l'Ta,shington

a Federal Reaerva funk examinar and at the time this is wri+ ten, 1921, he 11

seoond to only on9 man in the examining
Thar':) was al.moat imned~ate ne9d. for a atenog;rapher in the tmporary
quarters in ad.chtion to the secretary and. the clerk and so Miss Jennie Burri•
The ·fourth employee., R. Em!!lett Condon, waa

was employed a day or two later.

hir9d as a clerk.

~. Condon later was secretary to Colonel House. President

'Wilaon 's>aor, and in 1921 entered the ~mplpy of the AmericaJl Telegraph I

'1'he last helper employed in the temporary

Telephone Company in Naw York.

quart.era was Miss Katherine Dalton., a. stenographer who with the exception of

! •




. ,_




' J '·:'


••• • ,

nearly a year spent· at theD~?:V~rs National Bank: ~ere she

r.• ,--·



,,. •.-·.,

. ~

1 ' ~"; -,;, ,. -~

-~- ~ ,!_






t ;- ',.' v..~
-: '• ......






to Kr. Ramsay, haa been in the continuous employ
The following is a 11 st of all the

the bank.

employee ■

of the bank on the date
position ■

of its opening, Monday, November 16, 1914, together with their


the salaries paid them at that time:
R. F. Hitter, Secretary to the Chairman and temporary
Secretary to the Board,
James Buchanan .Jr., Clark
60 .oo
Jennie Burris,
R. E. Condon,
htherine Dalt.on,
Chas. Ferguson,
166 .·67
Marguerite &lump,

E. D. McAllister,


Ruby Raine,

GeneralBookkeepJrj:...- ~ ~/ j /
Office Boy
i f " ~ }i.--f

Cleo Unstead,
E. P.Tjner,
Charles King,
'V!m. Gamble,
·J. W. McBride,
K. J. Mclelll1,




It is a aignif'ioant fact that, while thare Yere only eleven directors
and officers and fifteen employees when the bank openad., six of' the former group

are at this time, 1921, still connected rlt.h the instituUon whereas only four ~'
of the original employees aow· remain on the roll.

They are:

Miss Katherine

Dalton, Secretary to Fedaral~Reserve Agent Ramsay, E. P. Tyner, Assistant Cashier
Charles King 7 who has advanced from office boy to bookkeeper,
in charge of' the Transit Depart.ment ,and "lilliam Gamble, porter.
Beginning on Kondtcy, November 2, theExecuti w Commi. tte" held continuous
eeS11ions through.out each day effecting the organization YOrlc of the new in-


Thia work comprised a variety of' o.uties incllaiing innumerable con•

f'erenoes with busineH men, furniture salesmen. supply salesmen, bank officials
and proapeeti ve .employees; .trips of .inspection and inqui.l'.!, a great amount

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oorrespondenc e by l etter and wire with the· Federal Reaerve Boardand .an -encl-. .
~- . . - :-.=!:!,; ·~ -~ .. -"".....:


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,.. leu .amount of exhaustive di.acuaaiona.....oL-lettera-pertalning ,to the -.opening- of .....1./·
Ct..- .•~!';~.,


? ~:,~~ -;;.1"~'\'1,..-1.';~;.:•

t,[""J.,' t ·;;

the ba.nk.
emplcrye ■ 11



a great amount of urgent work to be done and temporary

were hired ta do this preliminary work.

Form letters to

bank ■


aonneotion with the first paym13nt of oa.pita.l stook had to be formulated and
also a general letter

ot announcement to member banks, telephone equipn.ent an4

electrical burglar ala.rm system had to be installed • .

'l'hia ala.rm system waa

contracted for from the American Bank Protective Company o! Minnea.poli1 at a

ot $1,615.00/
The first invoice ot .t'urni"ture

n. ■

purchased from the Keith Furniture

Company,. 'l'heSdhooley Stationery Company and the Burnap Stationery and Printing

Thia f'urniiaure consisted of six flat top desks 66x38 inches with re-

volving chairs, a _diraotora 1 table 4--~14 feet and t :·renty-four d1rectora 1 ohaira.
In addition to this the :au-nett Company loaned a large amount of' general otfioe
~rni ture and aqui pment for temporary use •


• f"" -• •

• ,,• 1 ·

• • •



.r. • -


·The ground flo?r of the n. . A. Long Building at the time .•,it was leased
fA.Ping: the plevators
by the directors had as a part or the publio lobby the marble rloorea ;erea n
the center of which was a

Thia area extended about two-thirds ot

the distance toward the rear of the building.

One of the tirst acts of the dir-

actors was to provide tor the enclosing of this lobby into the bank's working

Thi~ was done aa a means of protection in the handling of the currency

and eeourities of the bank.
As fi.rst arrane;ed the space to· the narth of the main entrance to the

building· was for the use of the directors and the apace to the south was used by
on the left

the officers in the following ordor : 'l'be first room,1Kas the Federal Reserve Agent's
room. the next was tlmt of the Deputy Agent. the one next was the credit bureau 1a
Still to the north were the Governor's room and that of the Secretary•
passate way
Across the . / ·:.. !'rom tluae was designated a correspondence room.


the ·11ork . of the. bank increased the ci irectors


roam lfB.s finally given up to the.

oocilpancy of the bank proper and the director• were g1 ven a _meeting place on the
floor of the Long Building.
Draw Lots for Terma

At a meeting of the directors held on November 9. it lfB.S unani.mou1l:,
•a.greed that the Class A and Class B directors should draw lots for the term of
1ervica of each ..or the Class A directpra,.

Mr. Jonea atated hi• anxiety to

serve the three year term. aicplaining that he did not care to 11ene but one term
but preferred to spend three years in the 1ervica of his cbbsti tuenta.

poin~ad out by Director _l~(dley. however~ that ~t. TH not


It was

duty'pr th•

privilege of the ciirectol"a to d.etermine arbitrarily who should 1erw one year and

. ·...

who should serve three years.

As a result of the drawing ot lots Mr. Jonea

drew the one "'J8ar term, Jlr. Bailey tile,

year ■

and Kr. Burnham tlufee years,


i1 incidental that Mr. Jones aervaci b;\lt one yea.r whereas Kr. Bailey and Kr,
Burnham each succeeded themsalves. t.b.e £orm1er having been twice elected a,

own successor,

hi ■

,Mr, Burnham wao suoceeded in the 1920 election by Mr. E. E •

. • . . 1 ,1--i'-

Mullaney of) ~ ( lll ;' Kannas.
In tho Class B drarlng JAr. Byrne drew the one year term, Mr. McClure
two years ll?ld Mr. Wilson three years.

Mr. Byrne and Kr. McClure who, at thie

time are still directore of the bank, have each been three times elected aa dlr•
actors, of these times twice as their own successors.

~ year

Mr, Wilson served hia

torm and was succeoded in the 1917 election by" Mr, Harry W. Gibson


Muskogee, Oklaho:ne...

at the meeting held The Class C directors determined their length of term.a/ At this
meeting it was suggested by Di.rector Malone that it was possible to tetermine
ar all three directors in this class
the_ length of term¥ by the ingenious manipulation of coins that required but one
turn of these coins.

Duties o:f' Of!'ioera

While the officers and new employees or the bank were buat. ly engaged

in preparing the permanent quarters and installing various systems during the
first half of November the direct.ors ,rare far from idle.

At a directors' meet-

ing held on Tuesday, NO"fember: .10,- •a. oammi ttee oamprised ot .-Director ■ Byrbe •
~.- •


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Killer anci Jone■ a~.~~-~ . ~~ - ~~ m~eting ~- ~• : PZ:•~~~s Qay reportec[a ebhedul•
, .... .::- :




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of ottioara' duti••• a oon4ansat1on of which follows,
lll!!PO!t RDEBAL RESERVE A.Gm~ - To haTe
of apeoial
uaminationa of member bank&, arad.1 i bureau of the ba.nltt the
atatiat ioal deparblent and, Jo1Dtl7 with the >-aderal Reserve .Agent,
to emploJ minor offioiala, olarka and other employee ,in the off1oa
· and. deianmemt of the .rederal Reaene Agent and to pirobaaa
equipnent tor 1&14 department I and• w1 th the Governor and aey other
exeoutiv• ott1oer■ aeleoted bJ the .Board, to purohaaa equipaent
am. employ help throughout the operating department of the bank,
subJaot to . the approval of the
.· haoutive Committee.
o h a r g e

.QASHtm_- Aside trom the Oaahier•a duties a ■ .preaor1•4 in
the b7•la• ha shall have personal auperviaion o'far the working f'oroa
c,f l"tle operating dei:artment aubJeot to the supeniaion of the
!rhe above were the only duties presoriood at i;bat time f'or lt
oontemplated that additional rulings would have to

b e after the

b a n k

wa ■

h a d

to opera.ta. ror Ope:ro. Ung.

Daoia1ona nade at ibis meeting were to tha effect tba1i reserves received on the opening date should be either gold or lawful money and so far aa

olea.ri?Jg house funot1ons or the bank were conoern9d it should undertake at the
outset to oolleot only items of reserve cities within the Tenth District.
• • al■o a unanimous dao1s1on that

7% was

the lowest disaount rate the

OUJ' ba.nk oould oons1stantl;v obarga at the present

o. s.

a n d



1t B0 7w1red Governor

Hamlin or the P'ed.eral Beserve Board • .Baf'ora tha bank opened, however, the

41reotors belisved a lower rate sllould be charged and decided upon chargiJlg
6% for notes


bills of a maturit7 not over thirty days

uoeedi11g thirty dqa.



!or a maturity

This vas the rate upon whioh the 'bmk began operation.

but on Daoembar 7th a change was whereby the rate became 6% for all

On Daoember .16, 191-'- the

b a n k

lowered its rate on billa or abort

m&turit7, settling upon 6~ tor leas than thirty days and
oTar thirt;v da;v• to sixty days, 1nolus1Te.


tor maturitiea ot


At this meetin :", the bank application for membership in the Kansas Cit:,
Clel!.rlng House Associa:t.1.on on the same basis a.a}Yilmbership of the United States
Also during this meeting the Cashier -.,ao authorized to have made distinctive endorsing stamps for member banks and these were sentout subsequently

and the cost charged to general expense.
Friday and Saturday,
:Meetings of the Boa.rd wer~ called for Thursci~_,/lovember 12., 13 :and ,14.

There were., however, no quorums on the 12th and

:.tfx:waJ: iii I K~

14th and at the meeting on the 13th only a few general topics were discussed.,
for the officers and the directors who were in Kansas City were exceedingly


with the preparation of the bank for its opening.


\9 \ ~'

The morning of Monday., November 16., .found the ground tloor of the R.A.
Long Building in presentable appearance for the opening of what was de1ti.n ed to

geoome one or the greatest of financial institutions~

mti. le 1 t is true there wero.

mo vaults on that floor and the working force was both small anci equipped for only

a limited amount of operation, the offices
and the diect.ora' room had the appearance ofnreal banking

office ■•.

The payments of re1erve11 and the subscriptions for

stock had been received atttha temporary pf'i'ioaa on the second floor of the Ccrmmorce

Building and had been counted there with the aasisianoe of employees of the


These payme?)ts and subscriptions were deoosited in the vaults of the Commerce Trust
Trust Company. and for several ~eks a fter · the opening of t~e. tlEJII' ,bank the mone:, \Va■
• ~ >.. • ::.,.- ..


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kept in the Comm~roe Trust Company s vault • . ._ •., . ..,- . ,,.-.1 ..





4 • •.


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. , · t ..

On the opening day a large portion of the reaerve:~; paid :i n were in · gold.

Reserves _~ id in during the opening day were #67 f,{:,tflf-. ~2,
Just prior to the opening of the bank doors the following telegrami! f

wa ■

reo ai ved from Secretary MoAlioo z

'1".'a.shington, D.C., Nov., 16, 1914.

tCharles M. Sa-.ryer,
Gov. Federal P~aerve Bqnk:,
Kansas City, Minouri.
Please accept my cordial congratulations upon the
opening of the FederalRoserve Bank of your district, and
my sincere commendation upon the ef'feoti ve work you have
done in preparing the bank for susiness in the short
allowed for the opening.
I am sure that the Federal Re}l
servo funks will serve a great and beneficient purpose in
the future of our country, and I am sure that this Department o.nd the Federal Res~rve Boa.rd count upon your loyal
co-operation in the important work and duties which have
b~en confided to you.
My hearty good wishes for your success.

(Signeci) W.G. Uc.Adoo. 11
Telegrams were also read from John Skelton Williama, ComptrQller of the Currency,
and from Secretary McMoo advising that tile ohartar of the bank had bean executed but that 1 t would not reach the bank pntil . probably about the 18th.


Many Visit.ore Present
Secretary McAdoo 's telegram was authority for the mailing of announce-

ments to member banks ,and the Federal Reserve Eank, upon receipt of the telegram,
was in a position to begin operations at onoe.-

'lhe directors, upon receipt of

these, authorized the b3.nk 1s secretary to send oongratulatory telegrams
to each of the other eleven Federal Reserve Banks.
The lobby on the opening day presented the appearanoe of a florist's


display room.

bank ■•

Scores of vases of cut flowers an~ potted plants had been sent

bankers. business men and professional men ,rho wished

new inetitution,


to the

Many of theH tokens were sent by indi'Viduala and institutions

outside ot Kansas City.

From about 9;30 1D the morning until S o'clock in the

a.ftermoon the lobby• reception room and the oftices of the bank ware filled w1 th
viai tors who oalled to pay their respects and

expre ■ s

their well rlahea to the

infant banking in1titution.
The officers and dirao't.ors in their varlo\18 rooms were a receiving cammi ttee which oooupled e'Yery moment of the da.y in greeting_visitors unti 1 -the doorls ·-

ware closed •

.&nong the visitors on the opening day .rare

( 0-}'lA0'ik-


,c ,,~_,,j-)

Early Discounting Slow
,'here was a -wry modest amount of rediscounting done in the early days
of the bank;1s e:xi'stence.

In fact none of the Federal Resene Banks were call-

ed upon to gi78 marked assistance to the country or to the government in any

considerable degree for

■ ome

time after the banks opened. and thia in spite of

the .fact that Y&r was going on in Europe and a consicierable amount of financial
operation• were going on betYeen 'the United States and the countries 1nvol'9'ed in
the oonfliot,
E1peoially wa.a the Tenth Federal Rese"8 District in ·a stable conditi,o n,
owing to its wealth and/ The stringency ciue to crop moving in the summer and
fall or that year had b!:ten eliminated iry

the natural course of market payments.

It was in reality .not until April. 1917. when the United States had been drawn

-sointo the world war, that the Federal Reserve Be.Ilka became or great a1111atance
to the government. although the date of their opening bad been advanced beoauH
of the belief that the world ,rar ,rould naoesaitate an immediate operation ot
the Federal Reserve System tor tho benefit of the government.
Two days after the opening of the bank the Board pa.saed a resolution
that all pa.per would be discounted ta within five days of maturity and where
notes were paid before J11B,turity the unearned discount ,rould ba rebated except.
for a. period of fifteen. de.ya but such re'ba;tes ahould be at the prevailing rate

at the time of ~ont of such note.

The Executive COlll!llittee, was also authori1-

ed and directed to lower t:tie rate of discount to &~% on paper maturing within
thirty days and 6% on paper ma.tur ing thirty daya.

"if it is found that

the Federal Reserve &.nka in adjoining districts have lowered their rate or dis..
Prior to December 10 the Executive Committee of the bank had apprond
from day t~ day offerin ; s of thirteen member banks for rediscount aggregating

1•77,874.48. aevanty•fin notes having been discounted.
these. notes waa $2,295.04.
6,5½, and 6f..

On December 17 the

redi ■ oount

The groaa discount on
rate was lowered to

tip, to that date there had been t ra.nsterred to the Federal Reaern

Agent notes aggregating

t:sso,ooo. • secured

i-:i lieu ot ■ am• Federal Reserve bank


notea aggregating $530,000 ,· of which ther•J remained to dajre only $1,ooo. ·
The f'irst application tor redi.scount was made by

Begin Ba.ndling Cash Items
At the meetin~ of . December 10 it was agreed to extend the


of the bank beginning Tuesday, December 15. to include the handling of caah
items on all member banks in · the district,

also to include cheeks and d ratt1

-51drawn on all Federal Reierve Banke.
Up to ·:necember the bank bad counseled with the firm ot Robinson &
Goodrich in- a t n matters in which legal acivioe wa.a need.~ and on DeasnbeJ' ,
th& directors moved to retain Robinson & Goodrich and I. F. Detheridge as
attorn&ya for the bank on a basis of $50.00 per montJi.

During the ,early

years of the bank's existence Gudge Goodrich was the princlpa.l legal adviaor
of the officers and direotora.

Re ■ erve



Puring early i>eoember some of ~•--Other Fed-

oitiH declined to receive from the P'ede:ra.l Reaern l3B.nk: of ltanaaa
and drafts drawn on member banks in Federal Reaene cities.


lad to the local bank notifying its members that it had diaoontinued receiving

such itema.
st. Louie Applies the La.ah
One of" the early proelems which the Kansas City bank had to meet


in connection with the practice of tl:e Eighth District bank at St. Low.a.


St, Louia bank had been making constant demands for a shipnent of gold to cover
balance.a that had accumulated in the st. Louis bank • . The Executive Committee
spent a

con ■ iderable



amount of time trying to protect this bank against theae 4~

the morning of Deoember 22 the camnittee discussed tYe matter with the

Kansas City Clearing House Association as a re1ult of which the clearing house

ai;reed to protec;,t this bank to the beat of its 11.billt;y.
promiaed to instruct their St. Louis

corre ■ pondenta

The clearing house banks

to depo1it with the Federal

Reserve Bank of St. Louia for our credit actual oash to meet at least a portion
of the demands made against Kansas City.

In the meantime a committee or

ri w

of Federal Reaerve . &i.nks had taken up the_matter of adjusting thia

phase of the banking and woullr report January 22 on a general clearing plan be•

~•ab the Federal ReserTe Banke.


December 18 there were thirty en1ployea1 ln the 1eMice of the bank

and the montb.17 payroll.ex.ol111in of the

officer■• wa■


In the

first month of the bank'• ex11tence tlw or the twmity-fi w snployeea were dropped from the roll tor various rea1ona and naw employees aoon filled their placea.




-53The first authorization of the purchase r;L United

State ■

Boncia by the

Kansas City Bllnk 7.:1.s on Deeember 18 when authority was given the

of'fic".lr ■

to purchaae $250,000 of United State ■ 2%' Circulation Bonda at a rate not to ex-

ceed 9si-.
The first missionary work done by the Km sas City bank, outside of it1
continuous correspondence with member banks, was dona by Director Wilson, who,on
the authorization or the Board and at the invitation of Seoret~ry Harrison of th•
Oklahoma Bankers As10oiation, attended the bankors group meetings in Oklahoma in
December. 1914, and delivered an address at each of the meetings and explained thew
workings of the Federal· Reserve Bank.

It 1s'51gnificant faet that, while the pro•

visions of th~ Federal Reserve Act ware widely published and bankers were supposed
to be conversant ,ri th the operations of the system either through studying the A8t •
or by verbally leaa-ning

its powers and requirement& from other bankers, very few

active bunkers in the district had obtained~ clear idea of the ba.~k's function,
even after the first half dozen

year ■

of the existence of the system.

The natural

result of this ia an unfortunate situation 'Which trequantly leads to misinterpretation of the system and ita various phases.
1'ven member banks were so unfamiliar with the provisions of the ne,r Act
aa i t affected them that. it was necessary for the officers of the Kansas City bank
to wire varioua important instructions to these member banks less tha.n a. month after
Fecieral. •Reserve, .
thejllhnk was opened.
For instanoe, telegrams were :;-mt to banks having overdraft■
at the close of business to make same good at once; letters wer•; written~o all banke

advising that the Federal Reserve Bank would accept and place to the credit of member
banks only checks, cirafta and credi ta of a like nature where ·-..•

• ··,; · . , ,. the banks

on which these items were drawn "have with us sufficient funds to cover, and where


banks paying do not have sufficient !'unda to cover i tams received against them
the items are to be cut out and sent for oollaction and returns, the endorsing
bank to 'be notified that the amount repr9sented by such i tema wi 11 be placed to
their credit upon receipt of return11J" member

bank ■

were botified that a charge

would ·be made at the current rate against the account of a bank dradng draft.a '
against the Federal Reserve Bank and sent in auch a way as to create eastern exchange J they were advi eed that the Federal Reserve Bank would not accept tor oredi t.

items bearing endorsements outside ot district 10; me11a.ge11 were sent to


Denver, St. Joseph, and other reserve cities' banks advising them of the regulation ■

in regard to creating eastern exchange;

By ■

of the opening year the situation between the various

Federal Raaer'fe Banks had improved remarkably. the local bank );laving sent to

other Federal Reaerva Banks in that time a total of $6,109,878.72 and received
from them $5,923,283.06 ,leaving the local bank a debtor of $813,404 9 34, which
amount was being liquidated aa rapidly as practicable.
During the

fir ■ t


month ■

of operation the city and countcyolearings

had grown noticeably, · the total items in the city department amounting to 10,629

a~regating $28,888,260.78 and the country department having a total ot 128,107
items aggregating $35,048,927.93.


expen ■e

of conducting those two departments

had amounted to approximately $2,000 a ~onth.
The bank began the 7ear 1916 Tith reaerve deposit, ot $10,S8l 1 36S.27 ~

and with paS.d in capital of $928,160.84.
The first member ba.'1k to apply for permi.Hion to act as trustee, ex•

eoutor, administrator and regist~ar of st.ocka and bond.a na the United State•
lational Bank of Denver and this application wu aPProTed by the Federal

Re ■ erTe



Board in Ka.rch,1915.
On Monday, April 26, 1915, Governor c. s. Hamlin of the Ped.eral Re-

1orve Board ma6e
meeting or the

hi ■


director ■

vi ■ it

to the Kansas City bank and wa.e present at a

on that day.

Be was introduced to the Board by Chair-

man 18. ller and in the course or hie talk on the line11 of work and policies of the

Federal Reserve Board he commended most hi i;hly the Xansae City director, for th•
aplendld. pi.oneer work they had done in putting into operation the- clearing functions provided tor by the Aot.

Governor Hamlin wae entertained a.t luncheon w1 th

the Board at the Mid-Day Club and the discuaaione of the Boe.rd were continued until
2 o 1olock in the afternoon.·
During the first three montha of 1916 Chairman Miller had been called
upon to speak before various bankers'


in Nebraska, Colorado and

Kansas, and on April 8 the directors directed him to have publl1hed 5,000 aopiaa
of hi ■ address on the subject "Federal Reserve Jyatam and the Operation or the
Federal Reserve Bank of Kan1as City," and to send one cow to ea.oh bank in th•
dl ■ triot.

The result of this wu a. decided improvement in the underatandin& of

the system on the part of many

member ■

in the district.


):__., C.. -

THE FIRST E.Xlilrll5A1'I 01

On 'fhuredq. Mq 15. 1915. the directors held a oonterenoa with

Kr. J. A. Broderick. Federal Reserve Bank examiner who. together with

Keesr ■ •

Gidney and Grayson, had made an examination of the af'fairs or the bank and an
audit of the bank'• accounts and

Mr. Broderick reported that his ex-

amination ■hovred that the eipense ■ to d--.te wer~ $65,000 more than the bank'•

It also showed that the gold reserve attar the first 11x .J.110ntha of


the bank's existence stood at 98.!% after deducting $2,038,000 which waa due
other Federal Reserve Bank a and e learin g houss banks on account of debit 1:alanc es.

The earnings had averaged $128 a ~ and estimated expenses $126.,000 per annum.
The par value of United

State ■

Consols, 1930,was $941.750.

indebtedne ■ a


Bonda held at that time. all of which were 2%
other investments such as warrant, and

certificate ■

of cities totaled $65,000. it was shown in the bank's first examination that its gold resarTe

w~s exceedingly large due to a small amount of rediscounts. the estimated amount

at that time Ming onl;y $5,150 1 000.\fbereas it ,ra,s estimated that the rediscounta
in order to earn expenses and pay dividends should amount to approximately
Kr. Broderick's comm.ants regarding the operations
per ■ onnel

or the bank, the

or the officer• and employaa, equipnent and location of the bank Yere

highly gratifying to the directors.

However, he suggested that the bank !natal~

a more up-to-date vault record. that the tellers'


'.be audited

at least onoe

each month. the re■ erve oaah onoe ea.oh quarter and the Federal Reserve Agent' ■
cash and aooount■ once each quarter.
■ ettlementa

Be al■o augge ■ted th·1t the bank make dai 17

with the clearing house and that Kansas Cit;y members


be induced.


to maintain balances in the-Federal Reserve Bank

■ u.t'tioient

to cover three

daya 1 out or town clearings.

Director Ram.lay Resigns
At the meeting ot September 23 Director Ramsay tendered

hi ■


ation as a Claaa C director in order to accept a more lucrative poaition, that

Vice-Pre ■ ident

of the Drowra lational Bank.

ation was aooepteci and a

re ■ olution

At the same meeting the resign-

adopted appreciating

hi ■

valued aerTices in

the past and regretting the loas of hia counsel from the 'Board.

Thia resolution

presented to Mr~ Ramsay at a later meeting on December 16 when he appeared

before the Board With an application of the Drover, National :Bank for the privilege
of acting as trustee, executor, adminiatrator and registrar of a tooka and

bond ■•

Bank Vault Completed
Throughout the year of 1916 a aubatantial vault n.a being installed

in the bank.

Thia;completed early in October a.nd on its completion the gold

which was formerly held in the vaults of the Southwest National Bank of Ccmmeroa
a.nd the Fi.deli ty Safe Deposit Campany n.s 11oved to the bank: 'a own vault.


Farly in 11oftmber 'Messra.

serve Bank
Re ■ erve


examiner ■

made the

Bank af Xansaa City.

preT1.ou1 shCJW'ed a


J, A, Brod.erlok and J. L. - Cro11, Federa.l Re•

■ eoond

examination ot the oondi tion of the Federal

It rill be recalled that the f ir1t examination aiz
in earnin~• under the amount of expense•.

throughout the first year ot the bank's

e:d ■ tenoe

In fact,

the••• condition was true,

namely, tbatathe amount of redboounta in this dletriot Ta.a light and the

expen ■ e ■

of the institution due to the coat of organization and equipnant unusually
It 11 not 1urprising therefore that the examiner•, when they appeared be•
fore the Board by invitation on lovember 2:5, reccmmandationa cm .the
system of operating and aooounting which would tend to impron the oondition if not
to relieve the situation entirely.

Mr. Broderiok expressed his highest regard for

the a. bill ty and ef'f orts of both Governor Sawyer and \ ashier Thralls but stated a1
his opinion that both officers were undert~ing to do entirely t·oo much detail

Be recommended that a third officer Who should be entirely familiar Yi th

all the details ot banking be engaged wiW a Ti.n to relieving the two present
officers of a great amount of detail.

Mr. Broderick recommended that the df'fice of auditor be independent of
the operating department of the bank and that the auditor be given a tree hanci in
conducting the exsminations or the bank, being required to report at l!ast once a
month to the directors on the condition of all depattments or the bank.

A complete

re-opganizq.tion of the a\lllliting, accounting and tranait departments was recommended

and also that all oaah in charge
lea ■ t


any one officer or employe be audited at

once each month and the cash under joint control ot the Governor and
A further reoommandaticn

Cashier be audited at least every three mont.ha.
made that aredit

be.lance ■


resulting from our local clearings should be oollecte4

It was expre1sed at the sense .or the meeting that the above recomnand-

each day.

ation■ be complied rit.h.

With a view to ·gt-feating theae recommended change■ the

directors. with the conaent .of the Federal Reserve Board. employed llr. Cross to
remain with the bank temporarily, lending his exparience and
bringing abouththe


revi ■ ion

hi ■

1ervices toward

of the system.


Cross remained in this for several montha unt.':-1• upon the
- ·· ..
...... ____ _ _ ,
--. ____ .. _.. __ ___________




<(~1--;;-~f' Mr. Jerome Thralls as Seoretary-Caahier~_ Fabruary 10 followi~



,.Mr :-cross ·w·as•·re•feotetf"teniporary··a:ssi-s"tant.~cfthe Governor at a salary of $400 par
later, onC\ ~h .,

llr. Cross became Deputy Governor and served in that

,,., ci ,1


capacity fbroughout the greater part or our war period until his resignation on

o., ;/2, . , ~•. -:. '',

to become a Vice-President of the :t~tional City Bank of Bew York City.

lfr. Croes was the aotin hea.d or the Liberty toan Comnittee of


district being

nry actite ~n the organization of the oomrnittea and serving as its executive
manager until hie resignation.

~ reoignod

to beoomo oonneotad With the American B~r• Aasooiat-

ion in which position he assisted in an advisory caps.cit1 with Government'•
Yar financing program at Wa.ahington during the war period and later became deeply
interested in the foreign trade program.
The suggested change ■ in the bank '• working. ay■ te:n proved ■ a efficient
that before the next examim.tion
flattering degree.


made the bank'• ehcnring we.a improved to a

Before this improvement qa

■hawn •

hO'n"nr • it was neceaaary

lo adopt a plaD of amortisation of expenses by means of whioh that pa.rt of the
orga.nlsaUon upenaes which had not been ooverad by earning& up to the oloee
of buainess Deoamber 31st waa pro-rated over a period ot 24 months, one twentyfourth to be oharged ott ea.oh month.

In the same manner the oost ot Federal

.Resena notes wae pro-rated over a period ot 30 months and the furniture and
tutu.res acoount oharged ott 10",6 year for a period ot ten years in order
to equalize the expenses in proportion to the earnings,
Jlitchall Buooeeds Jonas
At the expiration of Director Jones •a first year ot service with the
bank. J.


Mitchell, President ot the Denver National Bank or Denver. Colorado,

was eleoted. to suooeed. him and at ,the meeting of Deoember 16th the direotora
ad.opted raeoluUon.a of regret at the expiration of Mr. Jones •a term and appreciation of his able services and wise counsel during his time of service.
Mr. Mitollall, who had been aot1va in obtaining a Federal Bsserve Bank
tor Xansas City and who had been previously considered tor a member of the
Advisory Oouno11, began serving at the meeting of Janua27 4, 1916.

In the Padaral Reserve Agent •s first report to the .Board in Washington
which was tor the year 1915, including the latter tew weeks in 1914., Chairman
Killer wrote that as the Jleder~l Reserve Aot was a compromise measure esveral
of its teaturaa were meeting with meager support, if any, from various intere11t1
within the district,

The first dittioulty seemed to be that the bankers, nan

those who were mambera ot the Syatam, were not tully appreciative of the

aoopa· ot the Aot and ot the fairness ot its measures to all the people ot the

lt was to be expeoted, therefore• that the 88.l'ly days or the bank ware

not all smooth tor the exeout1Tes who stood between the Act and the bankers

of the d1atriot who could not or would not see the Justice or the Act.



Agent' ■

tirat report alao set out as the most atriking ohara.oter-

ot the Xa.naaa 01ty ba.Dk the Tariety of interests it was 02.lled. upon

to serve. a territory of approxlmtel;y 470 1 000

■ quare

miles centering

not ta.r from the geographical center of the United States. pra.otioally every
oereal. every staple oonmod.ity, eTery forage orop and mineral ccmmon to the
United States was a part or the varied production of thla district ..


muah of this production was covered 1n the pleas nade to the organization
board in Washington by the Tenth District bankers tor the location ot a bank
1n .Kansas 01 ty, the Agent •s report again emphasised this variety of production
as it had affected the workings of the new bank.
fhe membership of the Xansas City bank at the close of its first
year waa 949 be.nk8, including 3 state institutions.


Du.ring the first year of the bank the rates ot discount varied

The first proposed rate was 7i, on all maturities. but on

Bovamber 14th, two days before the bank opened, the .ISOard approved a rate
of 6'1 on all maturities as the directors of' the Kansas City bank apoouraged
a policy of discount rates that would a tendency to lower and stabilize
the rates of interest and prOYe attractive to member banks,
mta gJ"adualq declined unUl August after whioh a
maturities and 6%


The discount

rat$ on 90-day

maturities over 90 de.ya and under au months prevailed •
Daring the close ot 1915 1 the Federal .Besarva Boa.rd approved rates of 3l;%

for 10-day pi.par, 3-t'


tra.d., aooeptanoas and ~ on ooamodlty pg.per,

Badiaoounting privileges W81"e ,017 poorl1 under1tood °b1' the
maJorU7 of the 'banks during the first 78&1"•


!l'hi ■

caused a great deal of

add1Uo~ detailed work an the pi.rt ot the Xansaa City bank


1n 8%pla1ning the rulings and the reasona tor au.oh ruliDga.

l1i was an

educational year but as the membership in the System oontinued to increaae.
ezeoutivea ot the bank


that virtually nery 1ear was one neoesaita-

t1ng ·a great deal of eduoational work.

It became apparent to ot:t'ioiala ot the bank -.rly• in the hiato17
or the institution that aoaraely less important than the prinary tmiot1on
ot creating elastic ourrenoy was the tunotion of' the ballk acting as a ·

clearing house among the member banks 1n the System.

In his first annual

report to the Federal .Beserve .i,oard, Cha.lrms.n •W.ller stated that it 1n
full operation the clearing house :tunation would enable the oheok ot


solvent depositor to circulate at Jar not only in hla own district, but
anywhere in the United States.
'!'here were problems in the ha:n611ng of' olea.r1Dgs, however, prinoipal

of 11lh1oh was the disinclination ot ma.~ of' the member bank$ to a.gree with

the 41reatora and ot1'1oers that the Federal Reserve .Bank should


1.mmac:Uate 4ebi t to the aooountB ot member bankll tor ltel!ml sent them, although,

at the same time, most of' these members were sending to thi~ bank tor immediate aredU items dl'a.wn on points throughout the distriot, generally a,uch
Uema as would othel'Wiee have cost them e:mbaz:ige to colleot,

The reserves

paid in were BlIBll while the Tolume of clearings gradually increased to
an extent whioh ocoasionally caused a debit balanoe or overdratt agai_n •t

member banks.

~ese bank.I were inclined. to question the ler,al right ot

the Fedenl Heserve .ISank to make immediate debit to their aooounta and ~or
a Ume U :n,s 41ttioult to fully Juat1f11n the minds of the members.the
rulings of the bank.

P'iD&lly all member banks were notified tbat only

•, .


• ,. • I


suoh oheOks as oould be oharged to their account without oreati11g an OYerdran would be handled. a.nd all oheokB 111 axoass of their balanoas would
be returned to the selldlng bank.

!his :plan proved satiafaotory.

ln connection w1 th the subject of olearings, Chairman W.ller in

hia tirat ammal repart d.ealt'. also w1 th a kindred subject, that of the handling



float 111 the· district,

In Bovember 1915, the amount of tloat of the

D1atr1ot was estimated at f25,000,000 and Uhai:nmn Miller pointed out that

1t all the olear1ngs ot the district floated through the l8deral Reserve Ba.ilk,
this amount of float would be redilced approximately three-fourths, or to
a::out f6,250,000, and the large volume of busimss that would be concentrated



bands ot a single institution oould thereby

be handled &t


less expense than by nmnerous independent orge.niza.tiona, Since the organization of the bank, tha questinn or the handling ot float has been one under
almost constant dis0",1ssion among member bankers and is perhaps umerstood
leas by most of those who discuss


than~s 8.Jl1' other division ot banking.

1'ha history ot the handling ot float in more recant years has borne out the
original oontention expressed above by Chz:..irnali Jlill•r•
fhe 0h.a1nan called the attmUon ot the P'aderal Beaerve .Board

to the d1apar1t1 in the methods ot carrying tloat in the variou1

41atr1ct ■•

po1nUng out that unUl a uniform ayatem was ad.opted 'by the Boa.rd, the regulations of the Act could not be administered w1 th equal Ju1t1oe and

He emphas1z8d the pred.iotion that it a oomprehensiva olearing

system nre esiablished 1 t would millions ot dollars to the country and

el1m1nata a ~rge on domestic exohange, thereby ha.ving a tendency to
equalise interest :re.tea and mke available to -commerce millions of
whioli would then be daposi tad in the banks ot the country.



lollowing 1• a 1'841aaount; table of the atatea ot the Tenth .District with
the number of member ba.nlcB and their

Bo. ot









Bew lle%1oo

re41 ■oounta

during the year 19161

m l)!OEl,IBER 31 1 1916.












1,791,826.42 1,894,563.68





2, '148,649.22




32 1 !62.93



l l 1 065,525.S6 11,575,338.30

ID lovember am Daoamber 191-', 89 notes were .redhoounted.,

aDd ln 1915 1 6,946 notes were redisoounted to December 31st, a total
ot· ?,036 notes, average amount of each note il,600.00,




9 l




~e operation ot the lwlk throughout the tlrst year gradually
demonstrated. to the dlreotors that the ot':tloa of Governor was by nature ot
more importance UlaJl U was origimlq oonoeivad to bee

While the GoTernor bad.

lesa ot oontaot with the Fed41ral .Heserva .Board than had the Federal Beaene
Agent, the responsibility that should be assumed by the Govorno:r ln carrying
out the operating end of the bank waa auoh that 1t required sane one of

both l~rge banking experience and of resouroefulness and axeoutiva ability,

It was tor that reason. therefore, that the directors at the meeting ot
Js.nuar~ 4th eleoted Oha1.rnan J,


lliller, Jr.• as lknernor of the bank. '!l'he

sala17 authorised tor the newly eleoted Govemor at the time of his eleoUon

wa.a $15,000 per 7eu. However. at the following meeting held on February 24th,
GoTernOr lliller ref'llaed to accept more than $10,000 a year until such time as
the bank should enter a dividend paying period,

Acting upon this objeoUon

the Board at that meeting adopted a resolution that the salu7 to be paid the

Go'Ye:nor be fixed at fl0,000 instead ot il6,000.

and the result

January 4th was the date for the election of otficera

-62of the election was immediately rlred to the Federal Reserve Boa.rd and the

request made ot the Board to appoint Mr. Charles M, S&-.;yer aa Federal Reaern
Agent to


Kr. lliller.

Thia ns don•~

At this same eleot-

The Board the resignation
on February 10 as .preTiously mentioned.
effective Uaroh land adopted a most complimentary resolution of regret and

For the poa1tion or Seoreta.ry..Cashier to


■ uooeed

Kr. 'Jhra.lls there ware

considered at the meeting of March 14.

These applicants were

as ·follows 1

Arch w. Anderson.
Eugene P. Davia,
Royal c. Stewart.
E. E. :Montgomery,

Vice-Pres., Stock Yarde Nat'l• Bank, Kansas City, Missouri.
Aa1 1t. Ca■b•, Southwest Nat'l. Bank of Commerce, K. c. Mo.
Aea•t. Bank Commissioner, 'Oklahoma City, Oklahoma.
Pree. Citizens State Bank, Blue Springs, 14i~aoµri.

John ·P'. Hecox,
A: ... R. Bradley,

City National Bank, Ck!laha, Nebraska.
State J3ank: Examiner ( Ko.) Kanaaa City, Missouri.




H. Langford,
E. E. Emmett,
L. H. Tate,

Cashier, Westport Avenue Bank, Kan•as City, Mi•souri.
Caaha 'lati'onal 1-nk, Cat.ha, Nebruka.
Asa •t. 'Cashier, First Wat '1. Bank, ()nab.a• Nebraska.
Internal Revenue Offioe, -Kansas Oi ty, Mi1&ouri.
Cash., Corn 3xcha.nge Nat•1. lank, Omaha, Nebraaka.
Asa 1t. Cashier, Corn Exchange Nat 'l. Bank, Omaha, Nebraska.

Eugene D. KcAlliater.

Federal Reserve Ea.nk, Kansas City, Miaaouri.

'W. 3 • Shepard ,

ltyles Standish,

The only one or thia list r.ho was connected with the Federal Reserve Bank
When asked hi• preference of the applicants Governor Miller
asserted that hia acquaintance ,ri th the ot.hers of the list. we.a 10 limited that he

could not oon11istently .make a selection but if confinBd to the list he would :naturally ■elect Jlr. KcAlliater tor he had had the opportunity of observing l!r. &Allister'•

or tba bank. Varioua

work aa mam.ger ot the loans and discount department

applicants had their staunch su~rtera among the d1reotor1 but the t1rat in-

formal be.llot taken showed a preterenoe tor _Arah



Governor Killer suggested to the d.1rectors that aa the a:ppl1cants were

not all tul~ mawn to himself and the directors, it might be desirable to
aleo\ .Ir, l'.0All1a\er assistant oal9h1ar aDd dater farther aation on electing

8eoratary-Ua.ah1er until a aubseqwmt meeting,

1'ha directors, howeTer, telt

that the had' arri'fed to eleot a Secreta:ry--ua.shier and~ they wished to
elect some om who would be Bllitable to the GoTeroor,


fhe situation waa some-

what embarrassing to the GoYernor owing to the that he was not eu~ficiently
acquainted with Mr, Anderson who appeared to be the choice of the na,jority of
the dlreotors, to enable him to pus an opinion.

Clearl7• the Governor 414

not wish to imke a mistake in the selection of' a Oaehier a.nd tor tbat reaeon
he was slow to aanotion the choice of o:ny one until he ba.d had :turther oppor-

twut1 to inYestigate. Ba stated, however, t:hat he bad no obJaotion to llr,


Anderson oth• than his own laolt ot e.oqua1ntrmoe with him.

!he Governor wiahed

to go on :reoord. as not assuming aJJ1' responlib111ty tor the oonduot ot a man
ohoaen who ma tmlmown to him• but he would JBrt'orm the beat service possible
tor Ula bank w1 th the tools fllrn1shed. him by ·t he ·d irectors.

1'he vote waa

taken and stood 6 io Sin fa'Yor of Mr. Anderson. !he Oha.1:rnan 4ecl.ared 111"•
A.Dd.enan elected and the sal.&17 fixed at $4,000 a 7ear,

lank Jecomea Pisoal Agent

Uie middl• of .Deo-,mber 1915, th• Govel"Dlll8nt ba4 asamed ao importan,

a oomnerolal plaoe among zatlona engaged til'.'.!the ai- and had ad.ertalcen auah a
•hare of finanolal Nlp0!111b111t7 towarcl E\lZ'ope that the !Te&BUl'J' Department
mteded asdstanoa \hroughotn tha aountry 1n bandHng 1ta relat1ou with the •


OD Deaember 16th, Oha.1:rman Killer presented to the Board a letter

from the Saoreta17 ot the Treasury designating the Federal Beserve l3e.J2k ot

Xansas Cit7 as liecal Agent ot the GoverDD811t tor this dietriot and outlining
the services a:pacted ot it.

!he assuming or this additional responaibilit7

by the baDlc led to the opening up ot whe.t became the Flaoal Agency ·Department•

destined to becana a most aativa department ot the bank during the


On Janlla1"1 2 1 1916, the bank began theJ_,b,andl1ng ot Govenment de-

posits and the payment ot Govornment warranta.

Although this was not a part

O'f the presaribed duties ot the nn Fisoal Agenoy Department. it was related
in a !ll6asure to that Department 1n that lt was due to the eama primary
cause, not&blt;~ tl:le World War.

~e government was purahasing a great amount

ot supplies tram industries ln thie district and it issued wa.rra.nta which

were redeemable at the Federal Reserve &.mt.

!rbis work was· handled largely

b;y Mr. !Jner, Ch1et Clerk.

The heavy work of the .Pisoal Agency De}Brtment did not begin, however, until about lb.7 23, 1917, and is desoribed 1n another oh.apter beg1:zm1ng

on page 70.

Governor's Report

Governor lll.ller 1n his report to the directors on lfarch 14-th allowed.
how tha Federal BeserTe .Bank of Kansas Cit1' bad began t;o f'orge ahead in

1ts earnings an4


recover it1 tinanoial balance the first year of rather unprofitable operation.

Be made it clear to the di:li_Sct.ors that of the four

poa ■ ible

methods of a

Federal Reserve Bank earning money. nomely; first. by redi'acounting bill1 for

member bank1; aacond. by bankers I acceptance11 and open market tra.nsactions; third,
by revenue income Ya.rr:ints and. fourth, purchase of United States Bonas.


'l'.ent.h district found the fourth method the only one adapted to its use at that

There was a very light call for rediscolmt a.nd the New York Federnl Reserve Bank was in position to materially assist in open market tranaactions or
revenue income warrants.

At the date of the Governor's statement a little over

$8,000,000 in United States Bonds bearing circulation privilege had been purchaaed

and the bank had received from the Cmnptroller of the Currency $2,000,000,000 in
oiroula.tion notes with which it bad been daily purcha.dng eastern axohange.


tha purchase of the bonds Governor Killer sr.owed that the bank had increased l ts
earnings to $777.46 per day while the expanses were &varaging $333.27 per day,
leaving a net profit of $444.19 per day or approximately $160 1 000 per e.nnua,
which was within $20"000 a year, _or 89% of a dividend p!lying ba.sia.

Dyring the ~exioan border conflict in June, 1916, three of the

l:.ank 1 ■

amployea who were members of Naticnul GU!ll"d unite were called to the service
LU1.d upon a rep-;>rt of thia to the directors at the meeting of June 22 the Board
instru~tad the officera of the bank th~t emplo:,as of the bank who were member■
of the National

Guard and had b'3an called to aervioe "shall be gra...,ted a leave

of absence o~ full pg,y for a pariod cf aix Zl!9nths or such part thoremf as shall
be apant in the miliu;ry service o~ the Ste;taa."

The Fir1t Dividend
By the middle a!' Jul:,,, 1916, there being accrued auttioient undiTi4ed

to more than caver the dUidenda dU:e at.oak-holding banka to fun• SO,,

1915, the directors at a meeting on Jul:, 13 authorized the payment or the f'irat.
dividend in the hiat.oey of the bank.

This dividend was pdd for two

number one,, the pariod from lonmber 2 to December Sl, 1914. inoluaive and,,

number two,, the period from January l to June 30, 1916.

The amount of number

one was $8,495.47 and of number two $58,211.48 making a total of $66,706.95.

GoverncrHarding '• Visit.
At its meeting of September 28, 1916, the Board of Directors was vistted by Governor W.P.G.Harding of the Federal Reserve Board who, u

one of the

original member a of the Board I had succeeded Governor Hamlin at the firs~ of
that year.

Upon invitation of the Chairman, Governor Harding iJrie!'ly addreaaed

the Board commending the directors and o!', ma.ldng

suggestion ■

on mattera

of interest and outlining the policy of the Federal Reserve Bank with r•~peat
to the declaration of dividends and the disposition


organization expense

prior thereto.
At an informal meeting at the Board ghe day Vice~oTernor
Paul M. Warburg na preHnt ln

Xan ■u

City to deliver an

addre ■ 1

of the American Bankers A1sociation held here on that day.

at the meeting

In the a.fternocm

he mat informalq rith the director ■ of the bank and di1cuned with them principle ■
and matter• of policy -;vith reapeot. to t.he operation of' 1'ederal Reaarve bankl


particularl7 the concentration of gold, the
vestment ■• earning■


i ■ aue

of Federal Re1erve

note ■ ,


dividend. ■•

At the meeting of October 12 the J"eaigna.tion of Director· Wil ■ on, effective December 31, wa1 accepted with regret b,y the directors.

Mr. Wilson was

soon to remove from the district and for that reason 4id not permit

name to

be included in the list of candidate ■ for the approaching election.

On OOtober 26 Governor Miller's report showed a decreaae in discounts
and ~ increase in banker ■' a0oeptanoe1 and Wlp"rant■ negotiated.
ed an increased volume of clearings.

It also

Alao an important part of

bi ■


report wu

the subject of penalties for deficient reserves and, following the report, the
Executive Cammi ttea was aut.h.ori zed by the


"t.o fix a rate as penalty tor

deficient reserve balances of members, to determine the time from which
penalties would. be made e.f'fective and to make auch changaa in the rate from time
to time as it may deem advisable and necessary."


Second Dividend

The second dividend paid the stock holders by the Fadera.l Reserve Bank
of lansas City was a,-t.horized at the meeting of Deoember 19.
at the rate of

e% upon the atook of the bank from July l to December 51,. 1915.

It amounted t~ $87.920/88.

Th.11 dividend

resolution ■

At the fl.nal meeting or tha year or 1916 held on

ot regret at the resignation of Director Wilson and ot

appreciation or his 1J0rk and his abilit7 were adopt.ed by the directors and an
engroued copy presented to Mr• Wilson with appropriate


by GoTernor Bailey!

., •..••.:L/ {}~~5 f.


. ·.:

:! .•


'}i:i;f~f!if\~}ti~t~' ,
: -- • •


""GG~~ ··:--'' ,.•.
, .. -.'



~ ~ i{-- "

In aontra1t to the oondi tion

· ,__ • • ..





' -•...


or the T~th -~i--~·;t :d~;i~g·\;~~--f t~~~>


_:- .

...'. ~~~'1 . •_.

year of the bank was the ai tuation during 1916 at the 4loae



./ . -_ -..: __ ~.

. ~-·•-.:..'.; .

ot which year th• ,· -.- -;r,~l

~ -· • ·• :-


. .



·:!·: -




Federal Reserve Agent was enabled to make a more favorable ·report f.o_ the Fed•··:·~-:~ ;: •
·. • - --- ··: ~ . ' - ·: -,
:--:· _. .• jeral Reser-ye Boa.rd a■ to the earning ■ of the bank and the· genera.l lanking oon• ... ;-~. ·:


• _ ,: . -

dition of the district.

Ai though a.grioulturaly the year wail . not an exoeptional ..

one, yet commercially and. 1n a g~eral

compa.ri ■ on

of prod.uct16n by industrie1 .•


1916 was materially more favorable than tha preceding rear in a ba,nldng way.
The manufacturing facilities nre at capacity production.

satisfactory with a general increase in wages • . Live 1took·markets re~ned
high and many record:s -;,rere broken in receipts ·and in prices.


,. : .

·, •'

The bank depoa~t•

held up in an unusually strong manner although., owing to a oompara.tively' light

demano. for money and the low level of interest rates. the banka perhaps ·
no more than in the preoading yea.r.
While it haa been stated that the earnings of the bank during l9i6
increased over those of 1915 yet thia increase was nue not to an increased


.... -,~-.:·

volume of redisoounts so much as to the open · market investments made by the bank,
out of the year 'a earning• it was po ■ sible to pay di'rl.dend ■ to J.une 30. 1915, . •• ••
as well as to charge off ali organization expenses.
Rediscounts -during -the y~ :. ·.




be found in tabulated form on page 60d.
It wa1 during· 1916 that the Fadera.1 Reserve Act waa amended ao that

!., •"";--·.,.

-.......-t. .•


,. ►


their •Qll'n· ~romiaaory notea.



i' ·-·~----·

"- -..- l"'i ': - ....

•. ,



the memberahip in the district during the year showed a slight decrease owing

to several member ba.nb hn.Vi!J8 dana.tiona.lized and having beccm1a State ba.nka.
!his obange 1n membership was due to tl:le fact that the "new State Guaranty law"

J)Opalar at that time.

In contrast to that year. there 11 the oaao



the Oklahoma guaranty fund becaning depleted in 1921. thua lmding :ma.ey Oklahoma st.~ta bulks to strive to bscome na.tionai" banks thereby the unaertain 1ntluenoas ot State Guaranty laws.

From the organization of . tha bank

to the oloae ot 1916. only one Trost COffll& uy and two State banks had applied

for and 'been granted membership in the institution.

i!he pers0I1Del of the bo.nk's management underwent moro ohangea during
the rear 1916 than in a"ff3 year of the ban.k's history to date.


l!itchell suooeeded Gordon Jcmes as Class A director.

On January 1st•

Colonel F.


llemlJJg na appointad. jioe-Cha11'Dlll1 and Depaty P'edaral Reserve to auoceed
A. E. Bamsay• resigned and Obarles J.l. Sawyer waa;,: a.ppointed to succeed. J•
141ller• Jr., as Chail"lmn of the Boa.rd and ll'ederal Baserve Agent.,




Miller had beoome "Govarnor0 lliller with the beginnuig ot the yea.r, thereby

changing places with Mr. Sawyer.

On February 10th, Jerome Thralls resigned as

SeoretaJ7•Caahier and J. L. Cross was elected assistant to the GaYernor.


.l'ebrua.17 1st, ll. A. 1'hompson was appointed assistant to the Federal Basene
and on March 14th, arch



Anderson was eleoted. Seoreta.ry-Ca.ah18l" to suooeed J4r,

In Ootober ot the same year Direotor Wilson. Olan .B director, resigned.,

to become e:t:teotive January 1, 1117,

In Daoember, H.


Gibson ot Muskogee


was elected to fill Uie unexpired term ot Kr. i/ilso n while Directors !alley and
JloClure were elected. to auooeed themselves.



1 9 1 7

At .the initial meeting of 1917 held on Je.nuary 11th. the ·Cha.irnan

a Class C Director for a term of 3 yeara.

re ■ igned.

,nu welcomed aa a new member of the Board.

a.ncUfoCluro were congratulated upon thair re-•leot1on aa Class A ari4 Class B

8ireotora, respeoti~ely. • 'fhe organization·ias further perfected by the re• lection of J.


Miller., Jr., as Governor, Arch 'Pf • .Anderson aa Seorot~ry-Cashier
_. -. ~?=

and E.F .Swinney as Federal Advisory Council.
At this meeting J • Li Cro11. who he.d

-· •:;i'

'to the bank


a.ti examiner

; . . -_ : /<,;.


the Federal ~Herve Board and 'Who had been serving aeTOral month ■ . in the caP9-city
·.·;,~ _
. .•,,·•
, . ~~
•··,· v4-~l:f.
of assist ant to the Governor, waa elected ''Vice-Governor".



by-1~■ }i~~t.


provided for a Depu;y Governor instead or a "Vioe-Oovernor" and the Chai~





instructed to preeent for action at the next ,meeting an amendment to provide foi- \ .-·::
·- ..,J":.
,:-· ~:,·:.:
a "Vice-Governor" instead ot a. Deputy Govemor.


a stat.eel

the following meet.1ng~'b ut• owing to



..;. Jffil-·

••. ·?,,,-4~...
Baa.rd, the action ot amendment was reeoind• _.::;;~

Owernor'' by the Federal .-:e■erve

preference tor the term "Deputy

__! : . .:i"w.•,•


ed at the meeting of March 8th and




that time the title ha.a remaintW Deputy ~ -·~ ".:

:.:- :f:'f,
• of~·, • •

Gcnem::■i4orillg Oampen■att.oa

of otfioero at





~-=- ·~.;, •., _ ~


mooting of January 11th



.•.• :-:.~~k: •

a.1' Governor Killer retired tram the meeting. the direator■ 1.manimoualy voted . . :-;-.:,,~ t
. ~. '·
a ealary ot . $16.000 a year _to the Governor-• .. Later in the moating Governor M111 ••
'" ":;


••; ,n_'-b~

w:~~ advi;ed._~f1f the inoz:e~e ,~- -~• · reque■te4 _, tbat the aatio~~ •

/ '?:•:, .•\·~ ..,~,~: -..:•.
:_ .


... - .



•• ·•<:.,

.. • .



;i:;~-,;:, /t{;.i;_~\~/--·





:.,-,,::• ,>:.~•






, ..


:~:, L·Y '-· •• .. __ .

----- ~.,::.•_'._/tt~






.}/ - ·;




~:~( :'I~

' ~~~=f,--~•

~1:~;;, -



._..,:~.:,\'?".. .,. .,~ -,;


1: ...

,!! .:: !--::~-:---f.~-.;'.·~-~-i-•



· - - - : : : ' A . ) · · ~ :-.-:,.


~-· ·' "-~~ ~:;"t:::.•



' , !'.

~ •-:~.

t:-.~~~n)-}-/. ;;_==:· ... .. • -_
;' '


. ._. _

.... -



- • • • : 'l,,~ _,.,


• -




' .J

• .;

. . ·-





aalaey .be 111i.erl.&1iy reduoed.-

reeon ■idered and th~





. J - ... •• • .-:··



At hia augge■tion . t.he · ;:'."·

flle ~~-;: t~ \~~~\{"
Board ~eoonaidered and voted t.he salary at $12,soq.
puty ~overnor w'aa fixed at 16.000 a yeu and the Searet.ary-ca■hier at ··•~•'°°•;'. ~













Oa thl~ ume elate a r~e!on and adjustment

• '



• ..: ,t



• :'.


..... , • • _


. ..


• . t-.

~ .'! ~~~- -~-~;- _ -

{ ~'.!:=<

~t ·employe■ ·•a.larle ■ · •~• ~• ~ .,·:<gwr.·





which an aggregate for the month wa.a awoxima.tely $300.
Bank Inaure• Elpploye1



·. .


· ·~ : . ~


;.- ,. ,::
. -~1-~.·
· ~;·~

: - ]~:
- ~ -'

The very sati ■ faatory plan of the Federal Reserve Eank insuring lt.■ ,_ ,:·'~-. /
employee had


~rlgin in i.he meeting of 1abruary 21, 1917, tor



~~~~-\.. ~ti

covering all

employe ■


;. - =~

Director &iley mowd that the bank enter into a contract for gDOup insurance



of the bank, the amount of suoh ·1nauranoa to equal the

annual salary or each to a maximum amount of $3,000.

Before the date ot the

next· meeting of direotors the bank oloaed a contract with the Aetna Lite In•

... . ,.


- --

- "?!t•

aura.nee cami:iany of .Hart!'o_rd. Conneotiout, to cover thia contingency, •


present at the meeting of March 21st. Mr. Delano of the Fed•

: ~/'.

.r-":ri~·- .\'.




'. 'i'ar P'inanca Begins
Although the European wa.r had exerted an influence on .~erican finanee
almost at tha outset of thl:l cont'liot in 1914. that influence did not become
markod until the Unitea States itself became involved in the strife with the
ainking of the Lusitania ,9t{
ities on April 14, 1917.

and the subsequent declaration of hoatil-

It became apparent immeailltely that if we were to

euacesar'.llly wage a conflict a gainst the central poV1era in Europe we must finanoe
the conflict promptly.

Morao"/ar II the woeful of preparation of'

thi ■


for war ma,qa it urgent that the war fina.~cing be done with the greatest promptness 3l'ld on the largast scale possible to insure success.
T}:a trea.eur.r, therefore• ,,i t.hout .rai ting for a public loan to ba launch·~ .

ed, authorized in Ap~il 1917, the issuance of $200,000,000 in United


Treasury Certificates which were to provide available funds in contemplation of • •
the subsequent war bond iasuo.
The Tentl:r District~a first official 78.r :measure wu.s the motion by Director

Byrne supported by Director Mi tohell at the me ating of April 26th. the
foilowing rosoluti on:

the Treasury Department of the Uni tea.
has offered far subscription an issue or $200,000,00
Treasury Certificates, as reported to the Executive Commit•ee
meeting April 19th, and
ll'!HEREAS banka in District No. 10 have filed their aub■cription11 with thi ■ Federal Reserve Bank, in the 11um of
THEREFORE BE IT R.:::SOLVED, That the of'fioers of this
1:ank are authorized and dir'eoted t6 purcha■ a such Certifi~a.tea
in the amount of $577,000, or such portton thereof as may be
neoeasary ~o bring the actual subscription to this issue, from
Federal Roaerve District No. 10, up to ts.000,000." .


It w~ll be noted that the Tenth Diatriot's. quota wa■ 4% of the national issue,

ihi, ratio remaining in foroe throughout most of the var loan P,rotJram •

The first official preliminary annomioement ~th respect to the1ir~t_


Liberty loan oan:-e as a tele ·"Tam frol'.!I the .5acrotar~: uf the Tr }asu..7 and

'l.'E. S

read at

the m~tin 5 of 1/iay 10th.
In the second issue of


·.Jertif'icates, opened ou May 10th, the Tenth

District's (!uota was subscribed promptl~,r on tr.. e forenoun of the opening day to the

extant of $9,500,000.

At the meatin~


19th, the directors were advised of a confidential

relation having been entered into between t.'he .Fader..J.1 .Reserve funk of New York and
the banks of England, Eranca and .A.r8"entine covering reciproJ.'31 with a
ln t:,is arrangement tha diMotors ot

view C>o the control of ex.cJ:ian3'8s and or9di ts.

the Tenth District bllllk voted to pirticip:ite to tho extent of 5%.

While war

fins.nae operations beoame a. matter or oornmon routine in. the meeti:::1gs uf th-3 directors
for the s-..1cceodi:03 few years, it ws.s at those me9t:i.::.1gs or April and lliy. 1911, t1'iat
the program of i'in."l.r1cing the .rar took 1 ts first shape.




The crunpaign of t..'l1e First Liberty loan


from J.l!.~ 23 to 15. 191'7.

Preliminary to the campiign in tJ-1 is district, howevor, J. 1. Cross v:ho had been

borrowed by the bank January 4, 191G, from the ~'oderal ne serve .Boa d, was e 1ected
Deputy Governor on Jam.12.r-J 11, 1~17.

loan for the Tenth District.

He wa.a put il1 active cr~rge of handling the

The first prelim.inal""'J work wns dono at hie desk in

the Governor's office in the Long building where tii.e proliminar.r correspondence
wa.s aarried on. together with oorrespondence relating to the Certificates of

Indebtedness which had been iss".led in a.ntir:,iputio::i of the First :Wan.

l.a tbo



A few days :prior to the beginning of' the,.ign, Mr. Cross o:pened offices
1n rooms on the second noor of the Glendale building across Jrand .t..vanue from the
Long building and fitted these room6 for the active work of handling subscriptions.

l4r. Cross called to his assistance in that cami:aign a re~resentative from
each of the bond houses 1n Kansas City, which force united in handling the sub-

-' and the publ10U1 ot the campLign.
Iha aubaoripUona were handled UDdar the d1reot1on ot John Phillipe, Jr.,
who redgned tram the ottioe


.t.rthur Young & Oompe.Dl' on

begin the aampdgn work tor the 'banlc.
bank and began assisting Mr.


22nd in order to

On that day, alao, 0, 1l. Biggs Joined the


On the following day,

w. I, .Earley


added to tha toroe.
!he t1rat subaoription of the lirst Liberty IQan was '500.00, taken by
J, z. Killer, Jr., GoTernor ot the be.nlc.

1ar1pt10:na amountlng to '3,7•"1 1 900,

fhe total tor the day was ll? 1u'b-

!'he final allotment tor the loan was

At the aloae of the Jirat Loan on June 15th, the tisaal pal't or the loan

organisation automatically beaam.:.the E1acal Agenoy Dapu-tment,

~1• deparxnt

~J....,'1(_ ct.~ e:t:,.;.,._
moved 1n the Imig building lobbJ on July lat of that yeal'A and on September


took up quarters in the Amarioan l3a.nk Building where it renained. as the Fiscal
Agency Da:i;:artment aUl the new bank building was oooupied,
1'ha data1le4 h1BtoJ7 ot the Tenth Diatriat •• waf loan organisation will
be fOUlld beginning page


One ot the war mea1urea which helped Ule Tenth distriot to raise ita

of Libert1 .Bond eubsoriptiona and whiah ended praotioally with the oloae

of 1921, was the "hrUo1paUon Cart1t1oate" which was authorized. by the
federal Beaane Boal'd. and the !raaaury Department on June 1, 191?.

!he Bew York

bank was the tirat to adopt this oertificate whioh waa designed solely to help

salaried people b1q Liberty .Bond.a and pq tor tham on tba installment plan with•
out aotually being in debt tor bond• 1n aey ot the banlm.


1DChe• and bore the following

ten a


(!.tl,,.) t~;C ~ •

!he oerUticate waa

•?ObUllll~ S~TES GOVE.:-~ l:,IBERTY LOil B>Bl>

Part1o1pat1on oert1t1oate





thla oert1t1oate represent• a ~ t o t TEI .OOLIABS on a subaor1pt1on
to the L1bert1 LOan ot 1917. Upon surrender ot tbi ■ oertitioate to
U1e federal Blaene ll&nk ot Xanaas 01 ty aooompanied bJ tow- othen ot
like amount• the holder her.eof will be enU tle4 tQ reoe1Te a '50•
United 8\atea GoYernmant Liberty loan ~ Gold Bond with all ocrc1pona
E.P.i'Jnar • Bagiatrar





J.Z.Killer, Jr.

the Amer1oan Ba.Dk Bota Oompmy of Bnw York 0it1 181!1ued tor the fenth

d1atr1ot 50 1 000 ot theaa ten-d.ollar ciart1t1oatea in a

aeriea numbered


to X0-50 1 000. fhe sale of these oart1t1oa.tea thi'ough '98.rioua member banlm
to whom the1 were oona1gne4 began prior to tbe SaoondLlberty lDan r.n4 were
sold both during and between the subsequent Loans until the oloae ot the
Vioto17 Loan in 1919.

Pllrahaaars of these oartifioates held them until the7

possessed t1ve,or multiples of f1Te 1 at llhioh time the7 exaba.nged them tor

Llbert7 iomla at the rate of five certificates for a fiftJ-d.ollar bond..
Ae fast as these oertificates were surrendered for Liberty Bonda, they
nre returned to the Bond Dapartment ot the :raderal Reserve .Bank and held
there until they were destr07ed as tallows a llovember 22, 1918 1 40,000 ot the


1saue4 were destroyed b)T burnings on December 31, 1920 1 9.970 of the

remaining l0,000 . were burned.,

At the close ot 1921, there were still outatan4-

1ng 30 of these · certltioatea at which time U was doubtful ·it all the remainder
would ev.e:r be returned.
fha prinaiple ot the Part1o1pa.t1on Certitioate was a aouml one ot

aapeaial advantage to persona on salaries or with small means.

After the

close of the war, t1nano1ng this same principle with modifioationa was adopted.

'b7 the !reaaU17 ~p.rtment to aid o1t1zena to save nx>ney. A.a a result of the


SaTing oampa1~,· the Govel"DDl9Dt Ba"Y1nga Organization of the !r•IUJ7

Dei:,anment 'beau lseuing, througb lt• 41str1ot organhaUona, freaaury SaThag








Oert1t1oatea 1n 4enorn!na~1cma ot t100 amt. t1 1 000 am later t26 4enam1nat1o~.
!hese differed tram the ParUolpaUon OerUtloat••• howner, in that the


1ar· BaT1J:igs Btampe.whiab oould 'be exahanged tor o•rUticatea ot higher ·c1e-


drew interest, whereas, the PaniaipaUon OerUfloatea d.i4 not~

liea"7 Badiaoounta in 191?

Pravioual7 U haa been atated. that the earnings ot the

1916 were from open Dl!ll'ltet transaotiana rather than by rediaaounta,


hlator:, ot the baJlJc in 1917• hownar, 1a 41raotly opposed. to that ot 1916 ln

that the banlca ot lhe d1atriot rediaooumed haavllJ' eapeolall7 during the



ot 1917 when Amerloa'a part ln the world war began to ha.v411 Jt•

et:teot upon American tinanae 1 and when tha movement ot the oropa 1n th.a !Pall
ot 1917 also required additional ourrena7 in the western aount17,

In that

year the bank was not obliged to resort to open m&rkat tranaaotion• mr to
outside investments of azq _mture.
Omaha '-8lcs tor Brano.b
A letter aig:ned by rapreaantat1Tea of all olaarlng house bal2lca la

the ··olty of OD&ha am requast_bg that a brp.oh banlc be located. in_that oity 1
waa read b7 GoTe:rnor Jlillar to the Board ot Direotora at the meeting of June

!he directors voted to acknowledge the oommnioa.Ucm and to g1Ta ·careful

oonaidetiation tor the earliest praotioable data to th~ request tor a branoh.
ID response to this ocnm1n41:)&t~on.,."'dJ6TBrnor:ll111er am Oh&~n B01,9r
Omha on Juq 10th. 1ollow1Dg th1• TisU,

Direaior ■

T1 ■ 1ta4

.llltahall and Jklone of

l>mrrer stated to the other diraot~n, in the JQeeting or· tiul.7 12th, tbat ~•Deirrv olear1Dg bouaa ,aa oons1der1ng the proposal for •~tabl1ah1ng a braulb··
banJc aD4 thal the7 wilhed ,he naUar aona14ered

the establ1ah1ng ot a branah bank at Omaha,

a branch, hownar. was talcen at this

'b.f the direatore al~ with _

The tlrat action on e1tabl1ahing


meeting in fe.vor of the Cbah.a resolution and it Yas moved by Mr. Fleming and
seconded by Mr. Bailsy that the applioation of the Om:lha. banks be approwd.
Directo·ra Burnham and BJJrne then made various

suggestion ■

with respect to organ•

This oonsideration led to a motion by Mr.

izing the branch bank at <ha.ha.

Burnham seconded by Mr. Byrne that the following men be appointed directors of

the branch barik at Onaha: Luther Drake,
Omaha, with Mr.

Hughe ■

as manager.


B. Hughes and J. C.lfoNish, all ot

Thia motion carried and was followed by

the adoption of the tentative by-laws 1upplied by the Fed-9ral Roaerva .Banl-c tor
branch bank•.

At the time of tho f'ir3t Liberty Loan in June, 1!Jl7, came the first
emergoncy in the ·bank's history requiring the appOintment of temporary officers.
At th:J meeting of June 14th Governor l4iller announced that the Interim Certificate ■

and allotment notices for Liberty Loan Bonds must be signed in large

volume on apaces designated for Assistant Cashiers.

The Boa.rd therefore

deaign~ted the £oll~rlng nine employee of the bank as Assista.~t Cashiers for
special purposes. such designations ta be considered automatically canceled
when the apeoial duties wero completed:


~. -

J. L. McCarthy
Samual Stewart. Jr.
E. P, Tyner
E. D, McAllister
c. A. "Vorthington

.,.,. ·• 13leJ,::ely
E. ,,:.• Kemner
Alfred. 3. Bolt

1171th the handling ot this 1eoond loan also came a demand for more


and the Board obtained from the Fidelity Trust Company and. the

Commeros Trust Ccx;pany additional apace in their vaults for Liberty Bonda and

other 1ecuritie1,
At the meeting. June 29~, i, 1917, Governor Miller montioned the.
responai bility assumed by Mr.


A. r:orthington in an \Uloff'icial capacity a.'1d

the efficient work 1,a haci been doing in the bank anci in the Pond Department


-~ ·"•~~




-72and recommended that the Board conaider znaking Mr:' Worthington



Thia was done and the salary fixed at $3.000.
At the June 29th meeting a 6;1o dividend was declared. to the


Also the Federal Reaerve Boa.rd'• asseasment of

■ took­


of ona poroent ac;ainst the bank tor expenses was paid.
Branch Eanks Sstablished
The f'ffl' aubaequent montha produced considerab1e activity on the part
of numerous cities in the di1trict toward the e sta.bliahing of branch ba.nka.
Then there ware problem• to solve in
branch in that city,


follonng the establiahiient of a

The directors appointed by the Board and those named

by the Federal Reserve Board failed to perfect aatisfactory arrangements with
Mr. Hughes vrho hao.

bean selected as mana.gor.

follo:,ed a."ld in his place Mr~



roaignation of Mr. Hughes

T. Eastman of Omaha ns elected manager. a.nci

dtreotor of the Omaha branch,
. CO!l1Illunicationa

were read from clearing house associations in Muskogee. and'/


Denver aha/member banks in Oklahoma City requesting the establishment of a
branch bank at each of those points.
of the Denver application


,\.fter considerable informat disc·u ssion •

the assurance of Directors Ma.lone ana Mitchell

that the member banks of that city would s~pport the bank with their patronage
sufficient to cover any deficit in expense. it was una.~imously agreed to

establi ■h

a branch bank at Denveu and the following men were apppinted directois of that


F. F. Struby.

c. c.

Parka, A.

wi. th Mr. Malone designated aa manager.


Foster and R. H• •lla.lone. all of Denver,
At the next subsequent meeting, how-

ever• Director Malone resigned as director of th~ bra..'1ch bank owing to a ruling
that a director of a prima.r;y Federal i?eserva Bank c,_,uld not

■ erve

as a director - •

of a branch.

Due to the report that be.nka influl1a were preparing an application
tot a .branch. consideration of the Eu.akogee and Oklahoma. City

application ■


.. ,


was deferred uhtil the next meeting anci the applicants were requested to
furnish the Chairman a brief
·each baaed i ta

■ etting


fact ■

and arguments on Yhioh


At the meeting of Juiy 26th~ on the reading of a communication
from the Feder~l Reserve Boa.rd authorizing the reduction of the bonds or the
Federal Reserve Agent and Assistant Agent , the Board reduced the bond• in
the case of the Kansas · City
Just before

thi ■



$100,000 and $&1,000 respeotiwly.

meeting acijourned Director Gibson presented the

application of the Tulsa associated banks for a branch.
At the August 9th meetin;:; a letter !'ram Mr. Delano of the Federal
Roserve Boa.rd asking that the Denver branch proposal be held in abeyance
for a week until he had visited Kansas ·-~city and Denver, was reaci.


account o! this decision also the three Oklahoma cities had been notified
that consideration would not be taken of their application until the Denv:er
matter had been settled.
Manager "3a.atman was authorized on August 23rd to enter into a

lea■ ing

the promi1ea in the Farnum Building in Caiha for the Qnaha

branch for three "ar• at an aJU1ual of $6,000.


On the above dat.e Direator Mitchell presented the resignation of

Kr. Struby a■ a director of the Denver brano~ ln hh place Kr. c. A.Bilrkhardt

~as appointed manager and director at a salary of $4,000. '
date Kr. E. D. lloAllister of the Kansas City bank

wa ■

Also on the abo_ve.

made Secretary-Cashier

~f the Qnaha branch.
• On. October 12th K. A. 'lhomp■ on who had been Aasistant Federal Reserve· ·Agent wa■ elected Asd1tant Cashier at a salary of $3,000.

'!'he fir1t reoorcied payment of

penaltie ■

by the Kansas City Clear•

ing House Association waa ordered at the meeting or Octobet 12th.
fine ■


had accumulated since the orga.iiza.tion of the bank and amounted to

$414.40 representing penalties for delinquency.
At the same meeting it was vot•?d that the Executive Committee
should meet daily at 11 o'clock and the aerv:ioe tee for the mG!!lbers of that

oOim:nittae be fixed at $10 per day and an expanse a.lloi'ra.nce of a li'.:e amount
for non-rasidont diractora.
On No'V8lllber 8., 1917, Deputy Governor Cross read to the directors

a report 0£ the Second Libarty Loan oampaig:ri ·.n-itten by Mr. !1"orthington,
Assistant Cashier and manager of the Bond Dapa.rtment.

On the recommendation

of Mr. ~orthbgton., A. l~. 1:cAdEµnS of the Bond Department we.a designated

e.asistnnt manager ~f that department at a salary of ~150 per month, Mr. Uo!l.dama
to have charge of the oonversion of ~ into 4fo bonds.

Aleo at

thi ■

meeting the resignation of M. J. McNellia, auditor,

was received and accepted and Mr. A. ~. Bolt, ieneral bookkeepor, was designated acting assistant auditor to serve during any interim.

Then the Denver branch was first authorized the directors decided ·
upon the same by-lawa as those governing the


branch. • However, at the

meeting of November 22, 1917, those by-lawa were rescinded and new ones adopted
authorizing a few ch!lllges and outlining specifically the !\motions a.nd
regulationi of the institution.
A dividend or 6% was authorheci £or semi-annual periods ending
December 31., 1916, and June 30, 1917, to be made p9¥9-ble .Dec~ber 31., 1917.
Extra Compensation
For the first time in the history or the bank the directors at their


meeting ot Deoemcer 6,_1917, oonsidered at the Governor's request, the matter ot
extra oompensation for Junior offioera and amployes in view of the extreme
high cost ot l1 v1ng and exoellant aerv1oes and loyal co-operaUon ot every member

ot the organization. The Governor had addressed a oonmunioation to the Federal
lleserva board on that topic and at tJ ;is meeting it was ·v oted to ~ an additional

compensation ot 10% of the current year's salary to all employes and a.11 officers
w1 th e.xoeption of the Gar ernor and .Federal .naserve Agent.

The plyment was

authorized to be m:i.da in War Sa~ings Certificates, the recipient to be notified
that it was a wa.r measure and not intended to establish a precedent.
l 9 l 8
Mr. 3amsay

At the expiration of Mr. Sawyer's term as Federal Res~rve Agent, the
Feder.11 .Reserve .Board had appointed to succeed him Asa E. fu.msay, who bad resigned
as director the year before.
At the election of officers, held on January 10, 1918 1 J.


Millar, Jr.,

was unanimously re-elected Governor and the Gbairmn was requested.· to recommend
to the Federal Reserve Board an annual salary of $16,000 for that of:f'iaa.


Cross was re-elected Deputy 11overnor and a salary or i9,000 waa reoo?DIJ1anded •
.A.rah w. Anderson was re-elected Secretary-Cashier with a reoor:r:.ended salary ot

Mr. Worthington and Mr. IJ. A. 'l"nompson ware unanimously re-aleoted

Assistant Cashiers w1 th salaries or $4,200 and ~.600, re,peatively.

was designated

coUI1Sel :t"or the bank


elected member of the Federal ~visory Oounail.

E. F.

Swinney was

James E.

again re-

At this meeting also,



Eastman alld E. D• .I.lo.Allister, manao~ and caohi er, respectively, of the Oms.ha

Branch were re-elected at salaries of $6,000 and $3,600, res:peotively, and

c. A•

.Burkhardt was re-elected nnnager of the Denver Brano.hat a salary of ;4,000.


First Mention of New Building
At the January 10th !)1.rectors


meeting in 1918 Governor Miller

ln hia report to the directors brought up for the first tL~e the



of erecting a naw building for the ?ederal Reserve Bank. explaining that
the inati tution had already expanded until it occupied floors in t·.vo other

builciinga equal or ~reater than the swce then oooupied in the Long Build•
ingma.king the a.cimini ■tration diff'ioult and the operation more hazardous.

Ha pointed out al10 that the present vault 1pa.ce was inadequate and that
it was imprattioablo to lease additional office or vault space in the Long
Building or sui ta"ole apace in e:ny otl:er building in the cl ty.

As the

present lease expired on November l, 1919, the G0 vernor urged that immodi:ate
1teps be taken to provid~ for a future home for the _ba.~k.

The directors

GoYernor 1s

unanimously adopted resolutiona endorsing t.ha/report a.nd recom."!113ndationa
'!his meeting



the beginning of what later .became the

greatest bank building in the West.
At the following meeting on January 24th a letter from Mr. O:llano

of the Pecieral Reserve Board was ·re1.1.d offering suggastions on the acquiring
of'· a/sito.
Immediately a committee composed of Dii,eotors Gibson, Mo6lure and
Ramsay .:iwa'S' appointed


a building comm! ttee e : n ~ instructed to investi-

gate sites and report to the directors~ tensity in the condition
live stock credits in the winter of 1917 and 1918 had become so apparent

the aireotora 6f the bank were .aa3ed for aaaiatanoe by a committee of represanto.tive live stock bank and loan companies of the district.

At the

meeting of Febniary 14. 1918, the regular business ~:..&a.:-cl s..u-.4:G@l


deferred in order to give the nommittee • hearing at the close of which the

~ard,. without oom:nitting itaelt affioiall7, gave

a ■ suranoe

to the committee

that it would co-operate by oalling immediate attention 9f the Federal

Reserve Board and the Treasury Bopartment to the eituaU.on and would. recommend means of relief.
'!he que1tion of the amount or "float" being carried by

banks as a!' the volume of loana

po ■ sibla

tor theae

Kan ■ a■


to make was

bank ■

frequently discussed unofficially mn the banking circle• in the ~pring of

It was first brou~ht officially to the attention of the dirootors of

the Federal Reserve &.nk a.t the meeting or April 25th "':1hen J. "'• Perry of the
Southwest Wational lnn< of Commerce appeared before the Board with a request

that ·the be.nk reinstate


it11 practice of purchasing miscellaneous banks ciraft

exchange in order to relieve the Kansa· City banks of ths burden of oarrying


the float and the~eby prevent the restriction of loans by Ka.nsas City banks.
Mr. Perry also btought up for discussion the cost to indiviciual banks of the
discount on Feder~l Reaer:ve citie1 exchange.

The matters ware thoroughly

taken by

diacuo sed and the at.and /

"the bank explained to Mr. Perry.

Several months having elapsed ainoe the resignation of
aa · auditor. the directors on May 9th elected as acting auditor


M.J .:McNellia



the bank at

a salary of $S,SOO, Mr. S. A. Wardell who had been filling the position ainoe
Mr. MoNellis ~ 1 . , ••PM•Ftu

One phase of the Treasury Department's plan/retiring silver certi~
ficates and

reissuing .

. ·outstanding notes as redeemed in the spring of

1918, w~s the material increase in the amount of Federal Reserve Bank notes

to be issued.


note ■

had previously been is sued in blank and signed by

the Governor and tire Cashier of the bank.

The continuation of this practice


:For this reason the directors voted to request the Comptz:oll~ of


the Currency to deliver the Federal Reserve :&nk notes to tho &lreau ;or :Em-



would have moant the consuming of a groat amount of t_ime by the Governor a,nd-the



... -




graving and Printing and hacre the tao

■ !mi le

aignaturea of the Governor and •the

Cashier engraved thereon by the Bureau.
A _6% dividend tor the,aemi-annual period• ending with Deoemb~r 3J.
1917 and J\Ule 30th, 1918,.were declared by reaolution on J\Ule 13, 1918.
On June 30th the


of earning• which the bank filed rith the

Federal Reserve Board shovred net earnings ot $1,015,980.13 between January l,
1918 and ~\Ule 30th.

A problem of more equitably advancing £und1 for productive purpos~s
preaented itself to the bank at the opening of the agrioulturo._l sea.son in


At the meeting of June 30th the directors voted to reaiscount eligible

paper nth othar Fede:eal Reserve Banks in amounts doamed necessary.


further · voted that whapever, af'ter Au~t 15, 1918, the E.."t,cutive Cominittee
of member banks
of the bank approved pfferinga;for discount in excess of tho !!lamber ba.,,ks'

required reserve balances these offerings should be subject to an advanced

differential and discount rato equal to~ for all classes or paper exoopt
notoa secured by Certifioates of Indebtadn_e ss ana_ by Liberty Bonds, in which
case the advanced differential wbuld be


The Bank Site Settled
After varioua meetings of the building committee at whioh ;it
considered the aeveral sites proposed for a new· bank building, the. committee

\ q \Q
finally presented to the directors on June l~t'h~wo reporta on a ~uilding site.
The majority report signed by Chairman Ramsay and Director Gibson recommended
the northeast corner or Tenth Street Bild Grand Avenue, a tract of 144xll5 feet.

provided it oould be purchased for _$500,000.

A m.ino:ri ty report signed by-

Director McClure of the commit~e _gave reasons why he could not agroe with the

other two members and rec~mmonded as the bank ■ ite the aouthwest · cor~er of
Ninth Street and Baltimore Avonua, the tract being 272-~142 feet at a purchase

After Director Gibson moved the adoption or the majority

price of $300,000.

report. and Director l4cClure movaci as a aubartitute the adoption of the minority
report the motio~• were voted upon and the

director ■

adopted the majori. ty re-

..aet ermi ni ng:_,



· . fJie Tenth Street and Grand Avenue location where the bank

building was flna.lly aonatruoted.
Director ■

Those who voted against thie adoption were

Eaileyl McClure and Burnh.aui.


t..l 1' 4

/ )

At a subsequent me~ing)11-rector Bailey

pen;itted to read into


the ~ecorda a letter which he had addressed to the directors 1etting forth
hi• reason, for favoring the Ninth Street ~nd Baltimore Awnue location u
bank site.


rea■ on■


stated in his letter were· that the larger dimensions of ·

that property would permit a park spac8 entirely around the building, thu1
affording additional ventilation and security.

Director Bailey felt that the

~dditional $150,000 whioh would have to be for the Tenth and Grand site
would be an unjustifiable expenditure of monoy.

Further reasons for favoring

the Pa.ltimore Avenue location were that it was close to •e,reral hotels thereby
being more convenient to repreaentativaa of the various member banks outside
of Kanaas City and th~t the absence of atreet oars at that location would prevent an.~oyanoe and

unneoe ■ sary


After Chairman Ramsay had submitted to the Federal Reserve Board
the majority and minority reports, togother ;rl. th Director Be.iley 'a letter,
ha reported to the directors that the Federal Reserve Board had declined to
reconsider the vote of the directors.

At the July 11th session also the

motion that Governor Miller be authorized to execute a. contract for a site at
Tenth and Grand was voted upon, the 4'otea of



Bailey and McClure being

Director ■

Governor Mi~ler showed at thi1 meeting that the difficulty




of obtaining steel for the structural work would. doubtleaa defer the making
of a oontraot.

-80On June 27th E. P. Tyner who 119.d boen a bookkesper since the

opening of the bank and part of which time he had been chief clerk, was
elected acting Assistant Cashier of the bank at a salary of $2;700.


the same de.ta the salary of Manager Burkhardt of the Denver branch wa.11 in-

creased from $4,000 to $5,000.
On July 11th the following salaries were incraaaeds ca. .-r.-orthington,

Assistant Cashier, fram $4,200 to $4,800;


A.Thompson, Assistant Ca.shier,

from $3,600 to $4,200; Cashier McAllister of the Cmaha brn.noh, from $3,600

to $4,200.
The resignation of !4, A. Thompson, Assistant Cashbr, ·who had

accepted a position with the Midwest National Pank was roan and accepted at
the me9ting or July 25th, the _resolution accepting it expressing the 'bank'•
• at his resignation .
regret/and its -8,ppreoiation of his efficient service.
On this date the directors adopted a resolution of regret at the

resignation of F.


Delano, member of the. Federal ·Reserve Board.

At the suggestion or the Federal Reserve Board the Kansas City 1-nk
voted on Au~st 22nd to absorb the expense of operation of the Capital Issues
Committee of' the Tenth District.

At the follo:nng session,, hmvever, on

September 12th, lt ""Nas voted to expunge from the minutes of the meeting thi a


The latter action was taken in consiaera.tion of a letter from.

the Capital Issues Committee at ~ashington suggesting that the ~i !t J


i•/ftle ■

Committee keep within the ts of the regularly appropriated f\md.~ e e

~ployes or the bank were appointed acting Assistant Cashiers at the masting
of September 12th, J. t:;. Helm. L. A. Farhart and John Phillipa,, Jr.~ each of

whom wa.s to continue to receive the same saiw::y until further oonsidora.tion.

The 1' inancial topics that were uppermost in the mind or the
nation during the fnll or 1918 are reflected in the minutes or the directors' meeting of September 30th.

At this meeting a.. report was made by

J.dvisory Couneiljor E. F. Swinney of the Federal Reser~e Advisory Council
meeting at fJa1hington from which he had just returned.

Foremost in these

topioe was t _h at or the curtailing or non-eseentinl credits.

Thie subject

was one which had become nationally or grave importance e1pecially in the
minds of fi.nanc1ere who saw the trend toward economic ruin being taken by
the short sighted portion of the public whose .heads had been turned by easy
st&ges of prosperity E.Jld whose investments wero of a spectacular rather thnn
~~~ -.
of e. &~mas nature.
other topics discW!lsed by Mr. Swi.nney and the directors
were the developnent of the acceptance market and the proper use of bankers'

and trade acceptances; the investment by bonka in public utilitiee' issues,
and the advancing of credit by banks thereon; the distribution of Liberty

Bonds, and preferential rates on loans secured thereby; the gold embargo
questionJ the supervision or bank loans for capital purposes by the Capital

Issues Committ~eJ the ~er o~ discount rates of Federal .Reserve Banta, the
tax on undistributed earning aocounte; the subl}eet or Government deposits
with state bank members) the proper basic priceo in mercantile inventories;
the absorption by Federal Reserve Banks of expenses incident to


transfer ■


currency and valuable doouments as bet.een Federal Reserve B&nka and members.
Despite the abnormal conditions of war finance, untimely Beasona
and labor shortage, the yee.r 1918 prove.d t~e the r~ocrd business and bank-



y~ of history.

The bank clearings J; the !'itteen clearing house

cities of the district showed tranae.otions aggregating approximately lT bil-

., .


liona of dollar11 or about 4 billions more than the 191'7 tranaactiorus • .
'l'be Tenth District in that year eent to its eh market oitlee approximately- 26,288,000 meat anil!Jala ae againct 22,840 1 000 1n 1917, the 1ncreaee being 1,055,000 cattle, 2,104~000 hogs and 281,000-5heep.

As a result the

packing plante b,y hr their gres.teot record or ury ye3..r.

Thim re-

cord was mado despite the fact tha.t appro%1ms.tely a half million young men
bad been called !'ram the district to the army., no.~, marines and to industrial
pursuits supporting · these military branche o.

The autumn or 1918, &part ~om any finanoial sign11'1c:uioe it may
_ hold, will long be rem'!!j'.b'3red by ottiobla
oi' other citizens

or the bank) as well as by thouaand.s

or the United state~ as an exoeed~ly trying time with the

health and bhe bueinesa or this country.

At the peak or the nation's aot-

ivity in the war and in war ••finanoe, when the front lines

or all the allied.

nati_ona were being virtually fed, clothed and equipped by the industry and
capital of the United States )there oame to our ahoreo an epidemic or infl_u enza
~ its most malignant .form 1Vh1ch took thouaande of lives in the army- and m"'IY
oampa and industrial centers and lert an almost


errect upon

bu■ i•

neas through shortage ot help oocaeioned by illn"as and death.
The Federal Reserve Bank suffered tram the help tor several
ween and the


or the situation ,m.a brought even closer to the dir-

ectors through the death on October
Chairman Ramsay

or the Boa.rd.


A1a E. Rammy, Jr., aeoond


The ep1dem1o ecoured during and following the

Fourth Liberty Loan, but despite this tact which i:revented thoueanda ot publlo

meeting•· OTer the dietriot the loyalty- and eupport
were neverthel••• responsive to the nation's call.


this aoutlmurt oaintry

With a quota ot f2a;,ooo,ooo

for that · loan the Tenth DistrS.ot subscribed to. a total of (295 1 961,460. ~


~6---\-J. U,-,




L1 &_,~~-e,-.l.

~ ~C..,,



·. ---


The report of Governor Miller read to the directors at the meet~
ing of November 14, 1918, etreesed the impoi-tance of s~e activity which
would relieve a situation in the Tenth District that required immediate

Thie aituation


in -effect that a limited number ot banka in

the district had demanded unusually large lines or credit while some of the
banks were rediecounting ecaroely any, a Qondition requiring sane sort or ,
remedy whioh should retard or at least discourage exceesive rediaoounting by
any member bank.
Although this matter was discussed by the

director ■

on September 30th

and October 31st, it was not until liovember 14th that a r _eaolution was adopt-

ed bearing upon the subject.

This was the beginning of the p:-ogressive dis-

count rate which later became nation-wide in ita scope.

For a more complete


histo·r y or the .progressive rate see page_
At tho close of 1918 the reserve posit~on of the Tenth District,
while considerably 1n·ex0ess of the legal requirements, v,as reduoed from the_
191'1 record and it was very evident that the war financing program had a telling influence upon the poaiticri or oc:mneroial bank• aa,rell as the Federal Reserve Bank.
War tinanoing narrowed the market · for oomma-cial paper in the dis,_
': ....
triot largely because of two things - firet, loans to custon_iera for purchasing

government securities and, second, the lessening market for cattle paper out1

side' the district.

Notwithstanding these cond~tione only about 68% of the

member. b~s mac;e uee ot, t)le:ld.i_10ounting Pfivilege during the year •
~ 1 1 , ~ ·~ \ q l ' ( "
During 1918 thore
a net increase of 33 ~ber b~k• in the dietrict.Jcloeing the yeu with a manberehip ot 994


which 239 wez:e ~thin the

Qnaha branch district and 139 in the Denver district.

Seven •h':Dldred par banka

were added to the list during the year_, lnor~asing the number to 3,200, leaving

approximately 1,000 banks not represented on the par list.

The clearing

operations increased steadily during the year tmtil the daily itana averaged about 60,000 near the cloae of the year.
A special compensation was voted to the employee including officers
below the grade of cashier to the extent of 10% or the· salary each received
during 1918.

- 1 9 1 9 -

The bank .began the year 1919 with the


directors aa the prev-

1oua year who, at the meeting ot January 9th, re-elected the same official •
staff even to the directors of the branch banlca.
Following is the person~ ~~ :l_(
nel of .the dir eot orat e end fr
□ NrA · family of
e bade:





w. J. Bailey
C. E. Burnham


H. w. Gibson
M. L. McClure
T.·c. Byrne

Aaa E. Ramaay
Fred W. Fleming
R. c. Malone

Chairman - of the Boa.rd and Federal Reserve Agent, Asa E. Ramsay.
Deputy Chairman, Fred W. Fleming.
Assistant Federal Reserve Agent, c. K. Boardmn.



J .z. Miller~;~Governcr
J .L. Cross, · Deputy Governor
Arch W. Andereon, Seorete.ry-Caah:ler
E.F. Swinney, Member Federal Advisory Coun~il

C.A. Worthington, Assistant Cashier
John Phillipa, Jr., Assistant Cashier

E. P. Tyner, Ass't.C~ahier
w. Helm, Aas't. Cashier


L. n. Farhart, Ass'tlCashier
S. A. Wardell, Auditor
A.E. Bolt, Asa't.Auditor.




_, ________ _

(Elected by Directors)


. Luther Dr alee



c. c.

O; T. Eastman
J.C. McNish

(Appointed by F.R.Board)
John Evans
Alva Adams

Foater .


C. A. Burkhardt




C. A. Burlcho.rdt, Manager

0. T. Eastman, Mannger

E. D. McAllister, Ce.shier






P.R. Fredman, Acting Cashier


_ So/. large had &rcwn ~~fdy- ~-; ~i~ilo'i~~<-or.
1ank and its brs.nclu ~hat
the .directors at i:;heir ti%.ld:. mee~in~ am i'ebrua.ry~ 1919, lhrl!h authorixed dinners
to be given to the offic~ra and employ•s or the main and also ot its branches.
The date set waiJ Thur~tay evening , Fobru1.ry l:!-. ~ In Kansas Citr, the
d_i:mer 7'"8.3 held s•m:e in t~ ball room or tl:e Meuhlebach Hotel , there being 438
otfic~rs a.nd employee. present. Mes::;ag~B or gre~tint; ....-ere e:;,d bet,•.-een_ the bank a::id. its branches.
, At the Omaha branch ii Beventy-1'1-ve ot:f'ieers, employee

and wifes were preaent. In Denver the number 7-iho enjoyed the dinner


fuirty-nin~ •

'l'wo Officers Resign

• At the meeting

ae Deputy Gcrternor



February 13th the resignation or J. L. Cross


read and . accepted effective A:EI" 11 let.

The resignat-

ion contained a sincere note ot regret that Mr. Croas' three years of ex. perience with the bank wer~ to terminate in order fer him to accept a position
of Assistant Vice-President of the National .City Bank


New Y~rk.

Upon the 8Uggestion of Governor Miller that the office or Deputy
Governor be not immediately tilled _and that aome one acquainted with the
operations or the Fiscal Agency Department and with the Liberty Loan Department to whioh Mr. Croll& had given special attention be

retained in the



Governor' a oi'i'ioe, the Board designa~ed C. A. v:~rthington as Assistant to
the Gowrnor with no increaae 1n aalary • .
Following the resignation or Mr. CroH there was read a letter from


Anderson, Secretary-Cashier, 1.n which he also tendered his reeignation

to become errectibire


,the earliest convenience of the dir.eotore.

Mr. Anderson 11tated in his letter of Na,gaatt.wt that he had de-

ferred the resignation tor two or three months at the suggestion or · oertain
directors and that he navr proffered the resignation in order that the directors
might with inore understanding consider the vnoancies in the official staff.
Secretary Anderson stated that he desired time to consider two busines1 offers,

one in Kansas City and the other in California.At the following meets.rig it was voted that Mr. Andere on' a resignation be effective Mar 16th with leave of' absence from April 16th.
C) L

7,.l,.(. '-~- ', •1



At this meeting and the one following Athe r~olutions commending
both Mr. Crose end Mr. Anderson fer. their splendid aervice with the bank and: regretting their resignations were offered and adopted.

Upon the suggestion of Governor Miller the official start of the bank:
was re-adjusted to fill-the two vet.canc1es in the following manner: J. W. Helm
·advanced from Assistant Cashbr to Acting Cashier J


K. Boardman.designated

as Secretary; Aasistant CaahiEI' John Phillips,. Jr., designated mane.~er or the
Bond Department;.


E. Daniel, manager ct the Discount Departmen~ and G. E.

Barley , manager. or the Certificates of Indebtedness and Depositary Di-v:id.on1,
elected Assistant Cashiers, and G. H. Pipkin appointed to succeed Ml-. Daniel
in the Discount Department, all without clanges of ealary.




- -:..,



Aleo at the February 2_7th meeting it

was voted "that the mov·e-

ment to organiEe a hospital and health association among the employee, u
recammended by Governor Miller,be endcrsed and the Executive CC1111J1ittee authorized to share in its support in an aggregate amount equal to the payments
made by members of the association at such times and in auoh l!,Dlounts as may
be then proper."
Honor Roll
At the meeting of .April 10, 1919• the directors voted that an
Honor Roll be incorporated in the minutes giving a complete record or th~
young men who left the service of this bank to be.come aoldiers or aailore in
the defense of the honor
as follows:


this aountry

and the

protection of its policies

87 A








Audi ting Dept.



Gon'l Utility



J.·J. Fredm:m

Diso. Clerk

Frnnk :! ■ Turck
Geo. Edwin Uora.n
J • L. .!JcCarteyr:> r l ·,7. Kemner
Lewis c. Winkler
Wm. E • .];bison
E.W. UJore


Thoe. Do:Jman
'8.-"rl .Getz

Em-ry Beeoro:f.'t
Bobert Steel

Glenn Eberhard
.Andrew Lawson

D. ':i. Chondler

c.-,7. Crowford



-;-1o.rren C. Grcy-

C. :E. Hinds
P..A. Lamborne

B. Le&ler
A. ll.
J~s ?Joore
·.1. Boy Lbore

Claude F. Roborts
Gey- Wint erfair

Fred ',7. Adams
Geo. s. 1,,,b17r0
J.T. Byers

Grove1- J, .Le.Vella
Lloyd T. Gilmore


Disc. Dept.

Tro.ns. Lister




Disc. Clerk
Corrospondinc Clerlr


Ass•t r~.
Cle1•k·--_ - ::·
Bo okkaepe1·

Trnzi s • Clerk

Trans. Clerk
Gov'n Teller
Traci:nc Clolit
Trans. Clerk





TrainiDG School









:~u.di tot __~- r:. :Jo:)t.
U.S. Si~l Cor.1)S




!t>tor ~ Corps
~37th Encineers





Q. :.1. Co:-:ps

--:.•M. Corps. Aviation
Signal Battn.lion

Tra~ Sobool
Na.val Boserve



Q14YJl1. I


~red.1th Transit ?.er•
Trans. Clerk
Clifford Ee Boand


Ralph Ilenderson

Phillip J • Clark
Fred s. Smith

Tr.:ms. Clerk







On April· 24th the directors voted to designate M.


E. Par~ as

Assistant Cashier.
Hearing on New Branch
~h'Aving b~en gommunieation~received '6y the directors bearing on the applic!!itiona ot Tulsa and Oklahana City tor a branch bank, the

directors voted on June 19th "that the date of July 24th be set to hear applicat•
ions for t-he' establishment


a branch bank in the state ot Oklahoma and all

cities which have requested a hearing be notified. n
On the morning of July 24th the Board held. a brief seasion and ad-

journed at 10 o'clock to the ~bite Roam of the B&.111:more Hotel to receive
applications of various cities in Kansas, Nebraska and Oklahoma for a branch

There were four applicants and an hour was alloted to each applicant

in alphabetical order.

The applicationr and written brief


Lincoln, Nebraska

was presented by H. s. Freeman, Vice-President or the F'irst National Banlc of
Frank J. Wikoff, President or the Tradesmen, State Bank of Oklahoma
C~ty, presented that city's application and filed a printed brief with mpe
and charts.

Judge P. D. Brewer orally assisted· in the arguments.


the arguments tor Oklahoma City the.. various delegates were given a luncheon
after which the ·application or Tulia wae orally presented by H. H. Rogere who
filed a printed brief.


Q. Chandler, President


the Kansas Nationl!l Banlc


Wichita and

B. Harrimn, Chairman ot the Board or the Union National Bank of Wichita

presented t.hat city's application and filed a p-inted brief.
Following the applications the Board invited and listene_d to ·the
endorsements or the several contending cities who would be affected by the

location of a branch bank.
The next step 1n the establishing or the branch bank ,ras at the
meeting of September 26th when Director Gibson, -~oonded by Director Fleming,
moved that the Board recommend
to the Federal Reserve
Board at Washington
that a branch of the li'ederal Reserve Bank of Kansas City be eatablished in
the atate of Oklahoma.

The motion was lost by the following vote:

Directors Gibson, Fleming and Ramsay.
Malone, Bailey,

Nay -


Directors Burnham, Mitchell,

McClure and Byrne.

Director Byrne then offered a resolution that no new branch bank
be established at the present time for the reasons that the original Federal
Reserve Banks were located not in reference to states but with a view to recognize the natural trend of busineBS and comneroial interests, also that the
showing made by the Ta.rious contending cities was based largely upon their
claimed superiority over other contending cities whereas the contentions should
have been bnsed upon the commercial fitness to serve a territory not already
fully served by the bank or existing branch bank.
This resolution was adopted and ended the contest for a branch b~

ttn the meantime the Federal Reserve Board set October 21. et as

the date for reviewing evidence and arguments of the various cities and on
October 9th the directors voted to be represented at this hearing by Director
Bailey and Chairman Rameay.

At this same meeting copies of w.rious telegrams

to and frl?Jll the Oklahoma Clearing House Association and the Federal Reserve
Board at ~-. ashington were read to the directors.

Director Bailey reported

on this hearing at the meeting of November 6th.
On November let otficiale of the bank reaeived ~ following telegram from Governor Harding of the Federal Reserve Board which narrowed the

competition for a branch bank to two cities, namely, Oklahoma City and

"The Federal Reserve Boe.rd has considered the brieta and oral
arguments presented by the respective petitioners in the matter of the
establishment of a branch Federal Reserve Bank in the southern portion
of the Tenth Federal Reserve Distr ic~ by the Federal Reserve Bank of
Kaneas City, and has reached the following conclusions:
While the por-·
tion of the distri~ tributary to these cities is being well served in
the matter·or rediscount facilities by the Federal R9eerve Bank of Kanea• City, it h the opinion of the Board, however, that a branch with
limited power.a in the matter of' rediscounts, the activities of which
ebo'Uld be devoted mainly to the forwarding and receipt of currency and
to traneit pperations, would be a convenience to the member banks and
to the publio in the territory eerved by the brnnah, and would increase
the efficiency of the transit system.
In view or tm i:roximity of'
Wichita to Kansas ~ity, it is manifest tho.ta brnnch located at that
point would not give any appreciable additional -facilities 1n this respe·ct to the more remote portions of the DistriotJ and the Board will,
therefore, direct the Federal Reserve Bank of Kansas City to establish
a branch at either Oklahoma City ar 'l'ulea.
In view of the technical
nature of' transit operations, the Boe.rd desires a report from the Federal Reserve Bank of Kansas City, giving e.n analysis of the source, .
volume, anq direction or outgoing business, and the volume and direction of incoming business, together with a oompl ete ans.l~;sia of all ipail
sohedules with reference to the territory to be aerved by a branch
located in one or the other of these two cities.
The Federal Reserve
Bank of Kansas City 1a therefore direoted to transmit to the Boattd, not
later than November 26 1 1919, the infonnation called for, in order that
a decision may be reached as to the proper location of a branch.
statement will be given to the P"ess for release to Monday morning
As soon -e.a thia telegram was received the bank began an analyaia
of the mail schedules and the preparation or other information · requeeted
in the telegram.this information obtained through the bank!.s-.own ohann(Jle

and also tbl!,ough the oo-opcration


both Tulsa llnd Oklahoma City waaffor-


warded to Washington during the month of November.

.Arter considering the •

information and analyzing the \arioua schedules or business to and f'rom
both the cities in question, the Federal Reserve Board decided in favor of
Oklahoma City- and issued the following statement in the morning papers ot
December 17, 1919:


"The Federal Reserve Board has authorized and directed the Federal Reserve· Bank of ltansas City to este.bli ■h a branch o1'1'ice at Oklahoma· City in order., pe.rticulatly to expedite shipments of eurrency ·to am
tran member banks in the State ot Oklahoma and to provide better faoilities for intr~state clearing of check■•
"As set forth 1~ the Boa.rd I s preliminary statement or November
3d., the discount facilities which have been accorded by the Federal Reaerve Bank of Kansas City ea regarded as ample.
"The branch will be operated in accordance with the provisions
of section 3 or the Federal Reserve Act, under by-laws to be framed by
the Directors or the Federal Reserve Bank or Kansas City and approved by
the Federal Reserve Boa.rd.
There will be five Directors; three flt 'Whom
will be appointed by the Federal Reserve Bank or Kansas City and two by
the Federal Rel5erve Board.
"The Board has recommende~ to the Federal Reserve Be.nk of Kansas City that the by-laws assign as territory for the Oklahoma City
Branch that portion of the State of Oklahoma which b not included in
the Elef'enth Federal Reserve District.
_An outline or the powers and
functions to be exerci!led by the branch as recommended by the Board is
as follows:


"The branch bank will receive deposit" rt-om member banka
but will carry no deposit account, . , 4\inounts receiv_ed on deposit will be transmitted daily, by or otherwise, to
the Federal Reem-Te Bank or Kansas City for credit to the accounts of the depositing be.nka, and each member bank in the
territory assigned to the branch, wherever located, may at its
option,make remittancea of currency and oh~cks direot•.to the
Federal Reserve Bank of Kansas City.
The Branch will carry
no Government deposit, but will redeem treaswy oertifioates, ·
pay goverrment oheoka, and will close out balances dally with
the head office.
The branch will carry no earning assets;
applications for loans ar discounts from member bank& and offers tor sale of aail tre,nsfers, bankers aooeptanoes and blllB
of exchange eligible fer purchase by Federal aeserTe Banks will
be tranam.itted to the Federal Reserve Bank or KsnBB.s City for
final action.
Immediate credit, however, may be g1Ten in case ■
where· it beoome1 neoeBBaey for member banks to redisoount in
order to meet clearing house debit balanoea_, unexpected _detioicmc1es in Reserves, and aey other case mere quick arrangements are necessary, all actual red1sccunt1ng ~peration•~ how.ever• to be made at the head office, inter en wing ohar1:,ed rrom.
the . date the notes were received by the branch. In caseB -where
Jicte1" are secured· by United States obligations, the branch may,

by authority of the Federal Reserve Bank of Kansas/City, hold
the collateral and forward the notes to the bank with
trust receipts showing the amount a.nd nature of collateral held .
.Banks in the 'Branch bank territory may deal directly with the
parent bank.
The principal functions to be exeriised by the
Branch will be the clearing and collection of checks and the
handling or shipments of currency to and from member banke in
its territory~
A privp.te wire will be installed between Kanau City and Oklahoma City in order that the branch may telegraph daily to the parent bank the amounts of all items received for immediate credit or immediate debit to members or other
Federal Reserve Banks, also amounts or currency deposited and
the details of other transactions.
This plan ls the same case
the one which governs the operations ot the branch banks at
Cincinnati, Pittsburgh, Buffalo, and otoor cities.
"The Board has made a thorough study of' the brieta and arguments
submitted by ?"epresentatives of Oklahana City and Tulsa, and has taken a
poll of' the member banks in the state of Oklahoma outside of two cities
applying for the branch, the result -of' which shows a decided preference
f'or Oklahoma City, both as to the number or banks and as to banking resources
It was proved, hovrever, beyond question that bank■ in ea.stern ·
Oklahoma have large volume of itanus which camot be collected through Oklahoma City without involving considerable lose of time, and awing to railroad schedules the mme condition applies to some be.nke in the western part
of the Stnte.
Under the plan adopted add1tional tatilitiea are given without affecting the business of an~~ member bank and without forcing collections into artificial channels.
The Board reserves the right to authorize
the discontinuance of the branch at any time if' its operation is found unsatisfactory. n
On November 25th the Boord approved bonueas for emplo"'jas and

cffieere except the Governor nnd the Federal Reserve Agent for 'the year
of 1919 as follows:
20% on the first $1 1 600 per annum -salary, or less.
l~ on the next $1,600 per annum aalary.
10% on all amounts in excess of $3 1 000 por anntim salary.




.. :,



filth the re-election or l"i. J. Bailey, M. L. McClure and


Fleming as directors respectively in ClaBBes A, B, and C, the

reappointment of Asa E. Ramsay as Federal Reserve Agent and Chairman ot
the Board, Director Fleming as Deputy Chairman and


K. Boe.rdman as

Assistant Federal Reserve Agent, and the re-election of all officers, the
same official personnel of the bank that obtained in 1919 began the year

In addition the following branch officers were .reappointed by the

Federal Reserve Board:

John Evans and Alv~ Adams, director II or· the Denvm-

Branch and P. L. Hall and R. O. Marnell directors


the Cmaha Branch tor

one year.
For the new Oklahoma City Branch L. H. Earhart of the bank,
Dorset Carter of Oklahoma City and P. C. Dings of Ardmore were elected directors with Mr. Earhart


llnno.ger or the Branch.



Wunderlich of

Oklahoma City was elected Cashier of the Branch.
f,bile the bank was considering the opening of the Oklahoma
City Branch with Mr. ~hart as Manager,


T. Eastman, Manager of the

Omaha Brancli~ tendered hi11 _resignation 'Which
March 26th and in

Mr• Eastman's place

Manager of the Qnaha Branch.


accepted at the meeting of

Mr. Earhart wns appointed Acting

The Oklahana City managership wae later

aoce~ed _by Mr. _c. E. ~iel, who had been one or the Assii!itant Cashiers of
the main bank.

A. G. Frost or the Bond Department was elected Assistant

Cashier at the meeting or January 8th.

At the eame meeting Luther Drake

or Cknaha., Nebraska, George E. Abbott of Cheyenne, TJyoming -and O. T. F,astman

.. ; ..



of Qnaha,Nebraska, were re-elected directors of the Qnaha Branoh.
officers for this branoh were elected as tollowa:
E. D. McAllister, Cashier.

Mr.- McAllister


O.T. Eastman, Manager,

nowever, following the resignation of lfr.

also resigned and in his place P. R. Fredtnan of

the Denver Branch was appointed Cashier

ot the Chaha Br1mch and W. D.

Lower was ;J.ater appointed Assistant Ce.shim- for the Denver Branch, Joseph
E. Olson we.a made Ca.shier in the place of Mr. Fredman ar.d Albert J. Conway
was made Assistant Ce.shier.
Aleo at this meeting of Mq 27th oooured

the election

or c.

E. Daniel as Manager and ~rector of the Oklahoma City

Branch and the promotion of George~- Pipkin and Arthur M. McAdams to beoome Assistant Cashiers at the head ~;

;'-' •

Following the excellent annual report · by Governor Miller
read to the directors at ti,., meeting


January 8th, 1920, dealing ex-

tensively with discount operations, Federal Reserve notes end bank notes,
r;apital stook, earnings and expense clearings, discount rates, employes,


bonuses, welfare work, choral club, new building, Oklahoma City Branch,
amendments to the Federal Reserve Act e.nd the election ot officers, Director
Bailey introduced the following resolution which was aeoonded ~ Director

Mitchell and unanimously adopted:



"VIHEREAS• Thie Board has · just listened to the report
of Governor Uiller reviewing the activities of the
bank tor the paat year, and
• v,EER~ • Governor Miller hae given due and proper
aredit to the efficient work of the different departments and to the force in genel"al, all or which is v£ry
gratifying to this Boe.rd, but we reoopibe that to
Governor Miller's devotion to hie duties aa Governor ot
this bank, is due the splendid organisation and the
large measur_e or success attained.

THEREFORE, BE IT RESOLlZED:That this Board tender to




Governor Miller this expression of our 1ino~re •
appreciation ot hie valuable service and congratulate him upon the showing made."


Buyllii& a Branch Building
Early in 1920 negotiations were entered into by the bank
through Director Byrne· with the ownera of the Farnum Building in Qnaha,
in vm ich was looated the branch bank, for the purchaee of the i;roperty
tree and clear of all incumbrances except lease contracts expiring at var~
ious dates for Cl65,000 cash.

The property fronted 66 feet on Farnum

Street and extended 132 feet to the alley.

A resolution was adopted by

the Board April 29t~ authorizing negotiations which were afterward consummated and the lot and building purchased for fl65,000.
On May 27th the directors acted upon the paying •or two in-

surance policies which had been carried by the bank for two employee recently deceased.

The bank had since ~4-_,-...,(At)µ_/


l q~J.rried group insurance

on mnploye~ in the amount or approximately o~e year's salary.

In may

oocured the death of Miss Anna Eisenburg, employed 1n the Bond Department,
and the directors moved to give the t .900 policy payment to the mother or
the deceased.

They took aimilar action 1n the death of A~ D. Fairley,

an mploye ot the Auditing Department.
Ur a • Nora B. Fairley, his widow.

In that case t2 ,000 was paid to


In the surmner of 1920 the attention of the bank was called to a condition in Wyoming brought about by the inability of' wool grow-

ers of that etate to finance the season's yi,ld of wool.

At the request

of Wyoming bankers Gove~nor Miller held a . bankers' conference in Wyoming
at which the problem v,u; discu&Bed and temporary adjustment in handl-

ing pnp~r in that territory.
Action intendod to remedy anergenoy conditions in the remote

parte of the dietriot wae taken by the directa-11 on August 26th when they
voted to a.mend the by-laws 0£ the Cmaha and D~nver branche•


that a re-


discount committee oompoeed of a. branch manager, a "eashia- and one director
should be enabled to pane up~n emergency paper.
The autumn of 1920 fou."ld tho off ioer ■ or the bank oontenplating the need for cradit to handle the ~Top mov001ent.

to be in a poeition to obtain this credit


In order

res~lutton was adopted on Nov-

ember 23rd; authorizing the Governor, Deputy Governor and Cashier to re-

dieoount with other Federal Reserve Ba.nkr; "r1otes, drd'te, bills of exchange,

acceptances or other bills receivable."

Subeequent to that action re-

discount relationl!I were opened up between the bank and two or three eaistern
districts that were temporarily high in reserves.



There ie no chapter in the story or -American banking that
holdn a keaner interezt for


ambitious student or .fin&.noing than the chapter

relating to the ~etcbliab:nent of t.~e progressive discount rate in the Federal
Reserve System.

Especially iuteirersting 1e this chapter to residents of the

Tenth Federal Reserve District, for it


in thia district that the pro-

gressive rnte had its beginning and it '18.e the Governor ot the Tenth Dhtrict 1 11

bank whose gaTe birth to th1e plan of regulating the limit or loans
and preventing the over-borrowing_ o!' member banks from the Federal Reserve

The greatest compliment that could be paid to Governor Miller

and hie grasp on the l'inanoial aituation of the country was paid him by the
entire financial rlruoture or the United States men hia ideas ~-ere advocated
in turn by the Federal Reserve Boa.rd, the United states Congreu and thereafter by the directors of all of t.he other eleven Federal Reserve banks.
The problem the Federal Reserve banks or the

country during thA days first succeeding the t1orld i,ar was one arising out
of the over-confidence and ex:oeaaive optimiam rel'!Ulting from the signing of
the .A.""?llistice.

The United States had ~ecn the farm, factory nnd storehouse

for the allied ne.tions during the -.:m.r.

There -wae no res.Eon apparent for

believing other than that the United states would continue to furnish Europe
l{ith its food. clothing and other neoe~eitiea, and at the prevailing high

prioee, until that war-torn continent ehould regain its produL-tion.
Consequently Amerioan .farmere planted larger aoreagea than
ever before • .American manuf'a.oturers aped up their production and ilJi.erioan
banke reflected the fferywhere attitude of .future proaperity.
But such an optimistic pl'ogram in this country called for
heavy loans 1n order to finance these bU6ineu venturee and ambitions.


wae not long until Federal Reserve Banks, especially th• one in Kansas City,
lituated at ·t he gateway of an already prosperoue territory, began to feel
the drain made upon their lOtUW.ble funds.
On l.fq 18, 1918, Governor Miller wired to the Fedoral Reserve

Board the.t the combined reserVe15

ot the Federal Reserve

Bank of Kansas City

at the oloee ot bueineH the previous night waa ~ , and that it waa the


the bank'e otfioere that nat for the i:reaent our rate•


diecount should be materin.lly increased to discourage unneceaall.?""J borrowin~ throughout the dietrict.

The rntes s.pproved for ue by the Boa.rd

effective May 2oth too low to e.ocanplieh the result desired and in our

opinion should be increased "9'en in ex.fess of reoommendatione wired the
BoN"d lagt S8 turday."

The rates referred tc effective on Ma.y 20th were

.trom 4~ and 4i% on 15 day paper to ~ on paper tram 90 days to 6 months.
For a few months the exchange of letter• and telegrams be-

tween the bank and the Federal Ileeerve Board referred to more er less sharp
advRnoes in the db count r!'.tei, and frcm the start the Federal, Reeerve Board
dieoourae;ed 'any auoh n.dvances and stated in effect that it believed the increase in demands for loane in this di&triot were growing out of the fears
of country bankere that the n:te would be raised.

The governor ard Exeoutive

Committee of th(! bank realized, however, that the actual situation wae this;

as long as there were available funds for borrowing many member banks found
it com'enient and profitable to rediscount with the Federal Reserve Bai:ik at
iTs prevailing low rates and continue to make loane at the prevailing high
ratel!I in :the country.

Thia we.a not true- of' all manb er banks, of course, but

it was true or many of than and it wu evident thnt a number or theae heavy

borrowing banks were ovor-stepping a reasonable limit.

Near the clol!le


May,aleo in 1918,Governor Miller wired t~e

Federal Reeerve B~ard· urging an increase or rates effective June lat..



Executive Commlttee dedred to advance rate11 to a achedule fran ~ to·~.
His wire also !Stated tm.t it wu, noeossary tor the Tenth District to redis-

count with other districts to the extent or $6,000;000•

On M..y 28th Gov-

. ..


erncr Barding of the Boa.rd telegraphed Kansas City thlt the suggested in•
crease was too drastic but that the Board 'Wile willing to authorbe a


of rate• f'ixing a minimum , for ba.nkll that were redhcounting within reason
and a maximum rate tor thoee who: had already e%ceeded their reserve ■ •


Boe.rd on that date alao arr11.1nged for Ka.nsaa City to rediscount $2,000,000
with Cleveland and $1,500,000 with Chicago and Philadelphia, all at a
4~ rate.

On receiving the wire from the Board Governcr Miller replied
by wire that the Exe~utive Camnittee believed the two standards of rate,
would create confusion and dissatisfRotion, "to l!Void which we prefer to continue the present rates."
'l'he following day Governor Harding wired that the Board did
not "deh to insist "but does wbh to give the Kanaal!J City bank authority to
charge higher rates to all banks alike where they have alrea~r discounted an
amount equal to tho required resen-ea, letting you be judge or the advisability
of enforcing or rela%ing the rule.w



'l'he double standard of rates was still urged by the Federal
Reeen-e Boe.rd early in


and the firnt turn ton.rd the progreHive rate aa

it was lnter adopted wae taken b? the directors of the Ke.l'l!!e.e ~ity bank at their
meeting on June 13, 1918:, :when it 'Wile moved by Direot<r Bailey .nd seconded by
Director Burnham that a resolution be e.dopted with provisions as followa:
"lf'ter Auguet 16 1 1918, the F.xeoutiw Committee will aprove offerings 1n excea ■
ot the required reserve balances, su~h offerings au~Jeot to an advanced
differential in discount rQtee equal to~ for all olaaaea of pap~r •114 &11
maturitiea, except notes aeoured ·1,y Certificates ot Indebtedneaa and Liberty
Loan Bonda which ere subject to an advanced dif'f'erenti&l of

1%. •


• .,,t

-100Washington Boa.rd Rescinds Move
Thil!I re~olution was adopted as a reauH; or a. conference

in l'laahington a few daya before bet,,,-een


mar,ber ■

_of the BOE,rd and Governor

t . thh ocn.t"erenoe Governor Harding and Mr. Delano of the Board


convincod the progreBBive rate as outlined by Governor Miller would

be utlefa.ctory and circular letterl!I r.ere prepared for member banks on
June 13th authorizing •a.nd explaining the progressive rate.
were being prepared for the mails when a telegram


These letters

received frw. Gov-

ernor Harding reecinding the Board's approTI.l of the rate1.
The neceHity of chocking excessive loans continued urgent
despite all efforts to regulate it by the means at hand.

At e: conference

or governors held in Washington July -10th, 1918, the matter was thoroughly
dif!c\ussed Md the Boord again decided not

in die count rates.

to authcrbe aey decisive raiee

The Board still held to the opinion that. ca.u tion1ng

the banks would i;rove the desired result.
Tenth Di sbr iot Ine is ta
YJhile moat ot the Federal

Re ■ erve

Banks acquiesoed in the de-

cision or ~e Federal Reserve Boord l'.gainst a p-ogresalve rate, tho dir• ectors of the Kansas City bank remained/ that such a. rate waa the real' 1olut-=- '\

ion of the problem, at least 1n thie dl11trict.


At the directors meot1nga

on September 30th and October 31st the subjoct 'mis thoroughly· d1scuseed but

• 1t ,m:s not until November 14, 1918, that a seoond formal -resolution w1u1

Thia resolution directed attention to Sooticm 4 or the Act author- •

bing the . directors to administer the affairs of the bank


tairly and 1m-

• 101partially and without dhcrimination 1n favor of or against any member
bank or bPJ.nks and which *****"""*****"'extended to each member bank iluch
dhcounts,: adv&nol!mentt' and aooommodation11 a.a may be u.i'el.J' and rea■ on­

ably made nth dm> re~rd for alaime and demands of' other member banks.•
It was reeolved that af'ter January l; 1919, the Executive
Committee ehould 11ubj~


for rediaoount to an _in~rea.eed am

progree~ive diecoum:; rate applicable to all claeaea and maturities of
pa,.per it the rediscount11 a.eked for were "in an amount greater than the


sum or the member bank'• capital and aurplua.

The progreadve rl!lte gug-

ge.sted we.e be.eed upon a differential or one-half of one per cent na rollowe:
"One-half of one per cent above the normal rate or
e. sum equal to firt;y -per cent of' the aggregate oapital and eurplua; one per cp above the normal rate
on the next 11ubeequent aum equal to fifty per oent
of the aggregate capital and aurplua, etcJ i.e., the
normal rate shall apply on paper discounted for a
member bank in an a.mount equivalent to the sum of itn
capital and eurplue, but thereaf'ter the rate shall increase progressiTely one-halt or one per cent on each
~Jbeequent sum advimoed equal to tlfty per c~nt of
the total capital and au-plus of the applyd.:rc member •."


Although the above re1olutiona 1U'9re adopted ai'ter a villt
to Kana&e City by Governor Harding


Mr. Delano of the Federal Reserve

Board at which coni'erenoe both or these men verbally approved of the plan,
the proposed sliding eo~le or rates in these resolution•
into ef.feet.


not then put

. For, b111fore the bank could get it11 11.torature ready to nnd

to member banl:a Governor Harding and Mr. Delano had returned to


and telttgra.phed back almost immediately that the Board could not endorae

the nn·N.tea a.f'ter having talked with th• Board's counsel ~nd obtained an
opinion ·rran him.

'!'his bpinion ·1nus tb111.t the propoaad change in rates

a violation of the Act in that it provided two different ratee tar the

wa ■



-102aame class of paper.

The counsel held that the proposed change waa,

in effect, merely an ·evaaion of the stipulations of the Act.


seemed at that time no meana by whioh thi• deciaion could be set a.aide
without a legislative change of the Act and as the activities of early

191\appeared to be more settled than late in 1918 the bank maintained a
steady hold on the district'• finance,.
Campaign ia Reopened
However, by December of 1919 new conditions hnd arisen by


speculative loana had increased ao rapidly that there was immediate

necessity or not only

con■ erving _ the

reeouroee of the bnnke but also their

Aoenrdingly Governor M:illflr wrote to Governor Harding of the •

Federal Reserve BoJU"d fl?ld eu~esteu that ae a means of applying a progressive di~count rate the Boe.rd considered theee progreaeive advances aa
"penalties" upon banka that overborrowed instead or c~nsidering them ae
two rates on the aame class or paper.

In other words, it was Governor

Miller 'a contention that a member bank's baaio line should.
for its normal requirements.



Then, if the bank overrrtepped its require-

ments in demanding loarus a penalty in the form or "graduated excesa charges n

be applied..

Governor Miller was over-ruled by Ur. Harrison, general counsel
or the Federal Reserve Board, who forwarded an opinion to the effect that,
. while Section 4 of the Aot gave the directors

ot a Federal Reserve bank the

power . to withhold loans from a bank which wa• rediecounted to its limit,
nothing in the Act could be construed as giving the directors privilege of
charging an m.oeas rate aa a penal19".
On January 16, 1920, Governor Miller wrote t.o the Federal Re-

serve Board stating that sooner or later "counsel for the Federal Reaerve


Board will find IJUf'ticient grounds on which to baae an opinion e:u.otly
opposite to that now held by Counael Barriaon.

An unprofitable rate

ls the reasonable and only logioal remedy to apply to INOh banks a• are

willing to borrow as long aa they can lend at a_ profit tor the purpose
of increasing
their earnings.********** There muat be_tound
a way to
make it unprofitable for members to discoum; exaesaiYe linea with Federal

Thia letter had ao much weight with the Federal Reserve
Board and its oounael that the Board aet about at once


find a mean•

or providing authority necessary for the app}ioation of a progressive rate
for suoh Federal Reserve b8llka as desired to adopt it.

Thi• legislation

we.a enacted April 13, 1920, being the following r,unendment to the Act:



ATIVES OF THE UNITED STATES OF AMERICA in Congres• ·assembled. That section 14 of the Federal Reeerve Aot a1 amended
by the Aota approved September 7, 1916, and June 21, 1917,
be further amended by etriking out the semicolon after the
word 'buaineeaa a~ the end of eub-paragraph (d) and insert
in lieu thereat the .t.ollcnring: '-'AND WHICH, subject to the
approval, review, and determination ot the Federal Reserve
Board, may be graduated or Jrogreaeed on the baeia or the
amount -o:r the advances and discount acoommodation1 extended
by the Federal Reserve bank to -the borrowing 'tank.•
Appro'Yed by the Prte'11~ident, April 13, 1920 •
•. ·~.:··~:
Four daye later the la.naa■ City banli: issued circular, to

member .bank• putting into etteat en April 18th the jrogrelfeive ~


'!'hie ciroular, which- wae general letter -#261, tollon;

-,_":. r

April 1?, 193> •


E.t'fective April 19, 1920, the provi■ iona of a recent
amendment to the Federal ReBerve Aot, providi~t( tor graduated discount


, /',,.,,

rates, will become operative in this district, on the following basis:
'rbe normal bnaic amount of credit accOlllllodationa which
each member bank may receive !'ran the Federal Reaerve Bank will. be determined by the member bank's average reserve balance and capital stock paymentJ i.e., the overage reserve over a fixed period, lea• 36% gold reeerve required to be main~ined by .the Federal Reeerve Bank• plus the
member's subsoription to stock or the Federal Rewerve
Bank} euoh eum to be nrultiplied by ~~, the resulting amount constitut_ing
the be.aio line.
Cr~dit advances extended up to and including this basic
omomit will take the normal discount ra.te in effect at the time paper 111
\ibenever advances to a member bank on rediecounts or member
bank notes shall be ar,proved in an amount greater than i ta basic aip.ount ,
auoh advances shall be subject to an increasing discount rate, applicable
to paper or all maturities, baaed upon e. differential of ½of 1%, as fol•


1% above normal rate on accommodation11 ertending above the normal .
bn~io Rmount up to and inc l uding 25% of such bl.sic amount;


nbcve normal ro.te for t..,e next subsequent sum equal to 26%
of the bnsic amount;


above the nonnal rate for the next subsequent eum equal to
261o or the basic amo,mt;

And eo on, at an increasing- r ate •of 21 or l~
for eaoh unit of
26% a.ddi tiona 1; 1. e. , the normal rate sha 11 apply on paper
discounted for a ~ember ·bank in a n amount equivalent to its
basio line, but theree.:fter the rate aho.11 increase progressively½ of 1% on each aubsequent sum advanced equal to 25%, or fraction
thereof, or the baelc amount of the applying member bank;
Provided, howev-er, that while the borrowings of member bank•
f'eoured by Government Viar obligo.tione ehall be oorusidered as a part ot the
INm constituting the normal baeio amount or any mnounta in excel!ll!I thereof,
the progree~lve rates ■hall not apply to member bank notes secured by Treasury CertU'icatea of Indebtedneee, Liberty Bonds or Victory notes actually
owned by the borrowing member bank on April 1 1 1920.
Provided further, that the progresslve rate shall not attach
to the pa.per now under discount, but nm, offerings, (other than those secured 'by Liberty bonds, Victory notes or 'l'rea.8ury Certifieates of Indebted.Deas
owned April 1, 19!9) shall be subject to the progrel'eive d:l.1100unt rate, to
be based upon the then liability or the oti'erinr; manber bank.


Reepectfully •
(Signed) J ..z.Miller ,Jr.


Ten eaye later thie ; letter waa modified in a few parttcrulnr •.
For example there we.a taken tram /the credit ■tMJcture determining the buii.W,

line mE1Dber bank natea aeoured l1f Liberty Bonds, Victory notee or Certi-

flcatee of Indebtedness actual~_t' owned by the borrowing bimk on April 1,

Also it allowed rediecbunts secured by


gO"f'ernment 88curities


acquired after April 1, 1920.: to be discounted a.t the preferentia.l·rate al: I



' would not be considered a• a i:art of the
ready obtaining, but this paper


aggregate indebtedness upon "thlch progressive

rate ■

~uld apply on eub-

1equent offerings of other eligible paper.
As the legielation which made it possible to apply the progre1Ssive rates was enacted at the in21tit;_a tion or tho Governor and directors
of the Kansas City bank, it was natural that this bunk would be quer1e~

upon the eucoeBB which attended thie new departure in banking.

The· other

Federal Reserve banks began writing and telegraphing to Kenso.1 City ae ■ oon
aa the re.tea were put into e!'feat and the governor I s office


giving account, ot the actual operations and the results.

As er.pected

kept buay

there were objeotiona raised to the progressive rate by numeroue interest•
'Within the district, ahiefiy banks that were alrondy .hea~ borrowers ot the
Federal ReaerTe bank and who eaw an end to their possibilities or greatly
increasing their lines or CZ"edit.

r,hethEll' by dee1gn or otherwise there we.a

a pre'eieteilt mieunderstanding of the new operationa and it rAquired man,y

months of •tf'crt
to,.. counteract theee · influence ■ •
It is therefore more to the credit o£ the Kansas City bank,



it1 d1rectore and otricera that the mee.sure which had been preeist-ently


opposed for two yeara •prici- to 1.ta enactment and, by some interests, for
many month ■ nf'ter it bogan operntion, 'Wll ■ completely -vindicated and finally



adopted in turn by the Federal Reserve bnnks of Dallas, Atlanta and
St. Louis.

All of these districts had experienced difficulty with

some member banks seeking to redisoount far in advance or their basic
lines and each of these other banks found the progressive rnte expedient in correct~ the rediseounting evils in the district.
Perhaps the most able vindication of the progressive discount rate was made by Senntor Glass of Virginia, formerly Seoretary
of the Tr~.asury, in his speech on Monday and Tuesdny, January 16th
and 17th, 1922, at the time the United States Senate had under consideration a bill to amend the Federal Reserve Act.

Senator Glass

recounted to the Senate numerous criticisms made by bankers, senators
and politicians and exposed the ignorance and miorepresentation that
had been the cause of the adverse criticism.

In regard to the rates

of discount Senator Glasc said:


A great clatter has b~en rahed about the
alleged'extort1onate' interest charges or the Federal Reserve banksJ but, as in other respects, a
half truth only !.s told.
The real fncte conveniently suppressed.
"The 'progreesive' interest charge l'nlB not a
feature of the original reserve act; it was put in
about three ago by Congress.
It was intended by Congreas as a penal provision.
It was not
designed to aid borrowing banks; it was intended to
penalize any bank that should persist in borrowing
more than its fair quota of the f\lnda or a reserve
bank, thereby depriving some other member bank of
its fair basic line.
If Congreee did not want that
done it should not have authorized it to be done.
"But, :ur. President, thie •progressive' in• ter~st charge was put into effect by but 4 of the 12
reserve banks.
By these it wao applied to c~1paratively tmr borrowing banks tn their districts.
These banka were inaorrigible offenders against
every requirement of oautioua and sa.f'e banking.
They were perpetually .exceeding ·their allotted line
or credi.,ts:
they were incessantly appropriating


more than their i'air ah.are ot reserve bnnk funds.
But the -assailants or the reserve eystem suppress
these fa eta.

On pcce

tlx>re w111 be fOurrl a ta.bls of discount

rates that lnve bow in offeot in tb3 Federru. Reserve
.B!3nk or :iansas Cit--.r since tho Oll3n.i.i:e•



• 108-

1 9 2 1

So mo.ny financial problems were awaiting l!l(;>lution and
so important. were these problems to the bankers of the district at
the beginning of 1921 that; at the first meeting of the direotoro
on January 13th, the d ireotors not only of the main bank but or the
three branches were invited to be present.

'fbe session was held in

the private dining roan of' the Mid-~y Club were t..~e directors listen. ed to the Governor'


a annual

report for 1920 whioh treated or current

imprittant in the bnnking world e.t that time.

At the sug-

gestio~ of the directors Gcwernor Miller' e report was later printed
in pamphlet form,

The only chenGe of directors at the outset or the year 1921
was caused by the resignation of' Director C.E.Burnham of Norfolk,
Nebrnska, who had served since the opening of the 'bank but v.ho, because


an amendment to the Aot, was made inollgible aa o. Class



Ur. Burnham wus an officer in a. Group 2 bank and, therefore, not allow-

ed to continue representing Group 3 banks.

A resolut_ion expressing

the regret or the direotora at the rel!lignatiori of Mr. Burnham was

adopted .and an engroased cow




presented to Mr. Burnham at a la~r

He was auaceedcd by E~ E. !rullaney of . Hill City, Kanas, who

.attended his initial meeting on J&l'lue.rr 13th_.

Foll~ng are the dir-

eotora ·and branch dire~rs lVho attended the Jenuaey 13th m,:,,eting:


Asa E. Ram11e:y,
Chairman and Federal Reserve Jtgent.

Fred W. Flmiing,
Deputy Chairman,
n. w. Gibeon,

Ke.neaa . City, U:iseruri
Muskogee, Oklahoma
Kansas City, Uissouri

M. L. McClure,

Kansas City, Missouri

J. Bailey,

Exchange National Bank,
J. C. Mitchell,
Denver Ho.tione.l Bank · ·
E. E. Mullaney,
Fnrmera & Yerchants Bank

Atohhon, Kansas
Denver, Colorado

Thoe. C. Byrne,

Hill City, Kansa11 •
Caaha, Nebraska

R.H. Malone,

Denver, Colorado



L. H. Earhart,
Manager and Director,
George E. Abbott,
First National Bank,
P. L. fiall, •
Central National Bank,


Qna.~a, Nebraska

Cheyenne; Wyoming

Lincoln, ?Iebro.ska


Merchants Notional Bnnk,

Nebraska City, Nebr.


A. Burkhalldt,

Manager and Director,
C. ~arks,
First National Ba~,
A. c. Foster,
Bankers Trust·Company,
John ETan1,
International Trust Company,

Alva B. /;dams,

. Denver, Colorado
Denver• Colorado

Denver, Colorado
Denver. Colorado
Pueblo, Colorado


C. E. Daniel,
Uanager and Director,
Dor set Carter,

Oklahc:ma City, Okla
Oklahoma _City, Okla


\'.'111 iam llee,
Security National Bank,

Oklahoma City, Okla.
Oklahoma City, Okla.

E. K. Thurmond,
P. c. Dings,
Guaranty Sto.te Bank,

Ardmore, Okla.

The directors at the.a.rternoon session re-elected the same
officers of the main bank and added the following to the personnel or
the branch officers:
Cmaha- C.A~ Gregory, Ass't. Cashier, and T.Gordon Sanders, Branch Auditor
Denver- R. w. Smith, Branch Auditcr
Oklahoma City• R. L. Mathes, !:!ranch Auditor .
Campaign to Decrease Loan~


A warning which had frequmtly .been .sounded by the officers

or the bank to member banka and the public in general to the effect
that o-ver discrunting during prosperous times might result in financial
diffioulties in more dii'ficult periods that were apt to follow was not

~iven proper heed by many of the banks 1n the district.

As a result

the beginning or 1921 found an un"Wbolesane· condition in the proportion
of rediscounts to reser"Tes.

As a measure of eafety the directors ot

the bank agreed during the meeting of January 27th ~ t banks ·that had
been continual borrowers with *e Federe.l Reserve bank be required to
liquidate a portion of their redisoounta.

It -.1l.s :f'Urther .greed that

the Exe~utive C01m11itteo should disoourag~ 1;he practice of aorne honks
to not continually maintain a borrowing line, so that the Federal Rese~e bank could take care of 1:ne district without redlscounting with
other Federal ReaerTe banks.

While there was more or leils _unwarrant-


ed critic ism or the bank from


sources lnter developnents 1.'uli7

vindicated the action of the· direotors and chowed that, indeed, the
mee.sures should hnve been taken at an even earlier date.

In Harch oocured the dooth of Luther Drake, one ot the
directors of the Qnaha Branch.

William J. qoad, Vice-President or

the Packers lational Bank of Qnahu was elected his succe21sor.

Corner · Stone ie Laid
On . April 16, 1921, ocoured the la~ring or the_ oorner rstone ,

of the now Fnderal Reserve Bank building • . The ceremonies were preeeded by a meeting of the directors at 10:30 A.M.
and Govornor Hiller were present.

All the directors

The morning l!'eeting wus brie!' and

tho only matters acted upon were the appointing of T. Gordon So.nders,
Branch Auditor at Omaha, as Acting Assistnnt Auditor for the head
office while Assistant Auditor Bolt should be on a leave of absence
granted hi.'TI to visit hie home in South .America, end the :s.ppointment
of Judd W. Jones as Branch Auditor at · temporarily.

A letter

frm: Dire9t0r Malone nt Denver was read to the di.rectors urging the
purchase of a lot in Denver on which to erect a permanent home {'.or
the Denver Branch.

Director Yo.lone stated that it n,u his intention

to have this matter di21cuesed at the April 16th meeting but on account

of the corner stone laying ho would defer it until the next meeting.
'While there hnd been much open wellther during the winter
and spring which allowed construction work on the new' building to be


carried on e.nd some unusual ~ild ~eathor in ?Jarch and early April,
April 16th was a cold, stormy day such as has seldom bean seen in

• this climate later than February or March.

Hov,eTer, notable gueusts

had been invited and detailed arra.ngements for the corner stone

layir,g and these arrnngemen:ts were all carried out to the letter
despite the storm.

A canopy


erected aver tho working platform

on which the 1ervioes ·.:ere held and canvas was spread over the top
and aides of this to protecrj. the guests and the Federal Reserve
Cliore.1 Club which sang several appropriate numbers.
For complete program, list of guests and addresses made at

the ceremonies, see page
Foll~v ~ng tho corner stone laying the directors and senior
officers with their wives, and Bishop Lillia and Birohop Partridge,
who had officiated at the corner stone ceremonies, were entertained
at a luncheon in the ten room or the Hotel Muehlebach at one o'clook.

The directors reconvened at 3:30 in the afternoon.


this meeting it was. voted to enroll upon t!,e minute book the addreaaea

of Chairman Ra.mae.v • Gov er,-or t'.iller and Director Y;. J. Bailey that
had been made at the ~orner stone laying.
Th·e directors also at this meeting voted to present to
Governor Miller,, with the compliments of the . directors• the gold

trowel used by the Governor in laying the corner stone.
Start Insurance F\J.nd

As a means of fortifying the bank against the paying or
possible claims it was voted on April 28th to set aside tB,007.39



.., _ insurance !'1Jnd to be irrTested in Treasury Certificates of Indebtedness in the names of Governor Miller and Chainan RIIJ:Jlsay tor
the purpose of paying death claima on employee who might die in the
Out of this start grew the more complete

service or the bank.

system of group insurance which the bank later adopted and by menns
of whioh the bank pays premiums on policies for each employ-a in the
amount of' appr02:bintely one year I s salary of that employe.

The bank


is made beneficiary and may direct the use ·to which the insurance

payment may be put.

It is the policy of' the rank to apply the in-

surance p~yment in such a manner that relatives of the deceased shall
be best served thereby.
Governors and Agents tleet

On May 23, 1921, oceured n group meeting of Governors and
Federal Reserve /,gents of three Federal Reserve banks, together with
Governor Harding !'ran Washington and the directors of the Kansas City

The fdinnee.polia bnnk was represented b;r Governor R.A. Young

nnd Federal Reserve Agent John H. Rich.

'rhe Son Frnncisoo bank waa

represented by Governor John U. Calkins and Federal Reserve .Agont
John Perrin.
Before the meeting opened in a discussion of matters per•
taining to the "tO.rious Federal Reserve bnnks, a committee of Oklahoma
City bankers presented an appeal !'or additional powers ·to be held by
the Oklahoma City Branch enabling that branch to. upon the dig-

S.bility of pa.per for redi.110ount without having it referred to the
Kan11as City bank.

l!r. Frank J. Wikoff, President of the_ 'l'rademnene

National Bank of Oklahoma City, was spokesman and urged that the
above pc,ners be granted to the Branch wit> the understanding that all
paper passed by the Branch would be subject to the final approval of
the Executive Committee at the head office.

The object waa immodie.te

credit in emergencies.




.At this meetillg were introduced a.lid adopted the by-laws of
the Oklahcna. City Branch, w.o.ich with amendments will be foimd on page_.

A considerable amunt of time




a -talk fran

Governor Hardiilg concorni.llg the controversy between the Federal P.eserve


Board and Jolm Skelton Williams, retirine Comptroller of the Currency.

Governor Il'a.rding outlined the fallacies

0£ llt-.

Willlnm's argtlI!lents aria,

in tho ostim.tion of" tho Governon 3lJd Agents and e.lao the Directors
of the KimSM City

bank. entirely vindicated

the Board., endorsing the_

operations o-r the Federal Deserve System.
Followil:JG a ltlllCheOn at the Hotel !behlebach. the Governors
and .Agents made short talks introducing special :problema that ~d arisen

in their v::i.rious districts and discussed solutions far these problems.
It .va.n generally O.S'"Teed that ~oup !!180tin,:;s of Governoru and ~-"'elltB

should be eontinued _parrnenen:tly at regular interv-al.a.


Stock Gr0111ers


In tho s-..m.:er o~ 1921.• tlestcrn cattle man and sheep am hog
crowero became deeply conoerned over tho need for r1.ncnc1Dg their stock
rmtil ready for the fall m3rket.

';Jitll a view to obt."'l-iu5ns what they

termed " ::iore leniency " :rra::i the l<'odcrol Reserve S~ta69 t~y mllod
a conf'erenoo or stock c;ro-.,ers, Fodertl ?.esarvo of'ficial& mld. other

with the Fadero.l Boserve .Bom-d mld the ,wiculturol Bloc Of

CollGl"ess at ',7aqhi.ngton on June 7tb.

Governor lJiller and Director

.Bc.lloy. represented the Y..a.nsas City 'oo.nk, i"or it was tho Tonth District
that was most vitallJ" ef'fected e.s a district.

riew York Feder-..J. fi:eserve Banl,:


Gov-er.nor Strons of the

also present and took o.n active part

in tho con:forencu.


the exprensod contention of' Semtor Capper of K."nsas

a.t this meotin.g. that tho stoclt: srowors a.nd i'ar..:iers in this district
were not able ta obtain rediscount pr1vi1Gt,~s, and ho openly denounced
the a.tti~ude o-f t:he bank 1n "de:privinc the ar.;riculturlsts of these

Senator Cal?!)Or was astaandod hooover,

wren Governor

Miller assured him that of' the t10lnber banks of the ~euth District. only
one-third had to that date discountod to o.n ££1ount ncywharo in the

proximity of' their basic 11ne 9


·,a·~· another one-third had redisocnmted.

to a small extent only end the rooninillg ono-third lw.d borrowed nothing
1"ran the Federal Iieserve Bank.

™s assertion from Governor lli.llor

baclrod by records; chnllged the attitude of the o:>nference and the
burden of' responsibility upon the various banks in tile agricultural
district rather tlw.n


tbe Fedel"8.l Resorvo System or ::my Federal




Ml nn indirect remtlt of t~u.s e=pose o-f tm Bank situation..

tho orgnnization later laio.m as the Stock Gro710rs Finance Corporation
t1as f'omod out o:t th1 s mooting.

~ouch the a::isertion or Governor lliller that it


the c_ity

ronk and not the o::>untry bank that redlsc01.mtod to the farmer and stock!-


tbere grew up also out o-r this meetil:16 the joint agricultm-e inquiry

into the ef.feot of reducing loans of cl ty banJts and allowi.n€ a surplus

of loan3 to be roleused to the coantry banks where the greateat aroormt
of good could be done for tho agricult-..u-ist.

Governor llillor his report on this conf'e.rence to the
directors at thoir meeting of 9th and stated that the ~tock Grovers
Finance Corpo.ration would doubtless soon relie"lre tho situation mich

the Foderal Re3erve .Act would not e.llcm the bank to r -: .lieve.
Also at the June 9th


was voted a final bOimS to for the relief o:r the rent and high price situation grow-

ing out of the recent \7",.r..

This bonus nan paid on June 23rd as i"ollomn

l<>;o of one-b3.lf year's nala:ry to and including
a yearly salar,J of' $1500.~_% on more than $1500 and including 03,ooo per year.
£1/, on sala.ries mre than ~ .ooo and including
~5 11 000 a year ..


Uisfortone to ~~nt .P.amsay.

Too meotir.c of June 9th res odjournod at 12:35 .?.~ and
?1h.ile Governor 1.!iller .'.lJld CJmL'"'l:Il8.n 3.'.ll:15uy ,iero a.t lune~ vmrd

received c.t tho 'bc.nk that &l.lln.uf' rt"lr,r.e-y,






'yoars old, eldest

s ao. of Cr~i.r.ln.n Rr""'!sey, had been a victim o:r a. nishar, v:b.ile swim-

minG' 1n Indian Creek


::a.11as, W.ssour1.

He ho.d ontored the

str~ ';Tith so!:le Clas:J!llO.tes rrom Rocl'"..hurst College and his bo~

md in the current •

Chai:t"r.l,;'..n r~a:,, Govornor Miller

Diroe·tor Gibson were rushed to the ,plc.ce, .joined a nen.rch for

the body and ::;ucceeded in f'indinz it, although more tmn an hour

after the dr::iimirlg.

Tho :f'uneral seI"lices ,,,ere held on Sunday,

June / J-",1s21. the body bei~ pL.'!.Ced beside that of the YO'llnoc-e?"

brother -.,,;ho had previously been a victim of in.fl~.
1\0solutions of sympathy wel"e adopted by the Directors
at a. moeti.DG of June 23rd ond an engrossed cvpy sent to I.Ii--. and
l.:h:-s. Ramsay.



".::; r-Dl'~.

On JUilO 23rd the director1s voted to negotiate :f'or the purchase
of' lots in Ok.13.boma City and in Denver for the construction o:r buildinga

to becO?:Je the per::nnent haoos of these branch banks. The motion carried
a proviso tm t the purchaso price should not excoed ::75,000 in Oklahann

Cit:,. noi- ~l.50,000 in Denver. Diroctors 1ll.tohell and lhlone of Denver
wore Eq;>pointed n.s a 6!)8Cial COani tt&e to negotiate !or pro-.9erty in

Denver. Director lb.lone, Chai:rmc.n of the C0:2lllttee. roported to the
directors on


llth, that a.n option to purohaoe for

~ .. ooo


13-14-15-16 of Block 175, .Eastern dlvir.ion of De~er, had been s i ~
by the own.or, ~ e t ?. Campbell.

A :::C..::? nhowi:cg theoo lots and other

available lots !n Donvor 'C:1s inspected by the directors o.fter "L"lhioh

:Director Bailey moved tha.t tho Campbell offer bo aubcitted to the Fed.oral
no-serve Board i'or a.]_Jilt"oval.

This ::iotion was carried.

A letter f'ror:i Governor F'.iurding mi.s rec.d to the directol"B on


in which ho stated tint the Bo::?rd v;ould DOt approve of

this 1 ~ s e at thn.t price and the directors instructed Governor ?

and the committee to obtain an opticm at $100.000 for lots 17 to 24
inclusive, and one-third o:r lot 25, be~ 20* root frontin,6 on Curtis

Stroet alld 125 i"eet fronting on 18th Street 1n Denver, and submit this
option to the Federal F.eserve Board.
by the .Board and the purchase

This opt.ion m.s finally approved

m.s mde.

In t~ moon time tlJOre was purchased as a. si to for the Oklcllo:m.
City branch b-;uldi.llg~ three 25 foot lots~ llllClbers, 17-18-19 in :Block

37, southeast corner of Third and Ea.rvey etroeta in Ok.lrulorna. City.

~ l_Jlll'Cl::.S.SO




The O\'mOrs were ':l."2,. Born and wi:fe •

.Plans for both tho Denver and Okl!lhoon City bu.ilding"s oore
dr::i.--n lllld build.ors selected soon after the purchase o"i" tho lots uas


Pull details o-r these lots

nin{; ~-e _


buildings mll bo found begin-

for Denver and ___ for <tuahoma. City.


Gordon Sanders who had be.on nnde Branch Audi tor

&.t ~ •

m.s elected on June 23rd,- l.ssiatmit .Auditor at the hoad -of':rl.ce •
..mother c1w.nce a.f'fectine the Cmaha. Branch ~,as the promotion

Tiill1am ::.)hilllps, Chia£ Clerk of the branch, to Assistant Co.shier

of the

same bl"nnch. o at the


23rd meeting tho Board of Directors

ratified a recent r~solution ~ssed by

the Gover.a.arts

conference for

the l:nnk to absorb the :'iocal i.gency Depa.rtriont ai'tor July lst, 1921.

!i.1J',.is ~ve virtually


tho Govermnent's department of tm bar:I.c


ApJ.)l"ove ?ens1on Bill

The C\JD:ference of' tho .Fed.oral Rosene gover.iors held in the
Slltlr,.er of 1921, bad appointed a oonmi ttee on pensions, tho chairman

of mich was E.R. I{emal or the Rew York

1,.... n~~

On July 14th.

Governor lil.ller road a letter :f'rcm ~. Kamel .ropo.rtl..Dg on the status

of a pension bill for employG~ of goverzmient institutions.


the read.ll:lg of" thi:: letter und a s:hm-t disc-..ission by the directors, a



adol)ted a.vprovi:ng t:r..e pension bill than pandirl6 before

CoDGrOss to establish a Pedera.l ?:oserve per..sion fimd in order to
provide petlSions i'or e!!JlJloyes of the bo.nk-, members o:f the .Boo.rd
Director:1., the .~"Gntz and their doponden.t::i.


Tha resolution also

detemir.od that tm ILusas City ba.llk muld operate llDder this ,. ,f. und
i£ it became e:f'fcctivo


it then atooo..-



As a matter of :fin:::.ncl.Dg, tho oi"i"icers of" the Kan'".a:; City bank
bad co:usistently m1intainoi tl'l8 a.tti tude th.:'1.t "settled r,rouuctionn of

oil wells ~s not a reel security for oil pa~ mien not accompanied
by other security.

~ &

result of this oourso, conzid.ere.ble criticism

raised in the oil fields of Oi:J.a..i"loma ur~cl :m:i.nsas and

C01!1plaints t"rOI:'l

these localities na.d bean to the Federal .Reserve .Board at -:'"!:1sh1Dgtan,
stating in ofi'ect th:~t tho }~sas City b~ rro.s discriminating- sgo.illst
the oil

Tho :first action by the directors in relation to this



on July 14th following the reading of corrospondcnco bot-:;oen

Governor !Jiller


the lxl.J.""l!t and. Governor Harding at ·,7a&h~on.


carrespondenoe .c.lso rolatod to pa.per secr-.u-ed by mortgages on growing

A:f'ter a discussion o'f this correspondence a. rosol.ition -wn.a

adopted in ".' the directors of the bnnk assumed full respo::::isibili ty
for the bank:"s ruling on these subjects •

.!ppeal.s :to..; come:: to: the ba.Dk £ra."!l the OkJaborro. oi1

£ields and a special meeting of the board


01lled on July 21st :f'or

July 23rd. to meet ·with representatives of tho oil industry for a
conference on the subject o:r rediscounting oil pa.per.. There wre
present at this z:ioeting Go,eroor ill.ller, Directors Bamsay, &iJ.ley,
Gibson, lmllmley and· .l!'


).,./ /4.,,.~
r .~-"k; .
-Ji-J... d..c 1,.(....-t1-t';._,.._
mooting Gov,.ernor Lil.lla+ r-c:ld a. ro-oort of a conf81"-






ence betueezl the· l"edera.l Reserve Board and the governora of tho Pederal
Beserve banks Of ru.cmiond, Atlanta, St. Latls, Kn:nsa.s City and Dall.a.s p3rticularly the cotton situation.

Be stc;,.ted tlnt the Federal

Deserve Board -;,10-lll.d soon m..!Cl.ka rui a.mio-.mco.~nt on poosible cb.'.:!.Ices 1n the

rulina relatiDG

to cotton p:i.:per.

The oormttee of oil 1:1Cn ~re met at the Hotel lllehleb~h. The
followi.Dg men represented tho oil irulustry:



:.: . 1. Davidson
:.. z. ?hilllps
Geo. I.. .Brown.ins
.1'"rod C. Carr
L.A. Lbek
7:1.rt Franklin
J. 'c7. ftioi::!P.rdson
;:;.? • Brewer



Oklcllama Ci ~J

?onca City

J.L. Beattio


F.·J. :Bry-dllt


G.l'.. MpOullcmgh
-;;•"· • .Brownlee



:; . y. llurra.y

Okl.ahom City


In openine the oon:f'erence, Cbail'!:IC.n Bn~ay of the directors,
&11'.:lounced toot the Federal .Re.serve Bank o'f Kmwas C_ity md enden.vorod
to deal impartially with tho business interests of the dlGtrict, nnd

tlmt its ambition


to assist f1'1cry vmrtey llld"<lotry and enterp-riso,

guided only by the best business Judgment 1n how :f'ar it ~uld bo sa£e
to prooeed with this hol:p,.

The bOllk realized the importance of the

oil industry but was bo1md by tho Fod.erol Bezorve Act to use ~.ution

and restraint and to


too reserves or ~ institution, l! only

such loans a.s woro ad'Visable and. had o'llf'1'1cient soeuri ty.

The Chairman invited d1scuss1on o:r tbe consess1ons. desired
by tha oil industry.,

There were so man_v suggestions made by members

oi' the oil deler;ation and so m.ny classes of' oil paper presented 1l1

this discussion. that the directors and dBlee-a,tea ~lized it \7ou.ld be
ext~ly di:N'icult to cane to any conclusion at that


univern.'.l.1 request seemed to be that the lnnk s;1ould 001"'..Sider settled

oil production o.nd oil well 6Up_;;1lios on hand as quick assets.
The directors suggost_e d that o. cor:nittoe be .oolected among-

the oil dolecates to reduce to writir.g tbt r arguments on those points
and present them to tlle Boord at a later meeting.

tho meoting



~ s was done and


a result of the cont"erences with. representatives of the

oil industry, the bank complied in part with tl1&ir roqueat as dlOtal
by the follo,,..rirlg form letter .fror.1 tha bank to various banks applying

for rediscoi:mt privileges for oil paper:
"As the result of' conferences b e ~ au.r Executive
COI?rrul:ttoe and a eocmittee representing banks moldnrra specialty Of oil loans. modified regulations in ros::_,eot to determining the liquidity of finnncicl cttl.tements wero adopted,
at least :ror the present, as follcm-s:

"PIRST: 7-'t1at, w118n


the financial statsnent

an oil producer VtbOso note is offered for discount. a
roa.sonable val'uat ion of 90-days 0 sett-lod production" wW.
in our ·analysis• be deducted from the fixed assets nnd
ad.clod to the quick or liquid assets. It will be necessary,
hO'.\'A:vert f'o1• e mornbor offering notes or a.n oil producer whose
stateroont, to a9,p0ar liquid, requ.U-es hia settled production
to be ta.ken into consideration., to corti!y i:n -:riting the
value of such "settled production."

"S~OIID.: That, ~ of the retlSontlble value ot new
m.lterial end su_pplies on hand, (excepting machinery') 1 will
be considored qttlck or liquid assets. It \?ill be neoossary.
however, that authenticated infol"!r.3.tion be furnished by the
producer and transmitted by the !OOr.lber nnking the offori.DG'
in respoct to tho qtl.3.D.tity, cliaroctar and value 0£ such new
mtorlal and supplies. The r1dht to mll for. e:rnm1ne and

verify the o:rlu---inal invontory, or to mske such further
inquiry conoe~ ma.teria.l. and S1l1.)pl1es as :ray bo doom8d
adviso.ble, is reservod.


•iPleaGe bear in mind tl:ID.t lnclividtmls, f'ims and corporations 1,roduoing oil nhoo.ld m::ilr.e no clla.n!;O 1n the method of
prepari.ns f'in.!lleial statements, but should be ~ided by the
provlslcms of General letter lb. 284 es hereto~ore... and the
figuros shcmn should 'b8 _!ll"epm-ed 1n the mannor indicated
Such stateoonts should not i:mderto.Jm to shoo tbs
value of "sottlod produotion," nor any d1v1sion of the value
of "material o.nd supplies."
Information des ired in connection with "s-ottled production" and "material and Sill)pliea"
shou.ld be given 1n the form o:f separate memo:'3lldo. as otated
above; and !'rm suoh inf'or.nat1on tho adjustrionts referred to
herein VAl1. be made by us on 011r credit a::a~-sis records."



SusDend ?rogressivo P;o.te.

Tho prof;1"8SSive discount rD.te uhich ~u5ed so much discussion
both be:f'o1se and after it

on 1..ugust 1st, 1921.


adOl,)tod by the j,:::xiza.s City ban..-it, wns suspeDded

7'ne e.ction su.or,ending i t was t~en at a !:lectmg ~

the Board on July 23rd, when a. letter rr001 Governor liardiDG m.o read in

,-1hich tho Foderal Beso...-.-vo :Board sue;eested that si.noe fim:neial conditions

had improved, the mr..:oas City br:>.nk micht well suspend the application o~
the rn.te until it should ~~in be needed as a.n emorgency moasuro.

Grain .R:l to ile:irLTJ.G.
The directors of' the bn.nk on August llthT np:9ointed Cb.a.i:rnnn

Ramsay to rer,resent tho

bmi.},; :it

tho h~1.ri:q; of' the ·,'.'&stern Grr>

Case bofore the Interstate Co:rmorce Co!reission in 'Ja.s.½ington.

This ~s done u t the inst.4',---a.tim:1 o:t Cl~1de Reed of To:pekn, Ka.s.,
cr_.a.L"'!!JC.n of' the E.ansas State .Railroo.d CQI:mission.

Tho hos.ring was in

the form of a complaint cc.used by th& current railroad ratos.

complaint was by the



Tu:ulroad Connission, joined ·1n by 20

other st;1tes and their various grain y;roducers and associations.
Ur. P.nmroy test1:fied August 15th, that b1.2Siness am financial

c D:ld.i t ions in the Ten th District



vi tally af:f'octed and oonsiderably

harmed ~y the present high cost of' prodnction a.nd disposition of ngri-

cult-.zral. products snd also tb9 pravailinf; lo-,., prices.



testimor.y ms f'Urthor to the effect tln t tho ::i.ssets of ',7estern bmllm
were trozen to a large extent am tila t interest burdens on tho farmers
in this territory l:nd been incre.lSod ar:proximatel.y 11 per cent I due to

the 1nab1lit9J to nnrket the old crop at anythi~ but a losa or to
woo.ther the :f."ina.ncial condition until n oow crop oould be harvested.

The mover!)8Ilt beginnlne in :Nebraska which had for its apparent rroson .
the alteration o:f certain rules c; tho o~r-.:.tion o-f' the Federal Reserve Bank
of KD.nsas City, but \'7hiCh bare evidence of'' in.spired as an attack upon the
~ n t of the baDk by certain b.:tz:1.kers md politicians, arose during -Jctober,1921.
~'hilo 1 t


followed aecressively by Hebraslmns for a.


weekS, the criticisms

were mde sq_wrel::, llc"'ainst the o:f'f'1cers and directors of the b ~ and the .lliltter
hZ-5 since been tanned " The .:.:0Kelv1e Incident" , the attack lnvi~ :f3.llm COl!{)letely

after a meetizu was .held n.t Qmlla in '.'.hich the operation


the bank as pertainiz:e

espechlly to agric-..ilturul aid live stock. peper, w~s :f'.illy exp.J..ained.

'Ju Oc,,ober .25th there wus received at the oonk a lengthy conr::nmication
transmitted by C• .E. 3urnl'l2m, 1Jresident of the l{orfol.k: r-.atioml 1:lank and until a
few months previously a director of the Federal Reserve Ban.k.

11r. J3urnh'3.m sent

tbe coommication as c~:rmm oJ: a cO!II!littee appointed by Governor Samual R. ltKelvie
o-f Nebraska at a conference of banlcors and £inru:icers reccn tly ileld \'11th the Goveznor.

This comrni ttee v.2.s directed to seek to obtains number of concessiODS tor ~:rmers

and s to clc-€:,-rovers in Nebraska •
..\.mobg the accusations ago.imt the '2enth :District b:ank: were the


That the Kansas City .Bank is the most " cUI!lbersome, inquisitorial and
technical bank for rediscomit ,o'f aey or the Federal Beserve 3anks' ;" that the
"financial stat~nts also uselessly inquisitorial and objectionable.;•~ ~hat the

Kansas City :Bank


ms been a law unto itself in r0t,----ard to rules, regulations a.?Ji

if too rules as to the di scOWlt~ of f'armin;: and live-stock 1)'.!per
"md been adjusted to meet conditions, there would not lln've been any oecasi'on for

the W:J.r Fim.nce Corporation to :fuootion in this r e ~ ". tmt ..he Kansas Cicy Bank

'.ia.couraged 1>3nkers to sell IJ.berty Bonds at a discomit and redlloe their obligations
to the Federal Reserve Ballk, nit h the result t~ t the bor..ds of the gover.moont were

thereby turtbcr depl'eCiD.ted in value, whioh resulted 1n ~'.Vlation ot •the
credit sl tuation ; "

tha. t

'~ r mich the Kmisa.s City Bankcwas 1 ~eJ,ooting

tor tm~· instruct •t.1ti.2nce pl.per' , , regardless

f .or red.1sc0tmt

ot the :tin:mcial. standing of. endorser
:t.rom membor banks


and. muer,1a beillg reoelved !or rediscount

other districts without sny objections mataver.n

The coJ?Qlmic ~tion ended

,;.,;t th

the following statc,nent: •

"Under no ci.roumstanceo do we advocate the cbeapenil:g of the security

the Fodera! Reserve Bank but we do tldDk that _ the rules and regalatiou

governing agl"icultural and stock raisi.~ districts shoul4 be di:f'terent tram

,t hose covering districts vmeroin the __pr inc.ipal industries m-e jobbing,
. mamtra.cturing, ~hipping end export


m.mer in whiah this' oommmieaticm was- dealtwith can best be

rela tad by tI.¥:1 lette.r mich Chai rnrm

~ 88lt - ••.

the follori,zg

Ja:ma17 t.o Governor Hardizg:
"You are ad.vised that Governor UeKelvie of llebras:k::l., f'Ollowing
his. correspondence with you, 3l)po1nt.ed a comni t ~ composed
or C.E. Burnham of Norfolk. NQbrasm,. fOl"JDe.rly a director o~
this lrank. ~ v. Stephens. Presiam~- o£ the Freizi>nt State
.Bank, B.J.• Wilcox. V1ee Presidont of th& Qm.m Rational Dmk,
J.E. Bart. Bank Comiasioner :tor ;1e~sl0l, a.nd .John u. J'lanDBgN:1,
President of' the Citizens State lhnk of stem.rt. 1lebra.ska,.. to
endoavor to obtain. fl"Om the Federal ResarTe Bank of -this district and 1 ts bran~s mora· liberal. rules aJld ,: regu.¥1,tioJis a&
to rediscounti!lg 0£ sgricnltural ::i.nd oo~roial paper,. etc.
That co:nittee mot ~d passed resolutions addressed t~ tl»
directors of this bank. a copy of which lfe are enclosing, .
Ins tend o£ rep ly!Dg to these reso l.ut ions oa.r board deeidecl
it muld bold Clle of lts regt1le.r meetings at Qmba. and invite
tho f'ccmmittee to be presmt and f1lnllah speolfio com_plainta

ins.t ead of a general criticism• . November 22nd. was the d~ set
Cd .Governor lacXelvie•s· comnittee duly .imited.;
A week or tan dcy'a be.fore the date set f'9l' the conference wa

learned throtlgh news~r clippings aent to us trom --var1oa.s
parts •er! Nebraska tha. t a movemen-t had ae~ 1n, originatiz:g at
Fremont, the home of' one ot •the· committeemen, Dan V. Stephana,
for the comnerclal clubs throughout the state to s8Ild representatives to the Omaha meetiz:g above ref'-erred to~


c. Byme. director of" this baruc. residizg at Ona.ha,
suggested that, as rerresentatives :fro.c various
com:iercial bodies would likely attend our meeting~ 1 t .might
be a good opportunity to have representatives from all tb8
melllJer banks of tm .zom served by the 0naha. l:Sranch also -att81ld.
Ur. Thomo..s

and invitations 19ere accordiilgly issued,. !Jut

of a msnbership

of 199 L"l Nebraska about l58 menbers had representatives present.

Oien tha •oo:umittee• learned from our directors, upon their
arrival at ~ , that a,Jpublic Eating was intec.ded, the
•com?:littea' suggested to ·our directors .that !ns:>:fal" as the
questions set out in tb3 resolutions adopted by 1 t were concerned.
a r.::l8ot1ng 1r:. private would be prei'erable, ,which was entlrely
.satisfactory to our directors am the meting m.s so held.
radle the 'committee' .and our :.directors did. not reach a unanimous
agre~ nt on what the Federal reserve bank could and should
do undar tbe provisions of too Act, the discussion brought out
!D2IlY o:f' the di£:fioulties ot complying with all o£' the demands :or
the • ocm:d ttee •. At the c-onc lusion of the conf'erec.ce we were • •
under _t.he imprr;ssiao. that at least av~ mudl better understanding existed and th~t all parties to ·the oonterenoe were sati s:n·•
No cri tici&J. of our !l:iaha :Bramh ba.s been brought to our attention
since the meeting and we were ratber surprised at the contents 0£
COD{;TGSs:.nil l.vans' Je ttel" to y Otl.•

At tbe close of' the priv~te conference requested by the 'cowit-tQe' ..
those attend!~ it ropairod to the banquet lnll of' tho Fontenelle

rrotol wbero a· ltlllcheon was served to appro::ic:Lmtely .roo ga.ests or
the Cbaha. Branch. Governor Bailey addressed the representatives
o:f our mwibe:i;,s present, goi.Ilg into sane detail as to Just what the
Federal resorvo banks aw una. cannot do• and generally pleading
for co-operation an tho pa.rt of m81!i>er banks to make the Systan a
Yours ve17•
(Signed} Asa E. ~

The letter tram OoncreSSllUl Bvans o-t llebraslm to Governor

B'ardiJJg. referred to 1n tlle- above lettel", was virtual~ the las-t time

DZJ:3 one 1n an Qf'f1~1a.l ca~city slx>wd 1nollnat1on to add ta.el to the

tlame in Nebraall:a ,wh1c-h diod out :mth the close or this contersice
by tlle camd ~tee in «-illa.·

L1lm other instances whore cri t1oism

ot the Pederal Reserve System ms 1ndl:J.l8ed in, the ease was et:t:eotively

cured by a simple treo.tmaot of f'aots.
The con41t1on of the be.nlt as to oe.p1ta.l. surplus a.Di prof1 ts

at the close


tbe yee.r 1921 as read by Cbai.rmn lbma~ to the

directors at the 1'ina.l. meeti:ng of tm J'e)ar. JJeo. 19th. was as tallows:
Capital stock paid 1n

Undivided profits
Less dividend tor 6 monthS,
en~ .vec.31, 1921-




Undivid&d profits not

41rectors o. t asa meeting authorised the otf'icer1,

after tbe7 had paid the ,-emtannnal 41,ridend, to charge to profit aDl

l011s account the not rema~ undistributed and to credit sllCh emount
as !ollowa1 tar losses

Surplus t ezst1mate4J

~ a e 1'8:E(est1mate4J

( .

;200,000.00 .
292.300.00 .
81,0.52.29 .


. 130-a

-l 9 2



'rhe Directorate of the bank char.gad 1n January, 1922 in only
one instance.

This was the appointing of' Heber Hord of' Central 01ty 1

.t;ebraaka, to succeed .l!.C. Ualone, who had been appointed a Class O
director at the organization ot the bmk.
meetiJJg on January 12th.

ME-. Hord attended his f'irzt

'the greater pa.rt or the forenoon of' the

meetiDg was occupied by the reading or t:ne annual report by Governor
lfi.ller tor the year 1921.

In the af'ternoon session the election of

the Officers of the bank was. held in which the l,)?'esent officers were

L.B. Earhart was re-appointed manager a.:ai director

of the Oma.ha branch at a salary of ~9,000 a ~ar.

The other of'1'1oers

of the Caa.ha ~anch and the offioers of tbe J)enver branch were reappointed at theil" farmer salaries •
.rurther o:f'tiolal changes weru too increase of the salary
ot .tt.o. Wanderlich• cashier or the Oklahoma. City branch 1n the amoant
ot ~300 a 19ar, the 1n01'8Ue of the salary ot A.M. JJoA.dams, assiatant


year salary to

to '4 1 500 per annum and the paying ot


u.x • .Bo,µ-dman for services as secretary to tm directors.

Up to Janua.ey 26 1 1922 1 the b'ederal l'Ceserve .Bank



ot Kansas

Ci fi1 could not entertain v1s1 ting bankers except at the personal expense ot various ot:t'1cers or directors.

As commercial banks lozg

einoe to~d the custom ot e~tertaining bankers at luncheon in o:der
to mke thml more tam111ar with tlle izult1tut1ons, tm directors ot tl:Jia
.recieral Hesene Bank at the January 26th meetil{;, decided their

130 b

institution should tollaw this custom 1n order to give more direct
attentioz,. to the banks and benkDrs served 1n this district by th$

:rhe d1l'eotors oonseq,uentl.y authorized the bBnlt to fundeh

the noon meal to visiting guests ot directors and of!ioers, and also
to the directors attending tlle regular board meetings and to th.a
alternating meni>ers sot~ on the executive oommittee.

)'ederal Reserve Bank Group Meeting.


February 23, 1922 1 there was held a group meeting o-r the

:Besides the governor, Jrederal .Heserve Agent and direotors ot- the Ko.nsaa
City bank, this meetil:lg was attended by Governor·Harding of tbe b'edoral
.Heserve .Boa.rd and the f'ollo.viDg representatives o~ the other three benkaa
D.C. Wills, .l!"edera.l Heaerve Agent and E.R. Fancher, uovernor, Cleveland;
John B.. Bich, .redaral Beserve Agent and .ll• .A. Young, Governor,

w.1. ~ .

Jrederal Beserv~ Agent and B.A. :UCX1nney, governor, lJallaa.

Governo:r Harding opened the meetil:g w1 th a d1scuea1on of


cU.aoounting relations, emphasizing the importance ot redisoolmting banlcS
ottering new paper endorsed bl tiret class bank1ng 1nat1 tutions.


topioa 41aouaaed wre building programs · ot various bankS as ef'feoted b7
pending legislature, the L"ederal .Reserve EwhAJlge, the bandlli,g of c~-

tidential reports, exarn•nation or national banks. the tn>1ng Of exam..

\ 1.mtlon report•• the n4t1on between war finance md l'ederal .Reserve
Bank-. penalties tar deticient reserves, issuanoe ot new and used
currency and financial statements.

At the m&etiilg o! larch 9th, Cha.irnlsn .P..amsay read a letter
trOi'.ll R.H. lhlone ot Venver exiressing his thanks to the cllreotora m:i4

the G-overnor far the engrossed oo:py
irig Of'

or resolutions paseed at



J 3l1'1.UU7' J2 th•

- In tlJe met1:tig of Jhroh 23, the d1souss1ons by tbB directors
leaned heavily tcmard the topic
Denver and




prov1d.1Dg adeqaa.te buildings for tba

It was at thla meeting that a letter tran

Govermr Ha.rcil.Dg was re~ ex,presslzg a decision tm.t no objection would
be raised to tho bank proceeding with plans tor a bl.ilding at .venver on
the site which lu!.d rocontly been purchnsed.

The directors, having been

well so.tisf'ied with the excellent work of the :tirm of architocts, Ore.ham,
Ailderson, ?robst & White 1n constructing the Kansas Ci -ey bui ldlng, voted
to employ this f'i:rm aa archi tocte oi' the .llenver bran.oh, :provided the
fin.. -..ou.ld empl01 at 1 ts ezpense as associate a.rchi toots. some Denver
f'i:rm to be named

bJ" the building

otxnclittee •

.I>llrillg the discussion o:f' bNi.noh bu1ld.1ngs 1 Director Gibson

sul:mitted a report of the conditions ot the branch building at Cmlba, 1n

he tavored the exahe.l\,e-e of the building and lot :tor a vacant lot

at tho comer o! ~evonteenth and Dodge streets, on m1ch lot he sugge~tee
the bank ahould ereot a new building.

Howevel", on June 9th• nt a

oonferenoe beld 1n Q:ioha between Chairman .lfamsay, Govemor Miller and
l>ireotor W. tobell repreBenti:tt: the .Board, tbe matter was S{;ain taken tlp
WJd the opinion was expressed by lJireotor lll.tohell tlmt t~ directors

would not a.t that timo b-e in favor of thia e::ohange of property•

·· i30d

Uncarer G-Overnors' Portra1ta.

J.t the director's meetiJJg at April 13th, tm portrait• of
Governor .1.z. W.ller

am J!:l:-gov-e:rnor ~wyer irere unoovered betore

the directors. the ceremonies be1:rg in .charge of .iJ1reotor llemiiJg

chairmwl of the Gom:nittee on portraits.

These pal"traits were

done b~ Charles !ennell 1 a !'renoh artist who he.d been aeleoted
tor this purpose and far whom %-governor ~ r had sat at lDa
Angeles previous to the si tt1Dg b7 Governor Miller at tbe bank•

l!cldorse G<JV'ernor iJardirg •



resolution offered~ lJir~ctor ;im1ley o.t the


1:1eeting, ~,as directed to the ! of t.ho Treasury V!ith the i-oqueat

that 1 t be broUght to the attention of tho ?resident of the United States,
endorsi:rJg Governor Harding Of the l'cdera.l ~.eeervo Board, am calling tor
hie re-appointment as governor for the following reasons& he_ had

ouried on a splendid w~k d.ur1~ the trying years through whioh the

co~try had.. recently _passed, that he knew the law, _posse2Ssed !llle executive ab111~, ha.4 inspired oonf1denoe 1n tm i!'ederal system, and that
h1a ·r..appo1ntment at tm l'l"esent ti.mi, would remove tm ~ten. ttom ti.
auap1oion of poll -tic a and thereby lend to t-2:e sucoesatul a.clminlstra.Uon
of the tiystem.

this r~solution was seconded by lJireotor .::1 tchell an1

mum1mousq passed


three months be.fore Go"Vornor .Hardillg' a term

At tble meeting a oamnittee tar the 1'enver branoh


build1Dg was authorized to axohange tba lots recently purchllaed at

-130 -e

.d.ghteenth and Curtis streots for fo'llt" lots on ~eventeenth and .Arapahoe

Whal in the Bll!!rner of 1922 the nomal rato of intorest at tbe

~·oderal .Reserve Bank of Kansas City was reduced from 6 per cent to 6 per
cent, it was perhaps natural that a m.:ciber of ban£:J mo Yere redisoounting
quite heavily with the Systan e.t tho 6 !)Elr cent rate, were anxious to
obtaiu tho benof'i t of t.he reduction,

These banks applied to tba Federal

.lieserve Bo.nk tar permission to pcy off these 6 per cent notes and on the
same day ma.kc


reclisoounts on the sa:oo paper ~t the 5 per cent rate.

The Federal .Hosorve Ibili-:, i7hen tho mtter was broueht to its attention,

was inclined to allow
. this to be done.

. governor of tho bank however,.

1n brlDging the mtter beforo the directors, pointed out that suoh procedure would be i!l a mnner to institutions whicil had paper that
was virtually ready to be retired.


on Jum 22nd this acute

situation having been passed, the governor advocated the rebati~ of

interest on paper paid before mtur1ty and ref'und the discount
at the ~rent rate of ~he bank at tm time tho piper 1s rotired.


action it was believed 'WOuld provide an equitable solution to slmilar
problems 1n the tuture.


Governc~ lllller Resigns.


J.z. Miller, Jr. resigned his office in tbe National BaJJlt

ot 00m'.il8.l'ce, and disposed ot numerous bank holdings 1n order to beco.:ne a
Class C director and Fedora.l Agent of the l'edere.l Reserve :Bank of Xansaa

City at ita organization, he did so at a financial loss in order to, aa
he himself' _expressed it, give a greator service to the nation.

It waa

true numerous other bankors who aooepted sioilm· positions at the request
of' the TreasurJ Department and the Federal Reserve Board did the same ae
Governor 1!1.ller.

He had hlDllY w:ibi tions f'or the now bank, one of th6%1 was

the erection of the !!) b·:.iilding in which tm bank was housed
1'ovember 16, 1921.

Opposition to the erection of tbe new building- onJ.r

increased Governor Uillor' s embi tion to put it through to tls height wb1ah
he and the :Board had decided w-as tha proper height.

When the bank had beooma properly housed 1n tm new buildillg,
and the various departments were working barmoniously

am. m. th


room and facilities, Governor W.ller•s greatest ambition was
achieved, and he began lookins forward to a vaoat1on of which 1:Je had deprived himaelt during hls conneotion with the bank.

m.s oloae trienda

h a d ~ times urged him to taku an extended va.oe.tion, but he had defer-

red this until such ti.:a8


he could relieve his mind of the JllllD1' rospons-

1b111t1es ·oomiected with his position.
With the beginning of 1922 however, he began gradually to paae

on to others m~ ot the matters requiring official 4ecls1on am 1n t~
meantime planned a trip to Europe with his wife and daughter.


At the direotors' meeting of June 22nd, Governor lliller reminded
the directors that he bad served the institution f'or about eight years, the

first two o:t whichthe ~ysten was untried, and later was subjeoted 1t>
a supreme tost by the v.orld war, that he now felt the need ot a rest and
that he desired at tha.t time to sever his connection with the benlt.
In ·handing Chairman .tUl!!lsay his resignation. ha thanked the Boa.rd
tor the hearty coo:,eration and macy- courtesies whioh ho had received from

every member.

His resif;llation :tollowtH



1 hereby tender my resignation as Governor of this bmilt.

"In doing so I wish to express the deepest gruti tude to each
of you for your earnest co-operation and the Jl!Ul¥ courtesies
and kindnesses shown me during our association•

J.z. Jl1ller, Jr."
It was moved b)· Director !'laming and seconded by Director Hord
and carried by the directors tmt the resignation be aocepted with regret,
to taite etf'eot July ls t,. 1922.

Thereupon ·tm

the to~lDW1Dg resolutions
"WRERE!S, Governor J.z. Miller, Jr. oos th1I day tendered his
resigJ:ls.tion as Governor. at the l.'ederal Reserve lbDk ot Jteneaa
Oity, am the sane ma been eooepted, an:l
"WHERE&..S, Governor Miller ha.a serve4 C..J.a 'bcnk tor the
eight ,ears, d,r~ which time he has had no •acatian and
dur~ T411oh time ho has baa:>. tirelssa 1D h11 etto.rta to br1Dg
tm bank up to its present ettioient oona.ition,


"THEREPJRE, BE IT RESOLVED, That in oonsiderat1.on at the
eminent service Governor .W.ller bas ramered this bfmk
during the trying years of t:m past, be be allowed three
montha' salary attar his retirement as en e~reBBion ot
the appreciation ot this Boo.rd for tbe great _-wom he ha.a

W.J. Bailey becomes Governor.
At tbe sam :reeti~ at which Governor Miller resigned, Director
tlemiDg moved that iV1llis J• :Bailey, rormer Governor of Kansas and a
director ot the bank since its orga.niza.tion, be appointed governor for
the unexpired. term of Governor Miller's office,


subject to tbe approval

of the l'ederal Heserve l3oard. at the sa.ue salary of ;20,000.

ment to be effective July 1st.

fhis appoint-

The motion was aeoonded by l11rector Byrne

am unanimously carried.
In a.ocept122g the appointment Governor Bailey


as followai

"Gnetlemen of' tm Board:

tar me to e~rass to you the sincere
appreciation that I feel tar the great honor you bave
done im 1». mlildng na tba Governor or this bm:ilc, am. having
oome to ZZ8 unsolicited. lntoneif'ies tmt feeling.
I now
promise you tlBt I will give to this groat position the beat
tmt 111 in me, 1n order that l my prove wort~ o t your
confidence and respeot·. - - - - -

"Lel:lguage is inadequate

Miller,- I talte this oooas1on. in the presence o t
""this !oard who are am haw beaa. yoUI' loyal friends ani aq,portet"e, to aolmo,.,ledge the =any courteeie s and the oons14el"atlon I have received at your hand&.
)(y olose aasoc1at1on
w1 th you as a director in this bank me been an inspiraUon
and a great education to me.

"1 csnnot eXpect to measure up to c;he t\lll measure ot tbe record. you mva; thia .ma.gnif'ioent oonstruoted
'lmder your guldlq; hand am the record c4 aohievermnt 1n br1~
~ the bank up to 1 ts present e:tf1t1ienoy ia your monument to
last through tm years that to cane.


"For myself' aild for this Board, l ask f'or your friondly
cooperation r..Dd n.dvice c.nd I wqnt to f'&el th3t I can go to
you as you cCJ:10 to zm, I expect to E;et I!lUCh more
f'ra.i :,ou than you received f'r0:!l mo on account of your
larger experience and the erea.t ability . ..-o nll is

"Gentlemen, I again thanlt your

Subseq_uent to his resignation, Governcr Miller ·roce1ved trom
uovernor ttardillg of the l!'oderal lteserve Board, tho follovrillg letter which
was made a part of the m.1nutos of tho bank at its moetiDg of July 13th•
.. Dear trovarnor !.U.ller:
"l mve J"t:.:it returned from o. vi s1 t to .Boston a.m fi:m
on my des~ your letter of the 22nd instant. I was ver,r
r:iuoh surprised and disturbed a few days before I left
for .Boston to loam of your contemplated resic,-----nation•
which I um.orstand was tendered am. bas been accepted,
effective July 1st, at which tizoo Governor ri.J. Ealley
will succeed you.


"I am glad to ~ow that at last :J;)U going to taJm
a rest am that you wil l :;pand a few months 1n Europe
with :,our family. You l::nve done a monumEDJ.tal work for
the .1"ederal Re:Jerve System and I mve af'tan wondered
w.bat kiJJd of a constitution you had 1n order to kDep on
the Job e.lmost fro::i d.o.w to da.r1c al 1 those years tbo.t
you have. I shall bring your letter to the attention
of the Soard tanorrow and wish to say now that I appreciate your firmness o.nd. strength of character, and that
you hnve handled an ir:lmenae Job 1n a b 1g ~ • You have
been unmoved by cJ..amour and ori tioisma and you have the
satisfn.otion of loaving the l"edera.l Ileserve Ba.nlt of
Kansas City wall housed, well organized aDi in a strong
posit i on. I shall alwa~ look back with pleasure to my
aasoo1at1on w1 th you &:cd wiah to thank you tor tba unifor~ c ourtesy that you almys shom me, and for
your hearty co-operation duri~ the tryi~ tir.:.1es thrO•
whic h we mve Just passed,

"With warm regards, I am
Sin:,erely yours,

W• .?.G. Barding. "


?.H.nor ohe.Dges in bank-

Governor lta.iley wm had since his first election e.s governor ot
Kansas in 1902 bem known throughout the middle west as "Governor" l3a.1lay,

attended his first meeting as ~vernor of tho bank on July 13, 1922. Hla
first report to the Board as governor, dealt rd th the usual topics o'f
oondi tion of' the bank and tm distriot,and. in ad.di tion bro~ht u;p the
subJeot of the rental ot floors in the bank bu.ildillg, which rental had.
not progressed aa rapidly as the bank had antioipa.ted.

'l'he Board vo-ted

to grant Ht.J&beB Bryant, the bank's a.cent, discretionary powers to grant

concessions to ;prospective tenants, provided these concessions would not
oonfl1ot with o:ny leases a l ~ •
.At this meeti?f; the following resolutions ooncerning the co..
operative store in the bank was ad.opted:
"WHEREAS, the grocery store known as the Glenda.lo l.tercantile
Com.)<icy, now operated by and under the supervision of the
.tederal .Reserve Bank, was organized at a t 109 when tood
necessities \-vere at the very highest and rar the purpose
of enabling the eiqployees ot this bank to purchase same
at lower _prices than wero being offered by the regular
•reta.11 a tore a, and,
"WHEREAS, toad pr ices have reaun:ed a more normal level


the store is not boillg patronized to the extent of justifying the l!lllount of e::q:ense necessary to carry it on,
"TBEREFOBE, BE IT RESOLVED, Tmt as quiokly as practicable
the stock on hand be closed out am tbe store discontinued."
At thi& meeting the salaries of five officials of three branch
banka were 1Dcreased aa tollowaa
Cmaba Branch: Wm. Phillips, Aaa't. cashier from ~300 to $3600 per yeaz-;

Denver Branch, Joseph E. Olson. Cashier. trom $4000 to ~800 per 19ar,
A.J. Co~, Aea•.t. Cashier from ~300 to f.3720 per year;
Oklabozxa City Branch: R.o. Wunderlich. cashier, mm ;3600 to '3900 "
R.L., Aas•t. Qaahier, :from ~2700 to ~000 per year.


strike af~ects business.

By mid-a'lmller or 1922 vman norcally the moving


the wheat crop,

oontemporery rrith stimulation of other business in the South\1estJwould ba~e
reciuired ad.di t1 onal capital resulting in rediscounts at the Federal Reserve
Bank, the whole oountry


was about to m teriallze.

re~ f -or a. business revival wnioh Eq?parentl.y
However, during June there was smouldering in,

this country a. dissatisfied i'eoling among- tbe ra.11ro£1.d shopmen whioh result-

ed in a general sh0p[llell's strike on July lst, which continued ttroughout
the month and into August to the detriment of business in general.
strike was also still unsettlod until late SUJ.ml8r.

'?be aoal

?artly as a result r:r£

these strikes and partly as ~. result of l2D.certa.1n conditions in :Europe,
business alld. international commerce took on a not1oable slowness as well as
a retarded mavemcnt


mw i:r.ves tment s.

These things \'lere reflected d.uring

the stun:nel:' a. t th.a Federal .:ieserve Bank, whare redisco,mts oontinuod to 9lacken

and the reserve to increase,
Che of the mrks Of this condition was the loweri~ of the redia:-

count rate 1n all of tht :tederal nouorve Banks of tha country, It


at tlu•

meeti.Dg ot .A~ust 10th that Cha.1.rmw. Rams~ read his letter of July 28th

the .rederal Rosene Boa:'11 in regard to the bank's l'ediscount rate.




a letter from ~e:nor Harding o'f the P'edarel Reserve lJoard. dated AUi:,'""DSt 1st,

• in w:hieh it waa stated tho bal.k WO!lld npprove a discmmt rate of 4} per cent
for the Federal .Reserve Ba$ of Kanas.a City, am also called attention to

tbe minimum rate ot thie bam:: of 5 per cent
S.CG&ptanoea as oompa.rod w1 th mininlum rates

for tM of banker'•


othel' be.n1m trona


to ~ •

per cent.

After a o.isci.1Ss1on Director Eord moved tmt tm rediscomJ.t

rate bo reduced troo


4½ por


cent, ef'ftictive


12th• a:cd tmi.t

the bank authorize the mini:::mm rateo for the purchase of 'w.nker 1 a accept-

auoea a.t 3 per oent.

This moti9n was carried.

Visouss llitohoock Bill•

Sons.tor llitahooak of Uobrc.:.lrr.1., iuvi1.JC introduced in Cone;ress a

bill authorizi?Jg the expenditure of e.n anoU!lt of mimoy equal to 3 per cent
of the oombined cnpi ~rll aru.t surplu3 of tho Foo.eru.l Rea1;31-vo ~nk ot Xn:nsD..s

01 ty for the ereotion. of


br''121Ch bu.:u~r e.t J~h::.i., the ba.nk' a cU.·aotora at

their i:nesting of A~us t 24th discussed bill ~d .-rnre 7i~•tually


imous in too opinion that the 3 per cent cteutioned would not be a.dequate
to build. e. suitable building for the 'branch, too s.mouut bein:; only

~26,348.95 at that time.

Tb:, diroctors, thero!cro, pa3sed a resolution

e.uthorizine Governor Bailey t:> comnr.mica to \':i th the Federal Reserve Board
D.Dd. re11uest its co-operation in tb:J intel'est o:f' havi~ Co21grosa l)Grmit the

GXJ.)8nd.1ture of

~o,ooo, f'or the branch bank at


.:'..t tho

abovo ~etiDg

the direotors voted to £ix the salary of Comiael Je.mcs E. Goodrich at

per year 1n lieu of his present salary and feos.




OJ.eariDg Ho'QSe Off ices.

Governor .Beiley presented


the diroctors on .!lJt;ust 24th•

the F.()pOsal to rent floor apa.oe in the Federal &serve Jank building


to the Kansas City Clear1lJ6 House Association.





the directors tbat 1 t would be ot bonofit to the bank to lnve tm

... '

Clearing House inside 1ta building, am thare:foru a motlo~ was made












ized to cl.ose a contract wl t'h the Kansas City Cleari~ Bouse Aasoo1ation

tor rental ot floor spaoe.



': !




lilSTORY OF 'I lie BB.wCR.ES ~

/3 /-



or Various CoMitions and Ope.raticma ot

the Federal Besene Bank

of Xansaa City at the Close ot :i:.och Year ~ance 1ts Organizaticm.




ot ~enth D1str1ct-

OOlorado • • • • •·, • • •
KariMa • • • • • . ., • •
w.asonr1 • • • • • • • •
Ne"braska • • • • .• • • •
1r8'f1 J.J&neo •. •. •
• • • •
OkJ a:Ucm:& • • •
•• • •




Square la.lea

• • • • • • • l.OS.658
• • • • • • • 81.m
• • • • • • • 10.509
• • • • • • • 4?,!02
• • • • • •
• • • • • • • • • • • • 97.-548

Wy, • • .




i. "169 .25'1






• • • • ~.zss

~tal • • • • • • • • •

Gross Earnings 1916_! • • • •
1916 • • •·
" 1917 • • • •
" 1918 • • • •
" 1919 •. • • •
1920 • • • •
• 19%1 • • • •






• • • • • ••• • "' •
• • • • • • • • • •
• • • • • • • • • •
• • • • • • • • • •
• • • • • • • • .•


• • • • • • • • •
• •
• •



. .


• • i 103,Z60 ..29
3".966.• 6'1
• •
• •
• •
• •
• •
• •

.s. '112. 858.33

'lota.l Gross Earn1nga • .- • • • • • • • • • . . . . . .. • • ., • • •=•~~.892-;Z2


Operat111g Expenses


1916 • . • • • . •





1917 •• •
1918. ~ ~
1919 • • •
1920 • • •
1921 • • •



1916* •• • ••• .• $ 126 ,8'0.SS



• • •
• • •
.• • •
• .. •



1..185, 966.S&



( *)


Includes November and December, 1914.

-Dividends Paid-

7-J.Z-l.6 for ?eriod 11-16-1914 to 6-30-15. • • • • •
1-25-17 h
7-1- 1915 to 13-31-15 • . . . . •
6-30-1'1 It
l-1- 191& to &,.,:50..l.6 • • • • •
7-1- 1916 to 6--30-17 •••••
12-51-1'1 "
6-30-18 a
7-l- 191? to 6-30-18 • • • • "
7-1-1918 to 12-31-10 • • • • •
12-31-18 "
1-11919 to 6-50-19 • • • • •
(b) 12-31-19 "
7-1-1919 to l.2-31-19 • •
l-1- 1920 to 6-:-30-20 • • • • •
12-31-20 ~
• 7-1-1920 to 12.-31-20 • • • • •
1-1-1921 to 6-30-21 • • • • •
12-31-21 "
7-1-1921 to 12-31-21 • • • • •


l25;088 •.86

. ..


122.583• .66


Total 1iiv1dends ?aid • • • • • • • • • • • • • • • • • • ,. • • • 0 1.495,986.'14



Colorado • • • • • • • • •
Kansas • • • • • • • • • •
Jll.ssouri • • • • • • • • •
liebraalla • __.,' _;, ..• :. ., • • • •
New J.lexioo • ~ •• ',; • • • •


•• • • •
• • • .••


• • • •· • • •


• *
• .,











• • • • • • • •


• ,. • • • • • • • • • • • • • •



• • • •

• • • • • .. • •

• •

1916 ·1917 1918 1919 1920










lZ1 132 145
243 · .253 211
55 SI 61 68
19.2 iOo . 20? 210
9 . 12 13
m 316 321 340
S9 45 ...........,.


· ;?.ZS



. . . . ___________ ___



958 994 1032 108'1 1103

-lfa::mer 0£ Banks >.ncomnodatod-



Colorado • • •·

• •
• •
• •

• • • • • • •

• • •
• • •
• • • • • •• • • •
(4) I.ebraska • • • • •
• • • •
Hmrlim.ico •• • • • • • • •
Or:.lahozn • • • •
• • • • •
'3yamlng. ,
•• • • •
• ·•
1u:tnsas •
lli as O"Jl" 1




• • • • •














z,4 ·

• •


23 ·


• •
• •
• •


fotal • . •

1915a 1916










114. 105
1'11 211






2.57 329







192 169



• Includes Novecnber am December. 1914..

-Otfe.ringa AcceptedState

1914 1915 1916 1917 1918 1919 1920 • 1921

• • ..
• . ·• • •
• • •
.. • • • . ..•
• .• •
., .... • ..
• • •



lfisscnd •


• • • •
• • • • • • .•
• •
• • • • • •
• •

Nebraska. •new :uexico •
Oklahoma. •


• • •

• •


Total •

• •


• • • • •


• • • • ••


• • . • •

• •

• • • • • • •
• • • • • •



• •

• •


• •



65 1060 1590
1'12 1392 281!5
9?1 1883.
113 1649 3886

536 3832


Z092 3615
4210 3939

250&1 2262




688 1137

9240 16024 2Z45l 26'163

- 1,. r--;)1'

-0,pen lht-kBt T.rsnuactlcmaBanJrnrs' Acceptances parchased 1n open
znrmt and acquired ~ other P.B. Banta.













.lt1n1 ted States Secari ties Ptlrchtlsed~ta.l -




1920 .


$ 128.o,e.650.00






·-total Cleari!lgs-

Total Jfamber ot
ill Itera ' Bamle4


191-' (Deoember on.q) • • • • • • • • • • • • -.


1916· • • • • • •• • • • • • .• • • • • • • • •


191' • • • • . •. • • • • . • . . . • • • . • • •
1917 & · • .• • -e, • • - • • • • • · • • .. • • • • •


191B . . . . . . . . . . . . ... . . . . .. ... .

!oto.l Amaat ot
All ltema Ifamle4

$ 38,642,?08.ff
'110,190, 98'1.50


:s. 982.e:so



1919- • • •• •. • • •· -t1t . . . . . . . • -. • • • • • • • 2a .no .ms,&.
1920 • • • • • • • .- • • • ,. •. • • • • • •· • •• • 63~881,G02
1921 • • • .• • • • • • • • ♦: • • • • • • • .• • 58-620.078

9,856·, '16'7~2~


. • ',




~ba.racter or JS,per and sturitlea.
Dates on ltlicb.) _ _ _ _ _ _ _ _ _ _ _ _...,..._ _ _ _ _ _ _ _ _ _ _~ - - - - - - rates were put)
)Agricul- l Com-into effeat. ) 0Oirmercsial, asrtcultural, a.Di live-stock pi.per.
)tural Blld )mod1ty
live- )paper
) ..
stoClc )within
)'171th1n )ll to 80)W1th1n ) 16 to 30 ) 31 to 60 ) 61 to 90
paper )90 ~
)10 days)
daJ8 )15 dqa) days
over )


1914-liav• 16
JJGc. 4
Doc. 15 •

1916-Jan. .a
Jan. 28
l'eb, 17
Jmw 18






l9o ws )






Aug. l3
Oat, 4
Dec, 2


1916-Apr, 1.2
Juq 24
Sept 18
,Ql'I-~ .,
lb.y 28
llov. 5
Dea. 3
Dea. 21
1918-Apr. 8
Aay 20



Sept 20
Oat, l



19.19-.Apr. 26
Jmie a
Sept, 3
Ncrr. 4
Nov• l2
Dec. 15
1920-Jan. 3
Jan. 23
. Feb. 6 ,
Eeb. 26
Apr. l
July 3
1921-Juq 1



l ~B1117

no tea


tint . S.aaue4 u at





15, 1921,

- •.Bates m - with thoH epplloa.bla to ~~ i:aper at ocrreepon,,hig matm-1\r.
4 1'he 4 per oent ;ra~ appl.1e4 only to paper aeom-ed 1G" tolU'th Llbert7 loan bcmda, '1bere ·the
paper ree111oounted 1dlh • . •e4eral Reserve !Emlt was t ~ b;r tbe membe:r llank trom lta
ouataner at a ra~ not ezoee4illg tbe coupon rate ot tba bon.4.
5 Applies onl7 ~ member b8.llJQI' collateral. note••

/ ~ '(




-u- ::·
.- . .
















. . .. 1 .•

19-i!er and mtvit101 • oazit~

""'-i.tes on whio.h) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __

• ~es v.ere put) frade accept-) Bank- ) Paper ..a eoure4. b~
)Authal-1ze4 retea
.1.nto ef:t'eot. )
)era ao-)
, l cm aooeptanoea
)oept- )Trea.au17· 'ii.ota■ l)L1bert7 boma) ~ 1n.
)ance■ )and oertft1oatea)am V1cto17 ) open IZIEU"Jalt•
- - - - - ~ - - - - - - ! ) w i t h i n )o( tndeb\t_dneaa.)
)W1th-J 16 to ) a
)Within )16 to)W1thin )16 io 90) 111n1- ) azs.)in US) 90
)mcmthe )15 4aya)90
_dap .) --. ) 111111.
OAU 1 om 1
ioan ,
1914-?iov. l6




Deo. 15

1915-Ja.n. 8
Feb. 28
Feb. 17


J,me 18

Aug. US
Oct. 4,


Jul.¥ 24


1917-Me.y 7






.. (4)4-4¼

lhy 20
Oct. 1


Jlme 19

Sept~ 8
Ii'ar• 4,








:t.. !i







:ia .






'l•.Tuly l
!iov. 2












1''eb. 26
Apr. - 1.





1919-Apr. 26




:.......S-Apr1l 8

lfov. 12
Deo. 15
19.20-J~ 8
Jan. 23



Dec. 21








D1aoonnt rate ocrrosponda 111 Ul interest rate barne bJ oertit1oawa r,t indebted.De11 ~
pledged as oollateral within limits. emwn.
llote- :aa~e on pap~ ■eoure~ lr3 .We.r Oorpora.tlon ~ -~ • oe~bll~ Apr~t-1,191$,
at l per oent Sn ~ u ot. t,lio rate applicable to aa:mierolal ·pepe:r ot ·oorrospo?J11ng
ma.writ;, and were au~ozrai1oa1~ diecontitmed otfeat1v"'··Aia-• ,l f ·1920• 00.1nol4ent with
the izatur1t7 ot all outstan~ We.r J'1oame Ocrpai-atlon b -~ _-:~. ··: •


Condensed history of the bu1ld.1D.£' s1 te am the structure erected
thereon for the .tederal Ho servo .8ank of Kansas City.

A dota.1.led history or the site of tm rederal !Wserve Bank bu1~-

1ng as a. part of early Kansas City as obtained. after exhaustive research
through a period of several years and written tor the corner stone by the
writer of this volma.e, is tound 1n manu.aoript Bo. 10 in the corner stonef,,
a oopy ot which is contained in the archives of the bank.

::5uff'1oe it to .,

say here that the s1 te was scarcely more than an arro\7•s :flight f'rom the
"Big Muddy" 1n the days men tho stalwart Red U'.m. hlmted on the hills that
are now Kansas City.

La.tor it formed the orest


a. moll that sloped

n~rthward toward the river and westward to the ravine that became :first
the Santa Fe Trail and la.tor Grnnd avenue, both notable avenues ot cozmneroe.
Of early importance to the three lots on which the building was erected are

the following dates;
Louisiana .?urohaae
John Jacob Astor f't1r trade opening
¥1rst t'ur warehouse bailt by Chouteau
Ja.okSon county organized
Independence fo\mded


James H., ltoOee 320 acres \now J.ScGee's

.Addition) bought :trom Gov. l!is.a1on ¥ounded



Santa J!e 1' trade began at lndependenoe
Westport founded
"Town ot Kansas" (now Kansas City) founded
John c. J'remont•a•:fl.rat expedit1on
lle%1can War proparatiQn w1 th "Town of Kansas"
as outfitting station
Kansas City given charter by the state
A.a Slll"Ye;yed•




lots were or1g1:call.y a part of the old "Smart

.Farm", later called the "SwoPo'I A.dd.1tion"•

'1'he t1rst OWDers wore Oliver

Caldwell end Henry Chiles who bought t:he tract t'rom the govermnent 1n 1834.


,:ha next year Chiles. sold his interest to cald:well wo one or
the original 1:noorpora.tors of Xansas City.

caldwell sold :rorty aoroa

including this traci to Thomae A. Smart tor ~400 on April 6, :857. Bmart
aold the same :rorty acres on ltv 12, 1859 to ~homn.s H- Swope for $7,500.
'.L'his was tho last transaction 'Wherein the three lota tnrming the bank
site were sold 1n the s ~ tract until, on July 29, 1918, the _three lots



alone wero bought by the ll'ederal 11eserve .mnk of Kansas City tor half a
million dollars. •
,Jf the early homes a.nd buildings erected upon tho three lots,
the first that 1s a.uthent1oally chronicled was tha/1 story brick home
built probably by George A. Tarbet who plll"chased tho lot April 9, 1869
:tor ,rl60 an,i sold 1 t October 27th of tm sazm ;year to Tho!!las J. Ba.mes
for ~l,300.

,:Ohis was on the middle one of the three lots on which the

bank building stands and was the only buildiilg' at thnt time on the three

:the toll,J~i.Dg description ot this groimd


written in 1921 by

L. .B. Arbuokle, who ·then lived at 2509 JackSon Avenue, at the dictation of
his mother, .urs. 1Jary r.:. Arbuckle,


was at tllat time in her eighty-

fourth year but woo died early 1n 1922.
"The 49½- teot ecbodied 1n the hd~ral iieserve .Banlt sito,
next to the corner o:t "J:enth ::;treat am Grand ATenue, waa
tm of the late Hiram Arbuckle and f'smily for savan
years, --187'7 to 1884-. l!r. Arbuckle moved to the home •
a 3-room briOk - at a rental of i15 per -month. later he
bought the property trom a Mr. Carswell of' Ob1oago 1 for
;1.100, pay ing f200 down and $15 monthly. This transa.ot1on occurod a tfffl months before tba ai te of the .l!'ederal_·
Post Otf'ioe, now tho home of tbe ¥1delity Trust Company,
was aeleotad at Ninth and Walnut streets,

"A little later a 3-story front was bu.1lt to the original
home. Mr. Arbuckle a old the property 1n 1884 :tbr about QO , ~-'.~•
$ m1oh was oonsidered a good prioe. His vision then
'\18.B that in a tow ,ears the property s,uld have a great
valua. tion.

, "This property was on the hill, as we do scribed 1 t, a.bout
thirty feet above Grand a.venue• and the :f'ron t y--.....rd :f'Urni sbed a tine view point eobraoing praoticall1 all of' the
business section of Kansas City, and all the residence
seotlon west of Grand avenue. 'i'he .W.ssouri river was
visible at the mouth of tho Kaw.
RThe survivors of the family are tm widow, .Mz-s. 1la.ry E.
.Arbuckle Md two sons, L. :a. Arbuckle of' 2509 Jackson
aven1 48 and M.P. Arbuckle of 214 N. El.r!I\v->od avenu.
":r.trs. Arbuckle is now 84 years old. A few years ago she
painted the :picture of the home :from e. sketch in
1884. The mother and the sons have a profov.!ld interes.t_
in the fact that a structure towering 305 feet - twenty--

one stories - so beauti:f'ul in· design, so magnificent, so
useful in our city and nation's welfare, stands on the
ground that for a was their :place of abode.

"It was wi. thin a cluster of' 011urohes - at least ten in
number - fro::n Eight~h street to Eleventh street - from
Walnut street to l.!oGee ~treat. Th~ location of these
Southwest corner Ninth street and Grand avenue
Ninth and lloGee streets, southvres-t corner
Eight street and Grand avenue, soutlrsost corner
Eighth and Walnut streets, southeaat corner
Walnut street between Eighth and Ninth streets
{about Scarritt Arcade)
Walnut between Ninth run r:ienth (about Gloyd. Bldg.)
Northeast corner .Eleventh street and Gra:cd a.venue
Grand ~st side about midway between Tenth
and Eleventh streets
Southwest oomer Tenth street and Grand avenue
Northeast corner Ninth street ruJi Grand avenuelcolared)
"The Grand .Avenue Methodist Church and the Germun Church at
Ninth and MoGee streets were among the fir st in bilildi11g and now the last remaining, and the Jdetbodist is in a new
building. The writer bas attended all these churches, ev91
the colorod church, ono or more times."

!rhe Arbuckle hoce was razed at .the time tho high clay bank was
cut down and the Glendale building erected on the corner in -.- -- --

rus lli1141ng served as an offioo bu.ildillg until the bank began p r ~ >
ation of the gx-ound !or the new J!'eclera.l iieserve Bank ·ouilding.

'.the first

work of razing the Glendale building was done by Chairman .Bamsay


t./- I


trovernor Uillar.



;"°'._:-:✓- :C / ,._.


·.,.Jc,-(~ _)

Tho goneral contra.ct for the constr-11ction of the new building
• was signed April 15, 192:>.
was Oot. l, 1921.

In that oontract the date aot tor completion

It was later revised however, to Hov. 16, 1921.

aotl.J.'.il wreckiz:ig ot the Glendale building began
of 45 man.



l.3, 19t0, w1 th a foroe

The wrecking ms CCl!lpleted by midnight ot June 4th, and u-

oa.vation :t'or the new building begun June 7th.

The building oomn1ttee ot

the Board of Directors of the bank encountered numeroue d.11":tioultiee and
obstaolea 1n their campaign of planning for the construction of the now

Objeotion to height.
?~inoipal amo21g tlle obistacles mt by the buildillg

oozmu ttee


the obJeotion raised t.o the height of the proposed building by a number

or ltanaas City business people.

The objection was raised following the

ad.option ot the report by the directors of the National b k of Oon:meroe
ln lfaroh 1918.

This resolution

oondemned the decision of the bll.ildiJlg

comm! ttee to erect the struot1.ll'8. to the height of tWSlty-one storlea o.Dd

was based largoly on the fact that the new building would tower aliov-, the
city's two tallost at that time, the Co::merce Trust Company 1 e
building and the R.A. Imig l:uilding, both of which w~re in a dir~ct line
west from the L'ederal .Heserve .Bank building site.
ion was based on the assumption th.a. t the oi ty' a

fecm1ically the object•


line 'lt'Ould appear ·

uneven and that other co~ies or corpora.tiona expecti.Dg to b'11.ld l>uild1ngs 1n tbe tuturo might again outstrip the now building and thDa


a •

manner bell ttle

the two ran~ business buildings who had

pioJleered the

tall building.

The resolution passed by the :Sank ot Comnerce directors· .

oalled tor a discuaslon with the Jfederal iteserve Bank bulldi:Dg oomnittM,
on the matter ot the bank building' B height.
The oontorence between the representatives

ot the Be.nlc ot

Com:ierce am the representatives of the l'ederal .Keserva .Banlc was held 1n
the dirootors• roams ot the latter institution.

There were presenta

R.A. Long, Chairman ot the objecting camnittee, W.T. Kemper, Cha1rmm
of the lSOa.rd of the Bank of' COl?meroe, and J.C. !Uohols.


the .rederal .Heserve Bank were Chairman .Mamaa.y, Director lloClure, Highes
.tsryant, a.;ent for the buildiog, and Governor Miller. J.C. Nichols was
spok.eama.n for the obJecto~s.

He outlined the obJect1ons and suggested the bank, in order to house itself' properly, should purchase more
frontage and build wider rather thml higher than adjacent buildings.
In answer it \'E.S pointed out to the objectors, tba.t men the
long bu.ildi:cg was erected it far outstripped the S'Ull"rounding s)cy' Una
and no objection was raised, also that the operations ot the bank required the maximum ot natural light and fresh air and tlnt the ho1ght of the
building was intended to ta.lee oare of these requirements aa well as to

utilize. the very high prioed ground to the best ot advantage.

It wae

a.lso pointed out that the emptying of the bulld.1~ at noon or eveniDg
-rush hours would not congest the streets e.t this corner nearly so much
ns the emptying ot ~seer buildings on other streets, such as lliin street.

The obJeot1on: ra-ised, While 1 t was unsuocessf'ul, had the ef,teot
ot' alowiJlg up the p:rogres_a ot the preparation for the building for s~eral •

months, or until the directors of the Bank of Cam:ooroe assured the .redaral
l(eaerve Bank directors thet t~ resolution of obJect1on had been expuDged
tram tho records.

The retarding of progress oame abo".2t beoa.use the.

~eder,al .Hesene Bank directors did not desire to


the re·q_uest of the .h,-

.l!'ederal .keserve Board for the.

21- .::tory building .vhile there were

extant ,my objections on the part ot any Kansas City business mn.
Partition wall a thorn.
Another mattor which retarded for a. short time the progress ot

getting the building under hoadway and which was the means at an important chazlgo 1n 'bllilding plan, ·.vas the 1nab1l1 ty of the building oomni ttee

to reach an agreement with Walter Jaccs.rd at the Jacoa.rd Jewelry


over the north wall of the :proposed building~ which wn.11 wa.s to a.but upon

the :property of Mr. Jaocard to tho north of tm



The archi tacts for the bank :proposed to llzy' the north cantilever
base of the buildine nearly 100 f'eet below tbe street level am in such a

men.nor as to


a base for not only the bank buildi:rg but tor whatever

building might be _constructed in tho tuturo on the property of !Ir. Jaccard.
It was proposed to Ur. Jacoard therefore, that if he should erect a building adjacent to the bank ho could go to matever depth he desired, using
the same cantilever supports and


a · fr~iction only of whe.tever part of

the bank.ts wall he might desire to use.

Mr. Jacoard did not see flt: to

agree to this and it was necessary far the architects to re-arrange their
plans ani place tho cantilever eupports at the front and roru- of the building and build only up to Mr. Ja.coa.rd'e line, thus maintaining a. bu.1ld1Dg

separate and apart from whatever bu1ld1Dg Mr. Jaccard or his lessees or
heirs might decide to orect. •

. . • 0 0 B If -~ B

5 'l O Jl E

8 E

:a V

I C E S.

Supplementmg tlla report ot the oorner stone :tey1ng found on page
1n the
precediDg narrative there are g1 van following the program, list
ot guests BD.d addresses ot oermoonies ot April 16 1 1921•

-PROOIWIFederal Reserve Choral Club

Bishop Sidney c. Partridge

Iha ter o t Oeremon.1.ea
.uiying Corner Stone

Asa E• ~ . Obai:rman

"America the J3eaut1:f'ul"

Foderal .Heserve Choral Club

Address- Federal Beserve Bank

Director W.J. '.Bailey

"The Stars and Stripes :rorever"

Federal Beserve Choral Club


J.z. Jl1ller, Jr. Govemor-Ot:f'io1atiJJg

Star-spangled Banner"



BiBb.op fhamaa F. Lilli$

John B. Jones, lmsical Direoto.r

Bichari Ji. Canterbury, Accompanist


Oliver L. ShOup
Henry J • Allan •



or se.,an states ot Tenth Federal lieeerve District.
J.B.A. Robertson
Robert D. Oa.rq

Arthur 11. Hyde

Samuel R. JloXelvie
11.c. .Meahem

Presldentp and Secretaries of' All 01ear1ng Houses in Tenth Diat;r1ct.
J.A. Connell

J.C. Barger

lii.D• fhatoher
w.J • .Bnile1

lat.~ lreidentbal


D.F. Calla.ban
J.R. Wiae
G.I.I. fb!th
1.L. lord

.B..L. Beattie
D.R. Fink

T.C. Jlloller
G.L• :Dmm
J.E. Ce.rm

.u.w. Hogan
W.L. Lowia
H• .B. Henderson
F.R. Davia



71.A.P. UoDone.ld
c.:.v. Jmaaor
~.Ji. Grubba

J.A. Bartan
E.S. Irish

x.J. L1tteer


!eP• Parmer
w.1. Dmm
Wm. .B. BD{;hell

Chas. !J.nlq

O.L. Wilson



the i'ederal Reeerve Jm-nk

or JPm2a


Obail'!mn Asa E. Ramsay and lfra. Ramsa7
Jred W. l!'larn1ng and da'CDl ters
E.E. MullJmey a:nd lll-s. ll12llanq

H.W. Gibson aDd Mrs Gibson
J.C. l!itchell and Mrs. Mitchell
M. L. l!cClure aDi Mrs. MoClm.-e
T.c. Byrne am Mrs• .Byrne
1:-J.J. Bailey and Mrs. :Bailey

R.H. Malone end Mrs. Ya.lone


lbrnham am ~s. Burnham

Directors lhnagers ot the Chaha, Denver ap4 OJsJahoma. 01tt
»ra@hes togetmr with their m.vea.
L.H. Earhart, t~ager and Director
P. L. Be.11, Direo t er

c.c. ?arks, Director

H.O. lhrnell.Director
Wm. J• Coad, Director

Alva B. Adams, Director
c.E. Dmlel, Yan.ager and Director

Geo. E. Abbott, Director
o .A.. Burlmardt, Uenager end Director
A.O. Foster, Director

Dorset Carter, Director

Jahn Evans, Director
'lh:n. Uee, Director

T.P. lllrtin, Jr., Dirootar
L.L fl:mrnx>n4, Director

J.E. Ha.rt
J.B. Bead
Fred G. Demis

Gl'ELnt !.i)Feraon
¥.B. J1'oater
J.G. liaghel

.B..J. Hottman

;i;:,s1denta and secretaries


Jrulkers' Aasoo1at10no ot tm seven

Ste.tea of the :tmth Federal BQserye D1str1oi.
Colorado Bankers' .Aeum.

Albert A. lleed, President
?aul Hardey,


Kiasour1 !ankera' Assn.
X. l!". MoNal. q. Preai dent
W.F. Keyser, Secreta.?7
Ban ea.a Bankers• Aasn.

H.W. Grass, Preaidmt


Bo"11DBZ1, Secretary
.Nebraslla Bankers' Assn,

J • C• llannigan, President



Bugbee, Secretary
Oklahoua Banlc:er1 • A1an.

D.1'. Fink, ?resident

Eugene P, Gum, Secretary
Now 1Jsxioo .Hankers• Assn.
l'rank R. Ooon, President

R.L. Orlubee, Secretary
W'JC)ming .Bankers• A11sociation

John w. Ha.y, President
Barry B. Henderson, Secretary

Newape.per Rem:ese.~tat1vea •
Dr. end Mrs, ~ i s Jmkina

Cbaa, H. Sessions



R.E• Stout
D. Aust1 n Latchaw
U.L, JloOall

L, .B, 111.clr:e l
V1 .it. .Butah1nson
.:.rx-• . &-..Jfr.s.J.s. JaOkSon
We .B. StODO
Bmrael Soalan4
tll.e tollQY4pg Sµperv1eire .r-oroe of QJW¥YP, An¢erpon, lfl'Obst &

rute, Arcbiteotp.

0,Vt, Dolle
D,P• lrlleiolc

H.G. OllOD
!<>than :icOuiaton

S.A., Wpl\
Lewl1 J)Qliler
lf,A, !fennel~
~,A, Ott

Clarence Ott
A.H, Br'eitag
S,A, W&ldmn
o.D,. Shaw.
W,A, JBttq

Graham, J.n4eraon 1 Probat

& White
John J4. Snead & Mrs, Snead
Obas. A. W1lcle 1 Jr.




Followire enb-oontrootors and mterial deal.era or t :lfir rppreaenta.tiyep.

Vernon He Trueblood
E.K. Adams

Edzmmda Mtg. Co.

Jolm J. Sherin Oo.
Badger Lbr. Co.
Stewart oand Co.

Medart llfg. Oo.
Lmlbermen'a Supply co.
l'fatioml x-~ Betleotor
Ve2'm0nt lm-blo Co.

Norton Bros.

L.K. Comstoalt & Co.
Xornbrodt Xornice Co.
Robert w. H'tmt co.
Pittsburgh Plate Glass Coe
J .i>.

Otis Elevator Co.

Knisely .Bros,, Inc.
Obas. Jomson & Son
Standard Asbestos lftg• & lnnla.Ung Co•

Overland Const. co.

The Lamaon Co•

Cecil de Groot Co.

Permanent Ironite Water-proofing Oo•
The Humboldt Brick atg. Co.
G.T. Barton

Coan .Bldg. Ua.terial. Co.

Paul .Patton

Jolm £tJBeath

?residents ot UniverBitiee gg seven States in Tenth District.
?res. George 1forllD
Cbanoellor c.E. Lindley
J.oti.Dg Prea1dan t of W.asour1 Univ~sity

s. Hill
?res. Stratton D. Brooks
.Pres. Aven Nelson
Pres. IE.via

Chancellor Sam' l. A.very

Cbas. CUrtis, Kansas
Ja.a. A. Reed, ?li asour1




Lawrence u. Phippe, Ooloracto

Gilbert l!• lll tohoock:, Nebe
(}90 • W. Norris, Bebrallka
J.ndrieus A. Jones, N.K.



Bobt • ::... Owen, Oklahoma
Jolm B. F..endrick, Wyom!Dg
Fran oi s ..!!.:._ Wa.rren, Wyom!Jlg E. B1cholson, Colorado



senators -

BBzoreld, Okla.

Sixty-Seventh QongreAAl?t)n - Residmoo Address.
Wm. N. Vaile, Colorado
Chao, :B. T1niberlalce,Oolo.
G-ay u. ~ . uolorado

Edward T. Taylor,
Daniel R. Antho~, Jr.Kansas
::dward c. Little, Jransaa
?h111_p ?. Campbell, Xanaaa

Homer Boch, Xmiaaa
Jaa. G, StrODg, Xanaaa
Btqs B. Wh1 te, Xansas
J.N. Tlnaber, Xansaa

BiobN-4 l!:. Bird, Xazusa.a
Bem-y F. Iawrenoe

Cbaa. L. Faust,


Edgar u. El.111.


w1111em '.>. Atkeson, W.aaom-1
c. Frank .Heavia. ~ebraslm.
Albert il. Jetfrie11 1 .Nebraam
.Hobert E. Evans, Neb.raalta

:Llelvin O, Mola\lghlin, _lebraaka
William E. A:ndren, ?fem"Uka
lloaea P. Kiua.1n~ Jlebraam

Nestor llontaya, Bew Jlazioo
!hos. A. Chandler, Ok:labomFL
il1ve l'I. Bobertaon, ~ab0Dl8

Chas • .u. Carter, OklaJ:>oma

I '-Ii

J.C. ?rillg9:,, Oklaba:::a
i' • B. Swank• Oklahoma
L.M. Genewm, Oklahoma



!.lmue 1 llerr ick, Oklahoma
Frank 71. Jlonde ll, \Vyom1%1g

Mo011nt1o, Oklahoma

zo11omng Qttlgera am b:1en4B or the Denk, n4ara1 Md 01v10
· 0tt1c1a1s yith their wives;

Governor a.nd lfl-5. J.z. Killer, Jr.
Deputy Govarnor am. :as. a.A. Worthingtca.
Seor&ta.I'.Y alld Mrs. C.K. Boardman
!lr. am ?Jrs. J.W. Belnl
Mr. and urs. J.M. Wo:rla7
1!r. and l.Irs. J.E. Goodrich
Ur. and lira. Jo Zach W.ller 111
.Mr. and Mrs i H1tjlea Bryant
Bishop Tl:l.omaa Jr. Lillis
Bishop Sicmey c. i'3rtr1dge
Bishop William A. ~ l e

Biahop E.B. Bendri:
.Bishop John Ward.
.Judge & l.4-a. A..8. Van Valkenburg
Judge Ximbreue}l Stone and Jira. ~ i s Wilson
~Ir. and Jdrs. I.R. Kirkwood

~or Jame Cowgill
.Matt A. Foster, ?ollce Comnisaioner

John E. Wilson,

Invitations tos


J .a. :lichola

W.T. Xemper
.R.A. L0Dg
~ • .P.

Walter Jao08l'd


Herman Renrioi
011nt ouve:Sam q • .Pearson

H.C. Schwitzgebel
E.E. A.mes
J.B. Burrow

B/Jy r.. .Bomt •

... -



Clulos Ed.wards, Chiet ot Police

(For addressee aee printed copy 1n archives.)


SUmmary of lJs.terial in Building.


:Brick - Face

:BriCk -



llEIGm.. roES









l3r1~ Camnon

Oement - Car.Dey








S,908 Ala



20,303 ~la








'l'YI Ua



U~OG-9 Yu







Wood Tr1m

14 ·


Hsple noor~






Straotu.ral -steel

Bein. Stee1

Floor Sl~.ers

Crushed BoQ.k
Lime a:ild




:lo-llow file

Fire .Escape -~
Cut Stone


llS,000 __









4., 1'16, 000


U/1 ,seo -!cl


.Elevator Equip.



Lie;h\~ 11.xtur••

.. ,

Electr1c&l. wol1c

Pneumatic Ta.bes

9,646 T4a

22;6-68, 100 .




2,-8'15 Tela








1. ,~_)










DI.GR'! PotmDS




1-ltab!Dg 5Jst8!JS

lieatblg Syatem11
VentllatiDg Syst11111B

Yacetian Bllnda


Metal Loclr8r8
l!etal Windon

Sheet Metal
Ki tcben Equip:Dent





l of



. ..... :4, -::--

..,..,. --~

-.BaI.tDDrG E m ' ~




Cm.rt ahadJlg mabc" oL woaing c1ap. zznm>er.'ot IIODiha D4
mmber tJt am •pl.o;yed par month 4m"izg t.1:11 21 ~~ oocmp1ed. 1D erecttnc th& Foan.l. BaMl'!l"e BmakGt ~t:r•• Cit;y.


ll1BmBn iY DB


rm (1' l'OIEIBG~


.. . ..... ..
- -··
... ._.









- ...




1921 '








A.Dgmlt "




De~- -




SeptUlber .



Ilovenber - ·- ..
Decenbv •


1922" . -









,.-2§ ,c·.





76 -·




-62 .






26 ····---- - -

26 ::













uo.'"9 •

·n·--..-.·.: · •


39 :..



240 .
128 -


. .-~. .·.
. ..



_,,,;,.:;.,,.•,, .....




. -- -·- -





. -.....


,...i; ....


. . . .,







60. 7i
6,360, 00

Wa tollnen


i 'rUOka
.P 1 tman

.?lumber loremm

Appr. Bridgemen
Gen' 1,


.b:reotion "


Bridgeman Foremen

Eleotrio Helpers
Hitter Foreman
Fitter Helpers

33. 60





1 1 592,90

Pluter Poremm
Sheet Metal J'orenBD
" Balper9'
Wiremen .

Boiler mer. :roremen
Boller llaker•


lather J.l'oremen
Pipe Coverera

2 1 '132e00





Setter Helpers

Rigger Foraman
Stone Belpera
Iron Workers
Stone Foremen
Stone Setter
2 1 322.00
Stone Cutter
Asbestos Worker
Elevator Oonatructor',292,00
Sheet Jletal worker 10,064.00
Oma., Iron Worker 9,206,30



Appr. Plasterers
Asbestos Work, RelpeN
orna. Iron Joramen
.?ainter l'Oromen




.l!'u:ture I!e~re
ElffV, Co:ast. Belpers




.l!"ixture llil,n



35, 753.oo .
2,412.00 ',

Hod Carriers

Appr. Roofer■
Cement Finisher



Carpente: Foremen
Shade lfsn
Iron Worker ApJr.
Mosler foremen
li:>aler . . "
.Kleotric l!'oi-eman

lillson Foremen
Glazier ,or,emc


Sign Painters
U&ble 1tan




6~.oo .









Schedule of Changes in Discount Rates and Dates Effe~tive During the Years 1914-1921

Rate ■

Member Bank Collateral Note•
Fifteen Day ■
Secured by Secured by
Commercial Pa1>er
in Effect
Maturina- Within
Oblia-ation ■






16, 1914......
3, 1914......
28, 1915......
7, 1916...-.
3, 1915..... ....... . ,.
12, 1916......
24, 1916......
18, 1916......
1, 1917......
7, 1917......
28, 1917... _
S½ ,Y.
1, 1918......
8½ %
8, 1918......
20, 1918......
4¾ %
23, 1918......
4¼ %
1, 1919......
4¼ %
19, 1919......
S, 1919 ......4¼ %&4½ %
12, 1919......4¼ %&4¾ %
29, 1919 ......4 ¼. %&4 ½ o/o
16, 1919...... 4¥.a % to 6%
8, 1920.....:4%. %&5½ %
23, 1920...... 4 %. % &51Ai %
26, 19 20...... 5 o/'o &5 ½ "lo
19, 1920......
3, 1920...... 5%to 6%
28, 1920...... 5"/o to6%
22, 1921......
1, 1921......
2, 1921......








4 ¥.a o/'o
4¾ %
4 %. o/o


Day ■

4¥.a %
4¥.a %
4¥.a %



4 ¥.a "lo
4¥.a "lo
• 6%


Commercial Pa1>er Secured CombJ' U.S. War Oblia-ation■ modiiJ'
Aa-rl80 DaJ'■ lli Da11 16 to 90 Daya Paper cultiual

4¥.a %
4¥.a %
4¥.a %
4¥.a %
3% %
4½% · 3½%
4¥.a % 8½%
6¼% 4¼%
4¥.a ,,.
4¼,4¾ & 4%.%
4¼, 41Ai & 4%. %
4¥.i "lo &
5½% 4%.% &
4%. "/o to 6½%
6% to 6% '?'o


Progressive rates effective--See foot-note.
5% to
6"/o to






• 6o/,,




5 "/•



6 ¥.a '10 .
6 ¥.a%
5 ¥.a "lo



6 ¥.a %
. · 6%
6½ o/'•


Tnd• Acc@'l)tanen
Maiurina- Within
UDaJ' ■ 80 DaJ'I

3¥.a % 3¾%
4¼% . 4%.%
4¼ "lo 4 %. ,,.
4¥.a % 4 %. .,.
4½% 4 %. .,.
6% - 6%
5½% 6½%


6,Y. _




6 "/o


Market Rate

5% .

Market Rate

, The application of the progressive rate was discontinued

•Tb■ baaic lli,_1 of a member bauk la determined bJ' deductlnr from th ■ amount of lta avera,:e Te■""'• foT tbe 1>recedin1r mouth. the 16~
Neer•• on depoaita which federal rucrve banka are required by the A.ct to maintain; to the ~tnainder la added tbe amount of capital ■ tock '
paid In by tbe member■; and thla ■ um Is multiplied by 2 ',!, . Offerlna-• ag1,?rel1'atin,: tbc amount,. ,. member bank'■ baeic line are dlacounted at
t.he nonnal rate of 6 %. The rate 11 PrOll'rn ■ ed ',!, ot 1 % for eacb bncket of 26 % ID exceu of lta ba■ lc line. Notee ■ ecured by Trea ■ DrJ'
Certificates of lnd.ebtedne■■, Liberty Bonda or Victory Note ■ actU&llJ' owued bJ' the borrowinli member bank on .April 1, 11120, ar■ dlacounted at
tbe uormal rat■.
tAdvance■ to member bank■ on their 'l)romlnory notu ■■ cured b7 U. S. Governm■nt War Obllratio11.1, or 011 r■dl■~ounta 10 ■ecurec!, will
be made on the bui ■ of the approltimat■ market value thereof.
. •.
, ·:
:The 'l)rg~eulve rate wa1 modified II follow■: Au addition&! ebar,:e of 1 ~ above th■ uormal ba■lc nte will apply ou advauce■ In <0:ree11
of t.he ba■ ic amount up to and lncludin6 200'!1, thl'reof. Sub ■ equeut additional advance■ equ■J to l00'J, of the baalc amount will b,o 1ubject
to a rate of 2 % I.II excen of the normal rate. Advance■ to n,."embu bank ■ on loaua iecured by U. S. GqY ■.rnment War Ob l~ation■ will b■
made on th• ba■ II of th■ approxiJDat■ markd ~&Jue of 1ucb, ■ -c~ti-■•


Ililltory of Finana1al .A.chiffemente of the Federal ReeerTe Bank ot
Kan.._. Ci'ty with Peraonnel ot District Worker•.

• • •
The history ot the ach1nemente of the Tenth Federal Re- ·
eerTe Diatriot in railing
pletely written 'b,-



in the World War rill nner be

one man nor 'b,- an;r one hundred. aen.

hietory would. of neoeHi'ty 1nolude the personal
and1 ot aen and


1aoritioe ■

Such a

ot thoue-

in the great aouthweat who plaoed their oountry

ahead of their oomtort and "bought bonds till it hurt. 11
hi ■tory


Suah a

would include a detailed chronology of the aocompliehmenta of

eaoh team ot eolicitora in each oity and inner, one or the 380
oountiea that •de up thia District during the nr.


be the purpoee of this reoord, howeTer, to

chroniole merel~ the organisation of the District••• tinanoial unit
for th~ aid ot the nr against
the Dietrict and. noh ot

it ■

Pru■ 1ianiem,

and the


state• during the war period.

The lleginning ot the World War, u it oonoerned European
·belligerante, wu ln effect oontemponry with the eltabli ■hllent of
the Federal Reaene oank1 1n the United states.

The World War be-

gai. in 1914. while the Federal Reaene .Aot•a paaaage by


Deoeuer 23, 191Z..

Congrea■ waa

The Federal R•••rT• Sy~ wa■ not in aotual

operation until llNl'ly the dl.te ot the great

war' ■

outbreak, and the

European conflict had 'begun to ehow its reneotian in .Ameriaa I .
tinanolal operatiou by tb8 time the twelTe Fed..-al Re1erTe 1'e.nk8





were fairly established and in working Ol"der.

eatablt'ahment ot the Fed~l


So tillely • • the

Sy.tem that the wv tinano/

ine 1n AaerS.oa tell natval~ into the clutS.n • • - ' b,- the Feel•
eral Reeen-e



J.nd, ta.kine the oountry

• whol• er by Dia-

trlate, there can be found no m.n today 'Who can •J' what tlmnolal

oalaaitl•• might haTe htallen the nation under woh atP••• •• it

• labored
dur Ing the war• had it not been
< ...
the Federal

Re ■ arre

tor the organised etteot ot
it ■

&yltem, 1t1 bank• and

LU,e... Lou Orpn-

In oold 'benla of

dollar ■

oent ■


there are g1Yen here-

with, tor the aake ot permanent reoord, the aotual

of the nation and of the Tenth Fede"l


1 inewB

Di1triot in n.ilil!g

Of -al' • II
Su'b■ ariptiou

raiaed in all the tin loane 1n the United

States totaled t23,9TZ,111,.a0.

·Of' th.le aao\1llt the TNaaurr aooept-

ri t:2il,-''1'1 ,336,850.Yet ~ e d with
the approximate total•


aooamplla!aent ■

rai■ ed. by

thi ■

wonderful reoord,here are

oth.- oountr1•• engaged 1n the oon•

Great Brl1¥,.n 120 ,ooo ,000 ,000 J France 120 ,ooo ,000 .ooo J Ital.7 .. .




The number ot lndiYidul war loan


in the

United states dlU"ing the war i■ ut!aated 'by the !reaa1r7 J)epai1aa~ •
- .
at 66,289,900, or between one-fourth Uld one-thircl of the nt1re


populaticm of the nationnat the oloee of the war.
the ll\lllher ot 1Ubaorlption1 oame troa the

The •jorltf'

pm-obuer ■

ot 'bo~ o~


..:_: ;

ot .


the smaller dencadnation•, turther attesting the patriotia of the
people who made up the Uni tecl states• and ab.owing ho.- broad
educ..tion wh1ah the Treasury Department and the 7edera1
!&nlcs gave to the people on the eubjeot or Government





One year before ttie iaaue ot the bonds ot the First

Liberty Loan there were outetanding tl,378,124,69i in United state,




the ■•

or wealth:,

had 'been added to

nre held alaost entirely by tinano:1.111

lndivlchaal ■•


On June lfi, 1817, tWQ blllien

outatand.lng, that aaount being all

that the Treaeury accepted. ~·the $3,035,226,860 nb11cribed 1n
Firrl Liberty Loan.

or the Federal


F.aoh sucoeeding loan prc,yed the ineetimable
Re ■erTe

B&nka a.a a oog in the -cbinery that

helped win the war•
Following ue the quotu, aubacr 1ptlon8 and &llcrbaenta-,

ot the t1n loan• by States ln. 'I.he Tenth Federal Reeen-e Distriatt

!otal .

11 1 98S,500









1 1667 1650

1'1,966 1 T60

1 1668 19q0


$91,?68 1 860








Ian•• ·





28 1?01,160

2, ,895,200 -·



.,: ' .


1..- Kuioo

3 19M 1000
ti.20 ,000 ,000




s,e92 1200

f-Sl,18-C: 1 900






In Jlexioo



$31,296,'160 4?,181,200






$204 ,092;, 800









,.,.3'1,4'49 ,600


JJ!.aa CNJ:i



llew YexiDO


, ,. vrr 15_00




T3 ,914-,660
46 ;4-33, '160







liew Muioo







10il8S 1160
$296,961,4e0 .•
. : · •;

Allotment : ,- ••

61,208,260 ·
~l,"68,860 •










..: --~ ·-:. -

=· ··.

44,211 1 T&O .


. .~--: ,-. •


Too much oredlt oannot be given the -ott:lo•• and dil"eotar~..
. . ...;.. :• ..





ot the Federal Reaern Bank of thi1 Diatriot tor ahouldwing the
reaponsibiH.ty or raising the Distriat'a quota ot eapeoi,all7 the
There wae no organisation at that tbte tor

1'irist Liberty Loan.

rahing the loan and the work na done under the direction ot .oo,,.
ernor !filler and through the aaabtanoe of the directors and ott!.eera

or the


in written appeals to member


to ralee the quota

assigned the Distriot.

For the Beoond Liberty Loan a tentat1Te orpniaatiOQ


etteoted in the Dietriot at the instigation or the Federal Re1ene

Of'tioera of the bank, ldth the aeaiiltanee of Mr. A. E.

Hutchings in charge

or publicity, distributed loan literature pl"epe.r-

ed by the PubHoi'ty Bureau in Washington and earried on a Clllllpaign
largely by correspondence, eutficient, however, to put the Di.trict
over its quota.

The permanent organisation ot 1ihe Dietrlot wae 'be-

gtn in January 1918.
•ere made.

B~tween -t·oana 1ome changes in the per aonnel

• are the names of thoise who eerTed:

Roetn ot Liberty Lean Offio1al•
Tenth Federal Reserve Diatr1at

.J.Z.Mlller, Jr., Governor Feclel"al Beeerve Bank and Ccadttee
· ·· ,

Aea E, Rpeay, Cbalnaan Federal Reaarn B~ and Vioe Chairman Cmmittee
J.L,Oro~i, Deputy, GoTemor Federal Reserve Bank end IDo. Mgr. Gamnlttff
C.A.Worthington, Manager Liberii7 Loan Department, P'.R.B.
C.A.Burkhardt, Deputy ExeetitiTe Manager Committee, Dem-er
o.1'.Enatmn, Deputy Ezeouti-.e Mnnager Ccmnittee, Omaha

heoutiw Ccamitteei

John F. Downing, K.C. Mo.
W. T. Grant, K. C. Mo.

C. G. Hutcheeon, K. c. Mo.


B. Motuoaa, K. c. Mo.
J.C. •1ehola, K.C. Mo.
Geo. 'f. Trimble, K. C. Mo.

B. P. llrlght, K. C. Mo.

Central Liberty Loan Camnittee:


F. D. G&rdner, Je~feraon City, Mo.
Arthur Capper, Topeka, Eanaa.
Julius z. Gunter, Dennr, Colo.
E. c. Du'baoh, Santa Fe, I. ir.
Frank L. Houx, Cheyenne, Jtyaming.

Bon. X. Im lle, Linooln, leln-aua.

Hon. R. L. Willitlllle, Olclahc:aa Cit,,, Okla.
Bon. J. W. Bailey, Atchiaon, Ian••.
c. E. Burnham, Nc,rtolk, Rebraaka.

R.H., Denver, Colorado.
M. L. McClure, Kansas City, Ko.


Fltming, lanau City, Ko.

?i. Aydelotte, Oklahcaa Olt7, Okla.
Geo. w.• Barne•, Kuakogee, atla.
Ward M. Burgees, Clu.ha, Nebraska.
'l'. C. Byrne, C-ha, lebraeb..


c. L. Da.vidaon, Wichita, Kanae.
Reed Holleman, Santa Fe, N. 14.
Robt. D. Ce.ray, · Cheyenne, Okla.
Geo. R. Collett, Kan•s City, Mo.
J. w. Perry. Kansas City, Mo.
B. w. Gibson, Muskogee, Okla.
John hvana, Derrrer, Colorado.



Goebel, Kansas City, lane••

J. H. Gordon, MoAleater, Okla.
• Ford. Harvey, Kanaaa City, Ko.
Mrs. Helen Ring Robin eon, DenTer, Cc,lo.
Mrs. T. s. Taliaferro, Rook Spr1nga, Wyaming.

~o. s. Hovey, Kanaaa City, Miaeouri,
William c. Irrlne, Ch. .nne, Wyam!ng.
Robt. M. Jarce, Lincoln, Nebr,

W. T. Kemper, Kane•• Oi'ty, Mo.

Harold Kountze, Denver, Colorado.
J. D. Lankford, OJclahcma Cii;y, Okla.
J.C. Mitchell, Denver, Colorado
:P~ c. Mitchell, laneas City, Mo.
J. K. Mullen, l>em'era Colorado
F. B. M..1mtord, Columbia, lfo.
Grant MeFereon, r>eiwer,


F. P. Neal, City, Mo.
J. C. Newlin, Cheyenne, lty'caiDg.
J. A,. ?reacott, Kaneu City, llo.

Hallett Raynolds, E. Laa Vegas,•• M.
Patrick Sullivan, Casper, Wy-cai11g.

Gi M. Smith, Kansas City, Ko.

E. F. Swinney, Kansas City', Jlo.
J. J. Tooler, Lincoln, Bebraeka.
Geo. H. Van Stone, Santa Fe,••••
Henry J. Water ■, Kansas City, lfo.

• • "I
# ,

• •~


• •




Walter E. Wilson. Topeka,

Seoundia Romero, L&e

Xanaa■ •



Mrs. Henry Ware Allen, l'ilchita, Xanaae.
Dr. Leila E •.Andrewa, OJclahmll City, Okla.
Mrs. A. D. Flintom, Ianaaa · Cii-7, Jlo.

Mrs. Howard Huey, Santa Fe, I. M.
Mrs. A. G. Petereon, Aurora, iebraaka.

w. .a.


Director Speakere Bureau - Dr. E. E. Violette
John T. Wayland
Director or Publicity A. E. Butoh1ngs
Jess -,i. Worley
Secretary P. W. llallahon
Chairman or Rom.en Mrs. Geo. w. Fuller

State Chairman - narold Kountse
State Seoreter,.1-Suiuel D. Nioholaon
H. L. Morgan
District Chairmm:

C. J. Moynihan
W. E. Duggan

F. P. f\'ood
Nell McLean

D. Thatcher

H. B. Means

E. P. Shove

J. H. Roediger


Richard Broad, Jr.
Geo. Mc Carroll

Luther M. Beck
J 6. s • p. Burne,c. N. Jackson
Har17 Caaeady

Wm. W

J ; F. MoDcma14
D.R. Grant

E. A. Schlic~ter
J.C. l!cWUllau ··,
D. 1' . · Stone
Geo. Jrgall

D. Nicholson

R. L. Snodgra.H
I<. L. Schu;ylC"
Veob.el Rtgaby

. • :,

lf&s Buehwnn


State ChairJ1181l - c. L. Dav1daon
State Secretary- L. L. Jla.xeyDiatrict Chairmen:

F . : W. Free11&11


J. Breidenthal

J ~ Ii!. Lamon
Wm;; Ti.,yml. D
-C. !. Kirtland
A. E • .Asher

A. D.

Jelli ■on-

C. G. Cochran
R. s. Hendricb

P. SulliT&n
R. Moae ■ .
C., Caner
H. Yomg _
.·, .
Geo . 'I'. Oaeru.,-



L. Da'f'14aon

lli ■■ Cllll"i:

State Cba1r-.n • F. C. Mitohell
District Chairment
I. A. Vant

J. W. hJT7
G. K. Hargett

r. L. ror•

E. E. Montgomery

B. A. Malin
E. A.


state Chairman - 1'. C. Byrne
State Seoretary• .E. F. folcla •
Di ■trict


r. Cordeal •

Mart 8panog1.-


F. L. Moon-,

F. A.


E. R. OurJle1
c. A. JfoCloacl ·
E. L. HeTelone
Paul Je ■■en
Geo. w. Sbreok




Ge<:> • N. Seymour
C • E. Burnham

P. Walsh





llew Mexico:


State Chain.-• Ballet't Raynolds
Reed Holleman ·


State Chairmen •
A. E. Ra.aa7
J. H. Gordon
L. E. Pllilllp1 _

N. R. Orahaa
Cheater Weettall

District Chairmen•
R. )f. lloParl in
H. H. Ogden
Fred T. Miller


H. Martin

E. D. Foster

w. B.

Lee Le'Yering
I. D. Sandlin

A.. E.Stephen1on
W. H. DonabDe

State Cha.inn.en •


Belli ■


E. Corthell

Patrick SulliT&n
In addition,. to the war
ganization ot the D1.tr1ot . the

loan ■

r a iHCI by the oentral _..


Lou and Barlnge Organ!•





the Diatrict conducted a great campaign tor

aaTing ■


Govsra::nezrt Savi•• Seeuritiea throughout 1918 and nen earried 0\.-t
the work oontinuoualy thl'ough 192G, and are -still engaged at the
preaent date.

.A wonderful 1'0rk in educating adult• •• well aa

ohildren in habit• of thrift was done by the organisation• and the
tunda rai1ed t.hrOllgh thia work mounted up :lnto the aillione despite
the nall dnominationa of the seourltiea.
Following were the sales during the


Viar Saving Stampa
'FhJ' i.f.'t st·ampe

Piece ■


Sold , Amt. ot



Sale ■

lfairurity Value

~29.972,314.,6 $36,439,1iS

?76 18~7~~6
$30,749,162.60 ta?,216,662.76

Certificates of Indebtedneaa
The sale• at Cert1t!ont.ea or IndebtedneH leaued in
E1ntieiptrb'8n or the Tarioua War Loans and iude through tbia institution

were t,563,816,600.00

U.:I;":'G QF CJ.E:5:ll J'!'J!E GF TRE NEJ HJ1tE OF THE

APRIL sv;TE::ilf2R,


NIN'ATEEN HQNDR.t.7? ,s,l:;Jn•x om;.

The amendmont to the .redera.l .Meserve Aot pe:nnitti11g the eotabliahment or branch bank.8 ,,;as passod 1n June, 1917, am on July 18th
:f'ollowl:ng tl:Je l!'edoral .Reserve Boa.rd authorized the- establishment of a
branch ot tha .rederal Beserve Bazlk of Kansas 01ty e.t Om.ha, Nebraska.

The branch tl:ms authorbod OO?:l!!lenced businees on Septed>er 4 1
1917, with reserve deposits of ~13,654,953.10, aDt\ vne the seoond bran.Oh
to be established 1n the United States.
!he territory of the Tenth ~ederal Heserve Dietrict ass4,-ned .to
the Cr.alla Bra.noh f'tt>.a the bog1nn1?Jg oompr1sed the etatea of .Nebraska 8Z1d
\Vyomillg, w1 th areas 1n ::iilen of 76,808 and 97,548 and populations
a.coording to 1910 oeneus of 1,192,214 and 145,965, respeotively. 11h8 •
1920 oensus gives the population 0£ Iifob.?-aeka l,295,502 e.nd 'i'Tyoming,194,402.
The Ounba Branch Zone is distinctively an egrioultural am
stoek-raising section. Tho agriculture.l aotivi ty of the State o-r Ilabraaka
includes tri..e :proctucing of corn, sIJBll grainG, ~a.r beets, and alta.J.f'a
hay, ?tb.Ue the range seotione of' the western portion or .Nebraalm and the
State of Wyoming af:f."ord e:,:cellent facilities for the raising of cattle
am sheep. Also,, is tm leadme vrool-growing state in t:00 Union
and as a producer o:! crudo oil ranks third Dmong the states of the 1'enth

In the territory served by the .Brunch on tm opening date there
were 1,.224 banks, or which 227 were natio:oal; the remainder operating under
"the laws of their respective states. Of the state banks q-ualified to
become momoers o:f' the Systot:i, one, too .Benk of Lewellen, 11ebrasm, had
been adm1 tted to membership when the Branch opened.
'ro do.ta the membership of tho State of Nebraska ls comprised at
188 national banks and 22 state ba..-riks 1 out of a total ot 1,196 banka f'or
the state as a while, while tlJe membership far the State ot Wyom.1Dg is
oomprised of 47 national. banks and 4 state banks, out ot a tote.l. a£. 158
'bmlks f'or that state.
The original ci1reotorate was oanpoeed of the following:
Luther .vralce, Cmaha, .Nebraska, .President,- Merchants !la.tlona.l Bank;
J.C. ltclfish, Oma.ha, .Nebraska, Owner or th.a MclUsh cattle u,an Company,
o.T. Fa.stmBil., Cbaba, .Nebr::i.ska, designated .!!rul9ger and <.,'bairman of the

.Board ot Vireators; J.Jr • .P.L. Hall, Lineolli, :Nebraslal. 11 .President, central
BationaJ. .!!Bnk and H.0. lm.rnell, Nebraska C1ty, NebraSka, cashier,
lferohants National :Ba:lk•
At the opening ot tb.e .Branch ,1'1". E.D. McAllister ot Kansas c1ir,
was des1.gna.ted caahler, the number of employees a.t that time being 17.
At the present time the number or employees 1s 144.

.rrom tba begiJm1.?lG the Clmlla Bl-en.oh bas enjoyeLi full po-:rers
with the 8%Ception of capital stook iaauas, oertain fiscal agenoy
ttmotiona. Also• the Branch 1 s permitted to engag-c in open market
operations on l.J s·.wject to tl::e ord.erli and ior the aooount of t be plrent
bank, the same beiJ:le true of reuisooimtine _privileees with other .l"ederal
.Heserve .Bc.nkB.
In JUllO, l9l9, the. .Hra.noh ex>mmonoed settlinf; direct m th othor
.l!'ederal lieserve Banks and »ranches through the gold fund of tho parent
:rho volu:ne of tr~si t operations ha.6 incroa.sed from a. dnily
average of 2. 768 1 tams lnndled at the 0!)8ning ot the Branch t'J the present
daily average of 31,000.
Cu."'Tenc7 t~aactians aleo show an increased volm:le ~nd have
reachod tbe proportion of ;2,000,000 received mxl. delivered monthly.
The de~tment o-£ the Qnaba Branch relative to fisoal agency
f'lmotions ~a 11:rawiso :.hown a mr}::ed g:-owth, the Government's f'isoa.l

operations being responsible tor the large vo l ume of' Liberty !Dan
coupons and .Uividend. ChookD, ~ertif1ciates of lndebted.ness, -;fo.r :Savings
StCJI!l?s, and Deposits for General aooount of the United ~tates naaaurer,
~e ma.x.1mum and minil:lum of branoh loons i"rom too opening ot

the braneh are liere sho'\'111:


9 2,165.000



42,26r/ ,000


1921 (To :Jarch 31st)



figuree :reflect demands growing out of war financing and tre strain
1no1dont to economio ree.d.Justraent period thereafter.


ltetlber bmiks have more


more availeu!.ves of tm f!-e&

service af':tordod 'tw the Branch, auoh aa trana:ferr~ timds l1J telCb"'Ta.J?h 1
abaorbiD,g transportation coats inaludhg cost of telegrams in conneotion
w1 th O1.UTency t!"tmaaations and tba perf'onnat10e ot the :tunoUons at a
clearing houso for its tlOd>er banlas.. The service last rot"erred to embra.ces
the oollaotion at _p:,,r ot cash items on all banlcSTJ& institutions or the
Branch Zone in accordance w1 th tl:Je provision.a ot ~eotion 13 of tho ~oderel
!Utserve Act.


Deoer.:Jber 31st, 1920, totD.l gt'OBB earn1.nt:,"'S of the Branch since
opening ware ;3. 773,407.40 as against t.o tnl expenses ror tbe S6JD8 period
of ~9,141.87, re1ult1Zlg 1nnat earn1nge ot ~,114.255,.5:5.
~ Cm.ha Branah is an honorary :nember or the <baha. 0learil'.€ House
.Aasoo1at1on 8lld effects da.11y oles.rings with nine national ban.ks located in
Gre&hr Omaha•

Increased 'WOlume of busine ■ s in all departments ot tbe .Branoh
has made add1 ti ons necessary to the alerioal toroe of tbe .Audi ting
JJepartment. This department nnkes an audit of each other department ot
the BraDah at onoe a month, end al110 lmepe a Clll'r&nt or perpetaal
aud.1 t ot all tra.nsaotions ot the Diaoount Department alld maintains a daiq
control on all cash and collateral held.
On ~ 24t.h, 1920, the Federal lfeserve .Bank of Kansas City
purchased as a :permanent home tor the Oma.ha Bran.oh, the premises known a11
the ¥arDam Buildi~ oon taining 40,421 square :teet at available floor space
at a cost ot ;166,000.
Some remodeling ot the quarters which the Branch
oaoupiea has been oade am turther important chru:gas are contemplated,
which m._an completed will result in the .Branch utilizing 15,300 aq_uare
feat of the buildillg purchased.


On January, 1920, Mr. Geo. A. Gregory was designated AHistant
On 1.hrch 1st, l':i20 1 Mr. L.H • .Barba.rt formerly .Assistant uaahier

or tm bank succeeded Mr. J.T. Eastman as Manager and Uhairman
ot the .Board oE Directors of the Bra.nob.. On /lay 1st, .Mr. ? • .H. Fredmen,
formerly Cashier ot the JJenver Branch succeeded Mr. E• .ll. llcAllister aa
Cashier ot the (Ana.ha Branch. In July, 1920, Mr. w.D. IDwer f'ormerly
Chief' Clerk was designated Assistant Cashier and placed in ott1oial
supervision ot Transit Operations, at which time Mr. William Phillips
was designated Chief Clerk. The present directors aDi officers of the
.Branch are, as followa1

o. lhrnell

Mr • .H.
Dr • .?.L. Ball
!Jr. Geo.~. Abbott

ur. W.

J. Coad • L.B. Farhart

J.Ir. t.H. E.arhart, Jfanager.
Mr. ?.R. Fre&an, uas:bier
Yr. G.A. Gregory, Asaiatant Cashier

ur. w.D. Lower, Asaiatant O&ahier

llr. f. Gordon 1:Jandera, Asaietant
.M'ederal lteserve Agent and Branch


Early in 1920


uao. ~. Abbott, ?resident of the .rirst liational

Bank, Obeyenne, W;yoming, was elected a director of the Branch to fill the
vaaanoy oaused by the resignation of Mr. J.C. ~il!lb.
llr. w.J. Coad,
Cmal:la, .Nebraska, Vioe ?resident ot the Packers National bank, was elected
dlreotor ot the Bre.noh on lhroh 24-, 1921, to till the vacancy created by
the death o t Ur. Luther l.lrake.
A Disoount Committee aons1st1ng of the r.tmager, the cashier. and
one Direotor, any two of whom oonatitute a quorum, are elected by the Board
of Directoi-s to serve tar a period at om month.

The foregoing narrative history evidences a marked growth 1n the
»ranch itself as well as a mter1al development in the territory which 1,
■aM"oa and 1a believed to be ooncluaive ot the beneti ts ot tm !'ederal
.Heserve tlystem to the Itation'a industry am commerce.

Jtaspeotf'ully sul:mitted,

L. Ji. b:arbart.


Binoe the history of the Cmiha !ranch was oompiled on the

occasion ot the laying of tbe oorner-stona for the new bank buildi.Dg
in Xansas Cit7 the tollmJJg of interest have transpired1

1'he loans o t the Branch, by tllB en:l or tho "$8BZ 1921 bad
dropped to fl? ,636,599.84 whlch was the lo.vest figuz-e touched sime
191~. The highest point reached dur~ 1921 was ~5,4.21,386.50 and
the lowest was ~14,325,614.55.

208 banks received aocom:ood.ationa

durbJg the year. These figures reflect tbe economic readJustme:nt
:,p0riod through which tho mtion has been pe.saing.
Tl::le average daily reserve imintained by mE!:!l.bers in the <m.ha
llranoh zone during the year 1921 ~s ~U4,646,339.00 against a. daily
average ot ,is,_702,309.00 for the previous 19ar.
Improvement was
DBD.ifasted in the actual reserves :.aa1ntained by members oon:i:e,red with
tbelr requirements mld. ..s.s reflected in a decrea~ed number of def~oienoies
am. a smaller amom:rt collacted on account of penalties for deficient
reserves. ~24,187.27 "mlS collected from ~~1s cource in 1921 co~red
with a total of ~60,765.58 for tbe year 1920.


The aocommod.a ti on:i granted im3mbers 1.l:. the Q.aahz zone dtlriig
19~1 oontinu.ed in excess of the rei.erve deposits maintained, oon.seq_uently the Brsnch books showed an indebtedness to too paront brulk
which f'luotuated throughout the :tear from a mini.m'am of ~l,066,934.00
and $19,242,566.00, a maximum.

The close of tbe year 1921 :finds a net decrease in "1le total
membership of the pravi oua year of 13 .members and. a gaia1.0:titwo.
deorease of' lZ members 1s aocOllJlted far by seven suspensions, 4- -1the:-:.. ,_ .:..;;;
drawala and 2 mergers.
The two gains comi:rise 1be J'1rst liatione.l Bank
of South Sio\1% City, a new bank whioh was organized bµt Tihioh went into
11qu1dat1on early 1n the yeo.r 1922 and the bank of Van 'r-assel, Wyoming, ·
which was added to the list ot Sta.te .Bank members 1n tbe ;vear 1921 ..

In June of 1921 the names of 172 non-member banks located Sn
Ne bra.ska 87.ld ten non-member banlca located 1n Wyo-:ni~ appeared on the
~on-par list iss~d by tho Federal · .Reserve Board. These .mmes oonstituted
the banks w b:> refused t,o remit at par tor i tema drawn upon tbtJla am whOse
tranBit relations with the Branch were not satisfactor7.
The daily average number o-r transit items handled by the
.Dl'allCh tor tbe yeaz 1921 was 27,297 whioh shows a daU~ aTerage
1n the nmnber of 1 tems mndled ot 2.195 notwi thstand.1:ag the ad.di U.ona to
the non-par 11st since June of the year.

'1'he daily analysis record of outstanding member and. non-member
collection a.coounta tor the zone 1nd1oates that Siloh collections e.ra be11Jg
made well within the published time ached:ules.

'rha extent ot Ue ~ree senioa rendered tD me:iber banks in the
matter o 'f telegraphic trsnater ~ tunds is shown in the report ~ 1921.
fhe to-tal number ot transfers between the Qzaha. Branch and other .federal
l"eserve!Cs and .Branches, including those wi ti.'lin District 1'10. 10 was
17 1 281 1nvolv1Dg an aggregate a:io\lllt ot _;:536,961,179.94.
C'tJ:aR:1-t(.;t 1 1 . J ~
The operations of the c1ll"re1'10J departimnt for 1921 shows an
inoroaso over previous years. A total 01" 140 nember ,;·8ll.ka 01" 56% ot .
the total mamborship received acocmcodat1ons direc..t, al ther thrOUlr,h shii'•
ments ot ourrenay to the Branch or the shipcent ot currency to tbe meniber.
DuriJ::e tl:a ;year currency to the a!II.Ount of ';20, 710,000

ma sup-

plied to banks in the Br-unoh .zone.. Slh·er aud. subc;idiar.r aoin was supplied. to banks in '. the amo:.:nt <Jf ~371,000.
October 29th, the Branch '<11:l.S a:cithorized by the Tree.sury Department to · perfar-m sub-tree.suey functions and received the neoossary equipment 1n the wsy of currency ca.ucallil~ r.mchinee..

Uni tad St .. tes notf.ia and Government lssu8:, are novr redeemed
and cance:lec1.. b",i the Cbaha .Branch before being- :for·•.'laJ:•deC to the Treasury

Tbe yJ:Jar 1g21 the volUJD:; of' trense.otions haildled by the l'iscal
!gflnoy Department ct th, Branch exceeded that or previous years.

In add1 tlon tho Branch, aotiilg as Fiscal Agents tr:,r the War
J'inance Corporation, disbursed · a total to applicants in Rebrasm ot
;3,804,550.15 to the oiose or the year.

fhe net ir.lcone tor 1921 was '969,621.28 retleoting a deoreaee
ot f?66,04l.42 over the net 1.Doons tor tbe prev101W year. This .falling
oft is almost. wholely accounted tar by the decrease 1n th:! volllti:18 ot
earning assets held throughout the year.
The expenses do not show much variation trom the previous year,


Bo change ha.a talcm place in the Branch D1reotorate e1nce tba
history tor tbs 1~1.Dg ot the oorner-stone was written.

ID J\me ot 1921 .ur. T. Gordon Bandera, Asaiatant lederal
.Heserve and Branch auditor was trana:terred to l'ml-.. 01t7 am
was aiaoaecled at tha Branch b7 Mr. Judd w• .Toms.
In June also, Mr. William Phillips, previousq Chief Olen:,
was elected. • Assistant Calhier ot the .8:nmch.

The number ot employee• at the cloae ot 1921 waa 123 oon,,pared w1 th 1.29 at the close

ot the previous year.

~e aonolusion drawn :t.rom the detailed report p-e'fioual, '
aubmi tted. at the close of the ,ear 1921 wa■ that the banks · ae"e4 'b7
the Qmha. zone an gradual~ worki.Dg them.selves into a aUOng
position and tmt a. greater appreciation ot the aervic& rendered b7 the
.rederaJ. Heaerve :Bank 1a beoomillg mni:l'est 1 du, to a be\ter 1mders:tan41ng ot its _purposes,,-, This stat~t has been corroborateu by events
d.urlxlg the early months of tm Je&r ·1922.


l 9 2 1







The Denver Branch ,vas opened ~or buaineaa on January 14, 1918, pursuant
to authorization of the Board or Directors of the Federal Rese!4V'e Bank
ot Xansaa City. Tbe terrhory assigned the Branch ,;as the State of
Colorado am the ten counties 1n New llexico which are imluded 1n the
Tenth Federal Reserve Districti tm member banks in zone having
the option ot transacting their business w1 t.h ei thar the otfioe or
the Branch.
The Branch began business 1n tbe Continental Trust Company Building, now
as the Interstate Trust Building, at the coroer of Sixteenth and
In.wrence Streets 1n Denver, Colorado, end at tba time of t h is writing 18
still in that buildiJlG • The ~ua.rters at first taken consisted or 8i)prox1mately one-hal.1' of the second tloor being 2784 square teet of floor space.
On July 1st of the saoe year the remainder of tbe floor was taken
the total floor space 5853 squaro feet. The growth o'! tm Branch continued and on li!arch l, 1921, additional rooms on the third floor consisting ot 792 s quure feet were added to the world.I{; space.


The Branch at :first operated on a modified plan, the member banka* accounts beillg carried at the bead o'!:t1ce in Kansas City am reports of
tro.nsactiona bei~ reported daily fbr entry 1n thOse accounts. Experience_
soon demonstrated that the plan "68 impracticable owing to the distance
:from tho cttioe and that it required t710 days for mail to pass frOlll
one to the other. Therefore on April 1, 1918, tlle accounts ot tie members 1n tl:le territory were transferred to the Branch and those members
began tranaaoting all of their bU.91:o.eaa with it.
Tbe Directors of tho Branch a.t 1 ts opening- were HOlf. ALVA A.Dil!S ot Pueblo,
OHAlUZS A. :BURXHA.RDT, ot Denver, ColoradO.
Mr. Burlcha.rdt was appointed Jlanager and holds that position at this time.


The .Board remained unchanged untl 1 .Tanua.%'7 1, 1921, woon ALVA B. ADAl!S • .
of ?ueblo was appointed by the .federal .He serve Boa.rd to suooeed Alva .Adams;
the other f'OUE' named above be~ app(?inted. tar tm yoar 1921, and
with Alva B. Adams constitute the Board at this tima.

mo was in tb3 om.ploy o£ the parent bank,
to th.:: .Branch at 1 ts opening and waa appointed Acting cashier. He held
that position until Janm.ry 1920 when he was made Cashier. On 15,
1920, he was transterred to the Omaha Branch as 1 ts Cashier.


On llay' 27 •· 1920, MR. JOSE?H E. OLSOJI', who had been 1n the employ ot tb&
.Branch since Ila¥ 15, 1918, was appointed Cashier and !!B. A ~ J. Oor.''7AY.
who be08Zl8 a.asooiated w1 th the .llranch on April 9, 1918, was appointed.
Assistant cashier.
In January l9ID UR. BEU!EN w. SM~H was appointed

.Bnmch Audi tor.

At t.he Opening ot tbs Branch there were eleven aployeea. By the close
ot the yeu these had increased to thirty-eight; on .lieoember 31 1 1919,
there were f1tty- ■1x employees a.nd one year later eighty-two. On .!pr11
l, 1921, these bad increased to one hundred six.
The number of member banks in the zone at the beginn1Dg of business waa
one hundred thirty-tour; on .JJeoember 31, 1918. there were one hundred
forty, tbe number 1noreas1Ilg' to one hundred f'orty-six by tbe close ot
1919 and one hundred f'Uty-nine by the end of 1920. At thill writiJJg
there are one h1mdred sixty-one manbers, being composed ot one mmdred
torty-toUl" national banks 1n 00lorado, twelve national banks 1n New •
?Jexico, and three state banks in Colorado, and two state banks 1n Bew

:t.'he volume or busineBS transacted by tho .Branch has shoVD a gradual and

constant increase. At the close of 1918 the dally average nuer of
items handled was approximately 9 1 000. Tbe daily average for the month
of .vecember 1919 was 18.457 aDd :for the same month in 1920, ;·,-as 21,598.

During the year l9a:> the Branch discounted 15,351 notes :tnving a value
of 1262,615,992.40. One hllDdred nnd. twenty-six of the bankS assigned
to the .Branch availed the?selves of tre radiscount :privilege during the
The Branch has supplied the members 1n 1 ts zone ·.rt th their currency
requirements and has received trom them deposits of cUITency, tm tormer
amounting to ;25,781,000.00 and the latter ::,32,696,000.00 dur~ the year
A Govel'DDent Department 1s :na.1nta1md and duri~ tbe ~ar it paid tor the
account ot the Government_ 198,318 United States Treasury 'Narre.nts amounting to 129,166,512.14. It also far GoverDment account 870,047 coupons tram Liberty I.osn lSonds and Victory Notes and 497,425 w~ Savings
Sta.ops. It received the deposits est tm Collector ot Internal .ttevenue
amounting to ~7,273,3:37.17 for the year 1920.
1'he Collection .Departl!lent bas sho'Ml. a oontinued inorense indicating that
member banks are availi~ themselves more and more of tbs collection
facilities provided by tho establishment of the ¥ederal Heserve Banks •
.During tbe year 1920 8,244 oolleotion items amounting to 122,403,891.05
were received Of which '1 ,564- smounting to fl9 1 843,6M.05 were co llsote~.
The relations with our member banks lnve been pleasant and no controversies of serious nature arisen. 'the sa.rm can be said ot our rela
w1 th the non-ment>er banlm in the zone, this tact be~ oorroborated by
the f'aot tbat the Branch is oollectil::lg at par checks drawn on all banlta

in its terr1tocy.

OoDl)lete harmolJ1' prenila a:nong the ott1oers and empl07ee111 ara4 all show
a desire to perto= their duties 1n a .canner that will retleot cred1t
upon the .Branch.

!rhe young men in our 8JZl)loy have a club loold.lg to the end
pleasure of all. A base ball team repZ"esents the Brrmoh 1n the
Bankers League and it held third plaoe out ot eight contestants at the
olose ot tbe 192> season.

A ba.altetball team alao repreaen ts the :Branch 1n a leaglle oompoaed of teams
re_presenting various bo.nks and this team won tirst plaoe in the winter
&ea.son Cloaed.
The 70,mg la.dies of our toroe also lave a olu.b known aa the "Beta Bb') Phi"
of which Mrs. C.A. Burkhardt is the .Patroness. !be purpose of this olub
is p1"1nc1i;ally social but 1t also loolcs to the welfare Of its meaibera.




DATZ OF ITS OP:FZING TO &'lUL 16th, 1921 1 '?m: n!Tl:: OF


Acting under authority of the Federal ReserTe .Bos.rd, the Federal

Reserve Bank of Kansas Clty .on August 2nd 1920, opened a bramh in the
Contiliental Bw.ldi:ng, at the corner ot Second Street am !road,.ay, Okla•


City Oklahoma, the branch bei.Dg off'ioialq dosigna.ted aa the Ok:Ja.hom

City .Branoh ot tihe Federal Beserve Bank of Kansas City,


lliller, Jr., Federal Beserve Agent ASD. E. Bamsn:y,

Director B.W. Gibson, am Assiatan t Cashier E.l?. Tyner, ot the Hea.d ot!1ce
were in attendance at tm f'irst regular meeting ot the Board o~ Directors

of the -D&wly organized branch held on the open~ dey.
the branch, all of

-mom were

'i.1:lie Directors of

in attendance at the aboTe mentioned meeting,

were1 c.E. Dam.el, Cha.innan of

tm Board, Dorset Carter, J.lae,


E.K. Thurmoild, all o£ Oklahoma City, and ,l).C. Dings, of Ardmore. Oklahoma;

lJesers Dings, Carter am l.eniel being appointees of the Board of Directors
of tbe .i?aren t Bank and lfesara Mee and Thurmond appointees ot the Fed.oral

Resel"\te Board.
On January 1st, ?.C. Dings, mo had removed his residence from

Ardmore to ChiCSg'O I was su.oaeeded on the Boa.l"d by T.?. Jhrtin,Jr• ot
Oklahoma C1 ~ •

.A.a evidence ot tm weloo-m extended to tm :new branch and as
t o ~ of tbe appreciation ot the ettorta of those responaible tor 1te

eat&bliabment, the ottioea. were protusely decorated w1 th cut fiow8l"8

bJ' the banlta am. bua1neea houses ot Oklahoma Cit7.


The aot1Te mamgement of the bank


vested in u.E. Dani~l•
·._ ._;; , ·-.-~ \

as Jlanager, R.o. Wtmderliah, as cashier, both of -.t>.om had 'been tor e. ') ·"

'• ,

considerable period prior to the opening of the Branch, 1n tm employ'·.




R.L. JILtbes, also previoUS,r' ,• l\., • -..
'!: :~ .-,·
ly w1 th the Parent Bank, was 1n oba.rge ot Audi UDg,
t ;
The ierri toey allotted to the branch wa.a e.11 ot the Ste.te of ·' •. ,_

ot the .rederal Reserve


ot Kansas Cit;y.

f \:'·

Oklahoma_. w1 th the e.xoeption of eight oormtios in the southea.atern pnrt \ ., ••,

f ·; ·,

of the State, which were in tlle Eleventh District,.. Bllll th!, operative

powers 8lld tunctiona of 1he Branch were at tm direot!.on of the Bo?-rd,



1!o receive deposits from banks w1 thin its zone aJ:ld ta .:nallD

pa31J1ents of money tor and 1n behalf' o~ the !"ederal Reserve llmlk ot Eanaa..- • -

To .r.m.intain and operate departments for the clearing and colleotiDg

or checks, drafts am maturing notes and bills;

receive from mecber banks within its territory a.pplioationa

tor discount of eligible notes,

and afters

tar sale of cable transfers,



bankers' aooeptanoes and bills of e:xcmnge, and to transmit such app11-

~t1ons end offerings with reco!!C8Jlda.t1ons to the Federal lleaerve Bank



at Xansae City ~r final act1 on; and
!o ;pertorm other duties end services as might be re-

quested of it by the Federal H.eserve l!allk o t Jransas City• and by the
hderal .Heaerve Agent of the !fenth D1str1ct.

It was anticipated that ~be fransi t DepartmEllt of the brm:lch
would probably be called upon


and with thls voltme


mndle alx>ut Twenty lfhou5and c~cks per

ot 'business 1n mind, ti:fV people 18d 'bNll em-

ployed tor the Tarioua posi tiona.

It waa soon demon~trated, ho1'9Tal",
, .






volume ot business to be tra.nsaoted lnd been undel-eat1nated 1 aa

in aotual pre.ctioe the bran.ah was from the start aa.lled ori to hsndle clle~
• .

ot an average n~er of Forty 'rhOusaJJd a.q.




-~ 'fl~

It vaa therefore found•.·. ,.•







neceaaary to ma.Jee a considerable ad.di tion to the opening toroe~ IJ.'lm. l.argv.\





._ \'I..-,.


u L

. •,

numbel" ot items band.led during tho tirst six months ot the Branch's
- .
, ~ ·~'-4.

ence .as ezceeded by only one other Branch Bank 1n tbe United



Pi ttsb-.n"g Branch of the Federal Reserve Ba.nk a f Clnelmld. .

!hara bei~ no vault 1n the buildil:rg oooup1e4 by the'
.. :





Dopa.rtment, suitable spice was acquired by lea~e 1n the va.ulta of tb4) •



Amari om Xa.tional .BDnJt. situated at the oormr ot i.hin and Bo'biuflm
,.,. _



and due to the deleg 1n delivery of the necessacy' vault equip:nent• t~ o~-~illg


ot a currency department was de~ed until December lat 1920• but tba


vol,-e o-t business transacted b:y that department after opnliDg, was. like
that in the tra:asi t department, groater than anticipated,
A private wire was m.1nta1ned between tbe Branch Off'ice


the Head Of':f'ice from the date of the Opening of the bran oh, by . D)CllallB

/- •

which tho ?&rent Bank was enabled to enter on its book:S 1n Kansas
. .

,..t .


• 1~

'i'.i1. tbout




reeul tant oonf'Usion,

On the 31st d~ ot Karch 1921, tm branch banlt bad



anplOJ", a very efficient force o~ Eighty Five people.
While the Federal :Reserve Bank of' Kezisas City, was prior to


~•r ,'




I '


on the date received o.nd. disbursed, all receipts and disbursements of
~e bra.noh




.,:· .


tba Opening of the Oklahoma. City Branch expeditiously handling all


; •

___ .

1tema handled:. 4&1q by tba Pa.rem .Brmk •re apparentl.7 -~ th~" ~





,. I

•• • :

waa conoluaive proof tmt tlB branah was 1n a large meaimra .~



.l ll.Dg

-~ , .




the purpose fo~ whioh 1t was esta.bl1ahed, that ot -~~ ;'

suppori.lng mmi>ar banu, the groatoat. •omt· ot aenice poeai:l'blo•:

!Ceapeot:tul~ submitted.,



c.E. Daniel .·.·
llanageJ:' ,. 'Okla.homa...Di ty Arand,l . : . . . \

•.~ . ~,~ -·






. :-..

: :.














......-- . ..:

. •. ....

Mr. E_. P. Bron. - Claaa C direotor - (Jlay- 29 1 1931).

Mr. Brown comae b-0111. an old Lincoln tmnily, his :rather haT1:ng
been GQ- Browa, S\ate Librarian i:a. the eerl.7 daJ'B.

Mr. E. P.

Brown graduated trail the State Uni"t'8ra1 t;r 1n IJ.ncoln, rl th high

honors, and tor a number of years wu a aucceaatul practicing


at'\orney in this city, (L1ncoln) with Tery bright prospects.
Bia heal th :tailed, and aboa:t twenty y-ea.ra ago he discontinued
Healt.h recover- .


Does a great deal. o:t read-

. ...

his legal buaineaa and wei:1:t on his tai,a.



ed. but eont1nea :tarm.11g operations.


ing and smite writing.

Be served

. ,.t

:tor .same time as a regent at

J . . .. ,.

!~~.: :

the State UniTeraity-.

Owna l.60

aere tum.

r ,..... . .
• ,. I

J.lao aerYed :tor a period aa atate ••nator.



~ranee and keepa


well stock-

·-•.u ~ I


Ia conaiderecl a


o:t mm.sual. 1ntelligeDC9, well read. BD4

:: t-,.:-~ '-


ot broad education - pertecU,7 sOU.Dd in hia Tieu. A88 - about


(J.bOTe 1n:tormat1on


P. R. Eu'\erda;r, V. President, Yint

liational. Bank ot Uncoln. )
Address g1Ten as .Arbor, Ne'bruk:a., e.bout 10 miles north

ot Lincoln.

. ..:.

BAILE?, TILLIS J. , i1a.s bom. e.t Ut Ce.rmel, Ills., October 12,
1854. and received hi a education 1n the aahoola a f Wabash County Bild at
the Illinois State Un1vers1 ty. At the age of twenty-five he came to
Kc.nsaa and on JuJ.y 14, 1879 settled on a :ta.nn 1n ller::eba Couuty. J:ad,
although he has been at various times einoe then a politician, banker
and legislator, he has remained at all times primarily, a progressive

In 1888 lb:-, .Bailey ms elected. on· tm Bepublloan tioket ae
state representative am. in the lecrisla.ture proved the champion ot the
farmer~ and stoek growers ot his state, . His popular! ty among ~
business men and farmers of Xanso.a, am especially<mg tho Bepubliocans, was instrumental in his eleotion for governor in 1902• when ha
auooeastully defeated Wm. B. Craddock, Democratic nayor of Kansas 01ty•
Kansas, also a vecy popular man in the state. He was iJJAugurated
governor Jan. 12, 19CX;. One of his first acts was to reoommend to the
state legislature an additional ;100,000 appropriation tor tba Kansas
display at the Louisiana .? Expos1 tion ill St. I.ouis in 1904, a
display which gained w0rld f'ruoo ft>r Kansas industry, agrioulture am
education. in 1903 and 1904 it was the business ability of the
governor which guided tha flood striokan cl ties of that ata.te toward
a soJution of their problems of refinanoing and rebiildi:ng the striaken areas in town and o11u alo.tJg tbe rivers.
His adminizstra.tion
throughout wa.s one notod far eoonom_v and g:>od business ju.dgclent.
i1hile lfr, Bailey was a bachelor a.t th& time be was elected
E,-overnor, his marriage w1 th .Mrs. Ida. Alberta Weed• occured on June 10,
1903, six months after his eleotion. Tlle reception held tor the
governor and bis bride at tm _Kansas capitol was one of tm notable
social events in the State's hiatory. .Anoth9r notable reception hel4
in the honor of himsel.1" and wi:te was on Sept. 00 9 1904, a.t the Kansas
day celebration during the Louisiana ?urchase Exposition.
In politi'O&, aa in buaineaa, Governor Be.lley bears the
reputation in Jtansa.a ot being a fair tighter, a oham,p1on of wortl\v
am. honorable principles atld a believer in a conservative people wbo
do conservative thillgs. H1a policy was also a oonstruotive policy and
he did not adhere to the fads of rofarmrs unlessthe reformers had
a feaaible plan ot bettering conditions.

Governor .Bailey was championed by a host of :friends and
a.dmi.rers f'or the posi t1 on or· Class A director when the organization
work for the new Federal Reserve l3e.nk began. Be had atro~ opposi ticm
but won over his opponents by reaocm of hifl c,;m ability end f'itneu. • -Bia rep11tat1on in tbe state bad pointed him out as ab~ fitted :tor tbl
pos1t1cm. 1 . and bis record 1n tmt position has aima :Cul~ Juat1:l"1ed the
amb1 t1ona 1fhich hia friends had :f'Or him. Be 'i\8.s elected in l914r md
by lot aa chosen tor tha 2-year tel'm. He was re-elected, etfeotiTe
Jen, l, 1917 and again Jan. 1, 1920. On J,me 22, 1922 be ve.s eleate4
governor· ot the 'bank to succeed J.Z. Miller, Jr. wbO resigned •.

Ohe.raoteriatio of Governor Bailey was his Bl)irit ot f'airneea.
'ilhile he held out stroz.gly for his ideals, whm he lost he ms a good
It a vote placed him 1n the m1.nor1ty, he was the first to
Join llB.nds W1 th the auooeas:t-.J.l ones and promise his support 1n their

BAB.LEY, GEORGE EDW.ABD,- .Born July 20, 1872 at \11aah.1Dgton, Xas,, where
he resided almost oontinuously until 1917. • He t.1lliahed high eohool at
Washington am. attended school at .Atchison~ xas., since which time the
greater :pa.rt ot his life was devoted to dif'f'eront lines of banldng,
f'itteen years ot which be was cashier ot the f"irat Bational Bonk ot
Wa.shington, K&s.
Bo came to the J.Pederal Beserve BaIJk in 1917 • entering the . P1soal. Agency Der:artment,
Here he organized the War Savings
Division ot that Depa.rtr.::ent and later became ns.nuger or the Certif'ice.te
of lndebte4ness Division. He was JIBd.e assistant ca.shier Feb. 27, 1919,
and in January 19a> was placed in charge of the .A.acounti?Jg De:IE,rtment
nnd. the Analysis Md Member !3:a.k Beserves.
1920_. be has
been supervising officer of the Disoount Department.

:BO.-iRDMAN, OHA1UE3 KNIGHT;- .Born Janyary 28, 1882 at Odebolt, Ia. When
h6 -.vas ten years old his parents removed to .l)Os lt>ines mere be attended
tbo pub lie schools. inoludlna the Horth Des Moin· _:: High School, after
vb.1ch ho was mployed with tbe United States WSD.tber bureau in 1898 mid
1899. He oon:rJ;1leted his education in the Iomi. State ec::..~ege at AI11as am
the Un1vers1 ty ot Wisconson at Ma.di.son, talti~ an agricultural course 1n
the tormsr 1nst1 tu.ti on and s.tudylng law in the latter. In 1903 be
r81'!10V'ed to Okecme, Okla., where be was oo:oneoted wl ~ the First Jlat1onal
l3a.nk tor alx>ut ton years. In 1913 ho beoame seoretary of the State
Bankers Assoo1at1on of Oklahoma w1 th of'f'ices in Oklahoma City.
position ba beld until November 1. 1917, at miah tim:, he beoama active
w1. th. the Federal Beserve Bank as assistant ~ederal Reserve Agent. Later,
he was secretary to the direators of tlle ba.nlt. • Mr, .Boardman was married October 25, 1905 m mas !hbel .Bowen ot Carroll, Iowa.

:S.Jm.Altt>, WILLI"!! PATTERSONa- .Born a.t Leavenworth, Kansas, Jct. 14, 1867.
Came to Kansas City in 1880. Graduated in 1892 .trom the law Bepartmf.11t
of the Un1Ters1iy Of Michigan. Helped orsari1ze the Kansas City School
ot Law 1n 1895 and was 1 ts Dean tor 15 years until he resigned tQ f!!J to
Congress in 1910. Was married in 1904 to OWne, daughter of W.R.
Wina.nts, a ltansa.s City banker. He is author of a text book on the ·Law of Wills and Administrations, also joint editor of Xelley•s Treatise. on
.Px-obate law. Died vtiile abroad ln 192 •



»tJIUCBABM, Cll.ill!BS A.,- Born January 2, 1869, at California. !Jo. He was in
tbe morcant!le business at the S3m8 town :froo June 1886 to January 1, 1890.
On the latter date he boomne a bookke9IJGr in the .l.!"armars & Traders Bank ot •
his native town. On Januar,y l, 1893 he was t! Assistant Cashier, and 1n
November 1896, was Jmde Cashier or tbllt bank.
Ho ~ld. tho latter poeit1on
until August l, 1905, whm be resigned to aooept an appointment as State
.Bank Ex.aminer 1n msaouri.
Be held the position aB ~1.ner until August
l, 1907, ~n he returned to the .tamers & Tre.dera Bank as Cashier.
resigned that pooi tion on September l, 1908 to becol33 Ca.shier ot tbe ?rodUea
Emhwlg.e BWlk ot Kansas Ci t°IJ, JJo. In March 1910, he became .Assistant Cashier of' "the National Reserve Bank of Xansas City, lt>., mioh position he
resigned on Jan. l, 1914 to move to lJonver. When the Dae.var .Branch of the
l"ed.eral Heserve !ank of Kansas Cit:, was authorized in the r a.ll or 1917, ha
we.a· elected e. Director and !Janagor of th.'.l.t .ora.nah and be08me aaaooiate4 with
the b'ederaJ. .Meserve Bank of Xa.nsas 01 ty, on .lleco?li>er l, 1917, and on January
14, 1918, the .l>enver Br'nnch was opened with him as Manager. The latter
position still 'bei~ held.




BY:RNE, THOMAS c. :-!orn ill St. Joseph , Mo •• and first started to wark as a
messeDger boy in the wholesale dry goods house of brittain, Ovelman & Co.
in 1874, ~en 1::.o ~ s 14 years old. Bis experience and training in the
wholesale dry goods business ~m.s very general and he occupied sucoessively
pos1t1ona of office boy, shipping and receiving clerk, stock clerk in tbe
merohand.1so elld o't ·the business, house salesman, travel.illg salesman, and
later as b~6r and department mmiager. On January 1, 1890, hems active
in pl'Olnoting and establishing the whOlesale dry goods business _o f ltiobardson-~oberts-Byrne JJry Gooda Co. ~en la.tar be moved t o ~ where
he became ?resident of Byrne & Hammer l1r'✓ Goods co. of t~.a.t city. Byrne became Claas •! Director on the Board of the ~·edoral Reserve Bank
of Kansas City when the bank wan establiamd in 1914. Ur. Byrne at that
time was elected by tbe .:iomber banks of Group 2, and he was also elected
to eucoeed himself by the bankB' of Group 2 for his prosent tenn, which
commencad January first of this ;;ear.

Born 1n
Illinois, in 1854, He entered
the ban~ businesa 1n bis native state but came to Kansas City a.a
paying teller at Armours from 1882 to 1885.
He· e:ngaged in the real
estate and loan business trom 1885 to 1889. He became president of the
lew England National Ballk in 1898.
He married Miss Jessie Burnhern of


OIDSS ,Joml

.Born at Pelban, Ala., 1,broh 16 1 1886, son Of
Be 1116B eduoated in dist.riot
school• Of his native t0\111, and his advanced educa1,.i.on waa received
at Howard College, B1:rm1ngbem, A~
ma early buinesa comieotlona
nre 1n JS1rro1ngham with tm Southern .Bai~, and finally with tbe
First Ba.tlona.l :Bank, with wb.1oh latter institution, i7.? .. G. Harding
was oomieoted until he became Governor ot the J.Pederal Beserve Board.
When xr. Harding went to Washington to take up hia pos 1t1on tar the
governmmt, Ur. Cross also became aonneoted with the Board at ';lash!Jlgton as Federal Reserve bank emminer.
LEI.Am) 1- and Mrs. William Shelby Croaa.

It was 1n connection with hia e-ai-mioa.tion or tm Kansas Oity bank •
with J,.A. Broderiok in Nov. 1915, that ur. Cross became e.oquaint-4.
with the _ot:f'loers and directors of the bank. At the aomplet1on ot
this examination .ur. Cross was loaned to the bank by tbe Federal
:Reserve .Boel.".d to establish eome new methods in connection w1 th the
bcnk operations. later, on Jan, 11, 1917 1 .ur. Cross becmne deputy
governo:::- and served in that capa.oity until hio :resignation Feb. 19,
1919, at which tim3 he wont to the Jratlonal City :Bank ot lfew York as
vice-president. llr. Cross vas married Oct. 12. 1911 to Rose
Atherton Jones of Anniston, Ala.

Born on a. farm nea.r Hiawatha , Kan3as, :December 6 1
1888, vtlere he lived until 1909.
'IVhm 21 years of age he entered the
employ of the rtrat Mtate .8Bnk ot .!'allia, Okla.
He r81!JB.ine4 in tl:8
employ of that institution and in tba lumber 1nteresta of its president ,·
until .April, l9ll. n-om that date imtil July, 1917, he was with tbs
Drovers Rational Bank and the StoOlcyards Jatione.l Bank of Xansas C1t1,
Be mtered the anploy of the B'ederal Reserve Bank ot Ko.nsas Ciq
Aug. 8, 1917, as general utility clerk, suoceodi~ to the position ot
Assistant Cashier on Jen. l, 1919. In March~ 1920, he was designated.
aa ~ e r of the ()-oo.ha .m-anoh of the Kansas City Federal Reserve .Bank•
EAlmABT, LLO!D H. a-

.. '

. · EiU3T14Ali ,OSGOOD TILTON, s- Born Janua.ry 18, 1865, at South .Braintree, Maes.
He started a business career in ~ha with the Union Pac1tio Railroad.
Ai'ter four years of service he was transferred to Kansas City as chief
cle~ to tbe Assistant Genei-al Freight Agent.
From 1891 to 1906 he was
w1 th Sea.rle & Hereth Company, m.:-i.nufacturine chemists, in ChicagQ; from
1905 to 190'8 , credit manager of D:>rrison-Plumner & CC>m!,Jally, wholesale
druggists, uhicago; :from 1908 to 1917, Ass1stnnt Cashier of the 11rst
National Bank, Omaha, 1n obarge o-£ oountry bank accounts; frCJ!l 1917 to
1920, msnager ot the Om.ha Branch, Fedoral Reserve .Bank of Kansas City.

In 1920 Mr. ~stman resigned to become Vioe President
Hat ional l3a.nk• tballa.



the i.farobonts

FLE!nNG, COL. FRED W. :- Born AUt,~st 8, 1866; Educated in the publio schools .
of Aroostook. Colmty, !.l!.ine; attended Houlton Academy !Di. graduated tram
Ricker Classloal lnstituto, Houlton, lhine, ill 1885. He oai:oo to Xnnss.a
C1ty 1n the apri~ of 1885, had has lived here ever sinoe. His :first
emplo~ant was as boolckeeper 1n a life insurance oompany. Later he worked
tor .Bradstreet's .lleroantile Agency as city solicitor. Re then sitored the
real estate ml4 mortgage business on his om account.
In 1904 he bought
the Xan,sas City Lif'e Insnranoe Company, and wa.8 its chief executive ot:tioer,
aervine as Chairman ot the Board <:If Direotor:J until 1918, when on aooo'mlt
of impaired health be resigned ·his position with that company.
Colonel lleming gained. his m111 ta.ry title through service in the SpanishAmer1aa.n War 1n 1898,. He enlisted 1n the lw.tional Gllard of ?41.ssouri 1n
1886, am. filled every position in the Third Regiment, !lational Uuard ot
lfiesour1, from enlisted man to oomuanding of't1cer. His administration or
Lhe af'fe.irs of the Kaneaa City Life Insurance Compa:zy during his fourteen
years' oonnection with that institution was brilliantly successful.

Colonel !'le.min€ was Chairmml of the f1rst War Drive Oampa.1gn tor the
.Amerioa:i Red Croaa 1n Kansas City durug tbe 8UIIID8r of 1917• Itanaaa City's
quota was f300 1 000, md the amo-mit ot mone1 realized was approximate~


In the ra.11 Of 1917, he was app91nted by Secretary ot tbe Treasury,
G. ;.~oo, Ol:le ot the .roderal Directors of the Wa:r Savings ldovemant helpill{;' put his district first 1n per oap1ta sales o! Wa.r Savings eecuritiaa
1n the Uai ted States. Wh.fle engaged in this work, Colonel J') suttered .a :peyslcal break-down a.nd. 9 on t.he advloe or his physicians, retired f'rOm
active business tor three, whiah tine was largely spent 1n toreign
travel, 1.noluding a. trip to Al.s.sls:n and a six months visit mth hb tamily
1n Europe, Upon his rot uni to X-:msas Ci~ 1n the !all of 19a:J, he we.a
appointed oue ot tlle receivers of the insolvent Kansas Cit1 Bs.ilways Compmi;r.
In oolljunation with Francis lit. 1i/1lson. his co-receiver, he caused tm railways co.m;; to make rapid. progress in a tinancial -.q.

OolO?J.el Flemillg is a member ot the Christian Chu:roh, ond Chairman ot the
Joint Bo~ of Christian Churches 1n Greater Kansas City; also a t~te•
of the Cllr1stian Church Hosp1 taJ. 1 e.lld o:r Christian College, of Columbia•
Mo. as .~ ll as ChaJ.:nnan of the Oi'tio1al Board of the Independence Bou1eTard Christian Church.

For ~ yesrs he took an active :nrt in tho aff airs o:r the Translfiesisa1pp1 OoDgress and the Interna.tiona.l-Irr1go.t1on Congress, serv1~
as president of both bodies. .A.s chainmn of the Conmittee on State and
National Legislation; he took an active !)(lrt in the ena.ctment by Congress
o:r the National P..eclama.tloo. Act.
Colonel Flsr:11:ng 1 s a momber of' tm Kansas Ci cy Club; the Rlllcreat 0Quntr1
Club; Blue Hills Golf' Club; Mid-Day Club; Automobile Club; Kansas Ci~
Athletic Club; Broadmoor Golf Club, Colorado ~'lprines; the Xe.nsas CicySymphoey Orohestra asoa1at1on; and the .Priests of .Pallas.
He is also
a member of tb:l National Geographic Society; Art & Arclw.aological
Institute o£ J.merioa; Amer1oan Aoa.demy o:r Political Science and the Na.tional
Mxmicipal League.
Be was G{)pointed Class "C" Director ot the Federal .Reserve mnk e:t!ect1Te
JanWJ:ry 1 1 1916 to :till the unexpired term of Director .Hnml!B.y who resigned

October 1. 1915 to go with the Drovers lla.tional Bank as Vice President•
1n 1917 and again m 1920. Ee was always a
fa.1 tbf'ul and 1nterested member of the boa.rd end fulf'llled his bbl1gat1ons
to tho govermnent, the bank mJd to the people ot hia district 1n a thoroughly oonsc1ent1ous mw:mer.

ur. Fleming was ro-appointed

FROST, A.:.F.3]ID GOLD, a- Born 1n Galesburg, Ills •. , July 1. 1874. In 1881 '
.ur. Prost' s tam1J.y r81I¥>ved to Tope kn, :Kansas, where bis :te.tmr was 1n the
lend .De:;,Lrtoent ot the Santa .Fe Rail way Com~ tx-o:n 1872 unt1 l 189~.
n-om tho public sabool aZJd high school of Topeka., Ali"red l"' attond.ed
7/aabhurn University and later cmtered Xnox College at Galesburg, en
inst! tutio.11 of which his great grandfather, John Frost, bad been one o~
the J.f'ter leav~ college, lfr• .rrost entered the
Univeroi ty or Kansas mere he graduated in the of 1895. The follo~
iil{;' year h& went t.o Uexioo whal"o ha ::1_9ont sixteen nine of
which h.a was w1. th the ~x.1oan Cenkal Railway in various oa.i:e,o1 ties at
~e::> City. While in JJexioo .Mr. Frost was cashier or the Uenoo Oity
B-'lDk1ng Company which did a large foreign buainese. Returning to ltanaaa
in 1912 he tam loans tor five ~ars with the Farm i.Iortgage ·Company
of Topeka, a.nd si.mi lar work tor one year with the Oomme roe Trust Oompaeyoi Kansas City. Be came to the ~•ederal .Heaerve 3ank January 18 .. 1918,
in oonneotion W1 th the Liberty Loon W1Jrk in tl:e J'itsoa.l Agency Department
a.oo. was el'3oted assistant ca.shier Janm.ry 8, 1920. He assumed charge
of the Department

GOEBEL 1 .PET.ER w. :- Dom in liassau, Germny llilrch 18, 1869; finished public
sollool course at 14 years alld w1 th con.sent ot pa.rents oame to ).J:oel'lce..
Worked tor a flU"ll8r near Chicago until coming to Kansas 1n
learning the El:lglish l~~ be clerked in a drug store and took care of
his employer's horses. When 19 old be had saved. enough to purchaa-.
a drug store o~ his own. In 1882 he became cashier ·or the l'io.nkSrc finzl al
M. Beed &: Co., touisburg, Kanso.s • Organized tm Com::ieroial National Bank
of Kansas City, Knnsa.a in 1897 and became its president. Organised the
Citizens State Bank in the same city 1n 1905 and 1907 organized the Xansaa
Trust Compmy of v1hiah he 1 s be head. He :mrr1ed Mary Sha.w of

GOODRICH, JAUES E. i - Born Cameron, Clinton Couii.ty., Sept. 20 1 1871 •
. .ul\1t7er. ?arents live at Cameron. Graduated from Righ School 1888 as
valedicto?'io.n 1 entered tmiversi 1;.'9' o-t W.ssour1 and took A.B. in 1892. cum
le.ude. Took .Be.obelor of Law degree here.
1=-re.ct1ced law lirst in
Cemeron, was cashier, First Nn.tional Bank, eameron for two
Practiced le.w again wit.h Thanas E. Turney. City attorney five rears.
In 1898 he was Bepubl1can oandi tate tor Congress and 1n 1900 d.elagate
to Republican Kational Convention. to Kansas City 1n 1901. Be was
a member of the Bepubl1oan Central com. i"our years• In Nov. 1907 was
elected Judgo, Div, llo, 5 of 6th Judicia.l di strict.
Married in 1894
to Miss Harper Higgins. Belongs to Oentral ~'rosbyteritm church.


HEU!, JAIJE5 WILSOll, i- aorn in C~algn, Ills •• J,1nunry 21, 1882. He
spmit his youth in Danville where he a ttonded public school and high
school. He was a student in the University of Illinois 1n 1898-1899.
Hie tirst bank1ng experience was with tba Comptroller ot t:be Curreney
in Washington ffll.ere he vms a clerk 1n the division of re~JOrts end
examinations trom 1903 to 1912 under Comptroller W1llia1:l .Barrett Ri~~ly
and Lo.wrsioa o. J.tarro.y. For three years t'olbwing this he ,:ro.s ~~g-ed
in the real estate and investment business a.t Pi ttsbu.rgh. rroc thero bo
v~ to the Federal Reserve .Bank ot Kansas City .Novernber:.l, 1917, ns
olerlc 1n tbs Bond Department. He became assistont cashie:- _ v-mi. l,
1919, actiz:g cashier in J.hrch 1919 and was el£:: cted ca.shier n1; the meeting of January 1, 1919. Mr. Helm was married on September 24, 1917 to
Ann Smart, a da.uehter of' n.o. Smart, a pioneer realtor of Kansas


ROW, HEBER 1- Born June 1, /f 71 in Crawford County, Ohio, son ot !home.a
~. Hord am. Se.rnh M. Hill. DuriDg his youth the family removed to Cheyenne,
Wyo. vhere he received his first schooliJJg and later to Jlerr1ok County,lfeb.
While . livi.Ilg 1n this county he attended the rural school and later Central
City High School 1n Central City, Nebr.
l!'ollowing his high sobool eduoation
he took a business 00-.rse at Overlan~ Ohio, · returning home to !febraslta where
he l'em!linad with his father until tm latter's 1n 1910. At this tima
he took charge Qf the stock business whiah he bad helped build up until tbs
name becane one of the beat laxnm names among the e tock breeders end mippera
of' the West.
Bo was mrri ed April 12,
to .l!:ff"1e ~ o:t .Ceu tre.l Ci~•
!febre He was BiJpointed Class "C" director by the Federal Beservo .Banltof'fect1ve Jl!.Zi. l, 1922.
Ria Judgment end experieuoe in a,eriaulture and in
stock raising and mrket~ mve made his services as a director very val,mble to the bank.

JONES, GORI>Oll ,- .Born December 20 1 1864 at J:dcbmond, Ky. He studied at
William Jewell College, Liberty, Mo.
In 188'1 he became interested in a
hanking institution at la.tbrop, a:>. with an older brother, and. later with
the bank o! Odessa., where he becarm Vice President 1n 1889. While in that
off'ioe he was influential in securing the enactment of legislation 1n
Missouri• oreatiDg the office ot State Banlt t:xam1nor, and providing for
regular examinations of banks organized under the state laws. He was Bank
Examine\" tor
His next banld.Dg ~erienoe was organizi~ a. 5took
lards :Bank n:~ St. Joseph, 11:>. tor the Swift Interests.


In 1901 Mr. Jones removed to ~ountain, Colo. and became interested in baruting there. llext year be went to Colorado Springs in the banlci~ end trust
business. Later he organized tm _.t:lbert County bank and 1n 1903 became
.?resident of the Union Stock Yards Bank of Denver. He was e.lso later
aaaoolated w1 th the u.:::i. Bat1onal iimk of Denver and became its President.
In 1908 he was Presidant of the Colorado Bankers Association; 1n 1910. he
was a member ot the Exeoa.tive Council of the American Banlmrs Aasociation;
in 1913 he was a member of the .American Comnission on Agriou.lti:rral Credit ■,
11bich oomniasion traveled in Europe, studying foreign credit methods; 1n
1914 he became a Class "A" direot·or at the ¥oderal Heserve lBDk o! Xansaa
City. lie died at ::it. Joseph Hospital, Denver. Colo. April 14 1 1917, following a sa.rgw al operation.

~ . WILLI.All T. 1- Bom in
, Ko. 1n 1866,, Atter reoeivil'lg a
high sohool eduoation he became a shoe olerit end later a traval.1:r:g ea.leemen.
He acme to Kansas City troz:J. Valley Falls, Kas. in 1893. Helped organize th9
Cazmneroe Trust Oompeny and tar .ueny ~ars Chairmen of the Board of the
E'ational :Bank ot Coi:neroe and the Commerce Trust Co. Was President tor a
number ot years ot the Jtsnper W.ll & Elevator Oo., Xs:nper .Investment Co. of
Kanse.~ City, B'ansas City, llenao & Orimt Rs'• Co., Commero1al .Bu.ildiig Co.
and other oorporations.
Has operated extensive farms, was a trtistee of
'ii'illiam Woods Coll~ tram

McADAMS, AlflHUR WBIOJI a- .Born a.t Salim, Ka.s. Deceni,er 7, 1887. He attended
public sc-bool and high school of Ssl.ina and upon hia gradu.ation entered the
University ot Xansaa :t'rcm whio'h he graduated in 1911. .l!'rCID 1911 to 1917 he
was in the business in Kansas. In September 1917 he oame to the P'iacal
Agenoy Depa.r1mai t of the Federal Reserve Bank as a. clerk. From January 1918
to the s~griing of the armistice of the world war, Mr. McAdam~ spent 1n the
United States military service in France, returning in July 1919 to Kansas City.
On September l, 1919 he re-entered the seI?Vices of tbe bank i:c the P'isce.1 Ageney
Department a.n:l on 1lay 27, 1920 he was elected assistant cashier.

MoCLUBE, l!EADE L. :- .lk>m on a :ram in ?ennsylva.nia. He came to Kansas in
1882 \' he was 19 ~ars olu. In 1883 .he entered the banking business in
Harper County, Kansas, in which b.usiness he remained mit11 1899 when. he
removed to Kansas City and became Vice-President al:ld General J..J anager o:t the ::T~.::_'..::-"1
Drumm Live Stock Comnission Oo.
Has been prosid8llt of the Xansas City Live
Stock E:ltoha.~e and the Batioml Live Stock Exclnl'.lge, was an origiJJal class
":B" director ot the lederal Reserve Bank of Kansas City.

1- Born Jll.rcil. 23 1 1857 at Ia Grange, Tenn.
Early entered
the mercantile business to beoome 1n turn book'.keeper, grocer DBnutaoturer,
rancher, real estate dealer and investment broker.
In 1913 end 1914 ··he was
named by t~ goverment as director of the Crop Moving li"lmd whi ah had been
f'ina.noed during the strenuous' periods of those two years just prior
to tbe o:paning ot the Federal Reserve Banks. The success w1 th which he administered and directed these tumls in the various Western localities, won
tor him the well earned thanks ot the Treasury Depe.r'2:lant. It was natural
theref'Ol"e, that when there should be appointed three Class "C" direotors tor
the Federal Reserve Bank of Kansas City, Mr. & should be named one o'f
than. He served as director trom 1914 to Dec. 31st, 1921, when he resig'lled
at the o lose o'E his term. The oon:f'idence in which ME-. lalone hasbeen held
by business men in his state is attested by the fa.ct tmt be was
?resid.ell t of the Manutaoturers Exoha.:z:ge of Denver in 1895 and .President ot
the Chamber ot 00m:Jeroe in 1902.


llILLER, JO Z.A.01! Jlb- .Horn on a f'arm in Be.strop County, ·.rems on April 16,
He is a son of William Addison Miller and Amanda Priscilla
~lliott, who were :married in Xentucey and csoe to ~ems only a ff1W months
bef'ore the brealdDg out of the Civi 1 war. The elder Mr. tiller was an
invalid \ihen he onme west, and atter farming for two years he removed to
Belton. Texas in Dec. 1865, llhere he was a school !sa.cher and county
Blll"Y&yor until his death at the age ot 33 years.
ll'or a short t1me betore
his death however, he -was engaged in a msraantile business w1 th a private
bank 1n oonneotion. wh1 dl be organized under the DaDE ot !Jiller .Bros.
Lef't fatherlesa at l2 or age. Jo Zaoh ?diller, - he was named tor
his Uncle Col. Joseph Ze.ohery Miller, Sr., - sp;int his boyhood dqa
largely in tbe s taa:-e and bank which were conducted by his mother aDi the
uncle tar whom he was named.
The Jliller Brothers bank and store formed
one ot the well known Tama frontier oonmeraial houses 1n the early CUW•
The subject of this sketch attended the fi'ee schools ot Belton and later.
1n 1880 and 1881, finished his education at St. Louis University.
Returning f'ret.1 college. Mr. lf1ller, at the age ot 21, organized the
Balton NatioDB.l Bank and liflllD.ged it, although associated. w1 th his unole
who remained presidec.t of the institution until his death at tho age of
SO :,years, in July, 1920.
On July 27, 1910, Mr. Miller sold his intereat in tm Belton National
Bank and cazm to Kansas City as vice-president of the CO!:ll:!lerce Trust
Company, v411ch l,)OSition he held for four until the organization
of the Jrederal Reserve System in 1914.
He was a,P.Pointed Chairman and
l'ederal Beserve .Agent of the Federal Reserve Bank of Xansa.s City on Oct.~
7, 1914. On JaiJ.. 4, 1916. he was elected governor of tbJ bs.nk: 1 bei_ng ~~
succeeded as cl:nirmmi by Director Asa E. Bamsa.y. He remiilned governor
until June 22, 1922, whm he r e s i ~ d severed his connection with ""1 ~
'- ~ 1
the ban~ 1.m!!lediately thereafter a trip to Europe with his family/. ~ v
r- <.:-'
the first o.cwal vacation he had since his oonneotion with the
Federal Reserve Ba.Dk. • He was married Jan. 2, 1883 to lbry Elizabeth
Mellor of Galveston, Tams.

To comment upon Governor 1:!iller's ambitiono, his business ideals aZld,
his methods ot o.ooomplishinrr suooess, would be to elaborate upon the
:preoedi?lg pages which write the history of tm J'edernl Hesorve Bank !or
its tirst eight years of ezj.stanoe.
Determine.ti on am pe?-eeverance
mark his life. He :ande no claim to brilliancy but from youth his habit
of 8%ha.ust1ve tb1nk1ng and plann1na in business matters spelled his
nentual financial suaaess.
Throughout all his life Mr. W.ller was
interested in and sons of his greatest efforts -were in connection w1 th ranch lands 'Which he owned 1n Texas and on which he proved the
fact that business Judgment and sc1enoe of farming can be successfully
coIIll'iined on tbe ran.oh.

lilTCHELL, JOHN c. a- .Born l'eb. 29, 1860 at Freeport, Ille. He "II0.8 1n turn
:president azid director of the Denver National .Bank; director of the Ba.omrs
Trust COCipa.lly, Colorado luel 8:. Iron Coe~, Denver Gas &: Electrlo Company,
Grea.t Western Bugni- Oompa:ly, Compressed Gae Corporation, and Agnes Uemor1al
3a.n1 tor 1"DIDe
1n 1880 he became bookkeeper tor F1e1d. & Bill .:.ferca.ntile Company of Alamosa,
Colo., end was later assistant ·sm. bookkeeper. of the .Bank of 3s.n
Jur.21, :n-om mere he wont to Durango w1 th Denials Brown & Company as a.se1etan t cashier am. then cashier. Thia bam: was later lmOim as the Bank at
Durallgo. In 1883 be was one of the organizers Qf the Carbonate National
Bank of Leadville, Colo. whel'(; he held the positions o! Assistant Cashier
and Cashier.
Ur. l!1 tchell went to Denver in 1890 as C!l.shier of the l.,eo:ples Ilatioml .Ba.11.4
A few months later ba left this positon to become assoo1ate4with tbe Bollin8
lnvestma:i t C~~ whore he remained until 1892, at which time be beoemit
cashier ot the Denver Rational J:lGnk. In 1912 he succeeded to the :presideno,v
of this institution.
Re became a CJ.ass "A" direotor of the ~odoral Ro3erve
.Ha:ik ot Xanaas Ci1;.v' .in 1915.

2-Born in Knoxville, Iowa, lq' 12, 1855. A:f'tor c_ornpleting his com.:on school course he attemed \ Jewell at Libcrcy, Mo.
l!arried Ida D.. Adk:l.n8 Jan., 27, 1880. to Kansas Cicy in 1888 and the
following year was irade President ot the Union Na.tion&l Bank which office
he held until the bB.Ilk ceased wstance in 1908 in which yen:r the Southwest Mc.tioDaJ. BalJ.k mi..s organized with Yr. Heal e.s its head.

OWEB, RORERl! LA.THAJl:,s- .Born February 2, 1856, at ~hburg, Va. ot Scotch
Irish and. Indian 't Uicastoey. Educated in Iqnchburg, Baltimore, WnshiDgton
and Lee University at Lexington, Va. !.hrried Daisey Deane Hester Dec. Zl,
1889. Has been teacher, ed1 tor, lawyer, banker and b~s1neBl!I man, served
in various national ottioes of the Deciocratic par1;,v'. rirst elected as .
United States Sena.tor December 11• 1907, established the First :ls.tional
J3snk at lfusJtogee 1n 1890, attempted to write a platfoim to prevent panlos

under the Rational Democratic Platform in 1896.

Studied mt1onal finance

in London, Paris and Burlin. \Vas Chairman of the Senate Co.n:nittee on banking and curremqv in which he in:f'luenoed the adoption of the Federal Reserve

PABK. JJ. w.E. 1- !orn in Kansas City, Mo • .A~t 19 1 1888. He was
educated in ward sohools and Central High School. llr. Park first
entered banki.ze in 1903 whtn he wee emplo:1ed, by the .werioan Kati ~ in Kansas City I tto • This bank was mo rged with tba Nationa.l Bank of the Republio, which institution later became the
National Eeserve .lnnk. With these three institutions Mr. Park ma
associated from 1903 to April 15, 1916, at which time he entered
the employ of tbe Fecieru.l Reserve .BD.nk.
Eis f'.trst work Ml.S 1n the Oepartmait whichr:.t tmt time, was composed of one person. He
r~lled in charge of this department which grew until 1t numbered
a.t one time 39 persons. Re was assistant cashier on April 24 1
1919. He wac; married on
to ! Leona D. Bonham at
Che tops., Ka.s. .

PHILLIPS, JOEN JR. a- Bom at Leavem.10rth, Ka.a., JuJ.y 2, 1886. He
attended the publ1a schools 0£ Sba:wnee County, after which he we.s
enrolled £or f'our and one~hal.f years at llaker Ulliversi ty, Baldwin,
K.:i.s. He le£t this ins ti tutiou on Chrlstca.s of 1905, to begin work
with the .First National ~ of Xan!ias City on Januacy 7, 1906. Be
entered the omploy of the Bew England NatioDAl Bank in August, . 1907,
end remained there two and one-half' ~Vil:€ .l!'obrua.ry 1 1 1910 1
he became associated with the .t'irst :ria.tional .Bank at Holton, Xas.
Where he recainad three years, then going with Arthur Young & Company,
certitled public accountants in Kansas City a.e an examiner under
Stanley Young. It was While 1n this position that he was loaned to
the Federal Be serve to assist in the .Liberty Loan. On 1.tey' 23•
1917, a. few weeks a..fter this work began, he associated hLnselt entirely w1 th the Federal .Heserve :Bank in the .nscal Jcency .Jepartment,
soon beoom1ng assistant manager. He was acting assistant
caShier in September 12, 1918. He became manager ot tm Fisoal Agency
Department on February 27, 1919, .and becal!E assistant cashier Jan. 1,
1919. He was married Boptember 22, 1909 to J.ilss Atha ~ Dennis ot
K.Ew.saa City, J&J.
PIPKIN, GE BGE HO?,.l'F.R• 1- Born April 9 1 1886 on a far.n near Springfield.
where be lived lDltil he entered Drucy-;· College a.t Springfie,ld•
There he studied until 1906, at m.ich t be be took a course 1n a
business oollege at Spr1ng:t"1old and then entered the employ of the
State Savings Bank at Springfield. He was in this position a yea.r and
a half, leaving it to enter tbe Farm lOa.n business in SpriDg:Cield. In
1916 he came to leanso.s City 1n tbe employ ot tbG Federal Trust 0ompml¥'S
Fann loan Depa.rtment. Later ha was plaoed in olnrge of the Farm
!!ortgege Department ot the Liberty Trust Camp~. Yr. P1pJd.n cam to
the Federal He serve Bank in June ot 1918. on Febrm.J7 27, 1919 be was nnnager ot Discount Department. Be became assistant cashier
on lby 27, 1920, rSDBinlng in charge of the diaoount aot1vit1ee of .the
He wo.s married October 4, 1911 to Mio Gertrude Vein ot
Springtleld., ll>.


REED, J.Al!ES A. a- Born near Jla:l.afield. Ohio, Nove;nber 9, 1861.


s lawyer and was a"2ni tted to tbo b&r in 1805. ~ to Kansas City in
1687, elected to the t1n.1ted Statea Senate 1.t!.rch 4, 1911 to succeed.

LfB.jor William Wa.rner, Republicmn.

SillTH, G.~. :- :Born Adams Coun.ty, Ohio, .Deo. 10, 1860. After a COl!!:!IOn
schC1ol eduO!l.tion attended Cornell College, 1!t Veruo.:i, Iowa. Bntered
the bl'..nk:1:cg business and located in Kansas City in 1890 • ·,vas wi t.'i tm
National .Heserve Bank ani the Central National. In 1911 be helped
organize the Cozxoonwealth National Bank and be03m8 1 ts prosidont •
.113rr1ed .Anna .B. Pinnell in 1885. ·

S'NnrnEY, E.F. i- .Born at !hrysville, Va., August 1, 1857. Attendod •
:1111 tary College at .Blackburg, Va, to .l.4'ayetto, Uo ., in 1876 81i4
was engoged as grcoory clar'J; 1 Entered the b'ayetto Bnnk 1n 18'78. I.a.tar
went. with th() Richhill, lt>,, 'bonk. &oama ca.shier of a. 7Ji3w bank 1n
Colorado City, ·.te:ma, where he rena1Iled until 1887, -.,,hen he came to
ltansn.s City as Cashier o:f too .rirst ?rational .Bank. .A.fter thirteen
years he 11i8S elected president. At one time he ~s director of the
Chicago & Alton ey. co., also of tho .r1del1ty Co., and of tm,
Missouri Savings Bank. He sorved severc;.l ; ns T:i:·eas'tll"er or the
Kan~s City School Boe.rd.
In 1905 ha became Pl•esident of tl:la
.Ame.rica.n Bankers Association. He became advisory oouncillor of the
Federal !teservG Bank of Kansas City at 1 ts organization a.lXl has continued in 1 ts service since then.
He married Uiss Ida !Aite orHoward County, Joo. , in 1882.

TYNER, ED'IAHD PRICE, a-Born 1n .Beloit, Kansas, May' 30, 1882, later
living a mnnber of ;years 1n Conoordia. where he attenled the schools.- •• Ho w~s graduated :from t:00 Un1verd ty of Nebraska in 19()4., coming soon
ai"ter to Kanoos City where he becwm exc~e teller and bookkeeper
£or the A::ieri can National Bank. Wl.Jen that ins ti tut ion was taken over
by the National Bank at the Republic ha continued w1 th -the orge.nize.t1on until 1907. He went to the Interstate National nank as a general
e:.Jploye 1n the book1taepiie and teller d.epartmnts until 1914. Mr. '.L'YJler's
servioes with tbs .federal Reserve Bank began two days before the bank
Ol)Oll8d when be was general bookkeeper and _paying teller, !Ater he
f'illad the f'Ollowing :po:11 tions, acting chief' cle?it, acting assistant
cashier am. was assistant cashier in




"8.A.RDELL. S.A.l!UEL A.:- :Born April 17, 1884 &t Derby, Bas., be was
educated 1n the :public schools and hi~ school, graduating 1n 1898.
In 1899 he attended Lewis Academy at 7iich1 ta. aoo. the f::>llo·, yez-,,;r
att6nded the 'Nicb1 ta Commercial College. In lb.y 1901, be t,I1.tered UlB
employ of the Fourth Notional Bank of Wichi.P ,···in ·which institution
he gaiood a general banking kno,~l e ~, do:riilg ten years until ot
1911 e.t which time he was nppo-intea. -state bank e:ami1ner. In lobrua.ry
of the following year he \"CS appointed assistant b~k oo.n:missioner

··Un't 11 July of 1913, .urr. ·,,ardell was associ~ted with
the benki~ business of Kansas but on the latter ciate he bousht i n to
the .&Ink of hcelsior Sj_)ri.Dgs of E:.tcelsior SprinG"S, Uo., wh&i-e he
rema.1.n.ed tor four He began his services w1 th the Federal Baserve
Bank .cm July 16, 1917, 1n tho Liberty .Bond Department. In October of
the sane_ year he organized the Deposita.17 and Uertitioate of Indebted- 1
ness Division. From this w:>rk he arose to tba office of act1~ and
a.ud1 tar am f'inal]J an 1E.y 9, 1918, was elected auditor of the bank.
:.rr. Wardell was .IIIB.rl"i eci Jlme 17 1 1906 to Miss !.13.ude J. Elliott- of Derby,
w1 th ,T.N. Dolley.




,~- I
ilORrHillGTON, CAR.'l!J LL J.LFRED:- Born at Grine ;i. Ia. , Ap: il 25, 1801. In
,)I )
1883 his pal"t)nts, Mr. am ltrs. Theodore -11 • ~ removed to •.raoomg.,
7lash., where the subject of 4.his sketch attended the :publio schooJsuntil ✓
1898, \7h.,~ be movou~- C}y.»9-~ r e tul':ai~ again to 'J:U.CO::Ja~illt e he
.. -./' '
cnter!,d~w~~1~'egt,~it"e"yenrs of l~OOy- 1901~ 190? ..,,,,J./fo"3
~ :nt"
vors i :;-tf Chicago. The su.ccet3dlllg fiv e years were spent
in several lines of c~roial 8Clterprise including advertising anc'l. the
wholesale cool business.
In 1906 he oame to the National Bank O'f Comm.eroe in Kan ss.s City es-private secretary to t he _presidout, "N.13. f i l . d g e l y , ~ ~
In November Of t~ some yoar he was made assistant national bank examinor
~~ _
tor the Kansas City district. :Early 1n 1911 he was called to
e::cunine several bo.nks am la tel' in the year he became assistant to the
president ot the First national Ba.Dk Qi' __Pi-ttsburgh, Pa. Be left this
institution . in 1913 and returned to Chicago as secretary 8.Dd assistant
treasurer of o. trust company, leaving this in iiby 1915 to return to


Kansas City, this as assistant olea.r·ing house examiner. Soon a.tter
.h is return here he became office ~ f'or the }rovers lla.nk:
where he reaw.ined until January 1917. Hef811te~lilt;t·~ J i ~
Bank at t.he beginning of 1917 M<~;•~st:z:::;;.u.... e ~ ~ ·
i 1? vct!lmI::7 rW t'E cf

1'iliii Pi soe


ig?ll. ~ ,...~

1f He was made manager

of ~Depart.ment in June 1917, B.Dd~Mstant cashier the
followin(; month.- •.At the resignation of Deputy Governor Cross he beorune
assistant to the Governor. February 13, 1919. In January 1920,- ha wa.s
made deputy governor., ·Ho v.ns married on 11V 13, 1903 to Miss Jane
A~£><US.ta; Wilkes of Ohlcago, Illa.



History of Central Banking in the United States
The concept of central banking in the United States
originated with Alexander Hamilton, the first Secretary of the
Treasury of the United States.

As one historian put it:

Hamilton's ideas of the functions of the proposed
national bank coincide with the objectives of the
present Federal Reserve System as given by the Board
of Governors . [citing Federal Reserve System, Its
Purposes and Functions, p.115] Truly Hamilton was a
man far ahead of his time in his concepts of money
and banking,!/
Hamilton felt strongly that a national bank, patterned on the
Bank of England, was crucial to the economic development and the
-~ monetary stability of the new country.

His plan provided for the

private ownership and operation of such a national bank.


December 14, 1790, Hamilton submitted a report to the House of
Representatives, later forwarded to the Senate, which contained a
plan for the institution of a national bank.

With respect to the

direction of the proposed _bank, Hamilton stated:
" . . To attach full confidence to an institution of this nature, it appears to be an essential
ingredient in its structure, that it shall be under a
.private,l/ not a public direction, under the guidance
of individual interest, not a public policy which
would be supposed to be, and, in certain emergencies,
under a feeble or too sanguine administration, would
really be, liable to being too much influenced by
public necessity. The suspicion of this would:most

E. Taus, Central Banking Functions of the United States
Treasury, 1789--1941 18 (1943).


Double underscoring indicates italicized words.

. - - -·~ - .

- 2 -

probably be a canker that would continually corrode
the vital~ of the credit of the ''bank, and would be
most likely to prove fatal in those situations in
which the public good would require that they should
be most sound and vigorous. It would, indeed, be
little less than a miracle, should the credit of
the bank be at the disposal of the Government, if,
in a long series of time, there was not experienced
a calamitous abuse of it. It is true, that it
would be the real interest of the Government not to
abuse it; its genuine policy to husband and cherish
it with the most guarded circumspection, as an
inestimable treasure. But what government ever
uniformly consulted its true interests in opposition to the temptations of momentary exigencies?
What nation was ever blessed with a constant
succession of upright and wise adminiitrators?
"The keen, steady, and, as it were, magnetic sense
of their own interest as proprietors, in the directors of a bank, pointing invariably to its true
pole, the prosperity of the institution is the
only security that can always be relied upon for
a careful and prudent administration. It is,
therefore, the only basis on which an enlightened,
unqualified, and permanent confidence can be
expected to be erected and maintained.





"As far as may concern the aid of the bank,
within the proper limits, a good government has
nothing more to wish for than it will always possess,
though the management be in the hands of private
individuals. As the institution, if rightly constituted, must depend for its renovation, from time to
time, on the pleasure of the Government, it will not
be likely to feel a disposition to render itself, by
its conduct, unworthy of public patronage. The
Government, too, in the administration of its
finances, has it in its power to reciprocate benefits to the bank, of not less importance than those
which the bank affords to the government, and which,
besides, are never unattended with an immediate and
adequate compensation. Independent of these more
particular considerations, the natural weight and
influence of a good government will always go far
towards procuring a compliance with its desires;

- 3 -

and, as the directors will usually be composed of
some of tne most discreet, res pe-ctable, and wel 1
informed ~itizens, it can hardly ever be difficult
to make them sensible of the force of the inducements which ought to stimulate their exertions.
It will not follow, from what has been said,
that the State may not be the holder of a part of
the stock of a bank, and, consequently, a sharer in
the profits of it. It will only follow that it
ought not to desire any participation in the direc tion of it, and, therefore, ought not to own the
whole, or a principal part of the stock; for, if the
mass of the property should belong to the public,
and if the direction of it should be in private
hands, this would be to commit the interests of the
State to persons not interested, or not enough
. interested in their proper management.

"There is one thing, however, which the
Government owes to itself and to the community--at
least to all that part of it who are not stockholders--which is, to reserve to itself a right of
ascertaining, as often as may be necessary, the
state of the bank; excluding, however, all pretension
to control. This right forms an article in the
primitive constitution of the Bank of North America;
and its propriety stands upon the clearest reasons .
If the paper of a bank is to be permitted to insinuate itself into all the revenues and receipts of a
country; if it .is even to be tolerated as the
substitute for gold and silver in all the transactions of business, it becomes, in either view, a
national concern of the first magnitude. As such,
the ordinary rules of prudence require that the
Government should possess the means-of ascertaining,
whenever it thinks fit, that so delicate a trust i s
executed with fidelity and care. A right of this'
nature is not only desirable~ as it respects the
Government, but it ought to be equally so to all
those concerned in the institution, as an additional
title to public and private confidence, and as a
thing which can only be formidable to practices that
• imply mismanagement. . . . " . (Emphasis added)1/

1 Reports of the Secretary of the Treasury 54, 70-72 (1837).


4 -

Congress authorized the First Bank of the United States
("First Bank") by the Act of February 25, 1791, giving it an
e~clusive char't!-er for 20 years.

capital of $10 million,

United States.

The ' Bank was incorporated with a

of which $2 million was subscribed by,the

About three-quartrs of the stock was held abroad,

but non-United States residents were prohibited, by the Bank's
charter, from voting.

The voting stockholders annually elected

twenty-five directors .!/
The First Bank could issue debt obligations without
regard to deposits, subject only to the limitation of its authoriz~d capital.

These bank notes were circulated in lieu of gold

or silver and represented a debt which the First Bank was obligated to redeem in gold or silver upon presentment .

The Act of

February 25, ~1791 further authorized loans to be made to the
•~ Government of the United States or to any State, again subject
only to a specific dollar limitation unless otherwise authorized
by statute.

Directors of the First Bank were authorized to

establish branches a power that was exercised in the principal
commercial cities.

The Bank was not empowered to purchase any

public debt although it was permitted t~ sell any part of the
Government obligations that were used to purchase its capital

Federal Banking Laws and Reports: A compi lation of major
Federal banking documents, 1780- 19 12, Sen. Comm: on Banking
and Currency, 88th Cong., 1st Sess . 74 (1963) (bereinafter
"Federal Bank Laws and Reports")

- s -

·rhe First Bank was formed ~ursuant to Hamilton's original plan, i nclcrding his desire that the Bank remain independent
of the ope 1·ation of the Government.

The charter required that

the First Bank submit reports of its condition to the Secretary
of the Treasury from time to time.

It is unclear how frequently

such reports were made, although two reports were made to
Secretary Gallatin when he unsuccessfully attempted to have the
charter renewed in 1811 .
Although not required by charter, much of the
Go~ernment's funds were deposited in the First Bank.

There was

no formal monetary policy at the time; however, it is clear the
the First Bank implemented informal monetary policy for the
-~ country . ii

Like all of the local banks then in existence, it

was both a debtor and creditor bank .

As the main Government

depository, the Bank would receiv~ large volumes of state bank
notes which represented the predominant form of Government
receipts .

By requiring payment of such notes in specie or by

failing to press state banks for such pa~ment, the First Bank was

able intentionally to control the economy.

Where state banks

were required to make payments in specie for their bank notes,
the first Bank exercised a restraint upon the banking system,
just as open market sales would today .

If a state bank issued

large volumes of notes, they were subject to greater. pressure.

F. Redlich, The Molding of American Bankin9--Men and Ideas,
pt.1 96-98 (2d Imprint 1951).

- 6 -

If large amounts of specie were demanded, a state bank would be
forced to becoffl'E! less active for fear of depleting its specie.
In periods when th~ flow of currency was tight, the First Bank
could and did refrain from demanding payment in specie.~/



there appear to be records of several instances in which the
Secretary of State interceded for state banks requesting the

F. Redlich discussed the role of the First Bank in
controlling the money market, id. at 99-100.
In an age which had hardly begun to understand
the question of specie reserves, the board of
the Bank not only guarded its own reserves by
restricting its note issues in times of stress;
but, working hand in hand with the mint, even
tried to protect those of the American banking
system as a whole. Consequently the specie
holdings of the First Bank of the United States,
like those of late nineteenth-century central
banks, came to reflect the economic activities of
the country and especially those in foreign
. Discount policy was not yet devised
at the time under investigation, and one can only
regret that the proposal to discount below the
legal interest rate, . . . was turned down by the
board of the First Bank of the United States.
Otherwise regardless of the limitations due to
the existence of a legal interest rate it might
have discovered before the directors of the Bank
of England did that a money market can be controlled by raising and lowering· the discount
rate. Failing to make this discovery the
directors of the Bank of the United States
could exert that control only by deliberate and
carefully dosed expansion and contraction of
their note issues and by presenting promptly for
redemption such notes of other banks as came into
their possession . Controlling the money m~rket,
of course, implied gaining influence over the
activities of other banks. The Bank was able to
exert such influence because of its (for the time)
large capital and its very cautious policy which

- 7 -

First Bank to refrain from demanding payment in specie, the


primary respon~ibility for regulating the money markets remained
with the First Bank.1/

As Hammond notes, the restraint exercised

by the First Bank on other bank lending later became known as
central bank control of credit.~/

He goes on to compare the

systems in the United States and Great Britain at the time:
The Bank of England was performing a similar function in Britain, but it operated on the demand for
credit, whereas the Bank of the United States
operated on the supply. That is, in the States,

made the other banks its debtors, as a matter of
(When the board of the First Bank of the
United States believed that the other banks had
overexpanded their loans and issues, heavy specie
demands were made on them.) In order to
appreciate this achievement, one should keep in
mind that the First Bank of the United States was
in many respects less fitted to act as a central
bank than its successor, the Second Bank of the
United States. It had no monopoly on the public
deposits and did not receive currently from the
Collectors the notes of other banks, two facts
which gave the Second Bank of the United States
much of its power of control." (Emphasis added)

In B. Hammond, Banks and Poli tics· in· America from the
Revolution to the Civil War 200 (1957), it is stated that:
Neither Hamil ton, nor Wolcott, nor Gallatin
refrained in the Treasury from assuming major responsibility for central bank assistance in special cases,
though the routine performance of the function, as
effected through current collection of balances due
from the local banks, was left to the federal Bank. 11
(Emphasis added)


Id. at 199.

- 8 -

with the private banking system engaged in furnishing credit-..P-xpansively and liberally, the task of
the centrw-1 bank was performed by pressing the
private banks for redemption of their notes and
checks and thereby restraining their extension of
credit. . . . Typically, the Bank was creditor of
the private banks, on balance; to-day it would be
debtor, holding their reserves as the Federal
Reserve Banks now do,2/
Despite the strong economic condition of the country
and the efforts of the Secretary of the Treasury Gallatin, the
charter of the first Bank was not renewed.

Many reasons have

been cited for the failure to continue the charter.

The primary

reasons were pressure from the state banks and the antipathy of
the Jeffersonians on the basis of constitutional grounds .
regard to the former, Redlich stated:
Years later Albert Gallatin, looking at
another aspect of its activities, correctly stated
that the first Bank of the United States if not
dissolved would have kept the state banks within
proper bounds. As a matter of fact, its ability to
do so, as mentio~ed before, was an important reason
for its downfall. Its enemies claimed that if the
first Bank of the United States were rechartered 'all
the state banks [would] become subservient to its
views and as thoroughly subject to its influence, 1
and one writer doubted 'whether [in this case] any
state bank from Georgia to Maine wo~ld for beneficial
purposes exist another day.' ('Beneficial' meant, of
course, for the purpose of increasing the available
loanable funds.) Another argument against the Bank
was that through its agency the government was
gaining power over 'the metallic medium of the whole
country. 1 All these statements imply an intuitive,
although inarticulate, understanding of the fact that
the first Bank of the United States had risen from
being one out of many money banks to being what is
called today a central bank. The only argument which



- 9 -

a defender like Matthew Carey could put up was the
assertion !hat the ~tate banks fn fact were not
dependent-.on the Bar.k of the United States and could
not be so because together they had more capital. If
it is taken for granted that Carey was honest in his
statement, one sees how little even sue, a good
economist knew abou t the mechanism of monetary
(central bank) control which the board of the Bank
had put into operation. 11 10/ (Emphasis added)
With regard to the .latter reason for the discontinuance of the
First Bank, the issue of the constitutjonality of a separate
corporation functioning as a central bank had been a question
debated from the initial proposal put forth by Alexander Hamilton.
During the period between the end of the First Bank
in 1811 and the chartering of the second Bank of the United
States ("Second Bank") in 1816, state banks rapidly increased
' .;>


in number as did the volume of bank notes .1.1/

The expansion of

credit which naturally accompanied the increase in the number
of banks was further fueled when in 1814 the banks generally
suspended payments in specie.

Until then, specie payments had

worked as a check against the banks' ability to lend, as the
availability of specie was limited.

The suspension, however,


allowed the banks to lend without regard· to their abil~ty to

redeem in specie.

Although justified during the war years . when

there was extreme demand for credit, the general suspension,

F. Redlich, supra n.4, at 100 .


B. Hammond states that by 1816, 246 banks
operation. B. Hammond, supra n.6, at 146.

- 10 -

which continued even after the war ended, helped produce, by
1816, tredmendous depreciation in the value of the currency.l1_/
Not only were g.pecie payments sus:,>ended, but state banks refused
to accept each other's notes at par, thus leaving the country_
without any common medium of exchange._!]_/

Under these circum-

stances, not only was trade impaired, but the Treasury suffered
loss in revenue, as well, when it accepted as payment state bank
It was generally believed that a stable and uniform
currency could be brought about when state banks resumed making
payments in specie.

To enable resumption of specie payments, it

wai estimated that state banks would need to withdraw a sizable
portion of their notes'in circulation.15/


It was, however,

doubtful that the state banks would voluntarily withdraw their

.... notes and curtail their profitable lending practice.
Without a national bank, and while the general suspension continued, Congress' power to regulate the value of the
currency was limited.

It was even said by many that that power

was in effect exercised by state banks, institutions not


29 Annals of Cong. 1062-1063 (1816f.


R. Catterall, The Second Bank of the United States




Id. at 1064.

Annals of' Cong. 1083 ( 1816).


- 11 -

responsible for the correctness with ,~hich they managed it, to
the detriment of the whole economy,.!.§/

It was under this

framework that in 1815 President Madison asked the Congress to
consider creating a national bank, and many in the Congress
suppdrted the chartering of the Second Bank.
In March of 1816, Congress considered the bill that
was passed the following month in the form of the Act of
April 10, 1816 creating the Second Bank.

There were differing

views as to the advisability of Government involvement in the
"Mr. Ross advocated the moti~n to amend the
bill. He did not believe, as had been argued, that a
participation in the bank would strengthen the arm of
the Government, or be very profitable. If, however,
the arm of Government was to be strengthened by
weakening that of the citizens, and uniting with a
privileged aristocracy, he was decidedly oppos~d to
it. He did not wish Government to become partners in
such a privileged order. If the reasons for retaining
the principle in the bill were correct, he thought
the proportion allowed too small. If Government was
to derive this great profit from the participation,
its share was not great enough. It had been said
that the influence of one bank (the Manhattan) could
have prevented the election of Mr . Jefferson to the
Presidency; if that bank had been uhder Executive
control, he believed its power would have been
exerted. This was a proof of the danger of giving
Government a great influence in such institutions .
He was opposed to the plan chiefly from his objections to joining a moneyed aristocracy, and his fears
that it might operate injuriously to the liberties of
the country, &-c."!1/ (Emphasis added)
Id. at 1961.
Id. at 1119.

- 12 -

Mr. Wright, on the other hand:
. wished to see the bank possessed in part by
the Government, and partly by the citizens, because
the stock of it would be extremely profitable. The
Government-ought to have an interest in the bank, as
they would thereby be informed of all the plans which
might be at any time entertained by the directors of
so powerful an institution. He was not afraid,
however, , to trust our citizens, nor ought they to be
suspicious of the Government; and the participation
of the Government could not, he conceived, be
productive of injury or mischief. "l!V
There was, however, a strong view that banking should
be something apart from Government.

The Congress thus rejected

several proposals as too oriented toward the Government.ll_/


proposal called for a bank with capital of $50 million, $20 million of which was to be subscribed by the United States. - In
addition, the bank would be obligated to loan the United States
$30 million as soon as it went into operation, and the President
·~ of the United States would have the power to suspend specie
payments .

Another proposal that the Congress rejected called for

limiting the choice of the president of the Second Bank to one of
the directors appointed by the President with the advice and
consent of the Senate.

This proposal was rejected by a vote of


"Mr. Ross could see no reason why the
President of the bank should not be selected from
the whole twenty-five directors, if it was the


Id. at 1118.


B. Hammond, supra n.5, at 232.

- 13 -

object to get the best man. If the President and
Senate app.oint a director the mo·st proper for the
office, h~ would doubtless be elected, but if not,
why ex elude the fittest character? . . . He
condemned the policy of giving so much additional
strength to the Executive arm. Alexander Hamilton
himself, in the zenith of his influence, would not
have dared to propose such a grant of power to the
President, as the control and regulation of a great
moneyed ins ti tut ion.· Mr. R. concluded by saying he
thought it would be much safer to adopt the amendment
[to remove the restriction limiting the choice of
president of the Bank to one of the five directors
appointed by the President with the consent of the
Senate] and withhold from the Executive so important
a power, &c. 11 20/ (Emphasis added)
Because the Second Bank was to be funded by the
Gov~rnment as well as by private stockholders, there was
concern that its conduct would affect the credit and resources


of the Government.

As a means to help ensure that the Second

... Bank would not, like state banks, act in a manner contrary to
the interests of the nation, Secretary of the Treasury Dallas
proposed that the Congress require that 5 of 25 board members
be appointed by the President with the advice and consent of
the Senate.

The Congress, also recognizing the need to protect

the public interest, incorporated Dallas 1 proposal in the
charter of the Second Bank.

As it was said at the time:

the true policy in the creation of a bank, then, is
to give it a double character--to combine in it the
elements of public and private interest--but to
secure to the former a control over the latter; for
the Government which creates this institution is


29 Annals of Cong. 1151-52 (1816).

- 14 -

responsible ·for its fulfillment of the great objects
of its creation . . . . "~.1/
The structure and function of the Second Bank were
fundamentally tne
same as that of the first Bank.
- ·
changes, however, are important to note.


The Second Bank's

capital was set at $35 million and its total liabilities
restricted to that amount.

The Government was still to subscribe

to 1/S of the outstanding capital.

The Bank was specifically

designated as a depository of Government funds, and specific
provision was made for the establishment of branch offices of


the Bank, each of which was to have between 7 and 13 directors

appointed by the directors of the Second Bank.

Under the new

charter, S of the 2S directors were to be nominated by the
President with the consent of Congress, and the remaining 20
directors were to be selected by the non-Government-affiliated
·~ stockholders .

furthermore, a bonus in the sum of $1,500,000 was

to be paid to the United States in consideration of the 20-year
exclusive charter . 22/
The Second Bank had some degree of difficulty in the
early years of its existence.

However, in 1823 when Nicholas

Biddle was elected President of the Bank., it came into its own
as the nation's central bank .
terized as "perhaps .

Indeed, Biddle has been charac-

. the world's first conscious central


Id. at 1144-45.


B. Hammond, supra n . 6, at 244-45.

- 15 -

banker," because he was fully aware of the central bank
character of the Second Bank.23/

Redlich states categorically

that none of t~ central banking func'tions performed by the
Second Bank was more important than providing a sound
Biddle took a strong, active role in developing the
policies of the Bank and extended its activities in promoting a
sound currency into such new areas as dealing in domestic bills
of exchange and foreign exchange .

Biddle attempted and suc-

ceeded to a large extent in securing a larger and more evenly
circulating currency and in diminishing the note issues of state

He saw himself as a regulator of state bank note issues .
It must be remembered that Biddle's goal to achieve a

sound currency had to be achieved without having a note-issue
,;monopoly such _as that granted modern central banks.~/
concentrated on two primary interim goals:

Thus , he

keeping the state-

bank issues sound and putting into circulation a currency of
uniform value nationwide, i.e . , the Second Bank's notes.26/


expanded the Second Bank's activity in the domestic exchange
market and, by fine-tuning the mechanism · for providing .currency


F. Redlich, supra n.4, at 128.




F. Redlich, supra n.



_ .

_, at 128 .


16 -

,~here needed in the country, through use of - the Bank's branch

system, he achi'eued a virtual monopoly for the Bank's no·tes .27/
Biddle believed that dealing in domestic exchange was
not enough to create a sound national currency, but that, in
addition, dealing in foreign exchange was essential, and, under
his control , the Bank actively entered the foreign exchange
market .

The large outflow of coin from the United States, as a

result of commerce between this country and Europe, caused
serious repercussions on occasion.
. Therefore the 'conservative power' of
the Bank over the currency necessitated its ability
to interfere on such occasions in order to break the
shock of a sudden demand and to give time to the
state institutions to adopt protective measures for
their own security. This ability could be acquired
only by large scale participation in foreign exchange
operations so that in any emergency the Bank could
~upply the most urgent needs of commerce out of its
own accumulations and credits abroad. Thereby, at
the same time, fluctuations of the exchange market
could be prevented. Two reasons stand out clearly :
Biddle entered the field of foreign exchanges in
order to protect the currency from foreign influence
and to counteract possible disturbances of business.
The former goal finds its explanation in the Bank's
obligation to 'preserve' the currency, the latter in
the fact the Biddle took upon himself the function
of keeping the country's business activities on an
even keel,
. 11 28/
Redlich provides a good summary of the operations of
the Second Bank under Nicholas Biddle :

Id. at 130.


Id . at 131.


17 -

"Domestic and foreign exchange transactions grew
originally_ from the Bank I s oblig'a tions as transfer
agent of 4!:-he government and as the responsible regulator of the country's paper currency. They soon
gained importance independently therefrom. The Bank
as d 'national establishment, 1 a central bank as one
would say today, was expected to 'equalize the
domestic exchanges, 1 a somewhat sloppy expression,
·the meaning of which was not without ambiguities. As
a matter of fact, the Bank's business in domestic
exchange pertained not only to buying (discounting)
and collecting transactions wh ich would have been
sufficient to back the Bank's issues and to provide
for their uniform value; it also included the selling
of domestic exchange whenever there was a legitimate
demand . In consequence thereof, and i n conjunction
with actions previously described, the great mass of
the American currency became more uniform than ever
before and than it was to be for many years after the
destruction of the Bank;





"As Biddle 'equalized' the domestic exchanges,
he stabilized the foreign ones. Such stabilization
resulted partly from his policy of buying foreign
exchange during the season when it came into the
market and selling it whenever it was needed. The
Bank 'as a large and constant purchaser of bills
prevent[ed] fluctuations in the demand, and as seller
of them, in the supply. 1 But more important was
Biddle's bridg i ng temporary diseguilibria between
supply of and demand for foreign exchange by shortterm l oan transactions of the type normally concluded
by modern central banks all over the world . As Biddle
himself expressed it, he · prevented mischief in the
foreign exchange market by the temporary use of
foreign credit. .
. 29/
Biddle also considered it part of his responsibility
to counteract cyclical as well as seasonal fluctuations and
other disturbances affecting business .

Id. at 132-134.

However, as Redlich


18 -

notes, although Biddle saw himself in the role of


managing 11 the

Since neither discount policy, <>pen-market policy,
nor the m~dern policy of varying reserve ratios had
yet been devised, a statement which should be taken
cum grano sa . is, Biddle did not possess a tool to
stimulate business in dull times.30/
In normal times, he adopted a policy of issuing only short-term
loans and making only those investments which could readily be
converted into funds, so that when the business community
agvain needed reviving, he could use those funds where they
were most needed.
In addition, the SecoMd Barrk received large amounts
of ~tate bank notes in payments of taxes to the Treasury.


the First Bank did, the Second Bank used its discretion to
either redeem these notes for specie or refrain from demanding

...... redemption

and thereby extend credit to the bank of issue.


the notes were redeemed, specie would be withdrawn from the
state banks, forcing a contraction of credit in the banking
system, just as open market sales would today.

However, as

Hammond notes, Biddle's tendency was to be liberal with the
state banks and hold their notes, instead of demanding instant
payment-- 11 a procedure followed, like present day open mark~t
purchases, at the Bank's initiative."11/

Id. at 135.


B. Hammond, supra n.6, at 308.

(Emphasis added)


19 -

In times of crisis or of bQom as in 1825, 1828, and
1832, Biddle ae-ted decisiyely to ready the Bank to deal with the
coming sysf·e mic problems.

For example, in 1825 Biddle sensed

that a problem was deueloping and began to prepare for it.32/
He realized that the Bank had parted with too much of its specie
in connection with the China trade, and he began to distribute
the remainder so that it would be auailable at strategic points,
especially New York.

He also took steps to strengthen the Bank

and improve its liquidity, so that when the crisis came the Bank
was: in a position to provide needed funds to state banks.


addition, the Bank took actions, such as presenting claims for
specie against the state banks, "to induce them to adopt a more
.,.. prudent course. "ll/

This action, of course, harks back to a

method used by the First Bank to effect monetary policy.
When the crisis did occur in 1825, centering in New
York, Biddle intervened in two ways.

There was a demand for

specie both from Canada and from a private individual who wanted
to set up a bank in New Orleans.

Biddle convinced the latter to

take bills of exchange of New Orleans rather than withdrawing
• specie from New York.

He also ~ttracted metallic money into the

parent bank in Philadelphia by paying interest, a novel approach
at that time, on a large specie deposit made by a leading


R. Catterall, supra n.12, at 106-107.


f. Redlich, supra n.4, at 138.

- 20 -

brokerage firm which held funds in trust for a foreign

Once the danger of a specie drain in New York

passed, Biddle sold the branch to expand its loans, and the
Bank acted as~ lender of last resort, finally breaking the
Hammond summarized the Second Bank's performance,
under Biddle, of a



rounded and complete central banking

in the words of a friend of Biddle's :

It regulated the supply of money; restrained the ,
expansion of bank credit; governed the exchanges;
safeguarded the investment market; protected the
money market from the disturbing force of Treasury
operations and of payents on balance, interregional
and internatonal; and facilitated Treasury operation
(sic) vis-a-vis the rest of the economy . . .
Moreover, the Bank performed these functions
deliberately and avowedly--with a consciousness of
quasi-governmental responsibility and of the need to
subordinate profit and private interest to that
responsibili t y.
In view of these two things--the central banking
performance of the Bank of the United States and
Nicholas Biddle's lucid running commentary thereon-it is remarkable how Americans have abstained from
considering any experience of their own in central
banking prior to establishment of the Federal
Reserve Banks . . . . 35/ (Emphasis added)



Indeed, it is clear from Treasury Secretary Dallas•
report to the Congress on the need for tTie Second Bank that the
Bank's monetary policy role,


in controlling credit, and


F. Redlich, supra, n . 4, at 136-138.


B. Hammond, supra, n . 6, at 323-25.

- 21 -

assuring a sound currency was one of the key reasons for its

He beli~ved that the state banks could not

accomplish thos.e. goals on their own:


It is a fact, however, incontestibly proved, that
those institutions [the State banks] cannot, at
this time, be successfully employed to furnish a
uniform national currency. . . . The establishment of a national bank is regarded as the best,
and perhaps the only adequate resource, to relieve
the country and the Government from the present
embarrassments . . . . Eminent in its resources
and in its example, the national bank will
conciliate, aid, and lead, the State banks, in all
that is necessary for the restoration of credit,
public and private.36/
In 1830, when the Senate was considering a bill to establish a
uniform currency, the Congress was made well aware of the
actions taken by the Second Bank to control state bank credit
and smooth the wild fluctuations in the value of the currency.
-~ This is shown in the following two questons submitted to Mr .
Biddle by the Senate Committee on Finance and National Currency
and his responses:
When a State bank becomes indebted to
the bank to an improper extent, what course do you
pursue? Do you let them go beyond a certain amount,
and what is that amount?

A. The great object is to keep the State banks
within proper limits, to make them shape their bu~iness according to their means. for this purpose they
are called upon to settle, never forced to pay

M. Clark and D. Hall, Legislative and Documentary History of
the Bank·of the United States 613 (1967) quoting a letter
f~om Dallas to the House of-Representatives da~ed Dec. 7,

- 22 -

specie, if it can be avoided, but payment is t~ken
in their bills of exchange or suffered to lie
occasionally until the bank can turn around; no
amount of debt is fixed because the principle we
wish to establish is that every ,~ank shall always be
ready to ~ovide for its notes.
Q.9. Since you commenced the purchase and sale
of bills of exchange, has the rate varied; if £0, to
what extent?
A. _ The operations of the bank in exchanges has
had the effect of preventing the great fluctuations
to which they were previously liable,11_/
Political reasons again led to the downfall of the
central banking system in this country.

President Jackson, an

extremely popular figure, was against the renewal of the charter
and . indeed vetoed the bill.

In considering whether the Second

Bank should be rechartered, President Jackson had suggested that
the benefits provided by the Second Bank might be obtainable if
its powers were reduced and its structure was changed to a purely
·~ governmental body:
It is thought practicable to organize such a bank
with the necessary officers as a branch of the
Treasury Department, based on the public and
individual deposits, without power to make loans or
purchase property, which shall remit the funds of
the Government, and the expense of which may be
paid, if thought advisable, by allowing its officers
to sell bills of exchange to private individuals at
a moderate premium. Not being a corporate body,
having no stockholders, debtors, or property, and
but few officers, it would not be obnoxious to the
constitutional objections which are urged against
the present bank; and having no means to operate on

S. Rep. No. 104, 21st Cong . , 1st Sess. 152-53 (1830).

- 23 -

the hopes, fears, or interests of large masses of
the community, it would be shorn of the influence
which makes that bank formidable. The States would
be strengthened by having in their hands the means .
of furnisti;ing the local paper currency through their
own banks_ while the Bank of the United States,
though issuing no paper, would check the issues of
the State banks by taking their notes in deposit and
for exchange only so long as they continue to be
redeemed with specie. In times of public emergency
the capacities of such an institution might be
enlarged by legislative propositions.]J!/ (Emphasis
However, President Jackson made it clear that he was not actually
proposing another bank in that form; he was simply calling
attention to the elements in the Second Bank's charter that had
to change if it were to be viable at all.
Indeed two years later President Jackson vetoed the
bill rechartering the Second Bank in essentially the same form as
it had had, i.e., a mixed government-private corporation,12/
' ,><

' "'

His ueto helped to arouse popular feelings against the Bank.
Senator Benton defended Jackson's veto in the Senate by saying:
"You may continue to be for a bank and for
Jackson, but you cannot be for this bank and for
Jackson. The bank is now the open, as it has long
been the secret, enemy of Jackson . The war is now
upon Jackson; and if he is defeated all the rest will
fall an easy prey . What individual could stand in
the States against the power of that bank, and that


Federal Banking Laws and Reports, supra n. _, at H37
(quoting Jackson's Second Annual Message, Dec. 6, 1830).


National Monetary Commission: The First and Second Banks of
the United States , Sen . Doc. No. 571, 61st Cong., 2d Sess.
296-98 (1910).

- 24 -

bank flushed with a victory over the conqueror of the
conquerors_ of Bonaparte. The whole Government would
fall into-the hands of the moneyed power. An
oligarchy would be immediately established, and that
oligarchy in a few generations would - ripen into a
monarchy. 11 40/

The veto was not overridden, and the election of 1832,
which returned Jackson to the presidency, marked the end of a
central banking system in the United States until 1913.
from 1836 until the passage of the National Bank Act
in 1863 the Federal Government did not exercise responsibility
over currency and banking.
commonly referred to as


Jackson relied upon state banks,

pet banks" for the performance ..of

fiscal services, a system that did not prove effective .


Government suffered large losses during this period and an


began to establish a public depository, other than a Bank

of the United States, where Government funds would be secure.
The independent Treasury was established by the Act of August 6,
1846, which provided for the establishment of "places of deposit
of the public money" in Washington, Philadelphia, New Orleans,
New York, Boston, Charleston, and St. Louis.

It also required

that payments to and from the government be made only in gold or
silver coin or Treasury notes,!l/

Thus, the Act made the

Treasury its own banker and in effect a bank of issue.

As one

historian states:

J. Knox, A History of Banking in the United States 69 (1903) .


E. Taus, supra n.l, at 49-SO.

. -- -. .. ..



- 2S -

The unique monetary-fiscal footing enjoyed by the
independenj: treasury practically'• ordained that it
would becQITle an agent of monetary policy, especially
when fiscal deficits were financed by treasury
During this period, an uneven standard of banking
existed throughout the country.

The older states in New · England

and the Middle Atlantic regions had developed sound banking
structures, but the newer states in the South and West had not.
Consequently, the sound banking systems were affected by the
unreliable currency that filtered into their states. There was no
control on the issuance of state bank notes, and as a result they
were often worthless . 43/
With the advent of the Civil War, a need arose to raise

money to finance the war.

Secretary of the Treasury Chase con-

ceived the idea of a uniform national currency backed by the
Federal Government and issued on the basis of United States bonds.

R. Timberlake, The Origins of Central Banking in the United
States 73 (1978) . Timberlake quotes Robert J . Walker, the
first secretary of the independent treasury, who stated
that, under the independent treasury, specie would:
neither expand nor contract beyond the legitimate
business of the country; [while if left to the
capriciousness of the banking system, specie
would be] made the basis, as often heretofore, of
bank paper expansions, and if so, ruinous
revulsions would not fail to ensue.
Id. at 77.


See F. Redlich, supra n.4, at pt.2, 13; R. Timberlake,
supra n.27, at 84 .

- 26 -

The National Currency Act was passed ,February 25, 1863 but was
replaced by the- Act of June 3, 1864 ("The National Bank Act").
The National Bank Act provided for the creation of
private banks to be called national banks.
would be managed by at least five directors.

Each corporation
All national banks

were put under the supervision of the Comptroller of the
Currency, an officer of the Treasury Department .

Each national

bank had to have the necessary amount of capital, de~ending upon
the population of the town where it would be located .


national bank had to deposit with the Secretary of the Treasury
United States registered bonds equal to 1/3 of the bank's capital

This amount would be increased or decreased with the

-~ amount of bank's paid-in capital stock.

Each bank was entitled

to receive circulating notes equal to the par value of the notes
deposited, but not exceeding the market value of the stock nor
the bank's paid-in capital stock.

In addition, each bank in

"central reserve cities'' (with a population of 500,000 or more)


was required to keep a cash reserve of 25. per cent of its
deposits and notes in circulation44/.

o·ther banks, in "reserve

cities" were required to maintain a cash reserve of 15 per cent.
The powers of the national banks were limited to
discounting notes, drafts, bills and so forth; receiving


The requirement to maintain reserves against the notes in
circulation was eliminated in the Act of June 20, 1874.

- 27 -

deposits; trading in ex change, coin, ,,a nd bullion; loaning money
on personal se~urity; and the exclusive issue of circulating

The circulation was to be limited to $300 million and

the notes were to be receivable for all purposes.


was made for the conversion of state banks into national banks.
The growth of national banks was slow thus frustrating
a major purpose of the Act, which was to stimulate the large
scale purchase of Government obligations by the banks45/ and
the creation of a stable currency.

In the Act of March 3, 1865,

a IP per cent tax on state bank circulations was enacted .


then did national bank notes become the predominant medium of
However, without a central bank, there was no regulation of the money supply, as such.

Thus, seasonal fluctuations

in supply and demand, plus periods of Treasury surplus revenues
followed by periods of depression caused serious disturbances
to businesses and banks alike.47/

The Secretary of the Treasury


The primary purpose of creating th~ National Ban~ing System
was to provide a new market for Government bonds. ~' The law
was .an effort to force the banks to sustain the public
credit, since under the system ownership of bonds of the
Government would be required for certain banking purposes.
This in turn would establish a ready market for the bonds
and greatly facilitate their negotiation." Taus, supra,
n.l, at 61-2.


See R. Timberlake, supra n.35, at 87.


E. Taus, supra n.l, at ch. 4.



28 -

did attempt with some success to take up the slack created by
the lack of a e-entral bank regulating the money supply.


the first 30 years following the passage of the National Bank
" . . secretaries of the Treasury consistently ~ent
well beyond the confines of a mere fiscal department.
They dev i sed methods of meeting the monetary problems
which a central bank would normally have faced . The
techniques employed varied and revealed the legal
limitations imposed upon the Treasury and the ingenuity of the secretaries. These men were making the
Treasury, in some instances unintentionally, function
as a central banking organization.
• But most
of the men knew that the influence of their activities paralleled those of a
central bank, and they tried to change or interpret
the laws under which the Treasury functioned to
protect and support also the banks and the business
community. Others . . . felt the Secretary of the
Treasury should be guided mainly by the needs of the
Treasury Department. This view may be sound in times
of prosperity relatively free from disturbances, but
in times of emergency intervention by the Treasury is
not only desirable but necessary. The Treasury was
often in a position to help the banks, and no other
agency existed that could render assistance. The
banks and the business community in turn were becoming
accustomed to regard the Treasury as a superior
financial authority which could and would render
assistance in time of difficulty. 11 48/ (Emphasis

An interesting episode occurred in 1884 when the
Treasury did not act to fill the void created by the absence of
a central bank, but a . private association did act to alleviate
the strain of a monetary crisis.

Id. at 84.

The action, as described in

- 29 -

more detail below, was taken by the Clearing House Association,
in a manner si~ilar to previous actions taken in the l8S0 1 s.


the paric of 1857, for example, the Clearing House Associations
in New York and Boston realized that, if the banks did not act
together, each would have been forced to make itself impregnable
by calling its loans .

The problem with that, of course, was that

it would cause further contraction, which, in turn, would have
resulte~ in more failures of intrinsically sound enterprises and
thus made the crisis all the worse.

Cooperation had to aim at

cou_nteracting retrenchment, and that could be done only .by making
available new media of exchange to replace what had disappeared
through hoarding.49/

But any new media of exchange had to be

-~ created on the basis of undoubted security, in order to permit
the banks to go on lending and even increasing their loans to
strong borrowers.

The solution was the "clearing house loan

certificate," which was issued by committees of clearing houses
on the basis of collateral security other than coin.SO/


Note 1 Redlich, supra n.4, at 158.


There were, at that time, "coin certificates, 11 issued by
clearing house depositories based on coin deposits . They
were used in normal times, whereas the clearing house
certificates were issued only in emergencies and were
withdrawn and replaced by coin or coin certificates as soon
as the crisis had passed which had given rise to their
issue. Id.

- 30 -

The crisis of 1884 demonstrates the use of clearing
house certific~tes in time of crisis.

As Timberlake describes

the occurrence:
A seuere crisis, a sort of capstone to the
mild recession of the time, occurred in the New York
money market in the spring of 1884. The. Trea~ury
Department did nothing unusual to alleuiate the
situation; the budget continued in surplus and the
Treasury's cash balance burgeoned. Howeuer, the
New York Clearing House Association issued $20 million in clearinghouse certificates in $5,000 and
$10,000 denominations to member banks on presentation of suitable collateral, that is, good
commercial loans. The certificates were almost
redeemed by July 1, 1884.
This action by the Clearing House Associationwas an institutional response to an internal
liquidity drain. It was, as Redlich states, "the
specifically American solution to a problem with
which central banks in the other great commercial
nations of the world were faced at every crisis
throughout the second half of the nineteenth
century." It demonstrated that limited central
banking functions could be assumed by a private
institution and that the actions taken would be
beneficial. [footnotes omitted].~..!./
By the early 1890's, the banks looked to the Treasury
as a source of help in time of need but felt that the Treasury
should only perform functions of a central bank in such periods .
This dependence on the Treasury in periods of stringency was
itself a problem .

Rather than attempting to prepare themselves

for the increased drain on their funds which occured every fall,
as they had previously done, they now expected the Treasury to
counteract the seasonal stringency .


R. Timberlake, supra n.35, at 138.

- 31 -

After 1900, and the Gold S~andard Act of March 14,
1900, the Trea~ury incre . :1,sed its banking activities and performed


central banking 11 f irnctions as:


Issue and redemption of paper money--United
States notes and United States Treasury notes of


Preparation and supervision of the issue and
redemption of national bank notes;


Exchange of the various kinds of money for gold
or for each other;


Regional transfer of funds to move crops;


Supervision of the division of the money into
proper denominations so as to furnish the proper
supplies of large and small notes as needed;


Acting as an influence on the rate of discount by
contracting and expanding the currency through a
shifting of its funds between the commercial
banks and its own vaults; and


Keeping the gold reserve of the country . 52/


E. Taus, supra n.1, at 100-101. Taus states that, although
after 1900 the Treasury performed many more central banking
functions than before that time:
If the Treasury had been a true central bank, it
could have issued notes by discounting eligible
assets. The volume of such banK notes issued would
then have depended on the amount of paper presented
for discount. No arrangement of this type existed
in the United States until the Federal Reserve
banks started to operate on Nov. 16, 1914-.
Id. at 101.
E. Taus also notes that in other countries gov~rnment
treasuries do not usually perform banking functions.
They do not hold specie and issue notes against it, nor
do they exchange paper money for specie. In other

- 32 -

During this time , national ,~ank notes were rigid in
amount, based i.pon the bonded debt of the United States, rather
than flexible in amount, contracting and expanding directly with
the needs of business.

United States notes were no longer newly

issued, and, if they were redeemed for gold, they could only be
reissued for gold.

If the Treasury had obtained them in payment

of revenue or in any other way except for gold, the Treasury was
free to use them for any Treasury

Therefore, during

periods of Treasury surplus , the surplus revenue was held in
Tre~sury vaults causing the withdrawal of large amounts of money
from circulation and from the banks.

If bank deposits and

reserves declined, thereby causing a contraction of loans by the
-~ banks , the Secretary of the Treasury would prepay the interest
and principal of Government bonds and would increase Treasury
deposits with the national banks .

By prepaying the interest on

bonds , the banks had the use of funds for the period until the
interest was due the bondholder.54/

(Cont 1 d)
countries, central banks are obliged to perform these
banking services, at their own expense. In the United
States, after 1900, the Treasury assumed these burdens,
whereas before 1900 they had not been exercised by any
central body .
Id . at 99-100 .


Id. at 99.


Id. at 103-112 .




- 33 -

Under Secretaries Shaw and ,~ortelyou, the Treasury saw


itself as the e-entral banking unit and copcerned itself with the
general banking situatio~ at all times, not only in times of

Secretary Shaw in many ways made his own rules ~nd

regulations in an effort to make the currency more elastic.


example, he interpreted the security requirement for the deposit
of Government funds,


United States bonds and otherwise,

United States bonds or otherwise,



to mean

thereby allowing State,

municipal and railroad bonds as security.~/

Although attempts

were made to change the law clearly to legalize the acceptance of
other collateral, no change was made until the last day of Shaw's
term, March 4, 1907.
By permitting certain types of bonds other than
Government bonds as adequate collateral for Government deposits in national banks, the Secretary of the
Treasury helped to relieve a stringent money market.
However, the prices of all bonds required by the
Treasury as adequate collateral were sure to rise,
since a new demand had been created for them. In
this way the Treasury exerted an unintentional but
definite influence on the bond market.56/
Serious objections existed regarding the Treasury's
involvement in the nation's banking system.

It was fe~red that

political pressures on the Secretary of the Treasury would result


Id. at 105.



. .,,


· ,. ·

- 34 -

in abuses, especially in light of the power that the Secretary
had over the banking system.57/
Weakri_esses in the banking system had long been
recognized in banking circles, but it took the panic of 1907,
with its restriction of specie payments, to make s~me measure
of reform politically imperative.fil!_/

The first step was the

Aldrich-Vreeland Act of 1908,59/ which provided for the
issuance of "emergency currency 11 by groups of banks and
appointed a National Monetary Commission of nine Senators and
nine Representatives.60/

After extensive hearings, a report

was submitted to Congress in 1912,§.1/ resulting in a proposal
for a National Reserve Association ( 11 NRA 11 ) , which, despite
arguments to the contrary, would have been essentially a
central bank.62/
·~ El_/

Id. at 119. E. Taus cites the United States Treasury Department Annual Report of the Secretary 46 (1906) regarding
proposals to change the system: The abolition of the
Independent Treasury would be, of course, involved in such a
plan. Government money would be then regularly deposited in
this central bank, from which disbursements would be made,
and the Government's supervision of and interference with the
money operations and the financial conditions of the country
would be effectually eliminated.


M. Friedman & A. Schwartz, A Monetary History a t the United
Sta t es, 1867 - 1960, 168 (1963).


Act of May 30, 1908, 35 Stat. 546.


M. Friedmand & A. Schwartz, supra n._, at 170-171.


R. Timberlake, supra n._, at 189.


Id. 190.

See, also, H. Rep . No. 69, 63d Cong.~ 1st Sess. 46

- 35 -

The 1912 elections gave the Pr·esidency to a democrat,
Woodrow Wilson, and the impetus for ban~ing reform to Representar,

tive Carter Gla,,ss, who labored long on what was to become the
Federal Reserve Act (the "Act").g/

Glass worked against the

republican-sponsored NRA, and against bankers who "would not
desist in their demand for . . . some kind of Central Bank to be
owned and operated for bankers."64/
Act avoided



Glass made it clear that the

a central banking institution which [the

bankers] may control and use for their own convenience, but to
which the American people may .not resort for any business purpose
wha~soever . . ; 11 it avoided a "central bank for banks. "65/
The alternative offered by the Act . differed from the
NRA in two essential respects.

First, the pyramid structure of

the Reserve Banks allowed a regionally based system with all
,..,. "the benefits of combined use of banking resources,"66/ without
resorting to a single bank unresponsive to



the United

States, with its immense area, numerous natural divisions, still

For a detailed history of the birth of the Act, See R. Smith &
N. Beasley, Carter Glass) 83-136 (1939).


R. Smith & N. Beasley, supra n._, ~t 98. See, also,
J. Jones, Carter Glass, Unreconstructed Rebel 228 (1938).
It had been decisively determined in 1913 that this country
did not want a central bank").


50 Cong. Rec. 4644 (1913).


H. Rep. No. 69, 63d Cong., 1st Sess. 12 (1913).

- 36 -

more numerous competing divisions, and abundant outlets to
foreign countries. . . . 11 67 /

Second , substantial powers were

conferred on the government controlled body, the Board of
Governors {the "Bo~rd'').

In response to bankers' objections

that too much power had been concentrated in the Board, Glass
there is scarcely a power enumerated in section 12 of this bill which has not been exercised
by the Government for 50 years or, indeed, which
has not been confided to one or two public
functionairies .
Nearly every power conferred by this bill on the
Federal reserve board, composed of seven members,
has been for half a century vested by the nationalbank act in the Secretary of the Treasury and the
Comptroller of the Currency, to be exercised in the
conduct and control of the national banking system.68/
As summarized by the Secretary of the Treasury, the
... new system was to provide:
for a central agency, to represent and act for the
organized and cooperative banks-this agency to be
securely free from political or trust control but
with the Government having adequ-te and intimate
supervision of it.69/
When the Act became law,70/ the country was divided
into 12 Reserve districts, each with a Reserve Bank, to be
supervised largely by the Board.



50 Cong. Rec . 4644 (1913) .


E. Taus, supra n.1, at 136, n.9, ·quoting from United States

Treasry, Annual Repot of the Secretary 3 (1913).

Act of Dec . 23, 1913, 38 Stat. 251.

- 37 -

The original Board, which was to exer.cise supervisory functions
over the Reseri::re Banks, was composed of the Secretary of the
Treasury, the Comptroller of the Currency and five members
appointed by the President with the consent of the Senate ,11./
All national banks were compelled to become members of the
Reserve System.

State banks were also permitted to become

The stock of the Reserve Banks was to be owned by the
member banks, which were required to subscribe to the stock of
the_.Reserve Bank of their district in an amount equal to 6 percent of the member bank's capital and surplus .

The Act provided

for Government subscription to the stock of the Reserve Banks
-~ only in the event that total subscriptions by banks and the
public should prove to be insufficient.

It was therefore

intended that the Reserve Banks be private corporations imbued
with a public purpose.

The Act provided that the member banks

elect six of the nine directors of each Reserve Bank, and the
Federal Reserve Board was to appoint the other three.


officers were to be selected by the respective boards of

The Act of August 23, 1935 provided that the

president and first vice president should be selected in such


The Act of Aug. 23, 1935, 49 Stat. 684, amended Section 10
of the federal Reserve Act to provide for the Board of
Governors, composed of seven members appointed by the
President with the consent of the Senate.

- 38 -

manner for S year terms, subject to the approval of the Board
of Governors. Section 14 of the original Act gave any Reserve Bank the
power, under rules and regulations prescribed by the Federal
Reserve Board:

( 1) to deal in gold at home or abroad:



purchase from member banks and to sell bills of exchange arising
out of commercial transactions:

(3) to buy and sell, at home or

abroad, bonds and notes of the United States and State and local
bills, notes, revenue bonds, and warrants with a maturity not
exceeding six months;
(4) "To establish from time to time, subject to
review and determination of the Federal Reserve Board,
rates of discount to be charged by the Federal Reserve
Bank for each class of paper, which shall be fixed with
a view of accommodating commerce and business;" [The
discount rate was thereby uniform throughout each
district but could vary in different districts]
(Emphasis added)


(5) " . . . purchase and sell in the open market, at
home or abroad, either from or to domestic or foreign
banks, firms, corporations, or individuals, cable
transfers and Bankers' acceptances and bills of exchange
of the kinds and maturities by this Act made eligible
for rediscount, wi t h or without the indorsement of a
member bank." (Emphasis added)
The creation of the Reserve System brought

about a new kind of currency and a new mechanism for supplying


The federal Reserve note was designed to provide

W. Burgess, The Reserve Banks and the Money Market 71 (1936).

- . ,,..(

- 39 -

currency expansion in response to business and banking



The original Act introduced a new princip~e

into our currency system by providing that, apart from a
minimum gold reserve, Federal Res~rve notes might be secured by
certain specified assets of the Federal Reserve Banks.74/


paper used as security under the terms of the original Act
represented agricultural products or other goods in the process
of production, or in movement from producer to retailer, in
process of export or import, or on the shelves of retailer or
wholesaler awaiting sale.

It thus specified a security which

is sound and at the same time increases and decreases with the
business and agricultural need of the country.75/

There have

-~been some changes since the original Act in the permissible
collateral for Federal Reserve notes, but the essential
importance of keeping the currency elastic and providing the
Federal Reserve System with the means to cope with crises have
remained intact.76/
It was believed, when the original Act was passed,
that Federal Reserve participation in the bill market would



Id. at 73.




Id. at 74-6.

- 40 -

provide a mechanism for drawing Fede~al Reserve money into use
when needed.77~

It was also thought that the discount rate

would have a great effect on the money market, as perhaps the
most important means of credit control.

As stated above, the

power to set the discount rate was given the Reserve Banks,
subject to the review and determination of the Federal Reserve
In the early years of the Federal Reserve System each
Federal Reserve Bank individually bought Government securities
without apparent concern for the influence of their purchases
on the money market.

Because the only major securities market

was in New York, the Reserve Banks would often bid against each

other when they entered this market at the same time .
[T]he course of these operations, entered upon
independently by each of the 12 banks, made evident
the need for a better coordination of the openmarket operations of the several banks, and in 1922
led to the creation of a committee of officers of
the reserve banks [the 11 Governors Committee"] for
the purpose of coordinating reserve bank dealings
in Government securities, so as to prevent possible
conflict between their own transactions and those
which as fiscal agents of the Government they were
conducting for the Treasury,1J!/

W.R. Burgess, "Reflections on the Early Development of Open
Market Policy," Essays in Domestic and International Finance
7 (1967).


10 Annual Report of the Federal Reserve Board 13 (1923).
Note that the official title of the Governors 9ommittee was
the "Committee of Governors of Centralized Execution of
Purchases and Sales of Government Securities."

- 41 -

As originally conceived, the function . of the Governors Committee
was to be only-that of executing orders received from the various Reserve Banks; it was not to determine policy.79/

It was,

however, mandated to execute orders in such a manner as to
safeguard the interests of the security market, the Reserve
Banks and Treasury . SO/
During the next few months of coordinated purchasing,
the Res~rve System generally began to recognize the significance
of open market operations as an instrument of monetary policy.,ll/
The . character and scale of the open-market operations engaged in
by the Federal Reserve Banks during the year 1922 and the early
part of 1923 showed the need to bring these operations more
-~ definitely into line with the general credit policy of the
System.82/ Increased attention was paid by the System to the
effect of the investment operations of the Federal Reserve Banks
on the money market .JU_/

Governor Strong of New York then took


L. Chandler, Benjamin Strong, Central Banker 21S (19S8).


1 S. Harris, Twenty Years of federal Reserve Policy lSO


W. Burgess, "Reflections on the Early Development of Open
Market Policy," Essays in Domestic and International Finance
11 (1967).


10 Annual Report of the Federal Reserve Board i3 (1923).


L.Chandler, supra n.46, at 217 .

I .

- 42 -

the initiative and proposed in October 1922 that investment
i ...

policy be dire -1,,.ted "with a consideration particu l ar l y- ex clusive l y had been in the original draft--of the conditions in
the money market, the state of credit, and the operations of the
Treasury. 11 84/
By April 1923, the new-found importance of open
market operations and the resulting policy making nature of
the Governors Committee was recognized by the Federal Reserve

The Board dissolved the Governors Committee and sub-

stituted a committee composed in fact of the same officers but
named by the Board.~/

The Committee was renamed the Open.

Market Investment Committee,!§_/ and the following general

operating principles were laid down:
That the time, manner, character, and volume of
open-market investments purchased by Federal
Reserve banks be governed with primary regard to
the accommodation of commerce and business and to
the effect of such purchases or sales on the
general credit situation.87/
This statement of principle--substantially identical to the
standard set forth in present law88/--represented a decision

S. Harris, supra n.47, at 151.


J. Hurst, A Legal History of Money in the United States,
1774- 1970 208-9 (1973).


W. Burgess, supraP n.53, at 240 .


10 Annual Report of the Federal Reserve Board


See, 12 U.S.C. § 263(c) (West 1945).

16 (1923).



43 -

that profit should no longer influence the purchases and sales
of securities.- Conducting open market operations was to be
done solely with the id~a of correcting market tendencies.
The Committee was supplemented by a •isystem open market
account,'' formed in December 1923, through whic~ the securities
purchased were prorated by formula among the Reserve Banks.


individual Banks themselves then decided by vote of their directors whether to participate in the particular ope~ations.
Although, from the beginning, there was a struggle
between the Board and the Reserve Banks over control of open
market operations, it is well-recognized that:
almost from the start the initiative in the determination of open market policy lay with the Reserve


Governor Strong of the New York Reserve Bank had particular
influence and was a longstanding Chairman of the Open Market
Investment Committee.
A clear example of the Reserve Banks' independence is
given by the stock market crash of 1929.

Rather than restrict

itself to the confines of an Open Market· Investment Committee
weekly limit of $2S million of purchases, and rather than going
through the laborious process of getting that limit removed, the

The Federal Reserve System After Fifty Years: Hearings on
H.R. 3783, 9631, 9685, 9686, 9687, 9749 Before the Subcomm .
on Domestic Fin. of the House Comm. on Banking and Currency,
88th Cong., 2d Sess. vol . 3, 1986 (1964) (herein~fter "The
Federal Reserve System After Fifty Years").


- 44 -

New York Res~rve Bank purchased $160 million of Government
securities in the week ending October 30, 1929.90/
/ ;,

In 19.30, the Open Market Investment Committee was
superseded by a new committee called the Open Market Policy
Conference, which was enlarged to ~Mclude representatives of each
of the 12 Reserve Banks._2J_/

The group of five who had controlled

the old Open Market Investment Committee constituted its first
Executive Committee.92/

The implementation of policy was

complicated by the independent attitude of the various Reserve
Banks,93/ who retained the right to decide whether or not to
participate in open market operations.94/
Against the background of a national banking crisis the
Banking Act of 1933 ( 11 1933 Act 11 )95/ was enacted, and its recovery
scheme included the strengthening . of the federal Reserve System .

'"' In order to better define the powers of the Board,96/ the 1933

M. Friedman and A. Schwartz, supra n._, at 363, 364, n.77.


Id. at 368-9 .




Id. at 368.


Id. at 369, n.89 .
Act of June 16, 1933, 48 Stat. 162.
See the Senate Committee Report on the 1933 Act which
recommends strengthening the Federal Reserve System, and
specifically recommends: ·

- 45 -

Act recognized the Federal Open Mark~~ Committee (''FOMC"), comprised of one !ll-epresentative from each Reserve Bank.


authority of the FOMC was defined with substantially the same
statement of purpose that had previously governed open market

No Reserve Bank could engage in open market

operations except in accordance with regulations of the Board.
However, any Reserve Bank could still decide not to participate
in open market operations.

The Senate Report on the 1933 Act

makes it clear that the legislature was legalizing and giving
official recognition to the then existing open-market


This structure of the FOMC was found to be defective

.,.. because FOMC initiatives could not be effectuated without direct

"Better definition of the powers of the Board
with respect to speculative transactions,
particularly as to authority over open market
dealings, by establishing a so-called "Open
Market Committee" with designated authority."
S. Rep. No. 77, 73d Cong., 1st Sess, 12 (1933).
" .":'


The Senate Committee Report recommending the enaclment
states that the bill:
" . . Adds a new section 12A to the Federal Reserve
Act providing for the creation of a Federal openmarket committee of twelve members to supervise the
open-market operations of the Federal Reserve Banks
and the relations of the Federal Reserve System with
foreign banks. This in effect legalizes and gives
official recognition to the present open-market
S. Rep. No. 77, 73d Cong., 1st Sess. 14 (1933).



- 46 -

Board approval, and, even when approved,
could be frustrated by
the refusal of-Reserve Banks to implement them.

A bill that

later became the Banking Act of 1935, H.R. 7617, as originally
introduced, proposed to remedy the problem by reconstituting the
FOMC to consist of three Board members and two Reserve Bank
representatives and by requiring Reserve Bank participation in
operations decided upon by the FOMC.

The Board opposed the first

aspect of the bill on the ground that, while it would centralize
authority, it could potentially give the Reserve Banks control of
monetary policy.98/

As an alternative, the Board proposed that

regulation of open-market operations be vested in the Board, with
a provision for an . advisory committee of five Reserve Bank

As reported by the House Banking Committee and



passed by the House, the bill followed the Board's proposal.100/

Heari ngs before the House Comm . on Banking and Currency on
Banking Act of 1935, 74th Cong., 1st Sess. 181-82 (1935)
(hereinafter 11 1935 House Hearings 11 ) .


Chairman Eccles testified (1935 House Hearings, supra n.58,
at 183):
Such an arrangement would resul~ in the power to
initiate open-market operations by either a committee of
the [Reserve Bank presidents] or by the Board, but would
place the ultimate responsibility upon the Federal
Reserve Board, which is created for that purpose.


The Committee Report stated:
The federal Reserve Board is appointed by ~he
President and confirmed by the Senate. It has a
national viewpoint and has long been accustomed

. . . . -·

.. -


47 -

The Senate rejected the Board's proposal, however.

The Senate Ban~ing Committee proposed a twelve-member Committee
consisting of the seven Board members and five Reserve Bank
representatives - - four to be elected by four groups of three
Reserve Banks and one to be chosen as a representative-atlarge.

Chairman Glass of the Senate Committee , an advocate of

the position that the Reserve Banks alone should determine
open-market operations and thus no change in the F0MC was
necessary, characterized the Senate proposal as a compromise
bet~een those who favored complete control of open-market policy

to considering matters as they affect the
country as a whole, without regard to the
special interests of any particular group or
locality. It was created for the purpose of
supervising and coordinating the activities of
the 12 ' federal reserve Banks "in order that they
may pursue a banking policy which shall be
uniform and harmonious for the country as a
whole" (report of the Banking and Currency
Committee of the House of Representatives on the
original Federal Reserve Act, Rept. No. 69, 63d
Cong., 1st Sess., p. 16). It is for this reason
that the original Federal Reserve Act gave the
Federal Reserve Board final authority over
discount rates. Since open-market operations
have in more recent years come to be recognized
as a much g~eater factor in credit policy than
discount rates, it is entirely consistent with
the philosophy of the original Federal Reserve
Act to vest in the Federal Reserve Board final
authority with respect to the open-market
policies of the Federal Reserve System.
H. Rep. No. 742, 74th Cong . , 1st Sess. 10 (1935)

.- ....

- 48 -

by the Board and those who favored total Reserve Bank control .
His statement


,' ;

debate on the Senate Floor clearly delineates the

conflict between his view and that of the Board and the House
Committee :
Some of us thought it was perfect folly to
undertake to interfere with the existing arrangement .
We are amazed to have it proposed that the Federal
Reserve Board alone should constitute the openmarket committee of the system . Let us consider
that for a moment.
Here is a board originally established and now
operating as the central supervising power. The
Government of the United States has never contributed a dollar to one of the Reserve banks; yet it is
proposed to have the Federal Reserve Board, having •
not a dollar of pecuniary interest in the Reserve
funds or the deposits of the Federal reserve banks
or of the member banks, to constitute the openmarket committee and to make such disposition of the
reserve funds of the country, and in large measure
the deposits of the members banks of the country, as
they may please, and without one whit of expert
knowledge of the transactions which it was proposed
to commit to them.
As I have said, in order to produce a bill, in
order to harmonize radical difference, concessions,
even yielding of convictions, had to be made; so it
was finally determined to constitute the open-market
committee of the 7 members of the Federal Reserve
Board and S representatives of the Federal Reserve
Banks . the Federal Reserve banks, which are the
trustees of the reserve funds of all the member
banks of the country, are graciously given this
minority representation upon the open-market
Some of us were opposed to any alterations of
the existing arrangement. Others ·thought that the
representatives of the banks, whose money is t~ be
used, whose credit is to be put in jeopardy, should
have control of the committee and should have the

- 49 -

majority representation. But in order to reconcile
bitter difference there was yielding, and we have
now propo~ed an open-market committee composed of
all 7 members of the federal Reserve Board and 5
Representatives of the regional reserve banks.101/
The Senate-House Conference Committee followed the
Senate proposal in virtually · all respects.

While the House

Banking Committee had favored complete control by the Board of
open-market operations, Chairman Steagall of the House Committee
supported the Conference Committee Report.

Recognizing that

this formulation of shared responsibility would theoretically
have permitted the Reserve Banks to ally with a minority of
Board members to control the Committee, Representative Steagall
pointed out that the Board had control over the appointment of
Reserve Bank presidents:
It will be remembered that the presidents of
the federal Reserve banks under the bill passed
by the House and under the bill reported by the
committee are to be approved by the federal Reserve
Board. five members representing the banks will be
added to the Federal Reserve Board to constitute
the open-market committee.
This means that we have fought out in this
House, in the Senate, and the Confer.ence the
question of Government control of open-market
operations, the rediscount rates, and the reserve
requirements of the federal Reserve banks, and as a
result of this controversy we have a bill which
writes into the law a safeguard that insures the
investment of these powers in a Governmentcontrolled board.

79 Cong. Rec . 11778 (1935).

- 50 -

The uote would be 7 to 5 if we assume that the
5 members representing the bank~ would go contrary
to the 7 members representing all the people of the
country the public at large. The Senate bill had in
it a provision requiring the appointment of 2 members
of the 7 constituting the Federal Reserve Board to
be experienced bankers. This provision was stricken
out in conference.
So we have written into this law the principle
that the Government, the sovereign people of the
United States, shall have control of the Board that
dictates the uast powers of the Federal Reserve
Something has been said about what was done in
conference being a departure from the wishes of the
House as expressed in the vote of the House on the
bill. Let me say to the Members of the House that
the open-market committee provided in the bill
reported by the conference committee goes further in
insuring Government control of the operations of the
Federal Reserve System than the original bill that
was submitted to the committees of the House and
Senate by the present Governor of the Federal
Reserve Board and by the administration.102/
In addition to changing the composition of the FOMC in
this manner, under the Banking Act of 1935, Reserve Banks could
neither engage nor decline to engage in open-market operations
except in accordance with "the direction of and regulations
adopted by the Committee."

Thus for the.first time, a single

body was given authority to determine open market policy and
direct all open market operations.
The statutory structure of the FOMC has remained virtually unchanged since 1935, with one important exception.


1942, Section 12A of the Federal Reserve Act was am~nded to

79 Cong. Rec. 13705-06 (1935).

- 51 -

provide that the Reserve Bank repres~ntatives on the FOMC must
be either the president or first vice president of a Reserve

Congress did not anticipate that Reserve Banks would

attempt to elect outsiders to the FOMC, and when attempts were
made to elect officers of commercial banks as representatives of
the Reserve Banks on the FOMC,101/ a statutory amendment was
immediately adopted precluding such practice, thereby effectively
ensuring that only persons selected with the approval of the
Board could serve on the FOMC.

Thus, since 1942 the FOMC has

consisted solely of persons who hold their offices either by
virtue of Presidential appointment confirmed by the Senate
the Board members -- or by virtue of the approval of, and
-~ subject to removal by, the Board acting in its statutory
capacity as the head of the Federal Reserve System.
The issues of


public 11 and


priuate" influence on the

FOMC -- debated vigorously during Congressional consideration of
the 1935 legislation creating the FOMC substantially in its
present form -- have been pursued legislatively by individual
members of Congress over _the 50 years o~ the FOMC's exfstence.
For example, the late Congressman Wright Patman argued in 1938

12 U.S.C.


Hearings before the House Comm. on Banking and Currency on
H.R. 758, 77th Cong., 2d Sess. 3 (1942)


263(a) (West 1945).

- 52 -

that the Reserve Bank members did not; , represent· the



interest." 105/- Congressman Reuss complained in 1964 that the
Reserve Bank members were "five essentially private persons who
are not publicly appointed," and he pointed to the possibility,
recognized in 1935, that the judgment and decision of the
majority of the Board members "might be overruled by essentially
private people. 11 106/
Repeatedly, and particularly in four of the last five
Congresses, bills have been introduced to alter the FOMC by
rem~ving the Reserve Bank representatives, adding the Secretary
Hearings before the House Bank i ng and Currency Comm. on
H.R. 7230, 75th Cong., 3d Sess. 56 (1938) .
The Federal Reserve System After Fifty Years, supra n.56,
at 37.
In response to Mr. Reuss'comment, Federal Reserve Chairman
Martin stated:
Let me say, Mr. Reuss, that I don't concede that the
presidents of the 12 federal Reserve Banks are private
The initiative on the appointment comes from the board
of directors of the individual Reserve bank . But the
Congress has given the Federal Reserve Board the
authority on the president and first vice president.
Id. at 38.
It should also be pointed out that the public records of
the FOMC reveal that a majority of the Board has never been
outvoted by the Reserve bank representatives.

- S3 -

of the Treasury, or both.107/


Two such bills are before the

present Congre~s.108/

Only one of these recent bills has been

taker seriously enough to prompt hearings,109/ and none has
mustered enough support to be reported out of Committee.
Clearly, Congress has been ever mindful of the composition of
the FOMC and has cons~stently refused to upset the balance it
created in 1935.


S e e , ~ . H.R. 4497, 99th Cong., id Sess. (1986); H.R.
1469, 99th Cong., 1st Sess. (1985); H.R. 5459, 98th Cong.
2d Sess. (1984); H.R. 5066, 97th Cong. 1st Sess. (1981);
H.R. 7001, 96th Cong. 2d Sess. (1980); S. 2540, 94th Cong.
1st Sess. (1975); S. 2577, -87th Cong. 1st Sess. (1961).


H.R. 4497, 99th Cong. 2d Sess. (1986); H.R. 1469, 99th
Cong. 1st Sess. (1985).


To Modernize the federal Reserve System: Hearings on H. R.
7001 before the Subcomm . on Domestic Monetary Policy of the
Comm. on Banking, Finance and Urban Affairs, 96th Cong. 2d
Se s s . ( 19 8 0) .