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1 992











As we open the doors of the

is the financial infrastructure that

new headquarters building of the

the Fed provides for the nation's

Federal Reserve Bank of Dallas, it is

monetary system. Originally, that

an appropriate time to review and

referred to the provision of a

reaffirm our role in the nation's

unified and "elastic" national

economy and in our local commu-

currency and a nationwide check

nities. With this in mind, we have

collection system. Today, those

prepared this special publication

important functions have been

highlighting the history of the Dallas

expanded to include more exotic

Fed and describing who we are and

electronic means of transferring

what we do. Its premise is that a

money, securities and informa-

better and broader understanding of the nation's

tion. The majority of the employees at the Reserve

central bank and the issues it confronts will contrib-

Banks are engaged in such operations, which are

ute to a more receptive environment for sound and

provided as services to financial institutions and to

responsible policies.

the U.S. Treasury.

The Federal Reserve System was structured by

Another important function of the Federal

the Congress as a uniquely American version of a

Reserve is our role as a federal bank supervisor,

central bank, established to carry out the Congress'

which we share with the Comptroller of the Currency

own constitutional mandate to "coin money and

and the Federal Deposit Insurance Corporation. Many

regulate the value thereof." Part of its uniqueness is

of our employees are engaged in the examination of

that it is a decentralized central bank, with Reserve

state-chartered Fed member banks, the inspection of

Banks and Branches in 12 Districts across the country

bank holding companies, and, more recently, the

coordinated by a Board of Governors in Washington.

examination of local entities of foreign banks. The

The Federal Reserve is part public and part

regulatory policies and standards pursued in these

private, with the Washington Board-appointed by

supervisory activities are formulated in legislation by

the President and confirmed by the Senate-repre-

the Congress and in regulation form by the Board of

senting the public or governmental side and with the

Governors in Washington.

private sector represented by local citizens serving on

If bank operations are the modern-day equivalent

the boards of directors of the Reserve Banks and their

of coining money, then "regulating the value thereof"

Branches. The Banks are self-supporting, with capital

is the task of contemporary monetary policy. The

coming from member banks and with the Banks'

most important tool of monetary policy today is open

operations financed out of their own earnings.

market operations which are directed by a commit-

Federal Reserve Banks do not receive taxpayer funds,

tee of Governors and Reserve Bank presidents. It is

although the public has a stake in their efficient

through my participation as a member of the Federal

operation because the Banks contribute their excess

Open Market Committee that this region has its most

earnings to the U.S. Treasury.

important voice in the conduct of monetary policy. Of

The modern-day equivalent of "coining money"

course, regional economic conditions and concerns

are also considered by the members of our local

roads of North-South international trade and promises

board of directors in their biweekly recommendation

to benefit from the important moves toward free trade

to the Board of Governors on the discount rate.

made by Mexico and other neighbors to the South.

Because of our decentralized regional structure,

One important way in which Reserve Banks have

with both private-sector and public representation,

contributed is through economic education. As the

monetary policy is not made exclusively inside the

economies of the Soviet Union and Eastern Europe

Washington Beltway. Through our directors and other

have fallen, too many of our citizens do not under-

local contacts throughout the Eleventh Federal

stand and appreciate the nature of the economic

Reserve District, I am able to get good grass-roots

system that won the ideological war. Too many do

information on the state of our economy and on

not really understand how capitalism works and how

problems and issues unique to our Southwest region

capitalism and freedom are so intimately tied. If we

and take it to FOMC deliberations. Our regional

can be a force for clarifying the benefits of a free

structure also allows the Dallas Fed to have a research

enterprise system, we can make a tremendous

staff to study theoretical issues-as well as to formu-


late independent judgments and forecasts on the

Finally, I want to express my appreciation to the

local, national, and international economies-to

individuals who gave their personal best in envision-

complement the research of the staff in Washington.
Aside from our regional structure and local

ing, designing, and constructing this new building. It
was a massive undertaking, and their efforts are

private-sector participation, the key to the ongoing

visible in every corner. I especially want to thank

success of the Federal Reserve has been the high

former President Robert Boykin, former Chairmen of

caliber of the people attracted to the challenges faced

our board of directors Bobby Inman and Hugh

by the organization. From the policymakers to the

Robinson, and our current Chairman, Leo Linbeck,

individuals charged with daily operations, the people

for their vision and persistence in getting the project

of the Fed are consistently impressive in their dedica-

started. Mr. Linbeck has also served as chairman of

tion and enthusiasm for public services. The following

the Building Committee throughout the planning and

pages tell the stories of some of these people in words

construction phases. Other directors who have served

and in pictures. Additionally, we salute the private

as members of the Building Committee are Henry

citizens who have served as our directors. These

Cisneros, Ted Enloe, Humberto Sambrano, Dickie

individuals are models of public-minded citizens who

Willian:son, and Peyton Yates.

give willingly of their time to contribute to the
economic well-being of all.
As we look to the future, we hope to continue to

To the bankers in the District, I hope the tasks
performed within these walls serve your needs and
enhance the efficiency of the nation's financial

contribute to the prosperity of our region. Many

system. And to the staff of the Federal Reserve Bank

changes have been wrought in our District over the

of Dallas, welcome to our new offices.

years. Seventy-five years ago, cattle and cotton
dominated, and oil was ascendant. Though still
important in today's regional economy, agriculture
and oil have been eclipsed by the growth of the
service sector and the rising importance of commerce

Robert D. McTeer, Jr.

and trade. Today, the Southwest stands at the cross-

President and Chief Executive Officer

~ Each season has its memories. Each journey, its roads traveled. Whenever a history is told, a collection of people, dreams, and events weave together to
form a tapestry. For nearly 80 years, the Federal Reserve Bank of Dallas has worked
to provide quality financial services to the Eleventh Federal Reserve District. It also
has monitored the performance and regulated the activities of state member banks
and bank holding companies. Finally, it has worked closely with the other Reserve
Banks and the Board of Governors of the Federal Reserve System in Washington, D.


to formulate monetary policy for the United States. These are all important functions
for the Federal Reserve Bank of Dallas and its Branches as they perform their work for
the citizens of the United States and provide the strong foundation upon which the
financial system and the economy rely for strength, integrity, and protection.


Captured here in photographs and words are some thoughts and places characterizing
the history of the Federal Reserve Bank of Dallas and its role within the Federal
Reserve System. As part of the nation's central bank, the Dallas Fed has a history
filled with ties to national political and economic events as well as events in the
region it serves. This story brings many perspectives into view-those of political
leaders who shaped the creation of the Federal Reserve System, the first leaders of
that System, and employees of the Federal Reserve Bank of Dallas. While it is a
history, it is also a framework for the future.


" ",.~

This book covers almost 80

years of history and ends with a beginning. The opening of the new headquarters
building for the Federal Reserve Bank of Dallas is a time for celebration and for

The employees of the Federal Reserve are frequently asked to

Top: Checks are processed around the clock.
Middle: Miles of fiber-optic cables allow faster electronic
payments and increased security for financial transactions.

Left: The vault at the Dallas Fed is the size of a five-story office




called an independent central bank, but it is more

of 12 District banks that, along with the Board of

accurate to say that the Fed is "independent within

Governors in Washington, D.C., make up the central

government." Although not subject to congressional

bank of the United States. The Dallas Fed serves the

appropriations, the Federal Reserve ultimately is

Eleventh Federal Reserve District, which encompasses

responsible to the Congress and comes under its

approximately 350,000 square miles and is composed

jurisdiction. The members of the Board of Governors

of the state of Texas, northern Louisiana, and south-

report regularly to the Congress on the state of the

ern New Mexico. Its Branch offices are in EI Paso,

economy and monetary policy, domestic and interna-

Houston, and San Antonio.

tional financial developments, and regulatory matters.

A nine-member board of directors oversees the

operations of the Dallas Fed under the general
supervision of the Board of Governors. The directors

the other Reserve Banks, is, first, a "banker's bank,"

represent the varied economic activities in the

providing services for financial institutions in much

District, including banking, business, and consumer

the same way commercial banks serve their custom-

interests. The directors work closely with the Dallas

ers. By providing these financial services, the Bank

Fed president to provide grass-roots economic

promotes the smooth functioning of the financial

information and to provide input to management and

system and the efficiency and technological develop-

monetary policy decisions.

ment of the payments system.

Although created by a legislative act, like the other

Every business day, millions of dollars are handled

11 Reserve Banks, the Dallas Fed receives no budget

and processed at the Dallas Fed. The money that the

appropriations from the Congress. Instead, it is self-

U.S. Treasury prints or mints is put into circulation by

sufficient, earning income from interest on its holdings

a Federal Reserve Bank. In addition, the Dallas Fed

of U.S. Treasury securities, from interest on loans to

ensures that the currency in circulation is in good

financial institutions, and from fees for the services it

physical condition by removing from circulation coins

provides to financial institutions. At the end of each

and notes that are damaged, counterfeit, or worn.

year, the Dallas Fed returns to the Treasury all earnings

The largest service function at the Dallas Fed is its

in excess of expenses necessary for operations.

check clearing operation. Most dollars spent in the

The Federal Reserve System has often been

United States are in the form of checks. Every day,


Above: Alan Greenspan became Chairman of the
Federal Reserve Board of Governors in 1987.
Right: The Dallas Fed receives and processes more
than 11 billion pieces of paper currency annually.
Below left: Every day, 3 million to 4 million checks
are processed by the Dallas Fed.
Below right: Federal Reserve Banks sell $100 billion

u.s. government securities-including U.S.

savings bonds~ch month.

millions of pieces of paper must be moved around

examining state-ehartered member banks and bank

the country, sorted, tabulated, and credited or

holding companies. The Dallas Fed is also respon-

debited to the proper financial institution accounts.

sible for reviewing banking organizations' proposals

To handle this operation and to provide overnight

to merge, make acquisitions, or engage in nonbanking

processing and collection of checks, checks opera-

activities to assure that such transactions will have a

tions take place 24 hours a day, five days a week, with

positive impact on competition and the community

special processing on the weekend.

served. Through the discount window, the Dallas Fed

The Dallas Fed performs two services that

provides temporary adjustment or seasonal credit to

provide for the electronic transfer of funds. The

depository institutions to offset financial strains they

continuous increase in the number of checks led to

may be experiencing in an effort to insulate the

the development of automated clearinghouse eACH)

broader community and financial system from

operations, which use electronic data instead of

potential instability. The Dallas Fed also implements

paper checks to transfer funds. The ACH is primarily

and enforces a variety of consumer laws and regula-

used for recurring payments, such as direct deposit of

tions to assure that institutions treat consumers fairly

payrolls and automated bill payments. A nationwide

and meet the credit needs of their communities.

electronic network also allows institutions to transfer

funds to other institutions anywhere in the country
within seconds. Many financial institutions in the

for formulating and implementing the nation's

Eleventh District have online computer connections

monetary policy in order to promote sustainable

that communicate directly with the computer at the

economic growth and stable prices. In other words,

Dallas Fed. This computer also is linked to other

the Federal Reserve is responsible for monitoring

Reserve Banks and some government agencies.

money and credit conditions in the country and for

As additional services to financial institutions,

providing enough money and credit so that the

the Dallas Fed handles transfers of securities between

economy can operate as closely as possible to full

institutions, holds securities in its vault for safekeep-

employment, with steady growth and stable prices.
The Dallas Fed's foremost role in the monetary

ing, and participates in a nationwide system that
handles the processing of municipal and corporate

policy process is the participation of its president in

securities and noncash check drafts.

the deliberations and actions of the System's chief
monetary policy group, the Federal Open Market
Committee. The Bank's board of directors also plays

institutions, the Dallas Fed and all other Reserve

an important monetary policy role through its advice

Banks serve as banks for the U.S. government by

to the president and its recommendation on the

maintaining accounts and providing services for the

Bank's discount rate, subject to review and determi-

Treasury and acting as depositories for federal taxes.

nation by the Board of Governors.
To assist in fulfilling these responsibilities, the

The Fed also handles the sale and redemption of
original issues of government securities to assist the

Dallas Fed's research staff collects a broad array of

Treasury Department in financing the national debt.

information and analyzes economic and financial

These Treasury bills, notes, and bonds are sold to the

developments. This current analysis is complemented

public and to financial institutions.

by longer-term research on the fundamental workings
of the economy and financial system. Sharing this
information is another important component of this

financial network in which the public can place its

activity. Through publications, conferences, and

confidence, the Dallas Fed supervises and regulates

other outreach programs, the Dallas Fed seeks to

financial institutions to ensure that they operate

stimulate broader discussions of economic issues

safely and soundly and in compliance with banking

and, as a result, an informed public review of

laws and regulations. It has primary responsibility for

economic policy.















He Simply Walked Off With Her

Br HOmO fiRE




District Is Considered Well Arranged to
Care for Business Demands of


Few Complaints Are Voiced at Results of Last Three
Months' Investigation of Nation's
Finan~ial Needs.

t. Johns t N. F.• April 2 -O~ath tray·
dcd in a galc thaI overtook the scaling
fleets last Tuesday. The learner Newfoundland lost rrobably fifty 01 her
crew. while as many more, it is reared,
\\ III be manned as a rc ult of c.xpo5urc.
Alarm is felt for the steamer Southern
Cron with a crew of 110 men, which
has nOl been reported since she passed
c..pc Pine inbound Tuesday morning.
The men lost welle rar from their ships
'-.llhng seals when the
torm with
blinding now woopcd tlown. They
\\Cfe expoSc.d for forty-eight hours be{ore 'as istancc arrived and In lhat time
m.. ny luccumbed..
lee Floe. Drift Away.
The NewSoundland was on~ of a
flett of fifteen ships carrying m~re
lhan 2,000 toeD .cauered among lhe ICC
(loCI ncar Belle hie lnit. The crewS
YI ere. on the floes hunting nOli and the
hunt had laken them from four to SIX
Imles {rom their ships.
\ Mn the blizzard' came the crews of
other ,teamers managed to regain their
,cUell. but th~ floes on which the
Newfoundland's men were hunting
dnfted awa.)' from the main body of
Wa.hlnl'1-on. AprU ~.-AdmlnJILraUon
icc and when darkness feU that night
le.der. In the Senal(. buckled on their
1101 onc had returned~ The shlp's crew
armor tod-aJ' and plunl'ed &cuvety Into
numbered 150 men, of whom 120 wcre
tbe toll. fleht. determined to
maintAin an unyletdJnl' poslUon until
lin the icc. aptatn \Vulcy Kun, his
the end ot the contJ'oveuy.
orflcer , en ineers. stoken and cooks
ThouI'll. tbe Bou•• bill lO repeal toUa
remamini on board.
exemption for American hlpa Is resting
III the Committee on Interoeeulc CAnal•.
Two Shipa to Reacue.
were many Informa.l conference.
The ¥oeather deared today and Cap.
dUl"ln. the day relaUnl to the 1•• Ue..
Amone tbe developmenta wu • yislt of
101.10 tc.~n
ignaled the steamers Bella
Secretary Bryan at the C.pltol In lbe
Ventura and Stephana telltng them of
Inter..t ot the Admlnlllr.Uon pOlicy.
"No com prom I.e" wa. tb, alo...n of
t he loss of his men. These twO vc sels,
lhe Admlnletr.Uon leaden tn their con·
IJeIDg fast and ;owerful, smashed their
fe.rencea. So rna-ny blU. and -resOlutlona
have been Introduced tendln .. to c.loud
\\ay into the floes to se~rch of t~
the pl.ln I.aue ot repeal thal tt haa been
mt slOg men. Late toda)' the captaID
detel"mlned to It pla.ln rrom the
ouuet that no temporlslnl' la to be counof the. Bella Ventura sent wirc.less mcsten.nced.
ages here saymg he had picked. up
Jo;slteet. N. Il'WIt...ert•••
Pruldent WU.oft told Inqutren lbat
,hirt)' survivors and a number of bodtes.
he expeeted no t..cUonal del.y or Wlft.alar
He estimated that forty men had per·
buterlnll ..nd h..d e,\·e.ry reuon t.o be·
wb..t Sen..ton told blm th.t
tshed a.nd said that thirty were unac·
of Pa_I ... eo_atufelt MOaey.
,ounted for.
Preeldent .a.ld there were one or two
A musage from the Stephano tonight
membel"a ot lbe committee who were
aid lhirty-five survivors had been
hlhuahua, April ~-Edward A. Pow.
(ound and three bod,es. but there is er.. United Statu Conaular ACent .t
P.rral. wu .rr~"ed by the onatltu.
doubt ill to whether he rderred only Uon.llat .uthoritlea at Parral today bn
I :::
to thOle picked up by her. The wire· a ch.rge or pa..lns countertelt. 01' the .Ion to deny pUblished nporta tb..l be
.eat ..ny ultimatum to the :ienale
less of the Bella VenlUra was working Conatltutlonallat nat money. Mr. Po.- had
Senalor Owen or &nyone els.
era tele&,raphed to M.rIOD Letcber. throuch
poorly and her mes.sage~ were con- Amerlean 'onsul hel·e.. ot hi. pH«hl and with a view to torcln.. early action. He
had done nothln&,. he ..ld. a.lon.- thl.
J&r. Letcher .ald he "'ould demand tbe line.
fu ed The number of falalitles Will be Immediate
He added that no tor
relea•• or Powers.
com prom I.e or chance In the rep~l
in doubt al least until she reaches here,
&. f). Jobn.on. ca.. hler. and F. A,. Ba"'.
meUUl"e had been broucht to him. and
probably tomorrow noon.
~N:r~·n:a:::JaM~II'rnalt't!ct~p~~;~got~~~·e~~ ~='~~fl::rt~I~~·~~t~~=dthb·:~::I~~~~~
Another Blizzard Ragcs.
~c:a7:'rd,:~r:n~rre::I:~1°Le~h'el~al~ Y::kf~: lion lelto-den.
The Pre.ldent ha. more than once
~; dusk another blizzard had sprung aner their Int rUllI.
made pl...ln Ihat be belleYed It the duty
It I.....erted thllt the men al'e nol
up and there was little hope for any of KulllY,
The flal curren y was cheaply ot lhe American Co'n."re.. to repe...' the
lhe sailors who already had not been printed and .Oon a large numbel' ot t.oU. e:r;empUon without equivOCAtion or
counterte.ll. appeared. For. time even ev...lon a.nd tb.t. he .a. ac&.lnat a.ny
orrlclal. could nOI tell the «enulne from ..mendment... He told caUe.ra tran..kl,
lha.t. wblle he did not upect obatrucltve
Added to the known disuter was a lhe lourtous.
tactic. In the Senat.e. he ell.pected • tull
Irowing suspense regarding the Soulh· I. -r.:rd.A:~~~~n:hew~00n-:;r1na.~~~le~lt't~ dlacusaton ot the qu aUoa tbere. but wu
for the purpose or paylnK employe. and
the repeal would p....
frn Cross. First reports of the 10 I Mr. Letcher erpectl little dlttlcully In confident
A ...
e.. De.Jed.
of the men of the Newfoun41and were uralll'htenlns- out the trouble.
The President no proPOlale
tor. cucu.. had bee.n mentioned t.o him.
confused and generally were acce~ted
at referring to the Southern Crosl, and
~:P:;::rt~rc~~ :~rc:~J~onlot~~e t~~
repe.1 bill Into a caucua. but lbese
It wu not until latc. in the day that the
rumora ,,· denied promptly. DemoIe .. .,,,, •• . . . . Attor.e,. File-. eraUe le..deu ....erUn. lh.. t • caueua
identity of the. crew was determined.
would not be neCuaa.ry. al the same
Paper. A..-I •• I Te • • eMe. Bre .....
Earl)' information that the
Ume Inalallnl' th.t t.bere w ... no doubt.
that the repeal bill will haYe • •ate
foundl.nd had be:en sunk by the icc
majority when t.he vote Ie tak.".
proved to be untrue. \Vireleu mes·
11 waa polnled. out by .uch Demoer.tlc
.. O'Gorma.n and CbambulaJD.
lilies dcscribing the lou of her hunt·
Memphl.. Tenn. Aprt! I --8'multa· SenatOu
who ar. openly ..nd unyle1dlnl'Iy op'Posed
"15 were read ill rcferrin,:t to the ship neoully wllh the luuanee or warranl. to loll e..emptlon repeal. they could nOl
Into • e..ucus which would be de·
prohibIil5eH. There still is lome doubt as to
tion law. nollce W .. I aerved today on etVr~:n~: :ln~hethl"eer:;eal bill In:l.ted tohow the vessel survive:d the storm. but
Jaeob Sehort' a.nd J. W. Schorr. lru:.t..s
a!l the latest Jmessagcs from the Bella 0' the Tennenee Brell,ln.. Comp..ny. that ~~,rc~ It.h~~c:eU.':,~:~lr:tthe~h~h.~r~~:Te."a.~~
Ventura and tbe: Stephano make no chaneerY' proceedln... would be· ~no~. t~~·tb:e:e~~de:an~~orlh~n:::;:~
mention to the contrary it is assumed tuted .eekln&, to have a receiver ap- VUI of the Ben. to. tod..y ahowed a c.lea.r
pointed tor the company. wltb In.lructlon
that the ship till floats.
to dllpoae ot lbe plant here.
:b~rt~ttef:. n~~:t f:~V~:1 b~~lle~h:o:~~:d
Thtl acUon wu taken at the direction tor tbe OPpOalUon would 1M re.eraed. A
Preparinl' to Receive Dead.
ot Z. N. Eat... County Attorney Oenera-1. number of RepubUea.n., bow•••r. 11 t,
Pre-parations are being made here to "ho ..Uese that 'he • cured trom the nnw
cenerally understood.. h.... deelde4
care for the: dead and suffering. The bottle. of a beyera.e which he a...n. I. to line up aaainat the repeaJ. notwltb·
Grenfe.1l Seamen's Institute hill bet" beer. The AItorney Oe.neral be :~;·Im~~~"
uled a tlctltlou. In ma.ktne the &}. Penrose .nd QU•• r nt PennayIY.nla.,
cODverted into an emergency hospital. lelfed purch......
nder a recent ChancerT Court TUllne, who h.·.. lJublle1y .nnounced their
The whole contingent of naval re.
flYe daTe' notice must be ..Iven betore e:han&,e ot pO IUon.
. . . . .Ueet• • •et,......,..
nnnU on the drill ship DIYflO has Injunction and receivership proceedln.••
Ch.lrm.n O'Gorm.n Luue4 the tormaJ
heen ordered OUt for ambulance duty are
Th. truele.. of the brewln.. eompaJlY e.ll todAY for lha Ca.n.l. Committee to
and coffins are being hurriedly con. wilt appear before tomor. meet nut Tue.a4ay mornlnl'.
row for hearlne on the "arra.nts which
8ec.ret.ary Bryan dtacu..ed the luoe
aUe..ed the IlIe.a) ..Ie of IJquor aDd with seyeral e.nators while at the CapiSearch (or the. Southern Crou Will violation of the taw prohltiltln.. the tol. amoall" th.m Senator\.. t ot Arl·
manufacture of In tori nts tor dlltrl ..
OONTDn1:ED ON PAGJIl I, COLUMN •. bullon wlthln the Bl&te.
CONTlNtllllD ON I'...OJll 1" COLtIKN ..





~~~~~~~~ n~~ U~~ :~~~ IS TAKEN


_.f ..



The. news first wu announced to the

W ... hlngton, April I.-Jobn LInd. tormer Governor ot MlnnesoU: and tor tbe
lut el«ht month. the p .-.onal repre·
.ent.o.tlve In Itt xleo of t.he Preslde-nt ut
the nlled Stal... will ...U from VerlL
CrUt tor Wuhlngton tomorrow abo.rd
the Preal y.cnt M .. ynower.
The aJlnounceme.nt ot Mr. Llnd·s pro.pertlve yl_lt ...... by Pre.lde-nt
Wllaon with the e:r;planatloa t.bat hi.
envo)" had requnted .. ·'.c.. tlon a.nd rest
(rom hlz l.bora In .. 1T0picai c.llmate I1ntl
thal .j9 aool1 •• thal h.d been obta1ned
he wnuld return to Mexico.
Thf' PruJdent d th.t ),(r. Llnd':I
departur for the Unllt:d !::it.... Ih.,uld
nOl be con.ldered as In the nature or
a recall or IU' torCK:.... tlng ahy

Oall..., Tu .. April l.-Foree.u\ to
7 p. m. SaturdaT:
0.1.........d nela1t'7. UlUdtled Fri.

.,rohbl,. ....owe-n •• d


Eut Tvcu; lnere...ln.. cloudlneu
Frld.y. ah:wera at alehl or i)alurd.. y; proba.blT .ome.... b.t eotdnr In
norlhern porUon Sw.turday.
Wut Texu: Showora ,,"rld.y; Salurday prob..bly (•..Ir except ahower.
and colder In .0.Jlbeut~r'1 pOrtion•.
Ark.n.... : Unaettled Friday. ra.ln
al nIght or Saturday.
Okl.. hom..: Un.etUed rIl1a,.; prObably rain and col4dr by night; galurday local raw.
Loul.lau.: Frld.y; S&tt::-day
De'.lIed Go"er.meat we.tiler re_

will be 1o••" u. pa..e






lblek 10 tb. . . . .

ture. tb.l .unbll.tered .ectlon
:~::;k nd dry







Tha t.llltU. pr I·
rl • • o~ _ _ II by
t h • I 1" burrow.
.nd r&lp out
ahrlll warnlncs
... w. &, .. llop

k U~:: ~~:z:~~: ·:r~

ao.rtnll: •·
tied Jack r.. bblt
with te.r In bl. brust like .. alreak throu&,b the
brusb ecattered wldel.Y - the
taun...nd tlora th.l m.rk lhe
ll"rc..t We.
Hurrah tor tbe feel ot a batl4red
.toc.k ..ddl ......tb. .l.pplnll ot
tbrUah ......'a.t we.tber • WO{D
ch.• p.:
Tbe .mell of • wet bore...-lhe aound
ot bla hooAeau-the Jlncle ot
Ipure and the cre.klna ot .t.... p.I
Your cities .eem nothlnc but den.
ot eorrupUon. tor bere .leady
breeze.a blow aweet wllhout reat..
Ju.t ~Ye me • belr.. and .ome n1l1... ot puture. .nd
'e..v. me at peace t.r oul here
In the WelL
(By The New. 8t.alt PoeL)

world when the bugler in front of Car·
ranz.', Tesidence blew the atacatto
notes of victory.' The paeD, Carranza
said, was aounded hert even before it
was heard in Torreon. Villa delaying
out of compLiment to b~ chief.
The meager bulletina excitedly. an·
nooncing victory after the bloodicat
series of battles kRown to modern


~.:~: ::dp:,~~~~a~:p=;d;e~~~
inC Federal remn.ant WIll being pur.
W'hether Velnco, the Federal com.
mander. was captured wu not ltated.
There W'U heavy fightinC today, it is
undenltoo~ and the end ume whe:n,
after capturina: the three umainina
barracks held in the city hy the Fed.
erals, the rebela stonned the trenches
and barbed wire entanglementa of Canyon del Guarache.
The prisoO'CTI captured arc believed
to have been the deJende,T"s of the bar.
raclc. while the troopi in the canyon,
whic..... fomu an egre.. from the bill.
girdled city. weT"e able to caapc.
The tranllation of the mellace re.
caved by Gen. Carranza from Ge:n.
Villa is '1 follows:

'"Torreon. Coahuila. Mexico, April
2.-Gcn. Venuatiano Carranza,
Chief of the ColUtitutionaliata-ln thil
moment the remnant. of the Federals
are leavinl' Ton"e.on in fliaht.. After
cle.YCl\ daya of terrible ftehtinl'. in
which we Joat I,.soo wounded and 500
killed, and the Federall. Irom the
enonnOua number of bodies bu.rne~
muat baye h,ad over 1,000 killed, and
their number of wounded I am unable
to utimate. Our forcel have full poI.
ae.ion of Torreon. I rerret to announce that amone Cie. wounded were
Gen. Y••bel Robl.. and Gen. Call1<t.
Coatretu. I ....a nd aaJute
7011 with reapecl and ..teem that I
ba.e aI_ya bad for J'OlL Yotu' 'lIb.



"Command«-in-Cblef .f Cooatitll.
tiOnalilt Forcea of Cbihua.bua."
By Carrarua'. order., aU the town
wu illuminated, aoldier. of the I'arri·
• oon poraded and the military band
The N.tional Wllte woo fired, chllrcb
bella rune and wbiatlea blOWft.

The twelve r

L Bo

S )'\'6


2. N \V York 'ity.
3. Philadelphia.
4. leveland.
5. Ri hmond.
6. Atlanta.

: Pima,


di trict· are numbered


7. Chi ago.
t. Loui .
9. Mim:lea,poli .
I . Ran a
II. Dalla.
1:2. I an Fran ·i. co.

\VASHll GTON, April 2.-After three month. of con tderation the re_eTY.
bank organization commiH~e lonig'hl announced that il had divided the Continental United Slatcs into twelve banking districts and selected twelve etties for
Federal reserve banks under he new currency law. This was the fir,t decisive
lep toward lhe establishment of lhe ne.' ySlcm. The cltle and di triel! are:
C~strict No. I, B05lon-RC!erve bank will have. capital of $9,931.740. with «6
Nation~1 b.anks a!l members. Turitory included.
ew England Slatu.
District No. z, Ne~ York-CapitaJ $20,687.616. with 478 National and a number
of State banks (not given) ill members" Territory, Stat~ of New York.
District NO.3, Philadelphia-Capilal $12,993.013. including 800 National b.nks
and Itveral State banks. Territory. 'ew jerse), and Delaware and a.1I of Pennsylvania e.ut of wUlern boundary of the following counties; McKean, Elk. Cle.arfield, Cambria and Bedford.
Districi No. ~ Cleveland-Capilal $11.621.535, with 724 National and scyeral
State banks. Territory. State of Ohio, all of Penn yl\'ania lying west of District
NO.3. the countic.s of Marshall. Ohio. Brooke and Han~ock in West Virginia and
all of eut of the western boundary of the follOWing counties: Boone,
Grant, Scott, Woodford, jessamin~. Garrard. Lincoln, Pulaski and McCreary.
District NO.5. Richmond-Capil21 $6,543.28., with 475 National bank and &
number of Slate banks and trust companies. Territory. District of Columbia,
Maryland, Virginia. North Carolina, South Carolina and all of WCSI Virginia
~xce:pt tho t counties in District No. 4District No.6. Atlanta-Carital $4.702.780. wilh J7.l r\alional banks. etc. T~r·
ritory. Alabama. Georgia. Florida and all of Tennenec ealt of the western boun.
d2ry of th~ following coundes:
ttwart, Hou~ton, \\layne. Humphreys and Perry;
all of Mis issippi south of Ihe northern boundary of the following counties: Is a..
(IUena, Sharkey. Yazoo. Kemper, ~1adtson. Leake and Neshoba: all of Ihe soulh..
ea tern part of Louisiana cast of th~ western boundary of Ihe following couatic!: Point Coupte, lben'ille. A sump lion :lnd Terre Bonne.
o. 7. Chicago-Capital $13.151.925. with 084 'salional banks. etc..
Territory. Iowa. all of Wisconsin ~Olllh of northern boundary of following coun...
lies: Vernon, auk, Columbia. Dodg~. Wa!ihinglon and Osaukee: all of the loutb...
ern peninsula of Michigan. YiL, all that part cut of Lake Michigan: all of Illinoi.
north of a Hne forming the southern boundary of the following countie.s: Hancock. Schuyler, Casso Sangamon. Christian. Shelb)'. Cumberland and Clark: all of
Indiana nOrlh of a line forming the southern boundary of the following countin:
Vigo, Clay, Owen, Monroe, Brown, Bartholomew. jenninas. Ripley and Ohio.
District No.8, St. Louis-Capit21 $6.219,323. with 4,34 National bankJ, etc.
Tf'rritory. Arkansas. all of M'ssouri dast of the western boundary of the f~t1owin.
countiC!l: Harri,on. Da\·ies. Caldwell. Ray. Lafayette. johnson. Henry. St. Clair,
Cedar, Dade, Lawrtnce and Barry; all of Illinois not included in District o. 7;
all of Indiana not in District NO.7: all of Kentucley not in G"istrict NO.4; all of
Tennessee. not in District No.6, and all of Miuissippi not in District No.6.
District No. 9. MinnClfolis-C~pital $.4.702.864, with 687 National bank. de.
Territory. Montana. North Dakota. South Dakota, Minnesota. all of \Visconsin and
all of Mic.higan not in District No. ,.
Dislrict No. 10. Kansaa City-Capita.l $5.594.916. with 8J5 National bank. etc.
Territory, Kan5as, Nebruk•. Colorado, V.'yoming. all of Missouri nOl in District
No.8. all of Oklahoma north of a line forming the louthern boundary of the fol.
towing counties: Ellis, Dewey, Blaine, Canadian, Cleveland, Potla.watomlt, Semi•
nole. Okfus'kee, Mcintosh, Muskogee and Sequoyah; all of New Mexico north of
a line forming tbe southern boundary of the following counties; McKinl~y. SaadoYal. Santa Fe. San Miguel aDd Uoion.
District No. II, Dallas-Capital $5.6344.091, with 726 National banks. etc. Ter.
,;tOT)',t'rcxu, IU of New Mexico and Oklahoma Dot in District No. 10, all oi Lou..

The Decades of the Federal Reserve






William G. McAdoo
Secretary of the Treasury

On April 3, 1914, the Dallas
Morning News announced

that Dallas hod been selected to be the headquarters
for the Eleventh Federal
Reserve District. The District
covered all of the state of
Texas, most of Louisiana,
southern Oklahoma, southern New Mexico, and five
counties in Arizona. The
Arizona counties were
transferred to the Twelfth
District (Son Francisco) in
1977, and the Oklahoma
counties were transferred to
the Tenth District (Kansas
City) in 1984.

Woodrow Wilson
The presidential election of 1912
marked the culmination of more
than 20 years of revolt against a
state ofaffairs that seemed to many
to guarantee perpetual political
and economic control to the privileged few-most notably, those
associated with Wall Street.
Shortly after being elected
President, WoodrowWilson quickly
established a legislative agenda
designed to improve the nation's
financial system and the general
business climate. He successfully
effected a reduction in tariffs and
set his sights on the nation's banking system.
Bankers, the business community, and political leaders agreed
that the national banking system,
which had been established during
the Civil War, was flawed in anumber ofways in meeting the financial
needs of the United States. Without effective central control, the
system's provisions for mobilizing
the banking reserves of the country were inadequate in periods of
crisis,and the inelastic moneysupply hindered the activities of business and industry.
The issue of whether the new
central bank would be organized
around regional reserve banks or a
centrally controlled system was
hotly debated. Wall Street supporters, politicians, farmers, and the
American Bankers Association all
had opinions on how the system
should be established. Masterful
compromises engineered by President Wilson and designed to combine the best of a regional system
with theoversightofacentral board
made the Federal Reserve Act a
reality on December 23 1913. The
only question that remained was,
"Where will we put the Reserve

Above: Albert S. Burleson, a
Texan serving as postmaster
general, wired his congratulations to Dallas Morning News
publisher George B. Dealey,
who had been instrumental in
promoting Dallas as a location
for a Reserve Bank.
Right: On October 16, 1914,
the first official meeting of the
board of directors was held in
the Directors' Room at City
National Bank of Dallas. Oscar
Wells was elected the first
"governor" of the Dallas Fed.
Shown here: (first row, from
left) Frank Kell, Marion
Sansom; (second row, from
left) Oscar Wells, Felix
Martinez, E.

o. Tenison,

chairman of the board;
(third row, from left) B. A.
McKinney, E. K. Smith, J. J.
Culbertson. Director W. F.
McCaleb is not pictured.


4 -






train ride the most decisive event of the whole effort

the Texas Bankers Record in February 1914.

because it gave him a "long and uninterrupted inter-

Eager Texans made passionate pleas at the Reserve

view with him [Burleson], in which we succeeded not

Bank Organization Committee hearing in Austin that

only in convincing him that Dallas should be the

February. Representatives from Dallas, Fort Worth, and

choice, but also in arousing his enthusiastic interest."

Houston expressed their desires to have a Reserve Bank

Burleson and House took the city's case to the

in their cities. Although all wanted a Reserve Bank,

Secretary of the Treasury and to President Wilson

their slogan was, "Texas first, the city after."

himself. In April, Dealey received a telegram from
Burleson indicating that Dallas would become the

Dallas supporters were especially determined in
their efforts to have their city selected as a Reserve

headquarters of the Fed's Eleventh District. Con-

Bank site. Dallas Morning News publisher George B.

gratulations poured in from around the state. Howls

Dealey and Dallas Clearinghouse representative J.

of protest, however, were heard from citizens in

Howard Ardrey led the way in promoting Dallas and

traditional financial powerhouse New Orleans. The

rallying support in Washington, D.C. Together with

Reserve Bank Organization Committee stated that it

two News reporters, Tom Finty, Jr., in Dallas and Mark

chose the 12 cities it felt were the most important in

L. Goodwin in Washington, D.C., Dealey and Ardrey

terms of banking resources, central location, and

sent coded telegrams to two influential Texans in

communication and transportation facilities. Though

Washington. Addressing the telegrams to "Mercury"

Dallas and New Orleans had comparably sized banking

and "Tacitus" to ensure confidentiality, Dealey

operations at the time, the committee thought it

communicated with Postmaster General Albert S.

especially noteworthy that the banking business in

Burleson and presidential adviser E. M. House to

Dallas had more than doubled in the past decade while

learn how Dallas was doing in the race. Ardrey and

that in New Orleans had remained stable.
There was a cloud in the sky, however. In the

Finty even "accidentally" took the same train from St.
Louis to Dallas as Burleson to make Dallas' case for

summer before the Reserve Banks opened for

selection. Ardrey recalled later that he considered the

business, war had broken out in Europe.


Above: The Federal Reserve Act designated three
officials to serve as the Reserve Bank Organization Committee and to select the cities where the
banks would be located. Secretary of the
Treasury William G. McAdoo, Comptroller of the
Currency John Skelton Williams, and Secretary of
Agriculture David F. Houston were also to draw
District lines. Their task was to designate no
fewer than eight but no more than 12 cities. In
January 1914, McAdoo and Houston logged
10,000 miles traveling across the United States
to hold public hearings. They also polled all
national banks on their preferences regarding
the location of Reserve Banks. On April 1, 1914,
they made an announcement designating 12
Federal Reserve Bank Districts. Although District
boundaries have changed slightly over the years,
the original 12 cities designated as headquarters
have never changed.

Left: Workers type fanfold forms used by the Bank
when collecting on notes deposited with the Fed.


The immediate impact on the United States was so severe
that the war threatened the nation's ability to maintain the
gold standard, brought the country to the brink of a major
financial panic, and raised doubts about whether to open
the Federal Reserve Banks in November. The war also
dramatically affected the cotton market and sent prices
spiraling downward. Efforts on President Wilson's part to
stay out of the fighting proved futile, and by April 1917, the
United States had declared war on Germany. Although not
the most opportune time to begin new central bank
operations, the Reserve Banks opened as scheduled, but it
would be years before they operated under what would be
considered normal conditions.
As did the other 11 Reserve Banks, the Federal Reserve
Bank of Dallas opened its doors on November 16, 1914.
With 27 employees, the Dallas Fed set to the tasks of making
loans available to member banks and implementing a more
effective system to collect and clear checks. The Fed also
introduced Federal Reserve notes into circulation, notes
redeemable in gold. This new currency was to fulfill one of
the major objectives of the Federal Reserve Act-an elastic
currency that would respond to the needs of the business
community. The Fed also began to participate with the U.S.
Treasury Department in raising money for war.
The Treasury started a Liberty loan bond program to
raise funds, and the Reserve Banks were called to duty. To
handle the transactions required, the Dallas Fed established a
Liberty Loan Department. District banks were asked to participate heavily and responded to the patriotic call by raising
more than $470 million during five separate bond drives.
With the end of the war on November 11 1918,
inflationary pressures affected the economy. Additional
burdens were placed on the Federal Reserve Banks, not
only as a result of war financing requirements (which
continued after the war) but also as a result of tremendous
loan demands from banks, an enlarged check clearing
function, and other activities.
While farmers tried to raise more crops and livestock to
help the war effort, a severe drought plagued the Southwest.
By the end of the decade, however, weather conditions
improved, and the economic outlook brightened. In its 1919

Annual Report, the Dallas Fed reported a phenomenal
growth in credit in the District and cautioned that this
growth was fueling "reckless extravagance and indulgence
in luxuries at a pace heretofore unequaled."

Benjamin Strong
During the turbulent early years
of the Federal Reserve System one
person stoodoutasacapableleader
and visionary who guided the development of services and helped define the role of Reserve Banks within
the nation's financial system. Benjamin Strong, first governor of the
Federal Reserve Bank of New York,
became the dominant force inAmerican monetary and banking policies.
Although reluctant to accept the
position and not yet 42 years old,
Strong had an impressive background in both domestic and international banking-an I~nusual expertise for that time. He was apowerful force in the early development
of the Federal Reserve System
because he threw himself into the
effort. With the prominence of New
York City in the banking industry,
Strong was in a good position to
help form the roles of the System
and the regional banks. Afriend said
that Strong "was master of the System because he mastered central
In 1923, Strong said it had taken
"nine years of the most intensive,
painstaking study and work which
it is possible for a man to endure
and survive" for the Federal Reserve to reach a point where its
policies were "affirmative and constructive" and there was "a pretty
good knowledge of the System's
power and responsibility."
Strong's excellentadministrative
skills and personal integrity won
him support from Federal Reserve
employees, bankers, economists,
and politicians alike. Aformer associate summed it up best: "We knew
that he knew, and we trusted his

Above: More than 100
bonks failed nationwide

every year during the 19205.

Left: After a brief economic
depression in the early
1920s, most people enjoyed rising income and
benefited from easy credit.
It was the age of flappers
and speakeasies. Those
expressing concern over
rampant spending and
unwise speculation in the
stock market were mostly
ignored-until 1929, when
the market crashed and
fortunes vanished overnight.
Right: In 1928, Texas
became the number one oilproducing state in the
United States. As the
automobile became more
common in the 1920s,
Americans saw something
new along the roadsidedrive-in gasoline stations.

9 2 0 -

9 2 9




regarding banking led to frequent runs on banks. To

with alarm" the unprecedented demand for

help ease the tension, officials of the Dallas Fed made

credit on the part of its member banks. Almost 800

several appearances around the District, hauling in

out of 850 member banks borrowed from the Dallas

piles of cash to assure depositors that their bank was

Fed during the early 1920s. The tremendous postwar

supported by the Federal Reserve. The touchiness of

credit demands, the inflationary pressures, and a

the situation led the Dallas Fed to issue a statement to

subsequent crash in commodity prices led to a severe

its employees about making personal comments on

but brief depression nationwide in 1920-21. The

banking conditions. The statement made clear that no

District economy made several adjustments to the

employee was to discuss banking matters that related

situation and, eventually, managed to recover well.

to the Fed or to individual banks.

Agriculture was the exception. Farmers, unlike

Although bank failures increased alarmingly

others in the economy, never fully recovered from the

nationwide during the early 1920s, following the

depression of 1920-21 and the drastic decline in

stringent credit conditions of 1920-21, the economy

commodity prices. Farmers remained trapped by

expanded and for the remainder of the decade was,

deflated prices and glutted markets. Lower farm prices

on the whole, profitable for banks. Deposits in the

and heavy debt made agriculture unprofitable for many

District reached more than $1 billion in 1927.

years. As business and agricultural problems mounted,

The 19205 produced a new order of things in

loans were not repaid, and banks began to fail. In 1921,

America. The coming of radio, improved highways, and

there were 82 bank failures in the District. In response

urban growth changed the nation in many respects.

to these failures, the Dallas Fed employed special "field

Mass markets developed for automobiles and timesav-

men" to oversee failing banks and established an Insol-

ing appliances. It was a decade of great expectations.

vent Banks Department. Failed banks with outstanding

Investments in stocks and bonds rose to staggering

loans from the Dallas Fed occasionally put the Bank in

heights. With almost no margin required, it was easy to

the cattle business because livestock were frequently

go into debt and gamble on what were assumed to be

used as collateral. At one time, the Bank even had to

ever-increasing stock prices.

arrange a cattle drive to Mexico to sell its "herd."

Both the world's economy and the District's

Bank failures and a general public uneasiness

economy were booming by the summer of 1929.


Carter Glass
Carter Glass began his career in
the 1870s as aprinter's assistant at a
newspaper in Virginia. His quick wit
and tenacious reporting skills served
him well when he was elected to the
U.S. House of Representatives in 1902.
He thought this career change would
not last long and that he would return
to his newspaper and his Virginia
farm-until he became interested in
crafting legislation to reform the
nation's banking system in 1911.
He began drafting abill to es tablish
a new national banking system, with
the assistance of H. Parker Willis, a
former professor of economics. When
Woodrow Wilson was elected President in 1912, Glass and Willis were
busy putting finishing touches on their
proposal. They delivered it to Wilson
the day after Christmas 1912. Wilson
liked it but wanted to add a central
board to control and coordinate the
work of the regional banks. Glass, who
favored an autonomous regional reserve system, was leery of any central
control efforts but reversed his opposition to ensure that the bill passed.
Glass wenton to serve as President
Wilson's Secretary of the Treasury
from 1918 to 1920. As such, he helped
structure foreign loans after World
War I and handled special postwar
domestic financial matters.
In 1920, the governor of Virginia
appointed Glass to fill a Senate seat
left vacant by the death of Thomas
Staples Martin. Glass accepted the
appointment and remained a senator
until his death in 1946.
Glass worked on banking issuesdrafting legislation during the 1930s
for bank reform, including the G1assSteagall Act, and keeping an ever-vigilant watch over the functions of the
Federal Reserve System, which many
consider his creation.

For DEAD Bank Robbers
$5,000 cash will be paid for each Bank Robber
legally killed while Robbin& this bank
Tu::aa 8uaIun ANodaUOo. a corpon.doa, oftG'l a ~ ftWVd r. c:acb lcpIly kiIJelI ...bJIc: ~ ~ bItWiIlI
u, a ftwanI ....~ a:taaJJcr Uftk in Taca -uti IIrc:arau duria.c
tbe uyUntc. UlllJbtllhepbcc
tilBeel.udllId.lIIaI arc iIII tbe NaIr..laI
bouK. _ ... l.bc.....-cn .... boW
Ia.,.c lhI: - - .
tIM: ~ ....
boWu,:&alI tbrGlg arc Itdaf; ~ U M ; . . . . . . tbq flu r,.... the 1tut.k_1th
lbit ,.....eny Qkca., :&all arc. raiKiaI kp.I pun-uJt aa4 ~ witbJa twenty
aillc':t oItbe NAIl: robIIJed ..... witbJa.a. belanaturtbe~aDIIboWup.


.... appJytea.i&b'.UXkI ... TItXlUNftIa.. _bctber.,



....~ tIgI tbcTc:J[U aaakcn...u.doD ~ ddcna!Dolt
~.,..e:ac" t.b.Is f"C':WaH
M aMc bcftu.IwIer,
t. wa.-a Iii' aD,._1
.ac:b JMoytDalC daU be: made;
tue::b ~doa
JwIpDaU sba1J M
8Aa1, COIIchuJvc and OM ftYkwabk.


Tbc ........doa wiU DOC pn eoc tt:at , . Un bnk roIMIen. Tbey arc. n.rdy
....tJ..tI.d., IIICM'e rudy coa"ktelt. '&All . . . . n.rdy May til tbc paUtaltb.ry
wben MDt t.berc:-aJJ ofwbkb .pcr.uJoDI are uoultJaome. ~ .... t. OW' IOVCftUllenL
qln ...... IOprolClCl tbe Uva 01 peopk .in tudl NnkI ..... lo protCld the pnpaq
ot,um bat:Lla.lbe AModatioa .. pnpuaIlO pay 'or any DWDbc:r of.web ,....
Iten aDd hOWUPlIO IdJ.kd.. wb.t.k lIMy aft robbiI:lI aM bDWJac up ltl reward
IUMcriWa& IIMBlIIa' baaIu with fI.fu.n:u 111 l.bc uylhae. .t 1o.s,OOO apkice.


T'b.M ran.nI .. dfect.lyc April

1M. 1930..... all .e.IMr rewa.r*.

uc c:aDCd.IM .....u ~


eftc:n ....


$5,000 In cash will be 10 paid lor the 1ep.I kl.I1In& or aD)' robber and
boldup WlULE aOIUllNG nns BANK with firearms In the daytime



. . . . . . . . ..-.. . . . . .


....... 1 "

n-..-.. _ _...... _1"'1

Top: President Franklin Roosevelt signing the Banking
Act of 1933. With him are (left to right) Senator Carter
Glass; Comptroller of the Currency J. F. T. O'Connor;
Senator Duncan Fletcher; Secretory of the Treasury
Henry Morgenthau; Jesse Jones, head of the Reconstruction Finance Corporation; Representative Henry B.
Steagall; Marriner S. Eccles, Chairman of the Federal
Reserve Board; and leo T. Crowley, Chairman of the
Federal Deposit Insurance Corporation.
Above: In 1926, the Texas Bankers Association offered
a reward of $500 for each bonk robber killed while
robbing a member bank in Texas. The reward was
raised to $5,000 as the number of bank robberies
increased in the late 1920s and early 1930s.
Right: Clyde Barrow and Bonnie Parker terrorized 27
cities in six stotes from 1932 to 1934. The two were
notorious for dramatic and deadly bank robberies.

9 3 0 -





financial system, banks closed in unprecedented

1920s. There was plenty of money, with plenty of

numbers. Of the 2,300 bank failures in the United

takers. President Herbert Hoover proclaimed, "We

States during 1931, 93 were in the Eleventh District.

shall soon with the help of God be in sight of the day

By 1933, something had to be done. Franklin

when poverty will be banished from the nation."

Roosevelt was inaugurated March 4, 1933, and acted

Conservative bankers and the Fed viewed the

quickly. He proposed to close all banks for several

situation with mixed emotions. To impose restrictive

days. On Sunday, March 5, the Dallas Fed decided to

monetary measures might slow down the boom, and

close the Dallas Office and its Branches to coincide

there was little inflationary pressure accompanying

with any national "bank holiday." On March 6,

the upward spiral. However, the boom was out of

President Roosevelt issued a proclamation closing all

control in the stock market, which crashed in October

banks in the nation that week. Each Federal Reserve

1929. Within a matter of weeks, Standard & Poor's

Bank had to review the financial condition of its

composite index of 90 common stocks fell from 245

regional banks and make reopening recommenda-

to 162, wiping out more than one-third of the index's

tions to the Treasury. By Monday, March 13, banks

value. A "panicky feeling about money" swept the

reopened in Federal Reserve cities. On March 14, all

nation and the Eleventh District.

sound banks in 250 clearinghouse cities reopened.

The 1926-29 boom and subsequent Depression

Other sound banks reopened March 15. Only 26 of

devastated the economy, resulting in political changes

Texas' 1,023 banks failed to reopen.

of major magnitude and a greater role for government

The Congress was convinced that major banking

in the regulation of business and banking.

reform was needed and passed the Banking Act of

The resulting Depression of the early 19305

1933 (also known as the Glass-Steagall Act) in June.

gradually combined with additional adverse economic

The act redefined the banking business, and many of

conditions brought about by a severe drought through-

its provisions and effects are still with us. Among

out the United States. A worried public, together with

other things, the act created the Federal Deposit

a shaky economy, caused frequent financial panics

Insurance Corporation (FDIC) to provide deposit

and bank runs. With the collapse of the nation's

insurance, separated commercial banking from


investment banking, prohibit d paying interest on demand
deposits, and set interest ceilings on time and savings deposits.
For the Eleventh Federal
consecutive ye


rve District, 1933 was the fourth

hi h busin

levels. Agricultural production


declined to new low

as above av rage, b t low prices

continued. Construction was down, t

. From January to July

1933, a hare the Work program at the Dallas Fed shortened work
hours and reduced salari

b 5 percent. This pr gram allowed

the Bank t hire additional e ploy es helping to decrease the
number of unemp

the Depression wor ned, married

women were increasingly forced out of th job market in favor of
unemployed men and wo en without families to support them.
The Dallas Fed adopted the policy that no marri d w men would
be employed at the Bank or at any of its Branches and that "the
marriage of single female employees will automatically terminate
their employment with the Bank."
In 1934, as credit conditions worsened, the Federal Reserve
was given authority to make direct loans to industry. A new
section of the Federal Reserve Act allowed Reserve Banks to make
loans to industrial companies in exc ptional circumstances and
only on a "reasonable and sound" basis, By ear-end, 371 busin

had applied for such loans in the £lev nth District.
ationally, the Banking ct of 1935 made significant changes

to the composition of the Federal Reserve Board and the way in
which monetary policy was conducted, The ongress, in an effort
to distance the Federal Rese e from undue political influence,
removed the Secretary of


Currency from the Federal ese


e forma'

ry and the Comptroller of the
of the Federal Reserve,

at bo the Board and e R e Banks had used the title
me confus'oD. Su
quently, "governor"
to re~ to only e se n me bers of the Board of

emo ," creating

eserve Banks became known as
ith five Reserve Bank


under way. The

other regions. Its
ell, although at a
growing oil producnd of the decade,
d a period of relative

Top: As unemployment reached
25 percent, employers across the
nation urged workers to "share"
their jobs with others. At the
Dallas Fed, employees took a
5-percent pay cut and worked
shorter hours as part of the



The Federal Deposit Insurance Corporation

Share the Work program.
Middle: Created on a temporary


basis by the Banking Act of
1933, the Federal Deposit
Insurance Corporation received
permanent status in the Banking
Act of 1935, which doubled the
deposit insurance allowance to
$5,000 per depositor.
Bottom: Checks were manually
sorted in the early days of





Marriner Eccles
Throughout most of the1930s and
almost all of the 1940s, Marriner
Eccles served as Chairman of the
Board of Governors. During these
dramatic economic times, Eccles'
leadership helped strengthen the
role of the Federal Reserve.
In the summer of 1931, anxious
depositors lined the lobbyof the First
National Bank of Ogden, Utah. That
day, a timely shipment of cash from
the Federal Reserve Branch office in
Salt Lake City calmed the crowd and
averted a run on the bank. Although
many panics would send depositors
to his door, no one lost any money in
the banks owned by Eccles in the
1930s. For Eccles, the experience
was unforgettable. He began to believe that only the government could
kindle a massive turnaround in the
economy by putting purchasing
power in the hands of the people.
Based on his successful handling
of banking operations in the early
1930s, Eccles was asked to testify
before a 1933 Senate Finance Committee hearing on the causes of the
Depression. In his testimony, he outlined specific ways for the federal
government to spur the economy,
and he set forth an agenda to improve the Federal Reserve System's
ability to respond to the banking difficulties of the times. Many of his
proposals were incorporated into
President Franklin Roosevelt's New
Deal program and the Banking Act of
1933. Impressed with Eccles' experience and intellect, Rooseveltasked
him to serve as Chairman of the Board
of Governors.
Marriner Eccles served as Chairman of the Federal Reserve's Board
of Governors from 1934 to 1948. He
continued to serve as a member of
the Board until 1951.

Top: October 27, 1943, was designated "Navy

Day" in Dallas. This cadet parade marched
through downtown, past the viewing stand in
front of Dallas City Hall.
Above: To help individuals purchase more
bonds, defense savings stamps were introduced in small denominations.
Right: Americans were urged to save everything in an effort ta conserve all resources to
win the war. Rubber, nylon, aluminum, steel,
gasoline, and coffee were especially important
to the war effort.

9 4 0 -





nation's banking industry. A mounting federal debt of

were shaped by financial panics, agricultural

$45.5 billion in 1941 soared to more than $260 billion

conditions, unemployment, and the Great Depres-

by V-E Day on May 8, 1945. A patriotic call for support

sion. The fourth decade revolved primarily around

was the slogan for the fifth war loan drive in 1944:

one event-world war.

"Back the Attack. Buy More Than Before."

On December 7, 1941, the war became para-

While war financing was a concern to the

mount to the American people. With the bombing of

government, the needs of the American consumer

Pearl Harbor, an immediate buildup of military

would have to be put on hold until the war was won. In

equipment and personnel, combined with sacrifices

August 1941, President Roosevelt issued an executive

in terms of credit and commodity purchases, galva-

order providing for the control of installment credit

nized the nation. Blessed with a large reservoir of

because credit obtained too easily stimulated demand

labor, underutilized plant capacity, and a determina-

for items that competed with the military's needs. "To

tion to win, the country was united as never before.

keep the cost of living from spiraling upward," he said,
"we must discourage credit and installment buying."

Federal Reserve Banks set about the task of

War production became a matter of paramount

helping to finance the war, which required large sums

importance. The military was in need of vast quanti-

of money quickly. War savings bond drives were
headed by the presidents of the Federal Reserve Banks.

ties of supplies and equipment. Following the attack

Three new issues of savings bonds went on sale. They

on Pearl Harbor, defense plants went on a seven-day

were designated "Defense Savings Bonds" and were

workweek. It became necessary to construct more

advertised as patriotic investments. Thousands of

military bases and expand defense plants. The

Americans bought bonds directly at post offices and

handling of large construction contracts was beyond

other designated agencies or through the mail from

the normal financing capacity of many firms invited

Federal Reserve Banks or the Treasury Department.

to bid on the contracts.
Early in 1942, another executive order authorized

Individuals also could buy bonds through the "regular

the War Department, the Navy Department, and the

purchase plan"-a payroll deduction program.

Maritime Commission to guarantee designated

War financing soon consumed the country and the


Left: Fighter planes
on the assembly
line at Chance
Vought. The defense industry
sprang to life in
the United States
and in the Eleventh
Federal Reserve
District. In this
District, 239 loans
amounting to $82
million were
approved for
businesses supplying military
equipment or food
to the armed

Above: Financing the war was almost as big an
undertaking as fighting it. The federal debt jumped
from $45.5 billion in 1941 to $263 billion on V-E
Day. Americans were urged to help by buying
savings bonds in five separate war bond drives.
Left: Federal Reserve Banks count, sort, and destroy
cash for the U.S. government and the nation's
financial institutions. Here, a worker in the 1940s
manually sorts currency and looks for counterfeits.


portions of loans that might be made by banks for the
purpose of financing war production. Under the order,
Federal Reserve Banks were designated fiscal agents of the
armed services in arranging suitable financing and investigating credit standings and the financial responsibility of
the borrower. To accommodate this program, the Board of
Governors issued Regulation V. The loans guaranteed
under this program became known as V-loans. The first
loans went to build army camps and air bases. Then
shipbuilders, ammunition manufacturers, plane parts
manufacturers, and food processors received loans. The
largest loan made by the Dallas Fed was for $10 million to
furnish powdered eggs and other food products to the
armed services. Over the course of the war, the Bank made
239 loans, totaling more than $82 million.
The war touched the Eleventh Federal Reserve District
in personal ways, too. In May 1942, Chairman Jay Taylor
asked for a leave of absence from his duties on the Dallas
Fed's board of directors to serve as a major in the Army.
Employees at the Dallas Fed and its Branches left in
significant numbers to join the war. In 1942, employee
turnover was a concern. Hundreds of Bank employees
enlisted in the services, and women were hired in increasing numbers.
By 1944, 250 employees at the Federal Reserve Bank of
Dallas and its Branches were in military service. A total of
285 served during the 194~6 period, and 152 were reemployed upon release from the service. Six were killed.
When the war ended in the summer of 1945, consumers were ready. With few consumer goods available during
the war, personal saving reached a record 25 percent of
income. This pent-up consumer demand helped drive a
surprising postwar prosperity. Fortunately for the District,
shutting down the war industries did not have the adverse
effects expected. There was a boom along the Gulf Coast,
where large chemical plants were established. Growth in
manufacturing-coupled with a favorable climate, abundant natural resources, and availability of labor-made this
area attractive for development.
Toward the end of the 1940s, a 40-hour, five-day
workweek was established at the Dallas Fed. America was
ready for some leisure time.

Left: The

William McChesney Martin
When created by the Congress in
1913, the Fed was designed to be insulated from political pressures-but
itwould have to wage several struggles
to achieve the level of independence
originally intended for it.
In the 1930s, the Fed gained a
little distance from the oversight of
the Treasury when the Secretary of
the Treasury and the Comptroller of
the Currency were legislatively removed as members of its Board.
During the 1940s, wartime financing efforts led the Treasury and the
executive branch to exert extensive
influence over the operations of the
Fed and disagreements developed
about the appropriate monetary
policy for the nation.
The Federal Reserve maintained
that it could not achieve its goals by
holding the rate on government securities low because that would subordinate monetary policy to the fiscal needs of the Treasury.
Working at the Treasury at the
time was William McChesney Martin.
Martin participated in negotiations
between the Treasury and the Fed
and helped formulate an agreement,
commonly referred to as the 1951
accord. Theaccord reestablished the
Federal Reserve's independence
within government and gave the central bank the flexibility to decide how,
and for what reasons, to conduct
open market operations.
One month after the accord was
announced, Martin was appointed
Chairman of the Federal Reserve.
With his background in finance, he
was uniquely qualified to reconcile
the differences with the Treasury
and implement the newarrangement.
Martin served as Chairman of the
Board of Governors from April 2,
1951, to January 31 1970.

housing boom
moved more
people into
the suburbs.

Above: Watrous H. Irons, a professor of
economics at the University of Texas at
Austin, was employed in 1945 as one of
the first full-time economists on staff at
the Dallas Fed. His role was to advise the
Bank's president on economic conditions
in the Eleventh Federal Reserve District
and to accompany the president to
Federal Open Market Committee
meetings in Washington, D.C. Irons was
director of research and then vice
president at the Dallas Fed before serving
as its president from February 1954
through January 1968. Economists
continue to monitor segments of the
District's economy, as well as study
national and international developments,
to provide advice to the Bank's president.
Right: Leisure time in the 1950s.

9 5 0 -





For the Federal Reserve Bank of Dallas and its

events and the people who participate in them.

Branches, the 1950s were fairly tame compared with

For the 1950s, the decade has been defined by its

the previous two decades. In general, there was a high

music, by its fashion, and, to a certain extent, by its

level of economic activity in the District. Agricultural

events. It was a decade that, in many ways, provided a

conditions were damaged somewhat by a prolonged

relatively peaceful bridge between a turbulent time of

drought, but industrial activity was robust and the

war and another type of revolution-a social one. It

production of crude oil and natural gas rose to new

was a time when the United States caught its breath,

records. Throughout the District, construction was

enjoyed leisure moments, and produced some

doing well in the post-World War II housing boom.

incredible automobiles and gadgets. For the banking

For commercial banks in the District, the focus

industry, it was a pivotal time when the industry was

was on traditional credit markets-business and

just beginning to feel the changes brought about by

personal loans-leaving the rapidly growing mort-

innovations in computers and automation.

gage market largely to savings and loan associations.

However peaceful the 1950s were, the decade

The structure of the banking industry nationwide

started off with a bang-a "police action" in Korea.

was changing significantly during the 1950s. Larger

On June 25, 1950, President Harry Truman declared

banks were capitalizing on liberalized state branching

that invasion must be stopped in Korea. Memories of

laws. Although Texas did not allow branch banking

shortages associated with World War II caused con-

until the late 1980s, the number of bank branches in

sumer goods to be snapped up seemingly without

the United States would increase eightfold between

regard to cost. Consumers were once more asked to

1950 and 1980 to almost 40,000. The shift of popula-

limit their purchases, and several Federal Reserve

tion to the suburbs spurred this development, as did

regulations covering credit guidelines for commodities

advances in communications, data processing, and

and real estate were issued. When the Korean conflict

funds transfers that made branch networks more

ended in 1953, the national economy had experienced

manageable. Interest ceilings on deposits helped keep

some inflationary pressures, but it was not affected to

the cost of funds low and shifted bank competition

the same extent as during World War II.

into nonpriced areas.


In the early 1950s, the number of bank holding companies also increased, renewing concerns about the regulatory
controls on such organizations. The separation between
banking and nonbanking activities imposed by the Banking
Act of 1933 (Glass-Steagall Act) did not apply to bank
holding companies; between 1936 and 1956, regulators
asked for the loopholes to be closed and for bank holding
companies to be brought under federal supervision.
Nationally, the number of bank holding companies
was still relatively low in 1956-about 50 organizations
owning 435 institutions that controlled 7.5 percent of
commercial bank deposits. But rapid expansion of the
holding companies, plus the growing number of bank
mergers, prompted the Congress to act.
The resulting law, the Bank Holding Company Act of

"Our purpose is to lean
against the winds of
deflation and inflation,
whichever way they
are blowing."

1956, was the most important piece of banking legislation in
20 years. It required all holding companies owning or
controlling two or more banks to register with the Federal
Reserve, file annual reports, and submit to examinations.
The act prohibited banks from operating lines of business
that were not a "proper incident" to banking, and the
Douglas amendment to the act effectively halted interstate
banking for the next 20 years.
While the act closed some loopholes, it left a major one

William McChesney Martin

open: holding companies with only one bank remained

Federal Reserve Board of Governors

beyond federal regulation. In 1970, amendments to the Bank
Holding Company Act of 1956 brought one-bank holding
companies under federal supervision and allowed all bank
holding companies to engage in businesses "closely
related" to banking.
The Federal Reserve Bank of Dallas expanded its
financial services, economic research efforts, and public
affairs activities in the 1950s. The Bank's first executive
development program was established in 1954 and involved rotating individuals through the various departments
for on-the-job training.
Bank operations, which had essentially remained
unchanged for several decades, were revolutionized at the
Dallas Fed and across the nation with the automation of
check processing. An even bigger revolution was brought
about by the use of computers to handle operations and
keep track of the growing amount of statistical information.
These technological breakthroughs provided small banks
with opportunities to expand and offer diversified services.

Above: One of the original objectives of the Federal Reserve Ad
was 10 improve the nation's check collection system and help
ensure an efficient nationwide payments system. Today,
processing checks for financial institutions is among the primary
services that the Fed provides 10 its customers.
By today's standards, the 1950s were the Middle Ages
for bank operations. Accomplished personnel could sort 1,000
checks an hour, a volume computers now handle in less than
30 seconds. The banking industry was worrying about being
drowned by the rapidly growing volume of checks. In the mid1950s, the American Bankers Association and the Federal
Reserve began 10 look inlo automating the processing of
checks, resulting in the development of magnetic ink character
recognition, or MICR-the preprinted numbers and symbols that
appear at the bottom of every check.
In 1961, the Dallas Fed tested new high-speed computer
equipment designed 10 read the magnetic characters. By
1963, the first high-speed check handling machines were
installed at the Dallas Fed 10 process MICR-encoded checks.
By 1967, MICR encoding was mandatory for all checks.
left: Through the years, the Fed has been instrumental in developing new methods of automated and electronic payments.
The Federal Reserve began transferring information on
public wire systems but decided for security reasons to install
its own private wire system in 1918. Over the years, teletype
equipment replaced the original private wire system. Today,
electronic impulses transfer funds for financial institutions
through the Federal Reserve's nationwide electronic network.
By the 1970s, automated clearinghouse (ACH) services
also advanced the evolution of electronic payments. ACH
services made direct deposit of payrolls a reality and sped
transactions made regionally and nationally.


left: The 1960s

• uprisings on
campuses, in

Andrew Brimmer

buses, at lunch

Andrew Brimmer was nomi-

counters, and

nated to serve as amember of the
Board of Governors of the Federal Reserve System by President

in the nation's

Lyndon Johnson in February 1966.
Brimmer brought a new voice
to the Board during the 1960s.
President Johnson said at
Brimmer's swearing-in ceremony,
''Thirty-three years ago this week,
not a single bank in America was
open for business. It was atime of
depression and despair as Americans lost confidence not only in
their dollar but in their system of
government itself.
"Today all of that seems behind us. Our banking system is
sound and there is confidence in
the American dollar. Instead of
depression or recession, we are
beginning our sixth year of uninterrupted prosperity."
Brimmer, who had degrees in
economics from the University of
Washington and Harvard, took a
leave from the Wharton School of
Financeat the UniversityofPennsylvania to serve as deputy assistant
secretary for economic affairs in
the U.S. DepartmentofCommerce
before being selected a member
of the Board of Governors.
While serving as a Governor,
Brimmer headed efforts to implement the Voluntary Foreign Credit
Restraint Program. He also focused attention on credit card
practices in the banking industry
and on the economics of AfricanAmericans. He expressed his desire that the main thrustofAmerican society be toward "widening
the opportunities" for AfricanAmericans and other minority
groups "to participate more fully
in an open society."

Second from top: lyndon B. Johnson being sworn into office
following the assassination of President John F. Kenned
November 22, 1963.
Third from top: In the 1960s, cash unfit to be recircula~I&:,:.iil:iIEI
was cut in half and mailed to the Treasury for destructio
For security reasons, only half of the currency cut was mailed
at a time. As postal rates rose and limits were imposed on
the amount the post office would handle at once, Reserve
Banks took on the responsibility for destroying "old" money.
Right: At 10:56 p.m. on July 20, 1969, astronaut Neil
Armstrong took "one small step" on the moon, and outer
space seemed a little closer to Earth.

9 6 0 -

9 6 9




and an effort was under way to move quickly toward

their turbulence and drama-civil rights demon-

automating the Bank's operations.
One of the first areas to benefit from computers

strations, political upheavals, the Cuban missile crisis,
assassinations, the space program, and "one small step"

was the Checks Department. The Federal Reserve

on the moon in the summer of 1969.

worked with the American Bankers Association to
develop new technology and methods of processing

On the economic front, the early 1960s were a
period of relative price stability. The seeds of inflation

checks to handle increasing volumes. The result of

were sown later in the decade with the simultaneous

that effort was the development of magnetic ink

fighting of two wars-the war in Vietnam and the war

character recognition (MICR) for electronic handling

on poverty. In almost every year of the decade, the

of checks. In 1961, the Dallas Fed participated in a pilot

federal government ran a deficit in its operations, and

program to use prototype high-speed check machines

the federal debt steadily increased. Wholesale prices

to read the magnetic information. The Dallas Fed

crept upward. But prosperity seemed assured as the

permanently installed its first high-speed check

gross national product also increased fairly steadily

handling machine to process magnetic encoded

and incomes rose. Bank deposits increased, and

checks in 1963. By September 1967, MICR encoding

financial institutions solicited the ballooning and very

was mandatory for all check processing.
In the early 1960s, approximately 90 percent of

profitable consumer credit market.

the currency and coin shipped by the Dallas Fed to

Advances in computer technology and operational developments forever changed the Federal

banks went through the post office. Increases in

Reserve's ways of doing business. Computer innova-

postal rates and limitations on the dollar amount

tions in the 1960s spurred electronic handling of

allowed to be carried on postal trucks forced the

checks, facilitated efficient accounting methods, and

Bank to consider greater use of armored carriers.
Changes to U.S. money also occurred in the early

helped the economic research departments track

1960s as silver prices rose. Silver certificates in $1

trends in the economy.

denominations were still in circulation and were

To help integrate new computer technology into
the Dallas Fed, a Machine Processing Department had

replaced with newly printed $1 Federal Reserve notes

been created in the late 1950s. Activities of the

in 1963. Clad, or "sandwich," coins containing a lower

department were expanded significantly in the 1960s,

amount of silver were introduced in 1965.


Richard Nixon
During World War II, at Bretton
Woods, New Hampshire, asystem was
established that required countries
to set "par" values of their currencies
relative to the U.S. dollar. The Treasury was committed to redeem surplus dollar claims of foreign central
banks or governments, in gold, at the
rate of one ounce for every $35.
Under the Bretton Woods agreements, deficit countries had to use
their international gold reserves to
redeem their own currencies from
the surplus countries at the fixed exchange rate. Alternatively, countries
with trade deficits had to use restrictive monetary or fiscal policies to curb
their imports, thereby restoring abalance of payments with their trading
partners at the declared fixed exchange rates.
As long as the United States had
trade surpluses, running out of gold
reserves was nota concern. However,
pressures on the U.S. gold reserve
began as early as 1958; despite efforts
to adjust the U.S. economy and curtail
the gold outflows, these pressures
continued, the U.S. balance of payments position deteriorated rapidly,
and inflation escalated.
On August 15, 1971, President Richard Nixon changed the monetary rules
under which nations had traded with
one another for 25 years byannouncing that the United States would no
longer freely convert official dollar
holdings into gold. Despite the growing sense that the Bretton Woods system was unraveling in the immediately preceding months, the nature
and scope of the program was asurprise to the world. Bargaining over an
exchange rate realignment was prolonged. Agreement on the new exchange rates was finally reached in
December 1971. The American economy responded to the new system
with avigorous expansion.

Left: In the 1970s,
a world oil shock
was caused when
OPEC announced
major price
increases. Gas
rationing in the
United States
meant long lines
at the pumps.
Left: Automated teller machines (AlMs)
introduced consumers to the electronic
age of banking in the early 1970s.
Below: Interest rates and inflation rose
dramatically during the 1970s. Efforts
to control rising prices were ineffective,
and in its 1979 Annual Report, the
Board of Governors stated, /fAt yearend, the short-term outlook for inflation
remained bleak./f


Annual Rate of Inflation











9 7 0 -

9 7 9



An emphasis on consumer rights commanded a


significant amount of attention and led to the passage

around rising inflation and its devastating effects.

Wage and price controls were put in place. The econ-

of many acts protecting all consumers and spelling

omy was stagnant, but prices were rising. This unusual

out their rights. The Community Reinvestment Act of

situation gave us a new economic term-stagflation.

1977 established the responsibility of financial
institutions to serve the development needs of their

In recognition of the powerful effects of monetary
and fiscal policies on the economy, policymakers were

communities, including lower-income neighborhoods.

advocating frequent policy changes in efforts to "fine-

The growing use of computers in the banking
industry affected the Federal Reserve Bank of Dallas.

tune" the economy and keep it constantly at full capacity.

Just as check processing was automated at the Dallas

To encourage this fine-tuning, the Full Employment and Balanced Growth Act of 1978, also known

Fed in the 1960s, currency processing was automated

as the Humphrey-Hawkins Act, was enacted. The act

in the 1970s, and in 1975, the first high-speed currency

expanded the list of national goals established by the

processor was operating in the Dallas Fed's Cash

Employment Act of 1946 for achieving employment,

Automated payments were coming into their

production, and price stability to include providing
growth, improving the trade balance, and balancing

own as well. By 1976, the first automated clearing-

the federal budget. The act also required the Fed to

house (ACH) payments were being handled by the

report its monetary policy plans to the Congress twice

Dallas Fed in conjunction with the SouthWestern

a year and to comment on the relationship of those

Automated Clearing House Association.
In the early 1970s, the District's energy industry

plans to the President's goals.

dealt with the effects of the oil embargo imposed by

In the midst of these events and perhaps more so
than in their prior history, banks were having to compete

the Organization of Petroleum Exporting Countries

for funds-with competitors who could play by less

(OPEC). This District's economy was helped by the

restrictive rules. Traditional savings flowed out of banks

higher oil prices, leading to increased real estate

into institutions not bound by interest rate ceilings.

development, manufacturing growth, and transporta-

These "nonbank banks" attracted funds with such

tion improvements. Most of the United States,

options as mutual funds and NOW (negotiable order of

however, suffered a severe economic decline

withdrawal) accounts.

following the sharp increases in energy prices.


Paul Volcker
For years, the Federal Reserve
System used interest rates to gauge
conditions in the money market and
set the direction of monetary policy.
In the 1970s, the money market
boomed,and interest rates rose dramatically. In October 1979, after only
two months as Chairman of the Federal Reserve, PaulA. Volckerchanged
the focus of monetary policy.
Calling an unusual Saturdaymeeting of the Federal Open Market Committee, Volcker expressed his desire to change direction. In a press
conference following the meeting,
he announced that the Federal Reserve would no longer use interest
rates as the only economic barometer but would look primarily at the
supply of money.
By monitoring the money supply,
Volcker hoped to curtail skyrocketing
prices and runaway inflation. Applying
the brakes to an overheated economy
was not an easy or apopular job. The
construction industry was especially
hard hit, and many contractors expressed their feelings by mailing twoby-fours and bricks to the Chairman
to protest tight Fed policies.
Butthe Fed underVolcker's chairmanship remained firm. The goal to
eliminate the devastating effects of
continuing inflation was reached
over the next four years. By 1985, the
prime rate, which had reached 21
percent in 1982, dropped below 10
percent. The inflation rate also
dropped dramatically-from 14.2
percent in August 1979 to 4.1 percent
by August 1987.
Volcker served as Chairman of the
Federal Reserve Board of Governors
from August 6, 1979, to August 11,

Above: The number of

u.s. banks

that failed averaged about six per
yearfrom 1950 through 1979. This
tranquil period came to an abrupt
end in the 1980s. Bank failures in
the United States increased from 10

r.. ··1

in 1980 to more than 200 in 1989.
In the Eleventh District, bank foilures
rose from none in 1980 to 144 in
1989. More important, as a
proportion of total

u.s. failures,

Eleventh District bank failures
climbed steadily from zero percent
at the beginning of the decade to 70
percent in 1989.


Paul Volcker-he put me on hold!'

9 8 0 -





reserves with the Fed. Second, all types of deposit-

front early in the 1980s. Economic events in the

taking financial institutions-induding all banks,

preceding two decades finally forced major adjust-

savings and loan associations, and credit unions-

ments in the banking industry. Inflation was choking

became eligible for loans from the Fed's discount

the economy. The prime rate rose to a record 21

window. And third, the act required the Fed to price its

percent, and the Fed's discount rate hit a high of 14

services for the first time and recover the costs associ-


ated with providing them to the financial industry.

Increased sophistication in monetary affairs on

Consumers also presumably benefited from the

the part of the average citizen, entrance of nonbank

act through the increased maximum of $100,000 for

organizations into the field of checking accounts,

deposit insurance and the phased lifting of interest

declining membership in the Federal Reserve System,

rate ceilings on deposits. Nonetheless, it was the

improved communications that permitted almost

financial industry and the Federal Reserve that had

instantaneous execution of transactions, and easy

the most adjusting to do. The long-defined lines of

access to the markets of the world disrupted the usual

distinction among the various types of financial

patterns of banking.

institutions became increasingly blurred.
During the 1980s, the Fed adjusted to its new

These factors, plus a growing interest on the part

client base and evolved in its role of providing priced

of the Congress, prompted the passage of the Depository Institutions Deregulation and Monetary Control

financial services. Innovation and reliability became

Act of 1980. This law reshuffled the entire financial

key considerations as computer technology contin-

industry and set the stage for change and innova-

ued to broaden the scope of what could be accom-

tion-especially for the Federal Reserve. Features of

plished electronically. Efforts were undertaken to

the act were numerous and far-reaching, but for the

expand electronic connections with the Fed, and in

Federal Reserve, three stand out. First, all depository

the early 1980s, direct computer-to-computer connec-

financial institutions (whether or not they were

tions were initiated with the establishment of the

members of the Federal Reserve) maintaining

Dallas Fed's RESPONSE network. Computer innova-

checking or transaction accounts had to begin holding

tions also allowed improvements to check collection


services, funds and securities transfers, cash ordering, and
data reporting requirements.
The Garn-St Germain Depository Institutions Act of
1982 sped up the phaseout of interest rate ceilings and
expanded permissible services for thrift institutions. The act
also permitted interstate and cross-industry acquisition of
failed institutions. Acquisitions across state lines allowed
banks to become "regional," although full interstate
banking was still not allowed.
The economy of the Eleventh District was devastated
during the 1980s by the collapse of oil prices-first in 1981
and again in 1986-and the subsequent bust in the real
estate market. These events took their toll on the District's
banking industry. In the Eleventh District, more than 500
banks failed from 1980 through the first six months of 1992.
Of the 200 bank failures nationwide in 1988, 117 were in this
District. The year 1989 was the worst for bank failures in the
District, with 144 failures. Texas was especially hard hit.
Nine of the top 10 banks either failed or were taken over by
an out-of-state bank, or both. Economic problems causing
bank failures became evident in other parts of the nation
toward the end of the decade. For this District, however,
failures have decreased dramatically, with fewer than 10
recorded during the first six months of 1992.
While the banking industry continues efforts to get back
to business as usual, "usual" has a new meaning. The business
of managing and regulating financial institutions has become
increasingly complex. Strict definitions of permissible lines of
commerce and structure are becoming less practical.
Together with the Congress, financial institutions and their
regulators face resolving the issues of the thrift crisis, deposit
insurance reform, and the expansion of bank powers.
The opening of international markets in Russia and
Eastern Europe also presents new challenges for the financial
marketplace. In addition, the trend toward freer trade
between Mexico, Latin America, Canada, and the United
States will improve trade relations, increase exports, provide
an improved basis for economic and financial stability among
Western Hemisphere nations, and strengthen the economies
of both the District and the United States.
For the Federal Reserve Bank of Dallas, the future will
revolve around providing quality services to the financial
institutions in the Eleventh Federal Reserve District, supervising and monitoring the performance of this District's
financial institutions, and helping to guide monetary policy
decisions for the nation's economy.

Above: The Fed has three primary methods of influencing the
amount of funds available to financial institutions and, thus, to
the public. It can raise or lower reserve requirements. It can
increase or decrease the discount rate at which institutions can
borrow from the Fed. It can also buy and sell Treasury
securities in the open market.
Open market operations are the most frequently used of
the three. In open market operations, the Fed can sell U.S.
government securities to established securities dealers. These
dealers pay for securities with checks drawn on financial
institutions. To collect these checks, the Fed charges the reserve
accounts that institutions hold with the Fed. This process
decreases the amount of loanable money and, therefore, the
amount of money in circulation. On the other hand, if the Fed
buys securities, overall reserves, loanable funds, and money in
circulation are increased.
Decisions regarding monetary policy actions are made by
the Federal Open Market Committee (FOMe). Open market
operations are conducted daily through the Trading Desk at the
New York Fed. Here, specialists carry out instructions from the
FOMC to buy and sell marketable securities. They maintain a
telephone link with about three dozen dealers in U.S. government securities.
Right: Computer-to-computer connections became possible with
the introduction of the Dallas Fed's RESPONSE network in the
early 1980s.


Buildings of the Past and Present








J. L. Lumpkin
Credit Manager of the Dallas Fed, 1920

Prominent Chicago
architectural firm Graham,
Anderson, Probst and
White was selected to
design the headquarters
building of the Federal
Reserve Bank of Dallas in
1919. Shown here (left to
right): Ernest Robert
Graham, William Peirce
Anderson, and Howard
Judson White, with a
model of their design for
another landmark
building-the Wrigley
Building in Chicago.

Above: The Federal Reserve Bank of Dallas
opened for business in rented space in the
Guaranty State Bank and Trust Company
Building on November 16, 1914. The building
was located at 1305 Main Street, where the
Davis Building now stands.



Above: The first permanent home of
the Federal Reserve Bank of Dallas
was located at 1101 Commerce
Street in a building originally
designed for a jewelry wholesaler.
The Bank remodeled the space to fit
its unique needs and moved into
these quarters on October 30, 1915.
Left: For 71 years, the building at
400 S. Akard Street served as the
headquarters for the Federal Reserve
Bank of Dallas. Above the entrance
stand "Integrity" and "Protection."
Designed by New York sculptor
Henry Herring, the figures were
carved in place. Crowning the
building is an interesting mingling of
classic design with a Southwestern
touch-steer heads wreathed with
garlands. Employees moved in
officially on March 12, 1921.

400 S.





Department, which sorted the growing number of

opened for business on November 16, 1914, in

checks for the Eleventh District. The department's

temporary quarters on the first floor of the Guaranty

employees moved to the third floor on December 12,

State Bank and Trust Company on Main Street in down-

1920. Remaining employees moved in March 12,1921.

town Dallas. Even with a small staff of 27, these quarters

For the next 71 years, the building at 400 S. Akard

soon proved to be inadequate. The vault space,

Street was the headquarters for the Federal Reserve

especially, was too small to serve the Bank's needs.

Bank of Dallas. The building was designed by the

By April 1915, the Bank's board of directors

Chicago architectural firm Graham, Anderson, Probst

authorized leasing a building that had been occupied

and White. The design borrowed symbols of beauty

by a wholesale jewelry firm at the corner of Com-

and strength from classic Italian architecture, with

merce and Martin Streets. The lease agreement

some appropriate Southwestern influences, such as

included a purchase option, and after extended

the steer heads draped with garlands that decorate

negotiations, the board decided to purchase the

the top level of the building. Griffins, the traditional

building in August 1915.

guardians of wealth, stand guard around the base of

This purchase made the Dallas Fed the first

the light posts on either side of the Akard Street

Reserve Bank to own its own facilities. In the early

entrance. Figures bearing the names "Integrity" and

years, however, the proper procedures for doing this

"Protection" were carved in place above the doors of

kind of thing were not specifically written down.

this entrance by New York sculptor Henry Herring.

When the Federal Reserve Board learned of the

The original building had five stories, with a central

purchase, it criticized the Dallas Fed's directors for

"light-eourt"-an inspiration for today's atrium designs.

not notifying the Board in advance. Matters were

The first floor was known as the Banking Room and

smoothed out when the directors adopted a resolu-

housed the teller windows of the Cash Department,

tion expressing their regret and giving assurances that

among other offices. By the late 19305, expanding

approval would be obtained before taking such a step

operations necessitated some remodeling. The light-

in the future. Employees moved into their newly

court was closed in, and two more stories were added

remodeled facilities on October 30, 1915.

to the original structure in 1940.

Because the staff was expanded in 1918 to

By the late 1950s, the Bank purchased adjacent

handle extensive war financing operations, Dallas

property for a large expansion at the back of the build-

Fed staff members were working in four buildings.

ing. The addition housed a new vault, had expanded

The Bank decided that it was time to expand its

cash facilities and security functions, and provided

facilities and purchased land on the corner of Wood

additional general office space to all floors of the Bank.

and Akard Streets-this time with prior approval.

In tribute to its architectural design and in

The building rose quickly. On April 2, 1920, the

recognition of its role in the development of the area,

cornerstone, with a time capsule inside, was laid.

the Dallas Fed building was designated a historic

Special efforts were expended to finish the Transit

landmark by the city of Dallas in May 1979.



El Paso Branch

February 1922. The cash and securities were moved in

Branch banks are an important part of the regional

armored trucks that were surrounded by an escort

structure of the Federal Reserve System. The first Branch

composed of the Houston police, Branch guards, and

in the Eleventh District opened in El Paso on June 17,1918,

the male employees of the Branch. This escort walked

to better serve member banks in the extreme western

the $25 million through the streets of Houston to the

portions of the District in Texas, New Mexico, and, at

new building. This facility served the Houston Branch

that time, portions of Arizona as well. Fourteen

well until the mid-1950s, when operations had grown

employees opened the new Branch in rented space in

sufficiently to warrant another move. The Branch built

Rooms 318-326 in the First National Bank Building.

another facility and on March 31, 1958, moved into the

By May 1919, the Bank had purchased property

building it occupies today on San Jacinto Street.

on Myrtle Avenue for a new building. Construction

San Antonio Branch

began in November 1919, and in August 1920, employees moved into the new building.

In October 1926, representatives from the San

Expanding responsibilities and increased

Antonio Clearing House Association appeared before

volumes necessitated the move to new space in the

the Dallas Fed's board of directors for the second

mid-1950s. Groundbreaking ceremonies for the new

time to present an application for the establishment

building were held in 1956 on the half block bounded

of a Branch at San Antonio. This time, their request

by Main, Stanton, and Kansas Streets and the Texas

was granted; on July 5, 1927, the Branch opened for

and New Orleans Railroad. Built to accommodate

business in temporary quarters in the Frost National

future growth, the offices at 301 E. Main Street, in the

Bank Building. A staff of 57 operated at this location

heart of the central business district, opened for

until a Branch building was opened in 1928.

business on December 18, 1957.

Over the years, as the San Antonio Branch grew
in responsibilities and staff, the need for a new

Houston Branch

headquarters became more and more evident. In

The second Branch office of the Federal Reserve

1952, the Gibbs MacDaniel property was purchased

Bank of Dallas opened in Houston on August 4, 1919,

for the site of a new building. On the property stood

in a portion of the first floor of the old Cotton Exchange

the old two-story Vance House, believed to have been

Building at the comer of Travis and Franklin, now

the headquarters of General Robert E. Lee, who spent

known as the Hermann Building. The vault of the

two of his six years in Texas as an officer in San

adjacent Union National Bank of Houston was used

Antonio. Although the Vance House had to be

to store cash and securities.

destroyed to make way for the new Branch building,

The Houston Branch quickly outgrew its initial

a marble commemorative plaque was placed on the

home, and a new facility was built to house the Branch.

northwest comer of the grounds as a reminder of the

Employees moved into this first permanent location on

house's historical significance. The new facility

the comer of Texas Avenue and Caroline Street in

officially opened October 11, 1956.


Right: Groundbreaking ceremonies,
June 14, 1990




relates to the beauty of the surrounding architecture."

this building," says James L. Stull, the Dallas

Groundbreaking ceremonies were held on June 14,

Fed senior vice president who has overseen the build-

1990. At the ceremonies, former Dallas Fed President

ing of the Bank's new headquarters. "We wanted to

Robert H. Boykin said, "Today, the Federal Reserve

build it on a fast-track schedule, bring it in under

Bank of Dallas is casting its vote of confidence for the

budget, and apply higher quality standards in building

long-term economic viability of the city of Dallas and

a state-of-the-art headquarters.

the Eleventh Federal Reserve District." Employees first

"In addition to those goals, we also had a mission

started moving into the building in May 1992.

that revolved around making the building a special

Special features of this new facility include an

environment for the employees of the Dallas Fed. We

automated vault that uses robotics for storage and

wanted to have the building be a pleasant and efficient

retrieval of currency, raised flooring throughout the

space within which to work, and I feel we have

building to facilitate the wiring needs of the auto-

achieved all of these goals."

mated environment of the 21st century, and floors

When the Federal Reserve Bank of Dallas

designed around the work-flow needs of the individual departments.

announced in 1989 that it was going to build a new

"Special efforts were made to make the building

headquarters facility, a long and complicated process
began. Building the facility on a fast-track schedule

a pleasant and relaxing place to be," says Stull. "We

meant saving millions of dollars but also meant that

wanted employees to want to be here. Having a good

construction had to begin before plans were devel-

place to work will help us recruit quality employees

oped and finalized for the entire project.

and retain them for the future."

"We are the first Federal Reserve Bank to ever

Features were also incorporated in the building

build a building this way," says Stull. "It is a reflection

for bankers and the public. A 300- to SOO-person

of the confidence the Board of Governors had in the

auditorium and special training rooms have been

people involved in this process that they allowed it to

built to accommodate conferences both large and

be done this way."

small. In addition, two areas have been set aside for

More than 17 alternatives were considered before

educational exhibits, and an extensive tour program

the site on the northeast corner of Pearl Street and

is planned. The public can even enter on the ground

Woodall Rodgers Expressway was purchased. "This

level to buy U.S. Treasury securities more easily than

site was selected because we needed a large amount

in the past.

of land to accommodate the footprint of the build-

"I think it


a great addition to the city of Dallas,

ing," says Stull. "We narrowed our choice down to

and I think everyone on the project just did the right

three locations and picked this one because it offered

thing," says Stull. "You know that saying, 'If you don't

great access and would accommodate our space

know where you're going, any road will take you

requirements. It also provided a dramatic setting that

there'? Well, we did know where we wanted to go,

allowed the architects to create a building which

and with some luck, we were able to get here."


A Point in Time






Harvey Rosenblum
Senior Vice President and Director of Research

Management Team: (first
row, from left) Jay K.
Mast, Tony J. Salvaggio,
Robert D. McTeer, Jr.,
Robert F. Langlinais;
(second row, from left)
Harvey Rosenblum, Robert
D. Hankins, James L. Stull,
Millard E. Sweatt. Not
pictured: Sam C. Clay,
Thomas H. Robertson,
Robert Smith, III.

Right: Branch Management
(from left) Thomas H. Robertson,
San Antonio; Sam C. Clay, EI
Paso; Robert Smith, III, Houston.
Below: The Boardroom at the
Dallas Fed.

For the staff of the Federal Reserve Bank of Dallas

"In addition," he says, "the smooth functioning of

and its Branches, everyday activities are an important

the nation's payments system-having payment

component of the smooth operation of the nation's

information transferred efficiently and reliably-is

economy, the careful supervision of its banking

another aspect of that integrity."

industry, and the reliability of its payments system.
Some of the issues dealt with each day are part of

Federal Reserve Independence

a continuing discussion regarding the role of the Fed-

Crucial to the successful operation of the Federal

eral Reserve in serving the United States and its bank-

Reserve has always been its so-called independence

ing system. Some issues are a result of new technology

from political pressures. While the Fed does not have to

and innovations in providing financial services. Some

get approval from the President of the United States for

arise from new legislation. This section takes a brief

its actions, it does report to the Congress on the direc-

look at issues currently being discussed by the senior

tion it plans to take and the programs it plans to pursue.

management of the Federal Reserve Bank of Dallas

"Our powers are Congress' powers," says

and considers the impact of those issues on the future.

Rosenblum. "What we do, we do for Congress. We
were established as an independent central bank



because Congress knew that we would have to make

maintaining the health of the economy for 250

decisions that may be unpopular in the short term,

million Americans," says Dallas Fed Senior Vice

but worthwhile over the long term.

President and Director of Research Harvey Rosenblum.

"We are the organization that has to pick be-

"It is an awesome responsibility when you think about

tween the trade-offs in the economy. Our indepen-

it, and we have to think about it every day.

dence, therefore, has to be used judiciously and very

"The main role of the Fed, both now and in the

cautiously because we are answerable to Congress

future, is to maintain the integrity of the nation's

and, through Congress, to the American people."

financial system and its most visible asset-the U.S.

Dallas Fed President and Chief Executive Officer

dollar," says Rosenblum. "I don't mean integrity in a

Robert D. McTeer, Jr., agrees. "We have a very delicate

moral sense, but in the sense of having value.

balance to preserve. There are checks and balances

"Our efforts in conducting monetary policy for

built into the system to ensure that we consider all

the United States are aimed at ensuring the integrity

aspects of the economy when we make decisions. The

and availability of credit and money in the economy

regional structure of the Federal Reserve System is

to keep it functioning efficiently.

what makes it an effective organization in meeting the

"Our Supervision and Regulation area maintains

economic needs of this country, and I feel that it will

integrity by considering the quality of the assets held

remain the backbone of our effectiveness.

by banks. When you think that much of our wealth is

"What sustains independence is our credibility in

held in the banking system, maintaining its integrity is

carrying out the right policy," McTeer says. "If

of utmost importance to the nation's financial system.

Congress felt we weren't carrying out the right policy,


we would have zero independence. We have to earn it

nesses and the public. The character of the American

by earning credibility. We have to have goals consistent

people and of the American system itself called for a

with those of the American people. It isn't something

decentralized Federal Reserve System. It is as unique

you write into law; it's something you have to earn."

an organization as America is a country, and both
have worked well for a long time."

The Regional Structure
Issues for Now and the Future

"Our structure is what distinguishes us from a
government agency," says Rosenblum. "Because we

According to Senior Vice President and General

have regional Reserve Banks spread across the country,

Counsel Millard Sweatt, the most intellectually

information flows from throughout the country to

engaging aspect of the work the Federal Reserve does

Washington, D.C., rather than from Washington, D.C.,

is attempting to balance the public and private

out to the rest of the country. We get the benefit of the

aspects of its mission. "Because we operate as a

collective wisdom of the entire country rather than the

provider of services and as an overseer of the finan-

wisdom of a few people in Washington.

cial system," he says, "the work we do is always a little

"There is no question in my mind that this informa-

out of the ordinary. We're not always going over

tion is truly utilized, and not just there for the record.

ground people have gone over before. There is an

All voices are heard, and when there is a consistent

opportunity for continual discovery.

pattern, we sit up, take notice, and act accordingly."

"Each day, we have to maintain a sense of

"The root strength of the Federal Reserve is its

continuity in our operations and yet remain flexible

regional structure," says Senior Vice President Robert

enough to meet changing conditions. As an organiza-

Smith, III. As the officer in charge of the Houston

tion, we have to constantly redefine, renew, and

Branch, Smith sees the importance of this regional

reestablish the rules we operate under. But at the same

structure on a daily basis. "Each Branch plays a signif-

time, we have to let people know that we're the same

icant role in filtering regional economic and banking

institution with the same purposes, ideals, and goals,

information to the District's president and, through that

but that we are flexible enough to be innovative."
Innovation will be a key aspect in all areas of

president, to the Board of Governors in Washington."
"Our uniqueness comes from our decentraliza-

financial services in the 1990s. "There is a lot of

tion," says McTeer. "In the whole world, only the

healthy competition in the provision of financial

United States and Germany have decentralized

services," says First Vice President and Chief Operat-

central banks, and Germany's is patterned after ours.

ing Officer Tony J. Salvaggio. "But the Fed is the only

People looking at our structure may think it is

entity that can do research and development in basic

unnecessarily complicated, and they want to stream-

payments system services with the broad public

line it. But it is as it is for a reason. There is a place for

interest in mind. We are investing resources into

many voices within the Fed-especially through the

developing imaging systems for check transactions,

boards of directors who represent all types of busi-

introducing new equipment to handle cash faster and


more efficiently, and consolidating data services to

issues, possible expansion of bank powers, and the

meet the changing face of banking in the United States.

reshaping and consolidation of the regulatory entities
that supervise the banking industry will be decided by

"Over the next decade, we will see the centralization of the operations of the Federal Reserve," he

the Congress. "The question is," says Senior Vice

says. "Fed District boundaries will become less

President Robert D. Hankins, "what will be the impetus

important in the provision of financial services. The

for new legislation that finally deals with these issues?
"Supervision and regulation duties are an integral

challenge will come in maintaining the regional
character of each Fed, but we need to make sure that

part of the Federal Reserve System in terms of the

as we consolidate, we don't overlook the valuable

Board of Governors having immediate access to the

relationships we have with our customers."

condition of financial institutions so they can have
some idea of the ramifications of monetary policy.

"The future is in quality," says Senior Vice
President James L. Stull. "We have to be a low-eost,

"On the District level, our efforts are aimed at

high-quality provider of financial services. What

providing financial institutions with an outside look at

matters now and will matter more in the future is

their operations to help them determine whether they

providing information to our customers so they can

are performing well. If we make suggestions that are

make business decisions with better data."

reasonable, well-thought-out, and tailored to their
individual needs, we can contribute to the effective

To make business information and financial

management of the nation's banks."

services more streamlined and useful for the nation's
banking system, the Federal Reserve System has

An Outlook

decided to consolidate its data services operations in

For the Eleventh District, the past 10 years were

three locations, rather than having 12 separate
operations. Dallas, Richmond, Virginia, and East

hectic ones in the banking industry. "We gave real

Rutherford, New Jersey, were selected as consolida-

meaning over a long period of time to what the Fed is

tion sites. "It will be a lot of work to accomplish this,

all about during the 1980s," says Sweatt. "We provided

but the goals are worthwhile," says Senior Vice

necessary liquidity to the economy and kept the

President Jay K. Mast. "The goals are to improve the

payments system going by making sure we provided

reliability of electronic services, improve the availability

the foundation to help keep the system viable."
For the future, the Dallas Fed hopes that the

of products, and become more standardized from a
business sense in the products we offer the banking

lessons of the 1980s will allow it to help build a stronger

industry. This means that as banks become more

financial system in this District. Although the makeup of

nationwide in scope, our products will be similar

the District's banks changed significantly during the

around the country. This will facilitate decision-making

1980s, with out-of-5tate organizations purchasing most

and will help us implement new services as well."

of the large, locally owned institutions, the goals in
supervising and providing financial services for those

In the bank supervision and regulation area, the

organizations never change for the Federal Reserve.

19905 will be the decade when deposit insurance


When the Federal Reserve System was created by the
Congress in 1913, one reason for establishing 12 separate
regional Reserve Banks was that each Bank's board of
directors would give the nation's central bank greater
contact with and knowledge of local business conditions.
Reserve Bank directors also provide input to management and monetary policy decisions. They bring the benefit

of broad experience and training and provide sound
judgment and advice on their region's business conditians
and credit problems. Their contributions enhance the overall
quality of the System's economic information and business
outloak perceptions, allowing the Federal Reserve to better
understand the viewpoints of the private sector.
The Federal Reserve Bank of Dallas' board has nine
directors, six of whom are elected by members banks in the
Eleventh Distrid; three directors are appointed by the Board
cl Governors in Washington, D.C. The Bank's three branchesEI Paso, Houston, and San Antonicr-have their own sevenmember boards of directors, who are appointed either by
the members of the Dallas Office board or by the Board of

"I've always been committed to the notion that an
economy can only function effectively over time if
it has a sound currency. The people at the Fed are
clearly focused on maintaining the stability and
soundness of our currency. "
Leo E. Linbeck, Jr.
Chairman of the Board

't,Serving on the Dallas Fed's board gives me an
opportunity to focus on the workings of the
financial and economic systems as they affect
Texas and the Southwest. "
"When I became a member of the board,
I wasn't that familiar with how the Fed or
the country's banking system operated.
Being on the board has given me insight
into those areas. It is an incredible
learning experience. "
Cece Smith
Member, Board of Directors

Henry G. Cisneros
Deputy Chairman of the Board

Federal Reserve Bank of Dallas

Deputy Chairman

Leo E. Linbeck, Jr.

Henry G. Cisneros

Chairman of the Board and ChiefExecutive Officer
Linbeck Construction Corporation
Houston, Texas

Chairman and ChiefExecutive Officer
Cisneros Asset Management Company
San Antonio, Texas

J. B. Cooper, Jr.

W. Thomas Beard, III

I. H. Kempner, III

Roscoe, Texas

Leoncita Cattle Company
Alpine, Texas

Chairman of the Board
Imperial Holly Corporation
Sugar Land, Texas

T. C. Frost
Chairman of the Board
Frost National Bank
San Antonio, Texas

Robert G. Greer
Chairman of the Board
Tanglewood Bank, NA
Houston, Texas

Eugene M. Phillips
Chairman of the Board and President
The First National Bank of Panhandle
Panhandle, Texas

Cece Smith
General Partner
Phillips-Smith Specialty Retail Group
Dallas, Texas

GaryE. Wood
Texas Research League
Austin, Texas

Peyton Yates
Yates Drilling Company
Artesia, New Mexico

Hugo Bustamante, Jr.
Owner and ChiefExecutive Officer
CarLube Inc.

Veronica K. Callaghan
Vice President and Principal
KASCO Ventures, Inc.

Ben H. Haines, Jr.
President and Chief Operating Officer
First National Bank of Dona Ana County
Las Cruces, New Mexico

Wayne Merritt
Chairman ofthe Board and President
Texas National Bank of Midland
Midland, Texas

Houston Branch

Judy Ley Allen
Partner and Administrator
Allen Investments
Houston, Texas
Chairman Pro Tem

Federal Advisory Council Member

Ronald G. Steinhart
Chairman ofthe Board and
ChiefExecutive Officer
Team Bank
Dallas, Texas

Milton Carroll

Clive Runnells
President and Director
Mid-Coast Cable Television, Inc.
EI Campo, Texas
President and Director
Runnells Cattle Company
Bay City, Texas

San Antonio Branch

Roger R. Hemminghaus
Chairman of the Board,
President, and ChiefExecutive Officer
Diamond Shamrock, Inc.
San Antonio, Texas
Chairman Pro Tem

Erich Wendl
President and ChiefExecutive Officer
Maverick Markets, Inc.
Corpus Christi, Texas

Gregory W. Crane
Chairman of the Board,
President, and ChiefExecutive Officer
Broadway National Bank
San Antonio, Texas

Javier Garza

Chairman ofthe Boardand ChiefExecutive Officer
Instrument Products, Inc.
Houston, Texas

Executive Vice President
The Laredo National Bank
Laredo, Texas

T. H. Dippel, Jr.

Lawrence E. Jenkins

Chairman ofthe Board and President
Brenham Bancshares, Inc.
Brenham, Texas

Vice President (retired)
Lockheed Missiles & Space Company, Inc.
Austin, Texas

Alvin T. Johnson

Jenard M. Gross

Jack Moore

Senior Vice President
Management Assistance Corporation ofAmerica

Gross Builders, Inc.
Houston, Texas

T. J. Moore Lumber, Inc.
Ingram, Texas

Walter E. Johnson

Sam R. Sparks

El Paso Branch

Chairman Pro Tem

Diana S. Natalicio
The University of Texas at EI Paso
EIPaso, Texas

President /Chief Executive Officer
Southwest Bank of Texas
Houston, Texas


Sam R. Sparks, Inc.
Progreso, Texas

Federal Reserve Bank of Dallas
Robert D. McTeer, Jr.
President and ChiefExecutive Officer

Tony J. Salvaggio
First Vice President and Chief Operating Officer

Robert D. Hankins
Senior Vice President

Larry J. Reck
Vice President

Marion E. White
Assistant Vice President

Jay K. Mast
Senior Vice President

Jesse D. Sanders
Vice President

Robert L. Whitman
Assistant Vice President

Harvey Rosenblum
Senior Vice President and Director ofResearch

Eugenie D. Short
Vice President

Bob W. Williams
Assistant Vice President

James L. Stull
Senior Vice President

Larry M. Snell
Vice President

Emilie S. Worthy
Assistant Vice President

Millard E. Sweatt
Senior Vice President,
General Counsel, and Secretary

W. Arthur Tribble
Vice President

Gloria V. Brown
Community Affairs Officer

Uzziah Anderson
Assistant Vice President

Joanna O. Kolson
Operations Officer

Stephen P. A. Brown
Assistant Vice President and Senior Economist

Bobby G. Moore
Senior Project Manager

Richard J. Burda
Assistant Vice President

El Paso Branch

Jack A. Clymer
Vice President

Terry B. Campbell
Assistant Vice President

Sam C. Clay
Vice President in Charge

W. Michael Cox
Vice President and Economic Advisor

Robert G. Feil
Assistant Vice President

J. Eloise Guinn
Assistant Vice President

Billy J. Dusek
Vice President

Johnny L. Johnson
Assistant Vice President

Javier R. Jimenez
Assistant Vice President

C. LaVor Lym
Assistant Vice President

Houston Branch

James R. McCullin
Assistant Vice President

Robert Smith, III
Senior Vice President in Charge

John R. Phillips
Assistant Vice President

Vernon L. Bartee
Vice President

Larry C. Ripley
Assistant Vice President

Rene G. Gonzales
Assistant Vice President

Mary M. Rosas
Assistant Vice President

Luther E. Richards
Assistant Vice President

Robert J. Rossato
Assistant General Auditor

San Antonio Branch

Philip R. Spear
Assistant Vice President

Thomas H. Robertson
Vice President in Charge

Rebecca W. Meinzer
Vice President

Martha Gayle Teague
Assistant Vice President

Taylor H. Barbee
Assistant Vice President

Gerald P. O'Driscoll, Jr.
Vice President and Economic Advisor

Michael N. Turner
Assistant Vice President

John A. Bullock
Assistant Vice President

Dean A. Pankonien
Vice President, Assistant General Counsel,
and Assistant Secretary

Stephen M. Welch
Assistant Vice President

Richard A. Gutierrez
Assistant Vice President

Basil J. Asaro
Vice President
Lyne H. Carter
Vice President

Billy D. Fuller
Vice President
Joseph T. Gholson
Vice President
Jerry L. Hedrick
Vice President
Helen E. Holcomb
Vice President
Joel L. Koonce, Jr.
Vice President
Robert F. Langlinais
Vice President and General Auditor




Federal Reserve Bank of Dallas

Federal Reserve Bank of Dallas

Oscar Wells


o. Tenison

R. L. Van Zandt



W. F. Ramsey

B. A. McKinney



W. B. Newsome

Lynn P. Talley



Lynn P. Talley

B. A. McKinney



C. C. Walsh

R. R. Gilbert



James H. Merritt

Watrous H. Irons



Jay Taylor

Philip E. Coldwell



J. R. Parten

Ernest T. Baughman



Robert J. Smith

Robert H. Boykin



Robert O. Anderson

Robert D. McTeer, Jr.


Carl J. Thomsen

* Originally, the head of the Reserve Bank was known as governor.


That designation was changed to president with the passage
of the Banking Act of 1935.

Charles F. Jones

John Lawrence

Irving A. Mathews

Gerald D. Hines

Ro bert D. Rogers

Bobby R. Inman

Hugh G. Robinson

Leo E. Linbeck, Jr.




Susan August Brown

Cover: Joe Patronite, Photographer

August Communications

Illustration (page J4): Mary Erikson
Designer: Susie Buffalow
Federal Reserve Bank of Dallas


Virginia M. Rogers
Federal Reserve Bank of Dallas

The Bettmann Archive: page 26, right; page 30, second from top; page 36.
Board of Governors of the Federal Reserve System: page 8, above; page 18,
Glass, top; page 22, Eccles; page 26, Martin; page 34, Volcker. Andrew F.
Brimmer: page 30, portrait used with permission. Bill Canfield/Newark
Star-Ledger: page 34, cartoon reprinted with permission. Henry G. Cisneros:
page 52, portrait used with permission. Dallas Historical Society: pages 4-5;
page 12, above; page 16, right. Dallas Morning News: page 10 (April 3, 1914,
front page reprinted with permission). Federal Deposit Insurance Corporation: page 21, middle. Federal Reserve Bank of Dallas: inside front and back
covers; page 6, left; page 12, right; page 15; page 24, bottom left; page 26, above;
page 29, above; page 30, third from top; page 37, right; page 40; page 44, top.
Federal Reserve Bank of New York: page 14, left; page 16, Strong; page 21,
bottom. Federal Reserve Bank of Richmond: page 29, left. FPG International: page 12, Wilson; page 16, above, left; page 18, right; page 20; page 21, top;
page 22, right; page 24, top left; page 25; page 26, left; page 28; page 30, left, right;
page 32, first left, second left. Graham, Anderson, Probst and White: page 38,
photo used with permission. Pete Lacker Photography: page 8, right, below
right; page 42. T. J. Morrow: page 22, above; page 24, above. The Nixon
Project: page 32, Nixon. Joe Patronite, Photographer: cover; page 6, top,
middle; page 8, below left; page 44,left, middle, bottom; page 46; page 48; page
52, top, bottom. Stephen Seeger, Photographer: page 2. Show Works: pages
50-51. Peter Tenzer Photography: page 37, above. Texas Bankers Association: page 18, above. Texas Monthly: page 34, above (October 1983 cover
reprinted with permission). U.S. Navy: page 22, top.