1 YEARS OF SERVICE FEDERAL RESERVE BANK OF ST. LOUIS 100 Years of Service 1914–2014 On the occasion of the centennial anniversary of the Federal Reserve Bank of St. Louis, this book is a tribute to the thousands of employees who have worked diligently at the St. Louis Fed over the past century to serve the public. We dedicate it to them and those who will follow for the next 100 years. October 2014 1 Table of Contents A Commitment to Serving the Public A Message from James Bullard, President and CEO ...........................................................................................................................................5 Serving the Public Good A Message from Sharon Fiehler, Chair, Board of Directors ...........................................................................................................................11 Our History The Fed Is Born The Idea of a Central Bank Was Anathema to Many ....................................................................................................................................... 17 Lessons from a Maverick How the St. Louis Fed Helped Shape the Nation’s Monetary Policy ................................................................................................... 27 A Foregone Conclusion How and Why St. Louis Was Chosen for a Federal Reserve Bank ...........................................................................................................53 Reaching Our Constituents To Better Serve the Eighth District, the St. Louis Fed Established Three Branches .....................................................................83 A Symbol of Strength One Federal Reserve Bank Plaza ...................................................................................................................................................................................97 Our Work Premier Service Provider Listening, Assessing, Maximizing Performance .................................................................................................................................................103 A Competition of Ideas Economists Need Freedom To Challenge Policymakers .............................................................................................................................107 Keeping a Watchful Eye Banking Supervisors Take On New Challenges .................................................................................................................................................. 111 Fiscal Agent for the U.S. Treasury Delivering Innovation and Efficiency in Federal Financial Management ..........................................................................................115 Adapting as Payments Evolve Reducing Costs While Maximizing Service ...........................................................................................................................................................119 Structure and Governance Providing Oversight and a Window to Main Street ........................................................................................................................................125 Accountability Yes, the Fed Is Audited, and It Has Been Since Its Founding .................................................................................................................. 129 Earning the Public’s Trust Open and Direct Communication Is Key ...............................................................................................................................................................133 2 St. Louis Fed Branch Offices Bringing the Fed Closer to the Community .........................................................................................................................................................139 Dialogue with the Fed Meeting with the Public and Taking the Discussion beyond Financial Headlines ....................................................................144 Economic Education Fostering a Stronger Economy through the Classroom .............................................................................................................................. 145 FRED and Family Bringing Data from around the World to Your Desk, Phone or Tablet ..............................................................................................147 The History of FRED ............................................................................................................................................................................................................149 IDEAS on the Web Keeping Up with Research from Economists around the World .............................................................................................................151 Center for Household Financial Stability Researching How Families Can Strengthen Their Household Balance Sheets ............................................................................153 Community Development Opening Doors for Low- and Moderate-Income Communities .............................................................................................................155 Office of Minority and Women Inclusion Fostering Diversity in the Workplace, in Contracts and in Educational Outreach .....................................................................157 Inside the Economy Museum What’s Your Role in the Economy? Find Out in the St. Louis Fed’s New Museum .................................................................160 Our People St. Louis Board of Directors ....................................................................................................................................................................165 Little Rock Board of Directors ............................................................................................................................................................166 Louisville Board of Directors .................................................................................................................................................................167 Memphis Board of Directors .................................................................................................................................................................168 Bank Management Committee .........................................................................................................................................................169 St. Louis Fed Councils ......................................................................................................................................................................................170 Board and Council Retirees .....................................................................................................................................................................172 Bank Officers .................................................................................................................................................................................................................173 This commemorative centennial book also serves as this year’s annual report. Read our financial statements at www.stlouisfed.org/ar. There, you can also find this entire report, plus our centennial video. The number of data series available on FRED, the amount saved through the Go Direct campaign and the officer and council lists of the St. Louis Fed are as of Aug. 31, 2014. 3 4 A Commitment to Serving the Public By James Bullard The 100th anniversary of the founding of the Federal Reserve System PRESIDENT AND CEO provides an opportunity not only for reflection on the past 100 years, but for preparation and anticipation. As we look back, we cannot help but be struck by the wisdom and foresight of the designers of the Federal Reserve. Moreover, history offers many lessons for the leaders of the System. As we look forward to the next 100 years, we can use the lessons of the past to equip us to deal with the challenges of the future. One defining feature of the System and its employees that has not changed over time is a commitment to public service. Regardless of the specific activity, the policies championed and the services provided by the Federal Reserve Bank of St. Louis have been and always will be motivated by a customer focus that serves the public. 5 REGIONAL LEADERSHIP AND REPRESENTATION aspect of the Fed’s design over the past 100 years. The Fed may At the outset, the design of the Fed—the third attempt at not have survived the 2007-09 financial crisis without its Main a U.S. central bank—required careful thinking. The first two Street component, given the amount of backlash against New attempts failed because of political backlash, especially in the York and Washington at the time. case of the Second Bank of the United States, which became Reserve bank district lines were drawn in 1913 and would fodder for Andrew Jackson’s presidential ambitions. He wanted probably be drawn differently today, given that relative shares to shut it down based on the notion that the financial centers of population and economic activity have moved south and on the Eastern Seaboard were benefiting at the expense of the west. For instance, four banks are along the Eastern Seaboard, Midwest and the South. After Jackson allowed the charter of as is the Board of Governors. However, the Fed is able to the Second Bank of the United States to expire, the U.S. had collect economic intelligence from all across the country, not no central bank for more than 70 years.