The Federal Reserve Centennial: The Atlanta Fed's Early Years
Towering prominently in the middle of the lobby at the Jacksonville Branch of the Federal Reserve Bank of Atlanta is a 10-foot high replica of the largest note ever printed: the $100,000 note. This note was never in general circulation but was a gold certificate used to transfer funds between Federal Reserve Banks. The front side of the note is faced with a portrait of President Woodrow Wilson, who created the Federal Reserve when he signed the Currency, or Owen-Glass, bill (also known as the Federal Reserve Act) into law in 1913.
Visiting tour groups sometimes wonder why Wilson's face is on the largest note ever printed (we tell them, of course—he signed the Currency Act!). But they are also curious about how the Federal Reserve got to Florida and exactly how the Atlanta headquarters was chosen. As the System observes its first hundred-year mark, digging into the Sixth Federal Reserve District's own history and early beginnings provides an interesting narrative that well illustrates the strength brought about by a decentralized organizational structure like the Fed's. In Jacksonville, our roots are very deep—we will be reaching our own branch centennial in just five years.
What follows are some notable highlights of the Federal Reserve Bank of Atlanta's early years, along with links to resources for teaching the history of the Fed as it connects with the history of the nation during the early twentieth century.
On November 15, 1914, the Atlanta Fed opened with a staff of just 13, including Governor Joseph A. McCord, an Atlanta banker, and Max Wellborn, an Alabama banker who would succeed McCord as governor in 1919. ("Governor" was the term for what is now the role of president.) The Bank issued currency and cleared checks. Most important in the region's one-crop cotton economy was the Bank's role in providing credit to member banks by the rediscounting (or buying) of their loans, enabling them to provide liquidity to local farmers. Demand for currency to pay cotton farmers was so strong that the Atlanta District was first in the System in currency distribution relative to its capital. These early leaders set a goal to diversify the southern economy.
Although the Atlanta Fed got off to a slow start—with only one member bank its first year—by the end of 1919, it had a $3 million surplus, thanks in large part to earnings from war-time Treasury bonds and a strengthening economy. As economic activity began to grow in the South, the Federal Reserve Bank of Atlanta also expanded, outgrowing its original headquarters and relocating to a new space by 1918. This Marietta Street location would serve as the Bank's Atlanta home until 2001, when the Bank moved to its current Peachtree Street building. In fall 1915, a branch office opened in New Orleans, the first Reserve Bank branch in the Federal Reserve System. Although Atlanta had been chosen to be headquarters for the Sixth Federal Reserve District, New Orleans was actually considered the financial center of the South. Consequently, its location, more than 500 miles from Atlanta, necessitated an office for the city that had been a strong contender for a Bank of its own. Branches were added in Birmingham and Jacksonville in 1918, and in Nashville the following year. System branching was thought to have ended with the addition of the Charlotte branch of the Richmond Fed in 1928. However, the Sixth Federal Reserve District had the distinction of opening the final branch in the System when it opened the Miami Branch in 1975. This new branch was considered necessary to service the increasing needs of a large and dynamic Florida economy.
The Cuban Connection
The post-World War I economy, the Great Depression
Franklin D. Roosevelt's New Deal reforms brought many changes to the Bank's operations, beginning with the departure of Governor Eugene R. Black, who left the helm of the Atlanta Bank to serve a short-term assignment as Chairman of the Federal Reserve. To date, he is the only Atlanta Fed governor, or president, to have served on the Board. In 1933, several Sixth District states created bank "holidays" in the weeks leading up to FDR's national bank holiday, which for six days halted all nonemergency banking operations and permanently closed insolvent financial institutions.
A new focus on monetary policy
In keeping with the new emphasis on the Fed's role in monetary policymaking, the Atlanta Fed hired its first economist in 1938. As World War II began, wartime production demands would transform the Sixth District's traditional agricultural base into a modern industrial economy, bringing new opportunities and challenges for the central bank's southeastern center of operations.
Historical resources for educators
Materials of significance for educators teaching Fed history include the Federal Reserve Bank of Atlanta's Classroom Economist series, which has a module on the history of central banking. Chairman Bernanke's Georgetown University lecture series, which is available online along with downloadable discussion questions, opens with a description of the Fed's origins, mission, and actions during the Great Depression and covers Fed history through the recent financial crisis. The Fed's history is also included as a theme for a chapter in the Philadelphia Fed's new video series, The Federal Reserve and You. And if you are looking for the history of central banking or finance before 1913, the Philadelphia Fed is a great source for publications, lessons, and other resources on the colonial period and early central banking eras. Also, you can find numerous history publications at the Federal Reserve's resource clearinghouse, www.federalreserve.org. For a list of history-related materials and lessons found there, see the link in the Resources section below.
The Federal Reserve Bank of St. Louis has included its popular Great Depression curriculum in its lineup of free online courses at its econlowdown.com site. The curriculum is also available in a printable format, and the main landing page includes numerous links to primary sources such as pictures, cartoons and art, historic newsreels, audio recordings, oral histories, and video interviews with people who lived through the era. The Federal Reserve Bank of St. Louis often addresses history topics in its Page One Economics Classroom Edition newsletter and activity guide, and is also the home of FRASER, the archival system of the Federal Reserve. This vast collection not only contains data, statistics, and annual reports, but also primary sources going back to the 18th century. Here, you can find copies of items such as Andrew Jackson's veto message to Congress in 1832, which ended the operations of the Second Bank of the United States, and Alexander Hamilton's report to the Secretary of the Treasury arguing in favor of the establishment of the country's first central bank. You can even find more modern contributions, such as President Roosevelt's proclamation declaring the 1933 bank holiday, records from the personal papers of President Harry S. Truman, and Chairman Greenspan's testimony to Congress following September 11.
The economic lessons from the historical events of September 11 and Hurricane Katrina are also the subjects of video curriculum from the Federal Reserve Banks of San Francisco and Atlanta. For the essential primary Fed source, the full text of the Federal Reserve Act is available at the Board of Governor's website.
From agriculture to aerospace
FRASER- Federal Reserve Archive
History of Central Banking (Philadelphia Fed)
By Lesley Mace, economic and financial education specialist with the Jacksonville Branch of the Federal Reserve Bank of Atlanta
November 6, 2013