Banking has been around almost as long as civilization itself. While the two aren’t synonymous many of civilization’s achievements are related to banking. The earliest known writing and numbering systems were developed to track commercial transactions, while loans from proto-banks facilitated trade between ancient cities. Modern banking originated in rich 14th century cities of northern Italy. Wealthy families such as the Medici and Peruzzi established trading empires which they controlled through a system of banking branches. Over the centuries other modern practices evolved.
By the 18th century banks were issuing banknotes, paying interest on deposits, and creating a system of money based on credit. Banking became the lifeblood of the emerging modern economies. Fluctuations in the availability of credit drove not only private enterprise, but increasingly influenced the power of the growing nation-state. In answer to this challenge, governments created a central banking system. Central banks serve as the lender of last resort, finance government, and as the only authorized distributor of the national currency regulate its value. Through these functions they attempt to steer a country’s economy away from danger.
US Banking
Central banking has a long and colorful history in the United States. The first two attempts at establishing a central banking system failed when Congress declined to renew their charters in 1811 and 1836. US currency bears the images of two important players in these failed banks. The $10 bill features Alexander Hamilton and the $20 bill pictures Andrew Jackson. Hamilton was a strong proponent of central banking, while Jackson effectively killed the second bank. Perhaps there’s some poetic justice to Jackson losing his spot to Harriet Tubman.
The Federal Reserve Banking System referred to as the Federal Reserve or the Fed, is the current central banking system. In 1913, in response to another financial panic congress created the Fed. Its original goals were to use monetary policy to maximize employment, stabilize prices, and moderate interest rates. Subsequent events, most notably the Great Depression of the 1930s and the deep recession of 2008 added to the Fed’s mandate. It now regulates banks and ensures the stability of the financial system. It also provides financial services for member institutions and the US government. Finally it coordinates actions with its foreign equivalents.
Fed members are appointed by the president, approved by congress, and periodically report to the legislature, but the Fed operates independently. It consists of the Federal Reserve Board (FRB), Federal Open Market Committee (FOMC), and twelve regional Federal Reserve Banks. The regional banks were created to avoid concentrating too much power in New York. Even so, the New York branch contains more than half of the system’s assets. Its president is the only branch president with a permanent voting seat on the FOMC.
Today’s Map
Courtesy of the Fed’s own website today’s map shows the twelve regional bank locations and their territories.
Odd as some of the choices may seem now, the locations reflect the political realities of the early 20th century.
Some interesting facts:
- Missouri is the only state with two regional banks (St. Louis & Kansas City).
- The NY branch of the Fed reportedly contains the largest single deposit of gold ~7,700 US tons (7,000 Kg) in the world. Most of it (98%) is foreign owned. The largest portions of US gold reserves are stored in Fort Knox, Denver, and West Point.
- Total Fed assets fluctuate, but are currently just under $4.5 Trillion. Minneapolis has the least assets (~$38B) and NY the most ($2.6T)
- The San Francisco branch manages the non-state territories in the Pacific. The NY branch controls the Caribbean. Washington DC falls under Richmond.
- American $1 & $2 bills include a distinct seal for their issuing branch, with an A for Boston, B for New York, etc., all other denominations feature the same Federal Reserve seal.
As always thanks for reading.
Armen
Thanks so much for this. I read a book many years ago about The New World Order (Illuminati) and how banking came to run everything. Where it began, who financed which wars and how the Americans passed income tax laws with fewer than the required numbers present to do so, in actually fact making it illegal but people are still prosecuted for non payment. I can’t recall much about it or what the book was called.
I’m glad you enjoyed the post. Banking’s not in my blog’s sweet spot of topics.
Your review of the Federal Reserve caused me to pull out a long-ago written paper of the Roman monetary system done for a Money & Banking class. What fun. I even had the gall to end with the following prediction: “Beware, though, of the day when our government is no longer stronger than its enemies. Watch out for the leaders who are swayed by those special interest groups who destroy the rights of the majority. A weakened government will not long be stable and trustworthy. An unstable and untrustworthy government will not long uphold the strong monetary system presently in effect. [Note: This was w2ritten in 1972.]
Who knew?
Thanks for making it through this one. To be quite honest, I’m not expecting this to be one of my more popular posts. But writing, especially in a blog, can sometimes be a selfish thing, and for whatever reason I found this interesting.