The Organization and Work of the Federal Reserve Board

• Published date: 01 January 1916
• Author: E.M. Patterson
• Date: 01 January 1916
• DOI: 10.1177/000271621606300108
• Subject Matter: Articles

88

THE

ORGANIZATION

AND

WORK

OF

THE

FEDERAL

RESERVE

BOARD

BY

E.

M.

PATTERSON,

PH.D.

Wharton

School

of

Finance

and

Commerce,

University

of

Pennsylvania.

Appreciation

of

the

importance

of

the

Federal

Reserve

Board

is

largely

dependent

upon

an

understanding

of

the

conditions

that

called

it

into

existence.

Many

of

these

facts

are

quite

familiar,

but

a

brief

summary

will

not

be

amiss.

Banks

in

the

United

States

may

be

classified

in

many

ways,

but

the

most

suggestive

in

this

connection

is

their

grouping

as

national

banks,

state

banks,

trust

companies,

savings

banks

and

private

banks.

On

June

30,

1914,

there

were

26,765

of

these

different

kinds

of

institutions.

National

banks

which

receive

their

charters

from

the

federal

government

numbered

7,525.

There

were

14,512

state

banks,

1,564

trust

companies

and

2,100

mutual

and

stock

savings

banks,

all

of

which

are

chartered

by

the

states

or

are

organized

under

state

laws.

Finally

there

were

1,064

private

banks

unincorporated

and

only

to

a

slight

degree

subject

to

any

supervision.

The

work

performed

by

these

institutions

is

of

many

different

kinds

although

all

of

it

may

be

termed

financial.

National

banks

exist

chiefly

to

do

commercial

banking,

i.e.,

to

accept

the

deposits

of

business

men

and

to

make

loans

to

others

who

are

engaged

in

strictly

commercial

lines.

Most

of

their

deposits

are

payable

on

demand

and

accordingly

their

assets

should

be

very

liquid.

State

banks

also

are

primarily

commercial

banks.

Savings

banks

are

of

a

very

different

type.

Claims

against

them

not

being

payable

on

demand,

their

assets

may

safely

be

invested

in

long

time

securities

which

are

not

so

readily

liquidated

as

the

assets

of

commercial

banks,

but

which

do

not

involve

any

considerable

element

of

risk.

Trust

companies,

per

se,

perform

financial

business

as

trustees

for

others

who

lack

the

ability

or

the

desire

to

act

for

themselves.

Private

banks

may

and

do

perform

many

different

kinds

of

business

but

in

the

United

States

they

have

largely

specialized

in

investment

banking,

i.e.,

the

purchase

and

sale

of

securities.