Federal Reserve Bank of Kansas City Revenue and Competitors

Between 1863 and 1914, the United States saw a series of banking panics - in 1873, 1884, 1890, 1893, and 1907. It was the last panic - occurring in a time of general prosperity - that led to the creation of the Federal Reserve. President Woodrow Wilson signed the Federal Reserve Act shortly after 6 p.m. on December 23, 1913. He and his wife left immediately afterward for a Gulf Coast vacation, having had their bags packed since mid-December in anticipation of final action on the bill. When the 12 Federal Reserve Banks opened on November 16, 1914, none had permanent quarters. In most of the Banks a clerk or two oversaw the small trickle of business. Twice a year the Board of Governors of the Federal Reserve System submits a written report to Congress on the state of the economy and the course of monetary policy, and the Federal Reserve Chairman often is called to consult with Congress on this report. Only one member of the Board of Governors can be selected from any one of the 12 Federal Reserve Districts. As a result, the governors represent various regions of the country. Alan Greenspan became Chairman of the Federal Reserve Board of Governors in 1987. He was originally appointed by President Reagan and represents the New York Federal Reserve District. Mr. Greenspan was appointed to his fourth consecutive four-year term in 2000. Before the Fed, check clearing was an antiquated, costly process. One check drawn on a bank in Sag Harbor, Long Island, and deposited in Hoboken, N.J., 93 miles away, traveled for 10 days, covered 1,223 miles, and passed through 10 banks before it cleared. Although banks are operated for profit and bankers are free to make many decisions in their daily operations, banking has commonly been treated as a matter of public interest. Thus, banking laws and regulations have been extended to many aspects of banking. The Fed often finds itself walking a tight rope between different sets of social costs and priorities. To do its job successfully, the Fed must remain focused on long-run national interests and avoid being thrown off balance by short-run political concerns. There are 12 Federal Reserve Banks whose head offices are located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Together with the Board of Governors in Washington D.C., they form the nation's central bank.