The federal reserve system

We are now prepared to examine the organization and the operations of the federal reserve system and to see how it has corrected the major defects of the old national banking system.

The system utilizes not one but twelve central banks. This avoids the traditional American objection to the financial and possibly the political power of a single central bank, and in view of the vast territorial extent of the United States as contrasted with most European countries, the system of regional central banks does not seem unreasonable.

These twelve great regional banks are owned and in part controlled by their member banks, which comprise all national banks within the respective federal reserve districts together with such state banks and trust companies as desire to join the system and which comply with certain required standards.

Coordination of the policies of all of the banks and a certain amount of control over each bank is in the hands of the Federal Reserve Board at Washington, made up of five members appointed by the President in addition to the Secretary of the Treasury and the Comptroller of the Currency. The boundaries of the different federal reserve districts together with the location of the different federal reserve banks and agencies are shown in the accompanying map [Eds: not reprinted here].