Business Adventures: Twelve Classic Tales from the World of Wall Street

by John Brooks

The Federal Reserve Bank of New York is set apart from the other banks of Wall Street in purpose and function as well as in appearance. As by far the largest and most important of the twelve regional Federal Reserve Banks—which, together with the Federal Reserve Board in Washington and the sixty-two hundred commercial banks that are members, make up the Federal Reserve System—it is the chief operating arm of the United States’ central-banking institution. Most other countries have only one central bank—the Bank of England, the Bank of France, and so on—rather than a network of such banks, but the central banks of all countries have the same dual purpose: to keep the national currency in a healthy state by regulating its supply, partly through the degree of ease or difficulty with which it may be borrowed, and, when necessary, to defend its value in relation to that of other national currencies. To accomplish the first objective, the New York bank coöperates with its parent board and its eleven brother banks in periodically adjusting a number of monetary throttles, of which the most visible (although not necessarily the most important) is the rate of interest at which it lends money to other banks. As to the second objective, by virtue of tradition and of its situation in the nation’s and the world’s greatest financial center, the Federal Reserve Bank of New York is the sole agent of the Federal Reserve System and of the United States Treasury in dealings with other countri...