Visit the Fed - see lots of money, learn some good stuff

Yesterday I saw Martha Washington's face on a dollar bill.  It was a genuine one dollar bill, not a fake, and not a picture of the currency; it was the real thing.

Also, saw a 10 cent bill and a 25 cent bill, as well as a money vault with a footprint the size of an American football field, but with a ceiling that is much higher than is the height of the field's goal posts.  And I saw first-hand why we are able to go about our daily lives without worrying after the safety of our money deposits that are on account with all those street-side commercial banks that we use constantly.

All of this--and more--is contained in the Los Angeles Branch of the Federal Reserve Bank of San Francisco.  I was fortunate to be able to attend a tour of this Fed location, and to learn about it from one of the great employees who work there.  You can do this, too.

We've talked about the Fed in this space before:  The Fed:  Why was it created? and What is the Fed and who owns it? provide some background on this institution and its functioning.

Tour the Fed

It's better to see it in person.  Take my word for that.  When you have the chance, get together with some friends, co-workers or a school group--typically from 10 to 30 people--and contact a local Fed branch about a free group tour.  Here in Federal Reserve District 12 they do tours at their locations in San Francisco, Los Angeles, Salt Lake City, Seattle and Phoenix.  Similar tours are probably available in the other Districts.  I think that the Federal Reserve is eager to do some educational outreach in conjunction with its centennial in 2013.

Check on the web site that corresponds to the Fed District for your geography; a good place to start is the Federal Reserve's educational web site.  Out here in the West, tour information is available by clicking here for this part of the San Francisco Fed's web site.

My group of 22 toured the Los Angeles Federal Reserve bank branch.  It is a quietly-busy place that is, as you can probably imagine, highly secure.  The location is freeway-close, as we say here in Southern California, but not obvious or ostentatious in its appearance. The people who work there are real nice and very informative.  They are also very careful.

My guess is that there has never been a robbery there -- if you go, don't bother asking any very specific questions of this nature, because they won't give you any specific answers in return.  I tried asking a couple of specific questions, and after some polite but firm "no comment" responses I decided not to press my luck any further by asking about anything that might touch on security issues.

A missing machine gun and shinplasts

Nonetheless, it was notable that at one point in the tour our guide showed us the main police location in the building, at which time she commented on the security preparations by saying "note the machine guns in their brackets on the wall. . .oh, one is missing, I guess it must be in use."

There was no reason to ask about the nature of its use.

All kidding aside, there is lots of important and valuable work that goes on in these Fed locations.  There's a small gallery to augment the educational experience; that's where they display samples of rare and antique American currency, including the Martha Washington dollar bill and the 10 cent and 25 cent bills.  These very small denomination bills were used during the Civil War when minting metal coins was not possible because the only active mint at the time was located in Richmond, the capital of the Confederacy; in any case, the metals were needed for other war-time uses.  These same small bills--they are physically very small, in addition to being of small denomination--became known as "shinplasts" when it was discovered that they could also be used to sometimes cover a soldier's small wounds.

Better than keeping your money in a mattress

The vault, of course, is the most significant part of the whole place.  It's full of cash money.  Lots and lots of greenbacks.  That's where commercial banks store their "excess reserves."  By law and regulation, every American commercial bank must keep a set amount of "reserves" on hand so that they always have the ability to redeem depositors' funds.

(You didn't actually think that the money that you deposited in your bank is really still in that bank, did you?)

With the total deposit amounts being as big as they are these days, there's just no way that a commercial bank branch can keep its required reserves physically on site, so they settle for just enough to maintain their normal daily operations.  The remainder is called "excess" or "excess reserves."  The excess reserves end up in the Fed's vaults, like the one that I saw yesterday in the Los Angeles Fed.

The place is impressive, and a big part of why its there is to maintain confidence in the soundness of the nation's banking system.  From what I saw, the Fed does a good job for us.

Go see it for yourself; let me know if it looks any different to you.