Inside the Fed: How Charlotte secured its Federal Reserve branch
Plus: The Charlotte Observer cuts back to 3 days a week in print
Good morning! Today is Friday, July 12, 2024. You’re reading The Charlotte Ledger, an e-newsletter with local business-y news and insights for Charlotte, N.C.
Today’s Ledger is sponsored by Carnegie Private Wealth. At Carnegie Private Wealth, we exist to make our clients’ lives easier. We provide planning and guidance to produce more clarity, less stress, and greater confidence around complex financial and investment decisions.
Editor’s note: In this special series, Mark Washburn provides an exclusive look inside the Charlotte branch of the Federal Reserve Bank, uncovering its vital role in Carolinas commerce. Each segment offers a unique glimpse into the unseen engine driving our local economy. Our regular Ledger newsletters will return Monday.
Strategic moves and persuasive efforts: Here’s how the Federal Reserve branch landed in Charlotte, boosting the city's financial prominence.
by Mark Washburn
Congress established the Federal Reserve System to strengthen stability in the nation’s banking system in 1913. Until then, financial panics, runs on banks and bank failures occurred sporadically, often blamed on the nation’s inelastic currency supply.
Twelve cities across the nation got Federal Reserve banks to serve their regions. In the mid-Atlantic, Richmond landed the bank that would serve the Carolinas, Virginia, Maryland, District of Columbia and most of West Virginia.
In 1918, the Richmond district added a branch in Baltimore and seven years later started looking for another location in the Carolinas.
Four cities were under serious consideration: Greensboro, Charlotte, Columbia and Greenville, S.C.
On Jan. 15, 1926, Charlotte’s delegation made its case for the branch, citing its growing financial empire with 16 banks in the city holding overall deposits of $38 million. Plus, Charlotte had east-west and north-south rail connections, allowing checks and cash to speedily reach outposts in the region.
But Greensboro and its suburbs had the edge in population in the state, followed closely by greater Charlotte (about 130,000 vs. 125,000).
Charlotte countered that it was midway between the Richmond and Atlanta banks and on the edge of the two Carolinas. Location, location, location.
When Charlotte was chosen, Greensboro boosters protested immediately. Greensboro’s Chamber of Commerce wired U.S. Sen. Furnifold McLendel Simmons, D-N.C., asking him to use his influence to get the Federal Reserve to pause the decision and allow them to make another presentation.
Sorry, Simmons replied. Decision made.
Charlotte’s business world celebrated. (And turned its ambitions to landing the U.S. Air Mail contract, then held by Greensboro. And soon Charlotte had it, too.)
Headlines on Feb. 27, 1927, trumpet Charlotte's acquisition of a branch of the Federal Reserve. (Charlotte Observer archives)
W.H. Twitty, vice president of Charlotte National Bank, praised the new Fed branch with a vision focused deep into the future: “Charlotte will be placed in the class of the more important financial centers of the country.”
Charlotte’s Fed campaign was wrangled by Word H. Wood, founder and president of American Trust Co. — forerunner of today’s Bank of America — and the city’s most-forgotten benefactor. He had agitated for six years for the Fed to put a branch in Charlotte.
Charlotte’s Fed opened on Dec. 1, 1927, on the top floor of the First National Bank Building, the city’s new 20-story skyscraper, the tallest structure in the Carolinas. (Unlike many of Charlotte’s historic buildings, this one still stands: It’s known today as the Tryon Plaza building, on The Square at Trade and Tryon streets.) A vault was built deep in the cellar.
First National Bank building, first home to Charlotte's Fed branch. (Robinson-Spangler Carolina Room, Charlotte Mecklenburg Library)
Immediately, check-clearing delays in the region were cut from three days to two — a huge impact in a business where time is money.
On Jan. 19, 1928, a gala celebration dinner was held at the Hotel Charlotte attended by 650 bankers and business leaders and Treasury Secretary Andrew Mellon.
To prolonged applause, Mellon told the elegant ensemble that the Federal Reserve System, begun under Democrats and still prospering under Republicans, had eliminated the danger of panics by providing an elastic credit system.
In his book “Banktown — The Rise and Struggles of Charlotte’s Big Banks,” author Rick Rothacker noted that Mellon’s speech predated the 1929 stock market crash by less than two years.
Fed’s Charlotte expansion
By 1942, the Fed had outgrown its old home and built its own building at 401 S. Tryon. An annex was added in 1957.
Fed's Charlotte Branch at 401 S. Tryon, circa 1940s. Today, the site is home to Three Wells Fargo Center, a 32-story office building. (Robinson Spangler Carolina Room, Charlotte Mecklenburg Library)
And still it grew. Construction began in 1986 on the Fed’s new branch in the 500 block of East Trade Street, in the city’s justice and government district.
With a well-fortified basement and vault, and clad with N.C. granite, it stood but four stories tall. Designed by Charlotte’s Odell Associates, it took 1,700 tons of steel and 7,000 cubic yards of concrete to complete at a cost of about $35 million.
Sleek but understated exterior of the Charlotte Fed, which occupies the 500 block of East Trade Street. (Photo by Mark Washburn)
With 265,000 square feet of interior space, it was more than double the size of the then-existing branch.
When it opened, Fed Chairman Alan Greenspan came for the ceremony, public not invited.
Mark Washburn is a retired Charlotte Observer writer and columnist who lives in Davidson. Reach him at mwashburn76@gmail.com.
COMING SATURDAY: Charlotte's fortress of finance brings benefits
Previously:
“Inside the Fed: Non-stop machinery of Carolinas’ cash” (Monday)
“Inside the Fed: Follow the money” (Wednesday)
Observer to cut back to three days a week in print and to deliver by mail, editor says
The Charlotte Observer plans to scale back its print newspaper to three days a week, down from the current six days a week, its editor said in a note to readers on Friday — a move she described as a “bold step forward” for the publication.
Editor Rana Cash wrote that the reduction in the printed newspaper will allow The Observer to transition to a “digital-forward newsroom that meets the expectations and demands of today’s news consumers.”
“In an age in which print has become cost-prohibitive and is limited by early deadlines, The Observer must transform its business to thrive in 2024 and beyond, while continuing to prioritize essential and distinctive content,” Cash wrote.
She added that beginning Sept. 16, the paper will arrive by U.S. mail on Wednesdays, Fridays and Saturdays.
‘Seismic’ move, ‘broken’ tradition: In a post on X (formerly Twitter) on Friday morning, former Greensboro News & Record editor John Robinson called the news of the cutback “seismic for NC papers” and wondered if others would follow. Former Observer columnist Tommy Tomlinson wrote: “Inevitable, and probably should’ve happened sooner, but still … a long tradition, broken.”
In recent years, The Observer has been de-emphasizing its print edition, as readers increasingly migrate to digital options. The shift has meant that the printed newspaper, which was long considered to be a wrap-up of the previous day’s top stories, has been increasingly unable to include developing news from the previous day. For instance, the April 29 killing of four law enforcement officers in east Charlotte, which happened on a Monday afternoon, was not included in that Tuesday’s printed newspaper because of deadlines that are now as early as 2 p.m. the previous day.
The Charlotte Observer is owned by Sacramento, Calif.-based McClatchy Co., which filed for and emerged from bankruptcy protection in 2020. McClatchy is owned by New Jersey-based hedge fund Chatham Asset Management.
Friday’s announcement is the latest in a long line of cutbacks at what has traditionally been Charlotte’s largest and most influential media outlet — although the reductions are typically described as enhancements. The size of The Observer’s newsroom has dropped by 80% in the last 15 years, to fewer than 40 journalists. It reduced its print newspaper to six days a week, down from seven days, in 2019.
At the same time, the media outlet says it has enhanced its online delivery of news. Last month, it unveiled a digital reader called “Edition.”
No mention of refunds, job cuts: Cash’s announcement on Friday did not address if The Observer plans to reduce its price or offer refunds to print customers. The paper’s terms of service say: “We reserve the right to substitute the delivery and format of your print subscription with an eEdition at any time.” It also did not address any potential job cuts, such as those to delivery drivers or others involved in print circulation, in connection with the move.
In her note, Cash praised the work of the outlet’s journalists, citing the “breadth and depth” of the outlet’s work in areas such as the arts, sports and local politics.
“These changes are necessary for sustainability,” Cash wrote. “The Charlotte Observer has been and will continue to be here. With these changes, we are stronger today and positioned to remain so because we’ve adapted to the habits of our readers.” —TM
Related Ledger articles:
“The future of Charlotte media is digital and niche” (Nov. 15, 2019)
“Observer tops list of most-complained-about Charlotte businesses” (May 23, 2022)
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