Cotton, Cash and the King – 100 Years of the Memphis Branch
This 15-minute podcast was released Oct. 15, 2018.
Douglas Scarboro, a St. Louis Fed senior vice president who is also the regional executive of its Memphis Branch, talks about how the Branch has changed over the past 100 years—from cotton receipts to cash services to the King himself.
Laura Taylor: Welcome to Timely Topics. I am Laura Taylor, your host for this podcast. With me today is Douglas Scarboro, a Senior Vice President of the Federal Reserve Bank of St. Louis and Regional Executive of the Memphis branch. Douglas, welcome to Timely Topics.
Douglas Scarboro: Oh, thanks a lot for having me.
Taylor: So tell us a little bit about your role and the role of the Memphis branch, and specifically how does that tie into the Federal Reserve System as a whole?
Scarboro: So my role is that of Senior Vice President's title, but then the role of Branch Executive, specifically for the Memphis zone of the Federal Reserve Bank of St. Louis. And the way it ties in is that you have about 25, 26 branches of the regional banks, and they do a number of different things. Since we do have a cash operation, we operate that for area banks not only in our zone—in our district, but also for other districts as well. But then also outreach function with community development, economic education. We also have a number of bank and supervision and regulation employees there, we have a number of community events. So the branch really functions as an extension of the headquarters to be able to reach out to community—with the number of services, products and information as well.
Taylor: You know, something you had mentioned, that I think makes the Memphis branch a little bit unique compared to its Eighth district counterparts in Louisville and Little Rock is that it has a cash operation. That operation was integral during the aftermath of Hurricane Katrina. I was wondering if you could tell us a little bit about that.
Scarboro: Well, one of, the biggest things about helping post-Katrina is about business continuity. And obviously a hurricane of that size, you're going to have an interruption in continuity. So a number of branch employees were able to help because there is a branch there in New Orleans that's part of the Atlanta bank but I still remember there were a number of employees that were actually from New Orleans working in Memphis. So it was obviously a trying time, but one that we were able to help significantly with.
Taylor: That's great. You know, cash is so important to running a stable economy and being able to help out in the aftermath of a natural disaster like that.
Scarboro: Cash, it's extremely important, but especially in an emergency as well, because I think what people don't necessarily think about is that when you have all of your systems down people want to get paid in the week, and how are you going to do that? You're going to need cash and you have a lot of cash that especially with the hurricane that had been under water and damaged, so you're going to need fresh cash. So it becomes extremely important.
Taylor: Douglas, you talked a little bit about the Fed being out in the community, and certainly having that cash operation shows how vital the branch is to the community. But getting beyond that a little bit, why is it important for the Fed to have a relationship with various groups? So whether that be a community group or professional group or even educational groups?
Scarboro: I think it's important because the economy is multifaceted. There's not one way to understand the economy. Also, very true that it changes so much overtime. Now we're starting to have e-commerce be a large part, growing part, of our economy. That wasn't so, say, five, maybe 10 years ago. So being able to have conversations with a multitude of different people allows us to get information from different sources. Your banker's going to be able to give you the best information about the economy. Well, sometimes your teachers that come in for an economic education session are able to give you information that somebody else may not have gotten. You don’t know who people talk to and you don't know how they interact in the economy. And having conversations with them is extremely important for us to understand how things are currently working.
Taylor: So when you're out speaking with regional business leaders, bankers, community leaders or educators, what kind of feedback do you get? What do you think surprises them the most about the Fed?
Scarboro: Usually it's the broad span of our not only capabilities, but our applications in what we do. So everything from handling ACH and Fedwire to handling cash to economic development to research. And then one of the most useful tools I've started talking about within the last couple of years at pretty much every presentation I have, I'll use a chart from FRED, the Federal Reserve Economic Database. For instance, I was just in Lee County, Mississippi. I had a chart that was specifically of an economic indicator from Lee County that was part of my presentations, and then tell them, you know, if you want to be able to get information, even in the middle of a meeting, you can pull out your phone, type in, you know, Lee County, Mississippi, get information, everything from civilian labor force participation rate to unemployment to any level of information, and showing people how easy it is to access the information that we have.
Taylor: Let's talk about monetary policy. What role does the Memphis branch play in monetary policy?
Scarboro: So our role in monetary policy is largely through our Board, and that happens with our Board meetings, each Board member. And they're deliberately diverse, not only based upon race and gender, but also what area of the district they come from, which industry they represent. And we have a really wonderful Board in Memphis. That information then goes into the Beige Book which is used by the Federal Open Markets Committee or FOMC to be able to have genuine information from the zone. Of course it's anonymous, so you're going to have information there that says, “Okay. A car dealer in Memphis says that the purchase of smaller SUVs is going up and the purchase of, you know, more, uh, economical vehicles has, has gone down.” That information is extremely rich, because what it does for monetary policy is in a large scale we're going to understand what the unemployment numbers look like, we're going to know what those labor force participations—you know what inflation looks like. What you need to understand in districts here, the Memphis district, specific to us, what it looks like, what purchasing looks like, what sales are looking like, how people are operating the economy. And that it allows you to be able to make monetary policy with more information and more detailed information.
Taylor: The Memphis branch is commemorating its 100th anniversary this year. It’s centennial. So I'm sure you've been digging into the archives and learning a little bit more about your own branch. So what are some of the interesting things you've discovered?
Scarboro: It's 100 years just recently. September 2, 1918, was the date that we started in Memphis. And it's been interesting, because actually we started on the seasonal basis. And it was not a thought to have a Memphis branch full-time, and it was around the sale of cotton, along Front Street of Memphis, which is now a bustling business street. And actually where City Hall sits and the Memphis branch sits just a few feet away. There was the branch there, so that way when people were selling cotton, we could provide collateral and help them with those transactions.
Fast forward 100 years and we look, you know, totally different. We had a large check facility that was on the fourth floor of our building. Well that is empty now, because—you know, people still write checks, but not to the tune that they used to. So we have total change in how we operate and I imagine that that will continue to be.
Taylor: It's certainly important to be agile and flexible and, like you said, changing from, an exchange for providing cotton receipts to, what you're doing now with community development and monetary policy.
Scarboro: Oh, absolutely. And I would even say a little excitement in, the Memphis branch of the Federal Reserve. So it was probably—in the, uh, '50s. Elvis Presley actually performed in the Memphis branch.
Taylor: No, way.
Scarboro: Yes, yes—so excitement and monetary policy. We do it all.
Taylor: The king himself was there.
Scarboro: That's right.
Taylor: All right. Tell us a little bit about how you’ll be commemorating the centennial this year.
Scarboro: One of the things that I'm really excited about is we'll have a number of sessions where we have people from St. Louis that are coming in. One, where our President Jim Bullard is coming. And actually, when he comes in, he's going to be doing a community session and having, you know, conversation about monetary policy. But then it also is very timely, because it’s a 100 years, and the centennial for the Memphis branch, but also its ten years for, Jim leading the Bank and being the, President of the Federal Reserve Bank of St. Louis.
Taylor: Have you heard from former branch employees during this time?
Scarboro: We have. We have a really robust, employee-base, our retired 25-year employees come back every year. We're going to continue that commemoration this year. I mentioned that we're in our second permanent location. Our first location, is a charter school now. It's an all-male charter school. President Bullard, myself are actually going to meet some of the older employees that used to work there along with some of the students and, have a conversation. Obviously, as a school, it doesn't look like it did when it was a bank. The vault now, I think it's a study hall last time I went over there.
Taylor: Probably hanging out in study hall isn't quite as fun as hanging out in a cash vault, but nonetheless.
Taylor: Fed branches have changed a lot over the last 100 years from purpose to size to involvement. Tell us what you think about the Memphis branch's next 100 years.
Scarboro: I think it probably will look a lot like the past 100 years: a good amount of change. 100 years from now, we could be looking at totally different industries, and a lot of that happens by having those regular conversations, as I said. It's extremely important for bankers and for the Fed to not only look at the current environment, but also almost predicting in looking at what's going to potentially be happening in the future. And those being the harder questions. Because obviously, as you look at things as they currently exist, you can, make some predictions based upon numbers and facts that you have. But trying to predict, and trying to find out what potentially may happen in the future is much more difficult and it's a harder work, but it's the work that we are charged with doing because we want to understand where the economy is going, and helping shape monetary policy in order to be able to fit that.
Taylor: One thing you mentioned was that, we of course have our 12 regional Reserve Banks, but then there's over 20 branches that are associated with each of those Reserve Banks across the country. What makes up the Memphis branch area?
Scarboro: So the Memphis zone is about 72, 73 counties. The majority of the counties, about 41 counties are in northern Mississippi. So that's, you know, everything from Oxford, from the suburb areas of Memphis where you have DeSoto County down to Sunflower County where you have Greenville, Greenwood, Mississippi largely agriculture there. You also have, western Tennessee, which includes Jackson, Tennessee, and then obviously coming over to Memphis. And then you have probably one of the bright spots, across not only the Memphis zone, but the district in Jonesboro, Arkansas. It has had extremely low unemployment. They've done a really good job of having a diverse economy there. And also, you know, kind of taking advantage of being able to have education, higher education systems, healthcare systems where people no longer have to travel out of their community to get those services.
So it looks—you know, the Memphis zone looks very different across the zone. It's good size area, because it is three different states. But it's, always very interesting to be able to find out what makes things work.
Taylor: One thing I'd like to dig a little bit deeper into is some of the outreach work you do with events in the community. And one example of that is you're working closely with the Center for Household Financial Stability, which is here at the St. Louis Fed. And you're hosting an event that is centered around the demographics of wealth. I was wondering if you could tell us a little bit more about that event and what you hope to get out of that.
Scarboro: Oh, absolutely. So that's focused on the economic realities facing black men and boys. And we have the Demographics of Wealth, a wonderful study I've referenced many times where it looks over a period of almost 20 years, about 40,000 different families, and then breaks down what wealth looks like based upon race, age and education. And this conversation's focusing mainly on race, but then also bringing in information from a recent study that was done by Raj Chetty at Stanford. Looking specifically at black men and black boys, their economic reality.
It's more likely that a black boy that grows up rich, by all the different factors we look at, they're more likely to end up, middle class or even in poverty. They're more likely to end up there than they are to end up rich. So it's obviously, you know, very timely conversation. One that, is good to be able to have with a lot of data, a lot of information.
Having grown up with a grandfather who was a farmer, my dad who was very focused on leaving the farm, went and became a dentist. So his economic realities were much different from his father's. And then as I looked at my career and I look at my sons and think about, what my economic reality is and what theirs are, it is not as easy as some people would think to relive the dream or the lifestyle that your parents have. You think it would be much more set in stone, and it's not.
Taylor: Do you think it's an important conversation to be having there in Memphis?
Scarboro: Oh, I think so. Memphis is a majority-minority city; the majority of the population are minorities. So in Memphis, black or African American. It becomes extremely important because you think about the history of our city. It was re-charted, the effort was led by a wealthy black man at the time. And you think about now, less than 1 percent of the business receipts are done with black or African American companies in Memphis. So I do think it's a timely conversation, especially as you have so many people in the city that want to have and are willing to work towards different economic realities, and see why it's not happening, and then ultimately what can be done in order to change those realities.
Taylor: Last question. Putting you on the spot, Douglas.
Scarboro: All right.
Taylor: What's your favorite barbecue place in Memphis?
Scarboro: Oh, so I will take the somewhat easy way out. So best barbecue is my backyard. I can throw down.
Scarboro: I can cook some great ribs.
Taylor: All right.
Scarboro: We have a lot of really good barbecue.
Taylor: All right. To learn more about the Memphis branch of the St. Louis Fed, go to our website at stlouisfed.org and click on Memphis at the top of the page.
Economists and other experts from the St. Louis Fed talk about their research, economics-related topics in the news and issues specifically related to the Fed. Views expressed are not necessarily those of the Federal Reserve Bank of St. Louis or of the Federal Reserve System.