Civic leaders in Dallas and Houston waited nervously on April 2, 1914 for the decision on which of Texas’ two largest cities had been awarded the new federal bank.
The rash of bank failures caused by the Panic of 1907 underscored the urgent need for effective monitoring and management of the national money supply. To avert future crises, the country required a bank for the banks.
The Federal Reserve System was created by an act of congress in December 1913. The law called for dividing the nation into a dozen different districts each with its own Federal Reserve Bank. Hearings would be held to fix the boundaries of the districts and to select the 12 lucky locations.
Bankers and businessmen across the Lone Star State faced a two-fold challenge. First, they had to join forces in order to convince the powers on the Potomac that Texas qualified for one of the depositories. When that hurdle was cleared, they could make the case for the district bank to be located in their respective towns.
With the chamber of commerce, cotton exchange, The Morning News and the nine local banks taking the initiative, Dallas really got on the stick. At a meeting in January 1914, a seven-member committee was created to coordinate the all-out campaign.
The group quickly wrote a tome extolling the economic virtues of Big D. A leather-bound copy was presented personally to each member of the federal site selection committee prior to its February hearing in Austin.
Secretary of Agriculture David F. Houston, one of several Texans in President Woodrow Wilson’s cabinet, chaired the proceedings. He stunned the audience by suggesting Lone Star interests might be better served by putting the state in a district dominated by an industrial metropolis like Kansas City, Chicago or St. Louis.
The spokesman for the Dallas delegation bristled, “Why not attach Missouri to Texas? Why suggest that the tail wag the dog?”
His point was clearly well-taken. When the dimensions of the Eleventh District were disclosed a few days later, Texas was in the driver’s seat with western Louisiana, eastern New Mexico, a sliver of southern Oklahoma and a chunk of Arizona merely along for the ride.
Next came the bruising three-sided battle for the bank. In reality, the fight was between Houston and Dallas since Fort Worth did not qualify as a serious contender.
Many believed Houston had the inside track because E.M. House, the enigmatic advisor who was the president’s right-hand man, hailed from the Bayou City. But the fact that Dallas was the hometown of Thomas B. Love, the very first Texan to support Woodrow Wilson’s darkhorse candidacy, made it too close to call.
Big D boosters seized every opportunity to sing the praises of their city. Hearing that a member of the selection committee was on his way to Texas by rail, two prominent Dallasites hurried to St. Louis to intercept the train. At the end of the all-night ride, the red-eyed duo had sewed up another vote.
Only a strict sense of decorum kept the businessmen, bankers and politicians from dancing in the streets that April afternoon in 1914. The smallest city awarded a district bank, Dallas had triumphed over its old rival and assured financial preeminence for decades to come.
The losers were not, however, left entirely out in the cold. The honor of serving as the first governor of the federal piggy bank went to a Houstonian, who was succeeded by a resident of Fort Worth.
Hurt feelings were further healed by the establishment of three branches of the national bank. The El Paso branch opened for business in June 1918, followed by Houston in August 1919 and San Antonio eight years later.
Dallasites soon discovered how handy it was to have Uncle Sam’s money so close at hand. A groundless rumor triggered a hysterical run by panic-stricken depositors on the Security National Bank in 1921, a wild stampede that in the not-so-distant past would have forced the doors to close.
But the feds were just a phone call away and immediately responded with an emergency transfusion of cash. Within minutes, an armored truck arrived on the chaotic scene, and guards began toting bags of currency into the beleaguered bank.
The sight of so much money instantly calmed the mob of agitated customers. A federal official announced from the center of the suddenly silent lobby, “There are thirty million more dollars in the Dallas Reserve Bank, and every dollar of it is behind the Security National.”
If there had been a hole in the marble floor, the embarrassed depositors would have gladly jumped in it. They scurried for the exit secure in the knowledge their money was safe.
Read all about Spindletop, Mexia, Roarin’ Ranger and Bloody Borger in “Texas Boomtowns: A History of Blood and Oil.” Order autographed copies from the author at barteehaile.com.