The heavy demands made by the war upon the services of the federal reserve banks led to a disproportionate growth of certain functions and departments, while the general growth of these banks since 1914 had been so great as to require a complete reorganization. The Federal Reserve Bank of New York devised a scheme of organization which it believed would facilitate the work of that bank and this reorganization (see Figure 6) was put into operation in September, 1919. It has as its aim the separation of the functions of operation and organization, and it places the responsibility for conducting each department upon its own administrative officer, requiring him to transact completely the business falling within his province. As every activity is definitely allocated to a specific department, responsibility is thus more specifically fixed. One of the most striking features of the change is the abolition of the office of cashier, through whose hands in the old organization all operating matters, in the last analysis, had to pass.
Figure 5. Proposed Type Of Organization For The Federal Reserve Banks, 1918
The officers of the New York bank are grouped as follows:
1. The junior officers are the managers of the various departments, their position corresponding to the former position of assistant cashier. Each of these managers is responsible for the duties of operation or organization, as the case may be, of his department. He has working under him subordinates authorized to sign within specified limitations, as well as a sufficient staff to complete all the business of his department.
2. The senior officers are called "controllers." To each controller is assigned the supervision of one or more of the important functions of the bank, and each is responsible for the development of the policies relating thereto and for supervision of the departments charged with carrying out such functions. The controllers are not in charge of the operation of the departments, but supervise and control their policies; however, with the present size of the bank, a controller may act as a department manager, and a deputy governor as controller.
3. The general officers include the governor, the deputy governors, and the chairman of the board of directors, corresponding to the president, vice-presidents, and chairman of the board of directors of other banks. These general officers form the managing committee of the bank, and certain controllers from time to time are invited to confer with this committee at its daily meetings. The members of the committee are concerned with general policies of administration and not with specific functions or departments of the bank.
Figure 6. Official Organization Of The Federal Reserve Banks Of New York
Another aim of reorganization was to center responsibility upon the junior and senior officers, thus affording them more opportunities for promotion than existed under the old form of organization with its one cashiership to which office all assistant cashiers aspired. The plan of fixing responsibility has been extended to the divisions of the departments, each of which is put in charge of a chief, and many of the larger divisions are divided into sections, each in charge of a supervisor.
As this functional system of management seems to be successful, it will probably be adopted by the other federal reserve banks.