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A century before Amazon H2Q, Denver and other cities battled for coveted Federal Reserve regional bank

A century before Amazon created a national frenzy to host its second headquarters, U.S. cities battled to claim one of a dozen regional banks that would make up the newly formed Federal Reserve system.

Under banker Gordon Jones, Denver made its case for hosting a Federal Reserve Bank serving the Rocky Mountain region. But the state, along with Wyoming and northern New Mexico, were tacked onto the sprawling 10th District.

Kansas City, Mo., which had about 70,000 more residents, won that bidding war, in part because of its better transportation links.

“It was very much like Amazon HQ2,” said Alison Felix, an economist and the executive in charge of the Denver branch of the Federal Reserve Bank of Kansas City. “But Colorado was different then.”

The state had only 512 banks in 1913, when the Federal Reserve Act passed, half as many as Nebraska. By 1918, its population was just over 900,000, close to the number who now live in just Denver and Douglas counties.

Denver, along with Omaha and Oklahoma City, did win branch locations under the Federal Reserve Bank of Kansas City, one of 12 established around the country.

That branch, which has occupied three different downtown locations, celebrates its 100th year on Sunday.

The Fed’s Denver branch, at 1020 16th St., continues to serve several roles. Economists and researchers housed there report back to Kansas City and Washington, D.C., on the state of the economy in Colorado, Wyoming and New Mexico.

Those reports, which go into a publication called the Beige Book, assist members of the Federal Reserve Open Market Committee in setting monetary policy, including the lowering and raising of interest rates.

The Denver branch also hosts bank regulators who keep an eye on the health of the financial institutions in the region. Examiners were especially active in the oil and gas bust of the 1980s and again after the housing crash late last decade.

The highly secure facility is also the storehouse for new currency that will circulate in the region and a “money morgue” where damaged and worn-out bills go to die.

About $2.5 million to $3 million of currency is destroyed each day, said Denver branch spokeswoman Stacee Martin. Check processing, another function once handled at the bank, has gone away as debit and credit cards are used for more transactions.

Shootout at the Mint

The Federal Reserve opened up the doors of its Denver branch on Jan. 14, 1918, in the Interstate Trust Building at 16th and Lawrence streets.

The building was difficult to heat and too small. The lack of space required storing currency at member banks or the nearby U.S. Mint and ferrying the money with an armored truck, according to a history written by Tim Todd, a historian with the Federal Reserve Bank of Kansas City.

That arrangement was less than ideal, and on Dec. 18, 1922, several gunmen robbed the Federal Reserve truck while it was parked outside the U.S. Mint, setting off a gun battle unlike any Denver had ever seen.

Some press reports counted more than 55 shooters, including 50 guards from the Mint, exchanging bullets. Federal Reserve security guard Charles Linton died in the shootout, and the robbers got away with $200,000 in $5 bills.

Businesses and banks responded by refusing to accept $5 bills in Denver. A month later, the body of one of the alleged robbers, Nick Trainor, was found riddled with bullets and frozen in the getaway vehicle at a garage at 1631 Gilpin St. No one was ever arrested for the crime.

Two other homes

The robbery pushed the Fed to construct its own building at 1111 17th St., but by the 1960s, that building was outdated, and in 1968 a new five-story building at 16th and Curtis streets would serve as the branch’s home.

That location previously housed the Tabor Grand Opera House, which local historian Tom Noel describes as “the finest building we’ve ever seen in Denver.”

An irony of locating on that site is that Horace Tabor, the silver mining baron who built the opera house, was financially ruined in the financial panic of 1893 after a big drop in silver prices ushered in a depression in Denver.

The Federal Reserve was created, in part, to smooth out the booms and busts in the economy and eliminate the panics that destroyed Tabor financially.

The impulse of the time was to raze the beautiful brick buildings and replace them with modern architecture. And while the Fed didn’t tear down the opera house — it was converted to a movie theater that was popular for decades, but eventually it declined and was destroyed in 1964 — it put up something that was architecturally much less majestic and more functional.

“When we moved, the whole area got remade,” said Todd.

For decades, the Federal Reserve kept a low profile, literally, on the 16th Street Mall. Of the building’s five stories, two are underground, and the facility, full of currency, didn’t want to advertise what it was about.

Abundant security cameras, numerous guards, a gated parking lot and pointy metal fences along the mall for years offered a less-than-welcoming presence.

But in 2011, the branch opened its Money Museum and opened its door to the public. The exhibit drew about 60,000 visitors last year, making it the top money museum of several in the Federal Reserve system, Martin said.

A different city

Construction on the Denver Branch of ...

Photo courtesy of Federal Reserve Bank of Kansas City, Denver Branch

Construction on the Denver Branch of the Kansas City Federal Reserve Bank Between 15th and 16th and Curtis and Arapahoe Streets in 1967.

Denver now has a larger population and more dynamic economy than its former rival, Kansas City. If the Federal Reserve Banks were being set up today, the competition would look much different.

Colorado’s population has increased more than fivefold between 1918 and 2016, which translates into a growth rate of 1.9 percent a year, Felix said. New Mexico, which was outpacing Colorado through 1960, has fallen behind, growing only 1.7 percent.

Wyoming, by contrast, has matched the U.S. population growth rate of 1.2 percent. But its gains have come with much more volatility, or big swings of people moving in and moving out.

In 1920, Kansas City ranked as the country’s 19th-largest city in population, while Denver ranked around 25th. But Denver now holds the 19th spot, while Kansas City is closer to 37th, not too far ahead of Colorado Springs.

But don’t expect a redo that moves Denver from branch to district headquarters. Todd said Kansas City still serves the purposes required under the 1913 act, even if it no longer is the largest city in the district it oversees.

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