The Museum & Gold Vault tour of the Federal Reserve Bank of New York is not the most famous activity to do in New York, such as the Statue of Liberty or the MOMA for instance, but it is really worth it! We heard about this activity when we went on our Financial District tours with Pace University. We were very curious to enter the Fed’s building and to see gold vaults.
We have tried for several weeks to book a visit. If you want to do this, you have to be aware that registration for public tours opens 30 days prior to the requested date and up to 25 visitors are allowed per tour. It took us only two weeks to book the tour, which is exceptionally rare! The visit is free and is one-hour long. (Here is the website for more information and to register : https://www.newyorkfed.org/aboutthefed/visiting.html)
You have to arrive early because late arrivals are not accepted and you have to present a recent government–issued photo ID. So, when we arrived at the entry of the Fed, on Maiden Lane, we had to wait for a federal agent to look at our documents. We closely observed the architecture of the building and we were very impressed.
The Directors of the bank wanted an impressive building to inspire public confidence, strength, stability and security. They required to avoid the appearance of extravagance and high costs, which is frequently associated to a modern bank building. The Fed building is gigantic and has 22 floors. Its multi-coloured stone facade (made with limestone and sandstone) breaks up the monotony of the building’s massive exterior and was also an economic solution because unmatched stones in large quantities are cheaper. Thus, the architecture of the Fed sharply contrasts with the neighbouring steel and glass skyscrapers of the Manhattan’s downtown financial district.
The architects, York and Sawyer, were influenced by Italian Renaissance style, especially by the palazzo Vecchio of Florence in Italy.
Rafael Guastavino, the architect of the Tile Arch System, created a self-supporting arches and architectural vaults based on technique that had been widely adopted in Mediterranean architecture. The method interlocks tiles and layers of mortar to form a thin skin with the tiles following the curve of the roof. (He did the same type of tile vaulting in the Oyster Bar in Grand Central Terminal).
Samuel Yellin fabricated over 200 tons of ironwork for the New York Fed.
The Fed is well protected. Indeed, when we entered the Fed, we passed into a metal detector. Everyone will tell you that no pictures are allowed inside. There are cameras everywhere.
The activity started with a guided tour of the museum, explaining what the Fed is and its main missions. The Fed is the banking system of the United States. It is the third banking system of the USA and was created in 1913 in the wake of the 1907 financial panic. The Federal Reserve System is not a central bank but a decentralized system with 12 Reserve Banks located in the main cities throughout the USA. The FOMC (Federal Open Market Committee) is the federal government agency and the centralized component of the Fed. It is located in Washington DC and is made up of 7 governors appointed by the President and confirmed by the Senate, and 12 non-voting regional Reserve Bank presidents. The FOMC sets the monetary policy carried out by the NY Fed through open market operations. The main goals of the Fed are to maximize employment and to maintain stable prices. The function of the Fed can be summed up in that metaphor: “irrigating the farm”. Let’s assume that the US is a farm and the Fed the irrigating system. The role of the Fed is to keep water (money) flowing to irrigate the crops, but not too much to avoid flooding (inflation). The Fed also has other missions. It supervises a wide range of financial institutions and regulates the circulation of money. The Fed provides cash to financial institutions, around $20 million every day. What’s more, about $5 million notes are destroyed every day because they are unfit for further circulation. Finally, the Fed is responsible for gold custody.
Now, let’s take the elevator and get down 80 feet below street level to take a gold vault tour!
You may wonder why we have to get down so much. It is because the vault houses approximately 7000 tons of gold. Thus, the vault needs to be built on a solid bedrock to support this weight.
What’s the purpose of the gold vault? The vault is the place where the Federal Reserve Bank of NY stores gold reserves. The New York Fed is the only one of the 12 Federal Banks to store gold. Surprisingly, the Federal Reserve System and the New York Fed doesn’t own gold here, but acts as a guardian of gold for account holders which include the US government, foreign governments, foreign central banks and other financial institutions. The end of WWII saw a massive inflow of gold to the United States, as it appeared to be a safe place to store gold and it is! Since its construction in 1920, nobody has tried to steal gold from the vault. The vault is highly securitized. It is safeguarded by a 90-ton steel cylinder protecting the only entry to the vault. What’s more, the vault is 24-hour monitored by security cameras. Additionally, the gold is protected by the New York Fed’s robust building security system and the armed Federal Reserve police force.
Let’s see what’s behind those massive steel walls. The vault houses 122 compartments. Each compartment contains gold held by one account holder. At a first sight, all gold bars contained in the compartments look the same, but there are subtle differences. On the face of each bar is imprinted a small seal to identify who casts the bar, when and where, and the purity level of gold.
How is the gold transported? The gold is transported from street level to the vault’s location. Once inside the vault the bars become the responsibility of a control group consisting of three representatives: two members of the New York Fed gold vault staff and one member from the New York Fed internal audit staff. The presence of these three people is necessary whenever the gold is moved or a compartment opened. The gold is weighted and the purity of gold is checked to ensure that these measures match with the inscriptions on the gold bars. Then the gold is moved into one of the compartments, but handling gold is not an easy task, as each bar approximately weights 27 pounds! Thus it is necessary to wear metal shoes if you don’t want your feet to be crushed by gold. What’s more, it is interesting to point out that the New York Fed doesn’t charge account holders for gold storage but only for handling fees.
After the visit, we came back upstairs where we were given a small present: a bar of gold !
Seriously, it was some shredded dollars with no more cash value … We really appreciated our visit. We learnt a lot of things, entered one of the most powerful financial institutions in the world. It was the first time in our lives that we have seen so much gold !
By Flore-Anne Ré and Marine de Blauwe