Worcester Business Journal

54 W o r c e s t e r 3 0 0 : C i t y o f I n n o v a t o r s 1922-2021 Upending the banking hierarchy Two Worcester bankers who shook the system M oney made in Worcester stayed in Worcester for the town/city's first two centuries. Locally based banks were the bulwark of its economy. But Worcester's place in the world began widening in the second decade of the century and beyond – like it or not. A president of the Worcester County Institution for Savings in 1908 and then as president of the Worcester National Bank in 1913, Alfred Aiken would accept appointment as the first governor of the newly established Federal Reserve Bank of Boston, holding that post from 1914 to 1917. Aiken appears to have been instrumental in implementing the Federal Reserve's discount rate policy, which established a universal borrowing rate from the Federal Reserve. is addressed some of the problems of the previous century that had directly affected the Worcester National Bank, where he'd served as president in 1913. Sixty years later, another Worcester bank leader would bring on an innovation that is now a part of everyday life. is was Ronald Haselton, then- president of Consumers Savings Bank. In 1972 he created the first Negotiable Order of Withdrawal, or NOW accounts, from which depositors could withdraw money from their savings accounts while the accounts continued to pay interest (During that era, interest rates were just above 5%). e bank made significant investments in an IBM system that would provide depositors with computerized statements of their account activity, which phased out the passbook system that had been a longstanding staple. Commercial bankers, prohibited from making similar offerings, saw the NOW account as a threat to their depositor base. Haselton prevailed in the Massachusetts Supreme Judicial Court in 1972 to establish the legitimacy of NOW Accounts. Two years later, Congress gave Massachusetts and New Hampshire banks approval to offer NOW accounts, and two years aer that, NOW Accounts would be permitted across New England; in 1980 the concept went nationwide. — Christina P. O'Neill IMAGE | ADOBE STOCK.COM Commercial bankers saw the NOW account as a threat. But with legal legitimacy established in Massachusetts in 1972, the concept would go national by 1980.

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