IN THE DAYS FOLLOWING the attacks on the World Trade Center, I was grateful to learn that my fellow attendees at the still-in-progress National Association for Business Economics annual meeting, being held at the Marriott World Trade Center Hotel, had all escaped with their lives.

My consolation was tempered by the same feelings that we Americans and all civilized people across the planet experienced watching events unfold on that dreadful day: shock, disgust, sadness and unimaginable horror. My other emotion was great uncertainty about what the attacks might mean for the St. Louis Fed, the Federal Reserve System and the world economy.

Here at the St. Louis Fed, we thought of the well-being of our Eighth District colleagues who were working at the New York Fed, just a few blocks away from the World Trade Center, on September 11. People like Hillary Debenport, Kim Nelson, Bill Emmons and Ellen Eubank. Thankfully, all of them would return home safely.

President Bush would tell the press that despite the emotional toll the events were taking on him, "I have a job to do, and I intend to do it." From those first harrowing moments, the employees at the St. Louis Fed adopted that same resolute attitude. Fear, outrage and stress made our jobs more difficult than ever. But we had a job to do, and we did it. Our job--our responsibility--was to help ensure the nation's continued confidence in the integrity of the U.S. payments system. We acted decisively in a number of ways:

• Our Cash Department processed its usual daily volumes of cash, handled all special requests for cash from financial institutions and made clear to them that we were prepared to provide emergency shipments if necessary.
  
• Our Credit Discount staff stayed on the job long after the normal closing hour and fulfilled all requests for additional liquidity from District financial institutions.
  
• Our Check Department processed high volumes and negotiated alternative transportation arrangements to ship checks to other Reserve districts in the absence of air transport.
  
• Our electronic services operated without a hitch and accommodated all requests for deadline extensions.
  
• Our Treasury staff met all processing deadlines for the U.S. Treasury's tax collection and investment services.
  

The St. Louis Fed and the entire Federal Reserve System played a significant, but certainly not the only, role in ensuring the stability of our economy. In this annual report, we examine four underpinnings of our economic system that, together, helped our nation absorb the shocks of September 11: competitive markets, a robust financial system, a strong government fiscal position and monetary stability.

We make the point that the United States has been able to move forward thanks to the strongest, most versatile and most balanced economy of any nation on Earth. The ability to move forward, however, should not lead us to minimize the impact the attacks have had on our lives in so many ways.

Beyond the tragic loss of life, our economy--as well as our national psyche--took a blow. But as the following essay shows, the deep foundations upon which our economy stands have allowed us to remain firmly on our feet as we clean up our demolished buildings, repair our damaged institutions and meet the threats we face.

St. Louis Fed President and CEO William Poole

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