To put the federal reserve system into operation the Reserve Bank Organization Committee was constituted, consisting of the Secretary of the Treasury, the Secretary of Agriculture, and the Comptroller of the Currency. This committee made a trip through the United States for the purpose of hearing arguments and assembling data to determine the number and boundaries of the districts, as well as the federal reserve cities. Two provisions of the law were: that the number of districts be not less than eight and not more than twelve, and that the districts conform to the convenience and customary course of business of the country.

The aim of the committee was to create a certain degree of equality or strength among the districts rather than to allow the New York district to overshadow weaker districts. As equality is impossible unless each district is laid out so that its area is inversely proportional to the number and strength of its banks, and as the minimum capitalization of a reserve bank was fixed by the act at $4,000,000, and was to be subscribed primarily on the basis of 6 per cent of the capital and surplus of the member banks, therefore in the South and West, where banks are small and few in number, the district had to embrace a large territory. The committee laid out the eastern districts on lines that will to a large extent probably prove permanent, but the western and southern districts will probably be rearranged as the country develops. In hearing arguments and assembling data the committee discovered an intense local jealousy among the candidate cities. To appease this jealousy and to effect as great local control as possible, the committee decided to establish twelve districts, as nearly as possible in their final form, so as to allay efforts to divide and rearrange them later.

The act provides that "the districts thus created (that is, by the Organization Committee) may be readjusted and new districts may from time to time be created by the Federal Reserve Board, not to exceed twelve in all." As the Organization Committee fixed twelve districts at the beginning, the board has no power to create new districts, but only to readjust boundaries of those already existing. In making such readjustments the board has transferred certain banks in Louisiana from the Dallas district to the Atlanta district, and certain banks in the new county Humphreys from the Atlanta to the St. Louis district, and in Fairfield County, Connecticut, from the Boston to the New York district. Appeals for transfer by other areas have been denied by the board, and it is probable that the districts are now quite permanently fixed. Appeals by Pittsburgh to be made a federal reserve city instead of Cleveland, and by Baltimore to supersede Philadelphia, and by bankers and others to abolish certain districts, have been denied by the board on the ground that it has no power to change the federal reserve cities or to abolish any of the districts.

The districts are numbered and each reserve bank is named after the city in which it is situated, as the Federal Reserve Bank of Boston, and the like.

The boundaries of the districts and the federal reserve cities are given on Figure 4.