The Federal Reserve Act provided that, as soon as practicable, the Secretary of the Treasury, the Secretary of Agriculture, and the Comptroller of the Currency, acting as "The Reserve Bank Organization Committee," should designate not less than eight or more than twelve cities to be known as Federal reserve cities and divide the continental United States into districts, each to contain only one of such Federal reserve cities. It further provided that the determination of the Organization Committee was not to be subject to review except by the Federal Reserve Board, provided that the districts should "be apportioned with due regard to the convenience and customary course of business."
The Organization Committee held its first meeting December 26, 1913, and announced that it would hold hearings in various important cities on certain fixed dates for the purpose of securing the views of bankers and business men as to the division of the country into districts and the location of the Federal reserve banks. The points upon which the Organization Committee desired to be informed particularly were: "First, geographical convenience, which involves transpodtation facilities and rapid and easy communication with all parts of the district; second, industrial and commercial development and needs of each section, which involves consideration of the general movement of commodities and of business transactions within the districts and the transfer of funds and exchanges of credits arising therefrom; third, the established custom and trend of business as developed by the present system of bank reserves and checking accounts. In laying out the districts and establishing the headquarters for reserve banks every effort will be made to promote business convenience and normal movements of trade and commerce." The Committee announced that political considerations would not be permitted to influence it in determining these important questions.
The Organization Committee held public hearings in eighteen of the leading cities of the country, and gave every reasonable opportunity to all applicant cities to furnish evidence to support their claims as locations for Federal reserve banks. More than 200 cities were heard through their clearing house associations, chambers of commerce, or other representatives; of these, 37 cities asked to be designated as the headquarters of a Federal reserve bank. The preference of each bank as to the location of the Federal reserve bank with which it desired to be connected was ascertained by an independent card ballot addressed to each of the 7,475 national banks which had formally assented to the provisions of the Federal Reserve Act.
On April 2, 1914, the Organization Committee announced its decision to create twelve Federal reserve districts and to locate a Federal reserve bank in each of the following cities: Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, San Francisco. Among the factors which governed the Committee in selecting the districts and cities chosen were the following: first, the ability of the member banks within the district to provide the minimum of $4,000,000 required for a Federal reserve bank on the basis of six per cent of the capital and surplus of member banks within the district; second, the mercantile industrial and financial connections existing in each district, and the relations between the various portions of the district and the city selected for the location of the Federal reserve bank; third, the probable ability of the Federal reserve bank in each district to meet the legitimate demands of business, normal or abnormal, in accordance with the spirit and provisions of the Federal Reserve Act; fourth, the fair and equitable division of the available capital for the Federal reserve banks among the districts created; fifth, the general geographical situation of the district, transportation lines, and the facilities for speedy communication between the Federal reserve bank and all portions of the district; and, sixth, the population, area and prevalent business activities of the district, whether agricultural, manufacturing, mining or commercial, its record of growth and development in the past and its prospects for the future. In determining the districts the Committee endeavored to follow state lines as closely as practicable. The twelve districts and the twelve cities selected for the location of Federal reserve banks are as follows:
Map Showing Federal Reserve Districts.
District No. 1 - The New England States, with Boston as the location of the Federal reserve bank.
District No. 2 - The State of New York, with New York City as the location of the Federal reserve bank.
District No. 3 - New Jersey, Delaware and eastern Pennsylvania. Federal reserve bank at Philadelphia.
District No. 4 - Ohio, western Pennsylvania, four counties in northwestern West Virginia, and the eastern part of Kentucky. Federal reserve bank at Cleveland.
District No. 5 - The District of Columbia, Maryland, Virginia, North Carolina, South Carolina, and all of West Virginia except the four counties included in District No. 4. Federal reserve bank at Richmond.
District No. 6 - Georgia, Florida, Alabama, southeastern Tennessee, southern Mississippi, and southeastern Louisiana. Federal reserve bank at Atlanta.
District No. 7 - Iowa, southern Wisconsin, the southern peninsula of Michigan, northern Illinois, and northern Indiana. Federal reserve bank at Chicago.
District No. 8 - Arkansas, most of Missouri, all of Illinois not included in District No. 7, all of Indiana not included in No. 7, all of Kentucky not included in No. 4, and all of Tennessee and Mississippi not included in No. 6. Federal reserve bank at St. Louis.
District No. 9 - Montana, North Dakota, South Dakota, Minnesota, and all of Wisconsin and Michigan not included in No. 7. Federal reserve bank at Minneapolis.
District No. 10 - Kansas, Nebraska, Colorado, Wyoming, northern Oklahoma, and northern New Mexico. Federal reserve bank at Kansas City.
District No. 11 - Texas, all of New Mexico and Oklahoma not included in No. 10, all of Louisiana not included in No. 6, and the southeastern corner of Arizona. Federal reserve bank at Dallas.
District No. 12 - California, Washington, Oregon, Idaho, Nevada, Utah and most of Arizona. Federal reserve bank at San Francisco.