When President Woodrow Wilson signed the Federal Reserve Act (Act) (Off-site) into law on Dec. 23, 1913 and established the Federal Reserve, the Act also created a Reserve Bank Organization Committee (RBOC) (Off-site). The RBOC was tasked with determining the locations and boundaries of eight to 12 Federal Reserve districts and banks that would operate independently and form the core of the Reserve System (Off-site). This structure ensures that the reserves and decisions of the Fed are distributed across the country and that the conditions of communities from every part of the nation are considered when the Fed sets monetary policy (Off-site).
The Act required that the RBOC divide the country into districts. Each district was to contain one bank to serve the region. For six weeks, the RBOC traveled to public hearings and polled national banks across the country to determine the final district boundaries and locations of the Reserve Banks. Ultimately, 37 cities applied for the chance to have a Reserve Bank.
The RBOC released the list of the finalist cities and districts on April 2, 1914. The committee also shared its selection criteria for the Reserve Bank cities:
- Ability for member banks to access minimum capital requirements
- Proximity to pre-existing mercantile, industrial and financial networks
- Even distribution of capital among districts
- Favorable geography and transportation routes
- Record of growth and development in population and key business areas
Additionally, the RBOC considered that the National Banking Act of 1863 had already designated New York, Chicago and St. Louis as central reserve cities. The 12 cities and their districts (Off-site) selected were:
- Boston, Massachusetts (District 1)
- New York, New York (District 2)
- Philadelphia, Pennsylvania (District 3)
- Cleveland, Ohio (District 4)
- Richmond, Virginia (District 5)
- Atlanta, Georgia (District 6)
- Chicago, Illinois (District 7)
- St. Louis, Missouri (District 8)
- Minneapolis, Minnesota (District 9)
- Kansas City, Missouri (District 10)
- Dallas, Texas (District 11)
- San Francisco, California (District 12)
Upon the announcement, some cities disagreed with the RBOC, believing they should have received a Reserve Bank. Despite the criticism, all 12 Federal Reserve Banks opened their doors (Off-site) on Nov. 16, 1914 to begin serving the financial system and economy of the United States. Banks began operations immediately, providing financial services to the banks of their regions and collecting regional data to inform monetary policy.
Today, the original 12 banks have expanded to include 24 branches across the nation, though the original districts have changed only slightly since their creation in 1914.
To learn more about the origins of the Federal Reserve, visit FederalReserveHistory.org (Off-site).
