Bankers' Preferences and Locating Federal Reserve Bank Locations

Abstract

This essay examines the relationship between the locations bankers preferred to locate Federal Reserve banks and the locations selected by the committee charged with organizing the Federal Reserve System. Immediately following the decision locating the 12 Federal Reserve banks, citizens and organizations alleged that the responsible political committee behaved with partisanship and favoritism, criticisms repeated to the present time. I examine the committee’s selections using a previously unreported February 1914 document prepared by the committee’s secretary. This document records the National bankers’ preferred reserve bank location for each county in eachstate. The April 1914 decisions reflect 11 of 12 cities recommended in Elliott’s report. I conclude that the evidence suggests the committee selected Federal Reserve bank locations in the public interest rather than favoritism, polities or ignorance.