David Hammes - Professor of Economics, University of Hawaii-Hilo
Published September 1, 2001 | September 2001 issue
Willis chose Philadelphia over the other cities (Washington, D.C., also being mentioned) because of the flow of banking business to the north and east, because Philadelphia was "far superior" to the others in business importance and because it already had important banking connections that should not be disturbed.
Willis in his 1914 report explains his selection: "From the standpoint of ... location and present predominance in business, Pittsburgh undoubtedly has the advantage of the other places. Under ordinary conditions it would seem to be ... the proper site for the reserve bank of the district. In this instance it is, however, believed that the ordinary considerations should not govern, and that Pittsburgh should not be selected. ... Pittsburgh has not in the past shown itself to be a very satisfactory banking headquarters. The fact that a bank has presumably been located in Philadelphia, Pa., is also a consideration against the designation of Pittsburgh, although not a very important one. Of the two remaining cities, it is believed that Cleveland is decidedly preferable, while inasmuch as Cleveland is the distributing point for the principal commerce of the Great Lakes it may well be considered in competition with Pittsburgh even if there were no other considerations to be taken into account."
Yet, why Kansas City, Mo., in preference to Kansas City, Kan.? The preponderance and prominence of Democratic politicians from Missouri seem to provide all the explanation needed (see endnote 1). However, there are institutional explanations as well. Flooding of an older terminal building and increasing passenger business led to the building of a large passenger terminal in Kansas City, Mo., which was nearing completion in 1913. This terminal was to be used by "all of the lines entering Kansas City, Kansas, and Rosedale," wrote Perl Morgan in 1911. In short, all passenger trains going to the Kansas City area (whether Kansas or Missouri) were going to use this new Union Depot.
Reflecting this (institutional/technical) reality, Kansas Gov. Hodges testified on Jan. 23, 1914, in Kansas City, Mo., before the committee: "We hope this bank will be established on the Kansas side of the line. I would not be a Kansan if I did not hope for that, but if it is not, then we want to join these good friends over in Missouri, because three-fourths of them are Kansans, and establish it on this [Missouri] side of the line."