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
According to Willis in 1914: "... the geographical and
transportation situation does not point to the selection of
a given city with the same degree of clearness and certainty
as in some others. The points that have presented claims are
Detroit, Cincinnati, Columbus, and Louisville. It is believed
that both in point of commercial importance and relative ease
of access, Cincinnati is to be preferred to the other three
cities as the location of the headquarters bank."
A tough call between Minneapolis and St. Paul, Willis
concluding: "A careful reading and analysis of the testimony
... appears to indicate that of the two cities Minneapolis
is perhaps the better situated and more convenient. From the
general broad standpoint there is no general choice between
the two ..."
- Portland, Ore.
Portland's location midway between the northern and southern
boundaries of the district was convincing.
- San Francisco
- Kansas City, Mo.
Another tough call for Willis: "Conditions in the district,
both from the standpoint of transportation and business ...
render a selection of this kind [Fort Worth, Texas, or Denver,
Colo., as headquarters city] entirely feasible, but the adoption
of such a plan would imply a reversal of the normal course
of business which ... is toward the north and east, and would
compel various cities which have been in the habit of acting
as reserve holders for others to invert this relationship.
It is not believed, therefore, that so drastic a change should
be made, but that the headquarters chosen should be in the
northern and eastern portion of the district, inasmuch as
a centrally located and important city accessible from all
parts of the region is lacking. In the northern and eastern
part of the district, it is believed that Kansas City is superior
to Lincoln, Neb., or Omaha, from the standpoint of both the
transportation and volume of business."
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."
- St. Louis
"St. Louis, by reason of the position it has already attained
as a banking headquarters, is the natural site for the reserve
bank, to say nothing of the other considerations relating
to general trends of business that have already been mentioned,"
wrote Willis in 1914.
Willis wrote: "A considerable number of cities are available
as possible points at which to place the headquarters. ...
Included among them are Charlotte, Columbia, Birmingham, and
Atlanta. ... While there is no great or commanding reason
for the selection of any one of them in preference to any
other, the geographical situation of Atlanta and the facts
as to present banking practice entitle it to a decided preference
over the other cities, which, unless counterbalanced by other
considerations not now known should lead to its selection
in preference to any of the others." Clearly, Willis was mirroring
an economic rubric similar to that of Odell and Weiman (1998),
not only for the South, but for other regions as well.
Locating Federal Reserve Districts
and Headquarters Cities
Dividing the Country into Federal Reserve