Re: the Fed

["Devine, James" <jdevine@xxxxxxx>]

Title: RE: [PEN-L] the Fed

> i have a different question - to which i could, no doubt, look up the
> answer - about federal reserve system (and i may well have come across
> answer in long forgotten past)...
>
> have reserve banks numbered 12 since system was established
> in 1913...

yes.

> if
> so, have they always been located in same cities...would that
> alone (are
> almost so) explain why there is only one in west (san fransciso)...

yes. That's why there's only one Fed branch in the West (and two in Missouri). Back when the Fed was founded, agriculture -- and thus Missouri -- was more important.

> irrespective of when they were located where they are at present, case
> can probably be made for cities such as atlanta, dallas, kansas city,
> cleveland, st. louis at some time or another in last century (suppose
> boston, nyc, philly, chicago are obvious choices)...
> minneapolis is bit more puzzling and richmond, va is baffling
> no matter
> when decision was made to locate there...

Minneapolis and Richmond were more central in 1913 than they are today.

> surely there's reason more specific than 'elite eastern banking
> establishment' to explain absence of western cities (after all,
> industrial mid-west is pretty well represented)...finally,
> why richmond  at any period of time...

the distribution reflects the distribution of banking activity at the time of the Fed's founding -- while the decentralization reflects the resistance to the "elite eastern banking establishment." Without it, the Fed probably wouldn't have been authorized for a few more years. Of course, the NY Fed ended up dominating (it's got a permanent seat on the Open Market Committee!), so the elite did too.

Jim