1

I am always wondering why the Federal Reserve district in the United States is so unevenly divided. Is it by the population? Any historic reason? As see on image here

I initially thought it was by assets, but in the asset history, it is even more skewed, St Louis has a big lead over the other districts. Any one know about this district division reason?

  • Interesting question. See: "The Committee chose 12 cities as Reserve Bank locations, shown on the map below, in part because of their importance as banking centers in 1913. Most of the Districts with large geographic areas or populations or both, also had Branch offices that were designed to provide central banking services in other parts of the District. . As selected, the 12 cities and their Districts were not evenly divided in terms of either population or the geographic area they were to serve." – gktscrk May 16 at 12:14
3

It is a compromise, using best data available in 1913 when those boundaries were drawn up, between:

  • respecting the natural hinterland of each designated bank;

  • respecting state and county borders; and

  • having each bank represent approximately the same number of citizens.

A useful proxy for the third is the Electoral College weights is the 1912 Presidential Election. With a total of 531 E.C. votes, one twelfth of that is ~44.

  • District # 1: 44 E.C. votes in ME, NH, VT, MA, RI & CT

  • District # 2: 45 E.C. votes in NY plus part of NJ

  • District # 3: 55 E.C. Votes in PA, DE & NJ; less a bit in North NJ and West PA

  • District # 5: 49 E.C. votes in SC, NC, VA, WV & MD

  • District #10: 37 E.C. votes in CO, KS, NE, OK & WY; plus a bit more in west MO and north NM

  • District #12: 39 E.C. votes

Clearly Districts 9 and 11 are exceptions to this at about 30 and high 20's respectively. However given 12 as the desired number of banks, I see no obvious better solution to the constraints proposed above than the divisions chosen.

| improve this answer | |
  • Interesting proxy in the Electoral College. I should note that the link in my comment stated "historic banking centers" which you make no mention of? Do you disagree with that assessment (and if so, why)? – gktscrk May 16 at 14:18
  • @gktscrk: That's a separate question. You inquired about skew in the (presumably geographic) distribution of the districts - so I answered that question. – Pieter Geerkens May 16 at 19:23

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.