57

24 Col. E.M. House, The Intimate Papers of Col. House, 4 v. 1926-1928, 

Houghton Mifflin Co.

31 

The Federal Reserve System began its operations in 1914 with the 

activity of the Organization Committee, appointed by Woodrow 

Wilson, and composed of Secretary of the Treasury William McAdoo, 

who was his son-in-law, Secretary of Agriculture Houston and 

Comptroller of the Currency John Skelton Williams.

On January 6, 1914. J.P. Morgan met with the Organizing Committee in 

New York. He informed them that there should not be more than seven 

regional districts in the new system.

This committee was to select the locations of the "decentralized" 

reserve banks. They were empowered to select from eight to twelve 

reserve banks, although J.P. Morgan had testified he thought that not 

more than four should be selected. Much politicking went into the 

selection of these sites, as the twelve cities thus favored would 

become enormously important as centers of finance. New York, of 

course, was a foregone conclusion. Richmond was the next selection, 

as a payoff to Carter Glass and Woodrow Wilson, the two Virginians 

who had been given political credit for the Federal Reserve Act. The 

other selections of the Committee were Boston, Philadelphia, 

Cleveland, Chicago, St. Louis, Atlanta, Dallas, Minneapolis, Kansas City, 

and San Francisco. All of these cities later developed important 

"financial districts" as the result of this selection.

These local battles, however, paled in view of the complete 

dominance of the Federal Reserve bank of New York in the system.