Redrawing Monetary Geography

How Section 2 of the FRA reshaped the Federal Reserve’s district map over the past century

In my last newsletter, I noted with surprise at learning that Section 2 of the Federal Reserve Act empowers the Board of Governors (BoG) to adjust, eliminate, or even create new Federal Reserve districts. In other words, the BoG does not need congressional approval to redraw the Fed’s 12-district map. Such changes may seem radical and unlikely, but with the Trump administration signaling an interest in exerting greater influence over the regional Fed banks, the possibility is worth watching.

My discussion sparked some interesting responses from readers, including one from my friend Kaleb Nygaard. He pointed out that Section 2 has, in fact, been invoked multiple times since 1914 to redraw the Fed’s 12-district boundaries. These changes, however, have never been collected in a single record. So I invited him to write a guest post on this overlooked history of how the Fed’s map has evolved under Section 2. Kaleb’s essay follows below.

Before getting into Kaleb’s essay, I want to highlight that this theme of rediscovering overlooked corners of U.S. monetary history carried over into this week’s podcast, which digs into the history of free banking. Jerry Dwyer walks through why Michigan’s “wildcat” fiasco—frontier conditions, suspended specie payments, and slow 1830s communications—was the exception, while New York’s bond-backed, well-supervised system performed far better as laws and practice matured. We also zoom out to Scotland (1716–1845) and Canada (19th–early 20th century), where competitive note issuance coexisted with notable stability and ended mainly by statute, not collapse. Those contrasts matter for today’s debates: the historical record is more nuanced than the caricature often invoked against modern private monies. For a taste, below is a video clip from this show.

The Dynamic Map of the Federal Reserve Districts

By Kaleb Nygaard

The Fed is a very different institution today than it was in 1913—in almost every respect. How it influences the economy has changed. Who inside the Fed holds decision-making power has shifted. Its relationships with Congress, the White House, the Treasury, banks, nonbanks, foreign central banks, regulators, businesses, and the public have all evolved. Its approach to supervision and regulation is different. So too are the ways it intervenes in domestic and international markets. But you probably already knew all that.

But there is another part of the Fed’s evolution that has gotten far less attention: the boundaries of its districts. When I went looking, I could n ot find anyone who had catalogued these changes in one place. And yet the map has shifted more often than you’d think! The following maps (with my own annotations) are based on a deep dive through every single Federal Reserve Board annual report since the founding. (Some people baked sourdough during the pandemic; I dusted off a giant stack of old Fed reports. No regrets—it was hundreds of hours well spent, and in many ways I owe my career since then to that time. But that’s a story for another day.)

The Original Fed Map

Let’s start with the original map, published on April 2, 1914 by the congressionally appointed committee responsible for picking where the Reserve Bank Cities would be and what geography they would cover.

The New York Times published their own, simplified version the next day.

Fun aside. In the announcement the committee released with the original map (reprinted here on p213), they made a tantalizing shout-out to the Pacific Northwest. Someone needs to dig in and see when they hit the minimum cap stock requirement and if any effort was made to have congress carve them out.

I could go into lots more detail about (the committee, the evidence for and against the conspiracy around Missouri landing two Reserve Bank Cities, the process for making changes, the fiery attempts to swap out Richmond for Baltimore and Cleveland for Pittsburg and the US Attorney General’s deciding opinion, or Nebraska and Wyoming’s boldfaced attempt to secede from Kansas City in favor of Chicago). But this is a blog post and not a book. So let us jump right into the actual changes on the map.

The First Wave of Changes to the Fed Districts

Alright, onto the maps! First up, the two first major waves of changes:

The highlighted blue sections are the areas that were transferred in 1914. The small annotations next to the colors indicate which direction the change went. For example, a big chunk of Oklahoma moved from the Dallas Fed to the Kansas City Fed and most of New Jersey moved from the Philly Fed to the New York Fed. Speaking of which, I know it is just legalese, but the Jersey jokes write themselves with their formal request hearing titled, “Petition of member banks in northern New Jersey praying that the territory in which they are located be transferred from District No. 3 to District No. 2.”

In 1916 (purple) the Greenwich, CT banks successfully moved from the Boston Fed to the New York Fed. The western half of Michigan moved from the Minneapolis Fed to the Chicago Fed. Finally, the Dallas Fed lost another large territory—this time by the Atlanta Fed claiming another big piece of Louisiana.

The 1959 Addition to the San Francisco Fed District

The next big change to the Fed’s map occurs in 1959 with the ascension of Alaska and Hawaii to statehood. These ones actually get enshrined into the Federal Reserve Act, though I am not sure that was necessary. These two states get added to the San Francisco Fed’s District 12. Puerto Rico gets some shoutouts in Board meeting minutes regarding certain activities, but they’re never included on the maps.

The Expansion of the Kansas City Fed District

In 1972, for reasons unknown, the Kansas City Federal Reserve district acquired a solid third of Missouri from the St Louis Federal Reserve district.

The Arizona Slicing off of the Dallas Fed District

The final big change to the map of the Federal Reserve system occurred in 1977. The Dallas Fed lost another big chunk of territory, ceding the rest of the state of Arizona over to the San Francisco Fed. Remarkably, the San Francisco Fed district not only started out with the largest Fed district, but gained extra territory over time. The Dallas Fed, on the other hand, lost territory throughout the Fed’s history.

The annual reports document a few other minor changes, but nothing as big as the five above. I suspect there are other changes that have been made (like when border counties change shape). But there is not a single place that lists all of the changes, big and small.

Next Steps

This is small potatoes, low stakes. But the Board of Governors should task an eager intern with digging through the internal files and publishing a full, complete list of all changes made to the district boundaries. As David mentioned, the power is enshrined in Section 2 of the act itself. Sometimes transparency has real purpose and there are serious debates about the costs and benefits of releasing information. Other times, it is just fun. A full list would be fun for the kind of people that read old annual reports instead of baking sourdough.

P.S. If you are a student looking for a paper to write, you could do a lot more with this than this little intro I have given here. I would be happy to share what I have got and point you in a few different directions, so send me a message if you want to chat: kalebnygaard@gmail.com.