William Wood, owner of William Wood & Company woolen mill, wrote Representative George Graham in 1914 to push for Philadelphia, Pennsylvania, to be designated a Federal Reserve city. Wood emphasized the value and variety of the city’s commercial and manufacturing interests, which required from banks “very great accommodations and have heretofore been forced too often to seek those favors from New York.”
The Federal Reserve Act had recently passed when Wood wrote this letter. The legislation established the Federal Reserve System, which was intended to create a stable nationwide financial system. No central banking system existed after the charter for the Second Bank of the United States expired in 1836, leading to the rise of state-chartered banks, each issuing its own currency with no federal regulation. Moreover, the federal government did not have secure locations to store money or to transfer funds. The Federal Reserve Act (also known as the Currency Act at the time, as Wood calls it in this letter) created a system of regional banks that were commercially owned and operated. However, the banks would be overseen by the Federal Reserve Board, and its members would be appointed by the President.
Although the task of creating a national financial system was gargantuan, deciding which cities would serve as Federal Reserve sites was nearly as fraught. In 1914, the Reserve Bank Organization Committee announced that 12 cities would have Federal Reserves, including Philadelphia. City governments believed that a Federal Reserve would boost the economy; however, minimum requirements for capital, as well as an already thriving economy with potential for growth were the selection committee’s primary concerns. As Wood emphasized in his letter, the committee also took into account the mercantile, financial, and industrial connections that already existed within a city.
Although the Federal Reserve System has undergone changes, the 12 Federal Reserve Banks created in 1913 still exist today.