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Divided States of America

Econ Focus
First Quarter 2015

The United States faced its biggest secession threat during the American Civil War. But there have been cases where states broke away from existing ones while still remaining part of the country. This has only happened successfully four times in America’s history, with the creation of Kentucky in 1792, Tennessee in 1796, Maine in 1820, and West Virginia in 1863. There have, however, been hundreds of unsuccessful attempts over the years. Under the Constitution, the division of any state must have the approval of both the state legislature and Congress.

In late 1941, a handful of counties in southern Oregon and Northern California briefly declared themselves the independent state of Jefferson. The movement died out following the attack on Pearl Harbor little more than a week later, but it has enjoyed periodic revivals since then. California, the most populous and third-largest state, has been the subject of hundreds of proposals to break it into multiple states since it first joined the union in 1850. Most recently, venture capitalist Timothy Draper launched a campaign in 2014 to divide it into six states.

And similar movements have occurred at the city level too. In 1969, Norman Mailer campaigned for mayor of New York City on a platform of making the city the 51st state. Residents of San Fernando Valley in the city of Los Angeles failed to secure the votes in a 2001 referendum to secede and form their own city.

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The Secession Question

What are the economic costs and benefits of nations breaking apart?

The driving forces behind these movements are often similar to the ones that motivate secession at the country level. Disaffected residents argue that their tax dollars are misspent or that local or state governments are not responsive to their needs. Differences in culture also play a major role. But these movements face many of the same challenges as country-level secessions. For example, the recent proposal to split California into six states raised questions about how public debt and services would be apportioned. Water is currently distributed across the state; splitting the state into six pieces would create the challenge of somehow dividing that infrastructure across new state lines. Economic disparities between different regions could be exacerbated as well. Critics of Draper’s California proposal contended that it would have created both some of the wealthiest and some of the poorest states in America.

Proponents of splitting states or cities do avoid some of the headaches involved in splitting countries, though. The new entities would retain the same currency, language, and national laws, which would likely make trade between newly split states somewhat easier than between newly separated countries. But given that partitioning states requires both local and congressional support to succeed, it is likely to occur as infrequently as national secessions.

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