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At an informal meeting of the Federal Reserve Board held in the office of the Governor on Saturday, May 18th, 1910, at 11:00 A. M., for tto purpose of hearing claims of Birmingham, Alacama, Jacksonville,, Fla., and Nashville, Tenn., for a branch bank of the Federal Reserve Bank of Atlanta: PESSENT: Ur. Harding, presiding, Mr. Miller, Mr. Warburg, Ur. Williams, Mr. Delano, • Mr. Adelson, Assistant secretary. Mr. Hamlin, Present also: Representing Birmingham,"r. Oscar Wells, President, First National Bank, Mr. J. H. Brye, President, Traders National Bank, Mr. W. H. Lanley, President, Birmingham Clearing House Association, Mr. J. K. Jackson Vice-President, 4.merican Trust & Savings Bank. Representing Jacksonville, - Yr. Giles L. Nilson, Vice-President, ,Florida National Bank. Reorosetin Nashvillc„, Tenn., - Mr. J. T. Howell, President, Cumberland Valley National Bank, Mr. T. B. 4abb, Vice-President, Fourth & First National Bank. Ur. T. G. Garrett, Mngr., Nashville Cleb.rin- House. Representing the Board of Directors of the Federal Reserve Bank of Atia nta; 1.1r. —. B. Alloorn, 11r. . H. Eettig, Mr. J. A. McCrary, Mr. P. R. "x.ittls, H. N. Randolph, Counsel. By way or opening the hearing, Mr. Harding stated tnat the nearing would nave a very important bearing upon the policy of brie Board in establishing branches; that the applications received rrom the tnree cities represented at this hearing appeared to have many meritorious points, but that there are general certain policies to b0 considered in trio establishment of branches that it is impossible to give every community that they wish in tnis matter because a multiplicity of branches would tend to weaken tne administration of the parent tank. That tne Chairman or tne Board of Directors of the Federal Reserve Bank of ittlanta together vAth such members of the Bo-r,.1 who cared to come, had been asked to be present at this hearing so that they might discuss the case from the standpoint of the Federal Leserve Bank of district as a wnole. tlanta as ,representing the That due consideration wou.d be given to what Lir. doliborn nad to say on behalf 84 of his awn Board, and tnat one representative from each of tne applicant cities would be asked to make a concise statement regarding the claims of his own locality. 1.:r. Wellborn stated; - That his Board nad held several meetings regarding the establisnment or branches and nad been thinking tne matter over for several months; that it was the pretty general opinion of his Board, nearly all agreeing, that they did not see the necessit:; of any branch banks being established at the present time, and had recently passed a resolution to that eIrect;rthat he did not think it would Increase the efficiency of tneir service throughout the umole district; especially in nandling rediscounts and shipment or currency to member banks; tnat they recognized it is intended by law that banks shall be established so that certain cities mignt be able to handle business to Dotter ,..dvantage through the Federal Reserve Bank, and mint be influential in getting state banks to enter une system. That urancn banks are very expen- sive, and While zney could well arrord to pay for tnem at present, it was likely th8y would have some slack years like 1915 and 1916. In reply to a series of questioLs by Mr. Hardiiv-, Yr. Wellborn stated, - that the present income of his bank was about100,000 per month. Reserve, about W,; gold reserve ;p34,0uU,000; paper pledged with the Vederal Reserve agent, Mr. Harding inquired as to the sentiment of the Atlanua Board regarding trio establisnment of a branch in New Orleans. Yr. Wellborn stated; - That tney were sor.ewhat divided, but felt tne law at -mat tine was mandatory. e felt that as New Orleans was urging for the establishment of a branch, and as it was the largest city in the district, it was entitled to it. Mr. dellborn stated that there were four member ban'es in Now Orlean3, at the time the branch was established, and that it present there were eight; that the New Orleans Bank was fully self sustaining. That it nad justified its existence, and that they would not be willing to contemplate closing the Branch; that the operations of the New Orleans Bank did not conflict in any way with the ;,.tlanta Bank; - tnat the cost or operation has been about 3'30,000 per annum, and that it would probably run to 4,42,0o0 this year. That the earnings for the last six months cover 40:7J of the tneoretical capital. Mr. Harding then stated that he did not know that there was any advantage in being heard rirs - or last, but in order to be absolutely fair, brie cities would be heard in the order that tneir names were drawn. The names were drawn by -r Wellborn in the • order: Jacksonville, Florida. 7-2:anville, Tennessee. BirmAn6nam, 4:ilanama. Lr. Giles Alson present tne case or the Ciu:y of Jacksonville. In rely to 4 „,ories or questions, he stated; - that Jacksonville was the gateway to Florida, that the entire state of Florida should be allotted to Jacksonville, ii a brancn wLs established; that the Florida banks are not as active borrowers as banks in adjacent states but that tne establishment of a Brancn in Jacksonville would stimulate business and encourage banks Lo engage in more intimate relations with the Federal Reserve system. That, Jacksonville is a general clearing point for State Banks; uhat frequent trant,fers are made for account of imerior banks; that all poinus in tne st,ate or Florida could be reached within twenty-four hours oy mail from Jacsenville. That the heaviest calls for currency are during the winter tourist season (December., January, February and Larch). over the counter b Payments Jacksonville banks, and Shipments to country banks for the three national banks in Jacksonville are about ;39,000,000 for the period, October to Lay. Rates of exchange vary from 500 to 4.2.50 per tnousand. at there are about 56 national banks in Florida, and about 250 state banks, that at present two state banks are members of the system. That a branch in Jacksonville would probably result in a dozen more comln6 in. (Mr. Wellborn stated that there are about 69 state banks in Florida that are eligible for admission). contemplated. That a bank with discount rowers was Mr. Hardin, tnen outlined briefly the • plan of operation of ,,he Baltimore, Pittsburgh and Cincinnati Branches. Mr. Wilson stated that he did not regard tae discount 9rivilege as essential, that a bank along the lines of tne Baltimore, Pittsburgh al4,1 Cincinnati Bank., m:)u.ld be satisfactor,-. That the Jacksonville banks paid 2 to 3;6 on bank deposits; 3;;; being paid on more or less dormant accounts. Mr. Hardin„; then called attention to the fact tnat these rates of interest add to tne cost of money, and are not helpful from a national standpoint at this time. hr. Nilson stated that they would be delighted with having an op)ortunity of lowering the rates; that the go rate was maintained in order to keep business which would otherwise be uttract,d to other cities. That the establishment of a branch in Jacksonville would add to the prestige or that city as a banking center. Lr. Harding then asked Mr. Wellborn the rate or interest paid by Atlanta banks on bank dePosits, to wilich Lr. se.aborn replied, 3,. r. Harding ask- ed if the Atlanta banks had this question put to them from a patriotic standpoint, as to the efroot of these high rates on the financial condition of the country; might they be induced to lower their rates. :r. dellborn replied that if Mar Harding would go there as he did to New York, then they would reduce the rate, and that he would have the bacfting or five banks. Hardin; stated, "I wish you would say to those banks that this matter was discussed while you were here, and the Board feels very strongly that they ought to minimize their interest rates.' Le. 4ilson stated I that suitable quarters could be found. Mr. Harding stated the proposition had been made oy cities applying ror brancnes, that the local banks would guarantee expense of operation ror a period or one year, but that ne felt safe in saying the Board did not propose to approve such a plan. Mr. ailson stated that the population of Florida was about Wo colored, and tAVJ uhite; tnat, the white population is divided into a fair percenta:7e or nervous peoole. Mr. aell- born then called Mr. ivilson's attentiou to the fact that his bank was paying LV, on bank oalances in some cases, to w!lich Yr. ailson replied that such rate was paid only on a dormant account. 1:r. Wilson stz...ted that Jacksonville banks would be willing to take some general action with the oanks in Birmingham, Nashville, and savannah, looking to a uniform adjustment of interest rates. Mr. Wilson was then excused. Ur. Howell, representing Nashville, Tenn., stated that, - The first consideration of the banks in Nashville, was whether tneir motive in applying for a branch was a patriotic one, and that if a branch bank at Nashville could not be operated ror the benefit and welrare or the System, they did not want it. In re- sponse to a series of questions, Mr. Howell stated that the population or Nashville was about 12b,000; that he regarded nis city as being a banking center for Southern Kentucky, Southern Alabama, and all of Northern Georgia. Mr. Harding then called attention to the fact that Southern Kentucky, West Tennessee, and Northern Mississippi, are in the St. Louis District. Mr. Howell continuing, stated, that banks in Nashville would be willing to make an agreement to hold interest rates down, and would be more than willing to do so if theY could get influence from the Comptroller's office to bear upon certain banks; that the rate paid now is 310. That a branch in Nash- ville would make it easier for the Nashville banks • to urge eligible state ,banks to come into the system. -Mr. Howell stated that a bank operated on the same plan as the Baltimore, Cincinnati and Pittsburgh Bunks, would, be satisfactory. That their payrolls and currency shipments (including money paid over the counter) for the last 7 months, amounted to over $25,000; that for 9 months in the year currency is in demand. For the re- maining three months exchange is in demand. That Atlanta was Nashville's main source of currency supplw. Mr. Howell further stated that Nashville is a great educational center and that the forein population is small. The distances between certain points and Nashville were then discussed as well as the bankbetween Louisville and Nashville, and in Memphis and Nashville. Li'. Howell stated that suit- able space with excellent vaults in the buildin; formerly occupied by the American National Bank, could be obtained. Mr. Howell called attentiLn to the powder plant beini7 built near Nashville in connection - th which the present payroll is about 4;500,0u0 weekly. That the business of Nashville would not be affected by the establishment of a °ranch at Memphis. Mr. Oscar dells, representing Birmingham, Alabama, stated that the Birmingham application for a branch bank was based on the assumption that the time had come When, in the interest of the development of the 3y3tem, perhaps it was wise to grant such applications and establish more branches, and that a branch at Birmingham, with the branch at New Orleans, would fairly well cover the volume of business of the Sixth District. Th.,t by time and railway schedule, Birmingham is closer to Nashville than atlairls is. - In response to a series of questions, lir. 4ells stated that the Birmingham banks agree with the Board's views as to a ZT.; rate; that the demand upon the Birmingham Banks for curreno',7, is seasonal only to the extent that they enter into the handling of cotton and that other requirement year round. for payrolls are about the same the • That the average monthly payroll in the Birmingham District is something over 2,,J0J,0J,), and that there are a good many foreigners in the coal and ore mines and industrial plants. That there are two state bank members at Birmingham, and the existence of a branch in Birmingham would serve as an excellent exam)le to other state banks, and be the means or drawing other banks into the system. of Birmingham is about 230,000. The population That they would be glad to have a bark with the fullest powers, bat that they would defer to the judgment of the Board. That satisfactory quarters with excellent vault facilities could be obtained. The distances between Birmingham and Atlanta, and Birmingham and Uashville were then discussed. Lr. 'ells stated that currency requested by telegram from Atlanta early in the morning could not be received the same day, that it was in over— niuht proposition. In response to the question, wnether a branch at Birmingham would stimulate business and interest in the iederal Reserve r. ystem, delis stated that his answer would be based largely upon the experience in New Orleans; that that branch made an excellent record after it once started. Lr. Harding then asked 1.1r. dellborn as to whether banks in New Orleans, rashville and Birmingham used the discount facilities of the Reserve Bank. Er. ,ell- born replied that the banks in New Orleans and Nashville did, but thau the banks in Birmingham did so very seldom. 1:r. :;ells stated that his bank had had no occasion to discount in recent years. The hearing then adjourned at 1:1!,-. P. Li. APPLOVED: Acting 3ecrotar7
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