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Reproduced from the Unclassified I Declassified Holdings of the National Archives
!£he Federal Reserve Board
In support of the able argument by the Chairman of
the Banking and Currency Committee of the Hew Jersey Bankers Associa
tion, I wish to make an appeal to you in behalf of the banks of Hudson
County, and particularly the banks of Hoboken and Jersey City, for a
change of assignment from District #3, in which the national banks of
our County were placed by the Federal Besexve Organization Committee,
to District #2 (New York), because Hudson County .is Hew York from every
business and banking standpoint, and we feel that in this connection we
are in a stronger position to object to our present assignment than banks
any other section of the country.
Since the days of civilization, ferries have connected
the City of New York with Hoboken and Jersey City, and the completion of
the McAdoo Tunnels has placed us within a few minutes reach of the center
of New York’s financial district.
We have five (5) National banks in the two cities,
four (4) of whom are Clearing House members, having been affiliated with
that institution for over a quarter of a century.
Bank representatives
go to New York from our County four or five times daily, and attempting
to transact the volume of business done with New York, in Philadel
phia will not only radically change business methods, but will result
in a loss of accounts, evidenced by the fact that at present many of
the Hew York banking institutions are soliciting business in this
county on the grounds that better and quicker service can be had
with New York City banks than with Hudson County banks clearing
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through Philadelphia.
When our national banks applied for membership in and assented
to the provisions of the Federal Reserve Act, they did so tinder the
impression that the Districts would be apportioned with due regard
to the .convenience and customary course of business, and with that
idea in mind, they feel that the Committee1s action in placing them
in a district remote from that in which their business has always
been conducted, will work hardship, and result in increased expenses
and certain loss of business.
Indulging in figures will result in repetition of data compiled
by the Banking & Currency Committee, as set forth in their brief, but
the importance of this question to our Hew York Clearing House banks
cannot be too strongly emphasized.
We can go to Federal Heserve Bank in Hew York in a matter of minutes,
but to the Federal Reserve Bank in Philadelphia it means hours, and
should it be necessary to rediscount paper with Philadelphia, this very
difference in time will make it next to impossible to secure the accom*
mod ation on the day that it is needed.
Your answer to these objections may be that a branch of Federal
Reserve Bank #3 will be established sufficiently near or even within
Hudson County^so that adequate service may be given, but we believe this
impracticable^as it will create additional expense to be borne by the
stockholders, who are most desirous of availing themselves of the facili
ties already established in Federal Reserve Bank of Hew York*
Competition with state institutions has been and is keep, but ft
feel that it is not the desire of the Federal Reserve Act to handicap
the national banks in meeting this competition.or to hamper their
/
usefulness in communities in which they are located, but rather that
the desire is unaaimous with the Board and the banking fraternity of
the country,to perfect and organize the system so that the State
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institutions may be induced to join the association, thereby futhering the best interestp jm A financial strength and credit protection
of the country*
To that end our member banks ar e most anxious to co-operate
with the new law, and trust that the rules and regulations that are
in future to govern them will permit them to do so*
We, therefore, earnestly request that a change in the assign
ment of Hudson County be made to the Federal Reserve Bank in New
York on the grounds that this county is as muck a part of Hew York
City as though it were within its confines.
Respectfully submitted.
First Nat’l Bank, Hoboken, N. J
TieM Mwl M il iMa
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TO THE FEDERAL RESERVE BOARD.
0
^ ^
jk
0 /P ™
GEHTLEL1EN:
THE FIRST NATIONAL BAiY£ CM JERSEY CITY, of which I am
Cashier and a Director, while agreeing with the able brief and
argument made by the Hew Jersey Bankers1 Association in favor
of the inclusion of Horth Jersey in the territory of the Federal
Reserve Bank of Hew York, rather than in that of Philadelphia,
desires to add a few words on behalf of the Banks in Hudson
County.
We have a population of nearly 600,000, about one fifth
of that of the State.
It may be that we were lax in failing to urge our
cause before the Organization Committee, but we relied on the
full knowledge possessed of the situation by one of the members
of that Committee, the Honorable Secretary of the Treasury.
Hudson County, and especially Jersey City and Hoboken,
are really a part of the financial metropolitan district of lew
York;
four of our banks are members of the New York clearing
House itself, and clear daily through that institution, as do
the banks within the City of Hew York.
Y/e can send a messenger
in less than five minutes from our Bank to the Federal Reserve
Bank of Hew York:
indeed we are nearer in time and distance
than nineteen-twentieths of the Banks in the Borough of Man
hattan itself.
Our Bank, as its low number will show, came into
the national Banking system immediately upon its organization
and established its course of dealing with the Hew York Banks.
Our reserves have always been kept in Hew York, never anywhere
else.
The great bulk of the checks drawn on our Bank are
paid through the Hew York Clearing House.
From October 1, 1914 to January 15, 1915 (79 days)
our average daily Hew York exchange was §1,019,646.95.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
From January E, 1915 to January 15, 1915 inclusive we
paid through the New York Clearing House 24,890 checks aggre
gating $11,121,351.54, while during the same time from all other
sources, including our counter, we only paid 15,708 checks
amounting to $8,239,576.86.
When we require credit or currency we can obtain it
from Hew York City in less than an hour.
Our north Jersey Banks generally do but little business
through Philadelphia; this Bank absolutely none at all.
By reason of our large daily draft on New York we are
required to keep a large daily reserve there amounting on the aver
age to over $2,000,000.
The reserve which we would require to keep in Philadel
phia would amount to $350,000. and would be so much dead money
as this Bank has not been a borrower in many years.
The tendency in Northern lew Jersey of late years has
been to the organization of State Banks and Trust Companies,
rather than to National Banks.
Quite recently one of our largest
Banks surrendered its federal charter and consolidated with a
Trust Company.
I predict that if we are not transferred to the
New York District, there will not be a National Bank left in Hud
son or Essex Counties in five years time.
Many of our customers are large manufacturers having
their factories in New Jersey with their offices in New York:
most of these would leave us if we cleared our checks through
Philadelphia, involving from four to six days delay rather than
through New York, where the result is know the next day.
Letters have already been sent by New York Banks to many of these
large dealers calling their attention to these disadvantages and
soliciting their business.
The Federal Keserve Act was passed to facilitate and
not to hamper banking, and the exchange of credits; the act says
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2-
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that the districts shall be apportioned with due regard to the
convenience and customary course of business and shall not neces
sarily be coterminous with any State or States.
The draftsmen of that act were shrewd business men,
knowing of just such situations as the one now before you:
they
provided for the contingency.
The mere fact that the change would somewhat decrease
the capital and deposits of the Reserve Bank of Philadelphia
should not weigh a moment with your board:
the act seeks not
the aggrandizement of any locality but the convenient and custo
mary course of business.
The whole matter resolves into a very narrow compassthe Banks of northern Hew 'Jersey and especially those of Essex
and Hudson Counties are not country banks or beehives for the
saving of money to be invested in the purchase of paper in dis
tant business centers, but active discount business banks having
their main business with New York City, and turningover 25$ to
30$ of their assets every day at the call of their customers.
They are accustomed to the methods of New York and
so are their customers.
With Philadelphia as their reserve City^ active banks
would simply have to put by 5^ for a reserve for that city, where
it would be of no value and yield no income ,and at the same time
keep up their reserves and deposits with the New York Banks in
order to cover the daily drafts of their customers.
This would
be hoarding money.
Mr. Rhoads in his brief for the Reserve Bank of
Philadelphia, able banker
as he is, appreciates the weakness of
his cause, and suggests several palliatives which might be put
in operation.
But he can make no promises that either the
Hew York or Philadelphia Banks will accede thereto.
But the most naive suggestion made by Mr. Rhoads is
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that if the necessities of Northern lew Jersey should require it
a branch of the Philadelphia Reserve Bank could "be established
i
in Ho r t h e m H e w Jersey. { This begs the whole question. / Why go
to the expense and detail of a branch hank here, when we have in
lew Yack a Reserve Bank which fulfils our requirements?
;\
Mr. Rhoads* appeal for delay has no merit.
If the
change is to be made there is no time like the present, just as
the system is under way.
@FedFRASER