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Before the

Federal Reserve Board

IN THE MATTER OF

PETITION OF MEMBER BANKS




OF NORTHERN

JERSEY FOR CHANGE IN THE GEOGRAPHICAL
LIMITS

OF FEDERAL RESERVE

DISTRICTS Nos. 2 and 3

Answer on Behalf of
Federal Reserve Bank of Philadelphia
(District No. 3)

NEW




ties of Ocean and Mercer. The capital stock sub­
scriptions by these banks aggregate $1,950,300. Their
deposits in the Federal Reserve Bank December 11th,
1914, aggregated $3,164,000. The change sought by
the petitioners would result in the reduction of the total
subscribed capital of the Federal Reserve Bank of
Philadelphia (District No. 3) from $12,528,000 to
$10,577,700, and the increase of the total subscribed
capital of the Federal Reserve Bank of New York
(District No. 2 ) from $19,932,000 to $21,882,300.
It would result in the reduction of the deposits of the
Reserve Bank of Philadelphia on that date from $19,359,000 to $16,195,000, and an increase in the deposits
of the Reserve Bank of New York from $103,837,000
to $107,001,000. The deposits which would be trans­
ferred, representing two-twelfths of the required
reserves of the member banks, will be increased until,
at the expiration of two years, they represent fivetwelfths of the required reserves which, on the basis
of the amount above stated would amount approxi­
mately to $7,910,000.
It is not sought in this answer to controvert the
statements in petitioners’ Brief as to the close com­
mercial and financial alliance of Northern New Jer­
sey with New York. It would seem obvious that on
the ground of convenience and the customary course
of business, could sole regard have been given to
these considerations in the apportionment and deter­
mination of the Districts, the Banks of Northern
New Jersey would have been assigned to the New
York rather than the Philadelphia District. No one
2

“ That the Districts shall be apportioned with
due regard to the convenience and customary
course of business and shall not necessarily be
co-terminus with any State or States.”
It is submitted, however, that the word “ due” be­
fore the word “ regard” deserves at least equal em­
phasis with the word “ shall” underlined by the peti­
tioners in their Brief. It was proper and necessary
for the members of the Organization Committee in the
exercise of their good judgment to consider other
factors. Two of those factors mentioned in the Com­
mittee’s report of April 2d, 1914, are in point here.
“ The probable ability of the Federal Reserve
Bank in each District after organization and after
the provisions of the Federal Reserve Act shall
have gone into effect to meet legitimate demands
of business, whether normal or abnormal, in ac­
cordance with the spirit and provisions of the
Federal Reserve Act.”
“ The fair and equitable division of the avail­
able capital for the Federal Reserve Banks among
the Districts created.”
3

Reproduced from the Unclassified IDeclassified Holdings of the National Archives




can doubt but that careful consideration was given by
the Organization Committee to such matters as con­
venience, accessibility and the trend of business in
the apportionment of the various Districts and the
selection of Reserve Cities. This was a duty imposed
upon the Organization Committee by the Federal Re­
serve Act, Section 2 , quoted by the petitioners, which
is as follows:—




Such reasons as set forth in petitioners’ Brief for
their inclusion in the New York District must be con­
sidered as of great weight. Had it been possible to
include Northern New Jersey in the New York Dis­
trict and by the severance of some other portion of the
New York District and the addition of other territory
to the Philadelphia District to preserve as equable a
division of available capital throughout the country
as by the present apportionment, no opposition could
have been justly made to the contention of the peti­
tioners. The members of the Organization Committee
having given especially careful consideration to just the
factors emphasized by the petitioners, there seem obvi­
ously to have been reasons which outweighed in their
minds such objections as are now presented, objections
which anyone can appreciate, inconveniences with
which we are quite ready to sympathize. Now that
the districts have been actually defined, we submit that
the change sought by the petitioners would involve
too many other changes to be justifiable, unless it were
the only method of correcting a serious error in the
apportionment, or to provide facilities actually lacking
and necessary which cannot be provided in any other
way.
It is submitted that it is not proper to assume at this
time that the inclusion of the banks of Northern New
Jersey in the Philadelphia District will result in such
inconvenience, such loss of business, and such reduced
efficiency as the petitioners contend. Any division of
the country into districts must be expected to result in
some initial inconvenience to banks near the boun­
4




dary lines, but it is believed that the actual incon­
venience to such banks will soon be found to be very
slight. Personal visits of representatives of member
banks to the Reserve Bank while often desirable, will
not probably often be necessary. The mails, the tele­
graph and telephone are less expensive than visits in
person, and for the purpose of transactions between
member banks and the Reserve Banks can in most
instances be as effective. Measures can be taken
whereby all necessary information as to credits in con­
nection with re-discounting will be readily available to
the Reserve Bank at Philadelphia. Banking and busi­
ness generally need not be more confined within the
respective districts than heretofore. An opportunity
should be given for the terms of the Act to be made
more fully effective and the possibilities and practical
operations of the Federal Reserve Banks to be more
clearly realized and understood before any reapportion­
ment should be attempted.
The petitioners aver that if their reserve is kept else­
where than in New York City large balances will have
to be maintained by them in New York banks not only
at a loss in earnings, but also to the detriment of all
the manufacturing communities of the section because
of the diminished loaning power of the banks.
In this connection it is proper to consider how far
the requirements of the new system need change pre­
viously existing conditions.
If the very moderate collection charges imposed by
New York banks influenced many banks in Northern
New Jersey, as averred in petitioners’ Brief, to open
5




deposit accounts in Philadelphia, which have been
maintained to mutual advantage for over ten years,
it would seem that it would be no great hardship to
continue to maintain deposits in Philadelphia under
the requirements of the new system.
As of October 31st, 1914, all but fourteen of the 132
Northern New Jersey banks now included in the Phila­
delphia District reported deposit accounts in Phila­
delphia.
The aggregate gross deposits of the Northern New
Jersey Banks on that date were reported as follows (in
thousands):
Demand....................................................... $137,571,000
Tim e.............................................................
16,359,000
T otal........................................................ $153,930,000
Their aggregate reserve deposits reported were
New Y ork ....................................................
Philadelphia.................................................
Other Cities.................................................

$13,860,000
4,528,000
666,000

On the basis of these deposits the total reserve re­
quired under the new system would be
12% of $137,571,000..................................
5% of $16,359,000..................................

$16,508,520
817,950

T otal.........................................................

$17,326,470

Two-twelfths of this total, viz: $2,887,745, would be
all that would be required to be deposited in the
6




Philadelphia Reserve Bank under the new system for
the first year, as compared with $4,528,000, the actual
amount of reserves deposited in Philadelphia before
the new system became effective.
On the basis of aggregate deposits as above stated,
the Northern New Jersey banks would be required at
the end of twelve months to increase the amount of
their reserve deposits in Philadelphia from $2,887,745
to $4,331,617 (i. e., three-twelfths of required reserve);
at the expiration of eighteen months to increase the
amount to $5,775,490 (four-twelfths of required re­
serve) ; and at the expiration of twenty-four months
to $7,219,362 (five-twelfths of required reserve). For
eighteen months therefore these banks could comply
with the new reserve requirements and keep larger
balances on deposit in New York than they reported
October 31st, 1914, without exceeding the total of
their reserve deposits in both cities on that date.
Of the reduced reserve now required the Northern
New Jersey Banks can keep five-twelfths on deposit
with their reserve banks in New York for the period
of one year, at the end of two years, after gradual
reductions, but two-twelfths and after three years
none.
Even after three years, however, in view of the re­
duction in the required reserve and the fact that it has
been the practice of New Jersey banks to keep large
deposits in Philadelphia for the reasons indicated,
they can comply with the new requirements and still
maintain substantial deposit accounts in New York
without diminishing their present loaning powers to
any material extent.
7




A comparison of the old and new reserve require­
ments as affecting the Northern New Jersey banks,
based on such figures as are available, seems to justify
this statement. The Northern New Jersey banks re­
ported on October 31st, 1914, as already stated, the
following aggregate gross deposits:—
Demand deposits........................................ $137,571,000
Time deposits..............................................
16,359,000
T otal..................................................... $153,930,000
The reserve of 15% formerly required,
on the above total would amount t o . .. .

$23,089,500

The reserve required under the new sys­
tem is
12% of demand deposits...................
5% of time deposits.........................

$16,508,520
817,950

Total...........................................

$17,326,470

For the purpose of comparison there may be added
to this last total the 5% redemption fund to secure
circulation, counted as part of the old but not as part
of the new reserve. Based on a total circulation of
the Northern New Jersey Banks, amounting to $ 1 2 ,464,737, as shown by the report of the Controller of
the Currency for 1913 (which total may be expected to
be considerably reduced by 1917), the redemption fund
would amount to $623,236, and this it may be noted
is less than one-half of one per cent, of the total de­
posits as above stated.




Deducting from the reserve under former
requirements............................................
the reserve under new requirements....................... $17,326,470
together with redemption
fund...................................
623,236

123,089,500

17,949,706
$5,139,794

leaves a balance of

which by the new system is released from reserve.
This may not be sufficient to constitute the deposit
balances which petitioners consider it necessary to
maintain in New York. It is fair to assume, how­
ever, that the deposits maintained in New York and
Philadelphia were larger than the amounts required
as reserve, and it would certainly seem possible
that they will be able to maintain sufficient New
York deposits for all practical purposes and still be no
more restricted in their loaning powers and efficiency
than under previous reserve requirements with the
balances they have maintained in New York and
Philadelphia in the past. If this is so the fact that
these banks are included in the Philadelphia Dis­
trict need have little effect on their business, or their
previous business relations.
Section 16 of the Federal Reserve Act provides in
part as follows:—
“ Every Federal reserve bank shall receive on
deposit at par from member banks or from Federal
reserve banks checks and drafts drawn upon any
9




of its depositors, and when remitted by a Federal
reserve bank, checks and drafts drawn by any
depositor in any other Federal reserve bank or
member bank upon funds to the credit of said
depositor in said reserve bank or member bank.”
If, as it seems reasonable to expect, checks on the
Federal Reserve Bank of Philadelphia or on any
member bank in the Philadelphia District can be made
available as cash at par through the Federal Reserve
Bank of New York, clearly some of the inconveniences
anticipated by the petitioners may be eliminated.
As to the transportation of currency, no great change
from previous methods is likely to be necessary. When
it is cheaper and more convenient for Northern New
Jersey banks to send their currency to New York they
can still do so. It would seem possible to obtain from
their correspondents drafts on the New York Reserve
Bank, which would be accepted for deposit by the
Philadelphia Reserve Bank. When they wish to obtain
currency by messenger from New York it would seem
quite possible to do so from their correspondents there
by means of checks on the Philadelphia Reserve Bank
or reserve notes from Philadelphia, redeemable in New
York.
Indeed, most, if not all, of the serious objections
raised by the petitioners can be eliminated, provided
adequate deposit accounts may still be maintained in
New York without loss of earnings or diminished
loaning capacity. This, as has been indicated, we be­
10




lieve can be done. It is true under the new system
they may not receive interest on their reserve deposits.
But this we believe will be more than counterbalanced
by the new facilities and advantages which the Federal
Reserve system will afford.
Certainly sufficient time has not elapsed, nor have
sufficient changes in the relations of banks of Northern
New Jersey with those of New York been made or
shown to be probable to demonstrate as yet that the
apportionment by the Organization Committee was
not the best under all present circumstances. We
believe that as the result of experience it will be found
that the relationships of the banks of Northern New
Jersey with those of New York will not and need not
be materially changed. If, however, in the course of
the year during which the reserve deposits required in
Philadelphia are so small, or the two years during which
the transfer of reserves is gradual, it is found that
inconvenience has resulted to Northern New Jersey
from the existing apportionment which should be
removed, or loss is threatened which should be pre­
vented, it is submitted that even then a change in the
boundaries of the districts should not be made unless
a change in the general apportionment throughout
the country is practicable. If experience shows that
the apprehensions of the banks of Northern New
Jersey are justified, it would seem that every material
objection raised by the petitioners would be removed
and every convenience would be accorded them of
which their inclusion in the Philadelphia District might
tend to deprive them, by the establishment of a branch
11




bank in Northern New Jersey such as the Federal
Reserve Bank is required under the Act to establish
if and when occasion demands. This, in our judg­
ment, is the only possible change that should be con­
sidered in the interests of the banks of Northern New
Jersey, and this only if, after further experience, it is
found that their needs are not otherwise properly met.
Our answer to the Petitions of the Banks of Northern
New Jersey can therefore only be this:
The Federal Reserve Bank of Philadelphia must op­
pose the removal of Northern New Jersey from its
district to the New York District unless other terri­
tory, supplying equivalent capital and deposits, is added
to the Philadelphia District. Otherwise, the capacity
of the Reserve Bank of Philadelphia to properly meet
the needs of its district will be impaired. The addition
of other territory to this District necessarily would be
at the expense of an adjoining district which in turn
would be entitled to additional territory to offset its
loss and so on, perhaps until all of the twelve districts
were affected. We consider that a trial should be given
to the system by the banks of Northern New Jersey
under the present apportionment at least during the
period while the requirements for deposits of reserves
at Philadelphia, in connection with the reduction in
the prescribed reserve, can affect them to so slight an
extent. If, after such trial, some change is found to be
necessary for the accommodation of Northern New
Jersey, every practical requirement could be met by
the establishment of a branch bank within the territory,
a far more feasible method of supplying such needs as
12




the petitioners set forth than one leading to the ex­
tended readjustment of districts which their assignment
to the New York District must now involve.
Respectfully submitted, on behalf of the Federal
Reserve Bank of Philadelphia.
CHARLES J. RHOADS,
Governor.
PA R K E R S. WILLIAMS,
Counsel.

13




BEFORE THE
FEDERAL RESERVE BOARD
In t h e M a t t e r of
P e t it io n o f M e m b e r Ba n k s o f N o r t h e r n N e w
Je r s e y f o r C h a n g e in t h e G e o g r a p h i c a l L i m i t s
F e d e r a l R e s e r v e D i s t r i c t s N o s . 2 a n d 3, a s
D e t e r m in e d b y t h e o r g a n i z a t i o n C o m m i t t e e .

of

A n s w e r o n B e h a l f o f t h e Fe d e r a l R e s e r v e Ba n k
of

To

th e

P h i l a d e l p h i a (D i s t r i c t N o . 3).

F ed era l R eserve

B oard:

Charles J. Rhoads, Governor of the Federal Reserve
Bank of Philadelphia, the representative duly ap­
pointed by the Board of Directors of said Bank to
appear and answer to petitions of member banks of
Northern New Jersey to review the assignment of said
banks of Northern New Jersey to Federal Reserve
District No. 3, and to alter the lines of said District
so that the banks in New Jersey north of the northerly
line of the counties of Ocean and Mercer shall be
included in Federal Reserve District No. 2 , makes
answer to said petitions as follows:—
The Federal Reserve Bank of Philadelphia has one
hundred and thirty-two member banks in the section
of New Jersey north of the northerly lines of the coun­




ties of Ocean and Mercer. The capital stock sub­
scriptions by these banks aggregate $1,950,300. Their
deposits in the Federal Reserve Bank December 11th,
1914, aggregated $3,164,000. The change sought by
the petitioners would result in the reduction of the total
subscribed capital of the Federal Reserve Bank of
Philadelphia (District No. 3) from $12,528,000 to
$10,577,700, and the increase of the total subscribed
capital of the Federal Reserve Bank of New York
(District No. 2 ) from $19,932,000 to $21,882,300.
It would result in the reduction of the deposits of the
Reserve Bank of Philadelphia on that date from $19,359,000 to $16,195,000, and an increase in the deposits
of the Reserve Bank of New York from $103,837,000
to $107,001,000. The deposits which would be trans­
ferred, representing two-twelfths of the required
reserves of the member banks, will be increased until,
at the expiration of two years, they represent fivetwelfths of the required reserves which, on the basis
of the amount above stated would amount approxi­
mately to $7,910,000.
It is not sought in this answer to controvert the
statements in petitioners’ Brief as to the close com­
mercial and financial alliance of Northern New Jer­
sey with New York. It would seem obvious that on
the ground of convenience and the customary course
of business, could sole regard have been given to
these considerations in the apportionment and deter­
mination of the Districts, the Banks of Northern
New Jersey would have been assigned to the New
York rather than the Philadelphia District. No one
2

“ That the Districts shall be apportioned with
due regard to the convenience and customary
course of business and shall not necessarily be
co-terminus with any State or States.”
It is submitted, however, that the word “ due” be­
fore the word “ regard” deserves at least equal em­
phasis with the word “ shall” underlined by the peti­
tioners in their Brief. It was proper and necessary
for the members of the Organization Committee in the
exercise of their good judgment to consider other
factors. Two of those factors mentioned in the Com­
mittee’s report of April 2d, 1914, are in point here.
“ The probable ability of the Federal Reserve
Bank in each District after organization and after
the provisions of the Federal Reserve Act shall
have gone into effect to meet legitimate demands
of business, whether normal or abnormal, in ac­
cordance with the spirit and provisions of the
Federal Reserve Act.”
“ The fair and equitable division of the avail­
able capital for the Federal Reserve Banks among
the Districts created.”
3

Reproduced from the Unclassified / Declassified Holdings of the National Archives




can doubt but that careful consideration was given by
the Organization Committee to such matters as con­
venience, accessibility and the trend of business in
the apportionment of the various Districts and the
selection of Reserve Cities. This was a duty imposed
upon the Organization Committee by the Federal Re­
serve Act, Section 2 , quoted by the petitioners, which
is as follows:—




Such reasons as set forth in petitioners’ Brief for
their inclusion in the New York District must be con­
sidered as of great weight. Had it been possible to
include Northern New Jersey in the New York Dis­
trict and by the severance of some other portion of the
New York District and the addition of other territory
to the Philadelphia District to preserve as equable a
division of available capital throughout the country
as by the present apportionment, no opposition could
have been justly made to the contention of the peti­
tioners. The members of the Organization Committee
having given especially careful consideration to just the
factors emphasized by the petitioners, there seem obvi­
ously to have been reasons which outweighed in their
minds such objections as are now presented, objections
which anyone can appreciate, inconveniences with
which we are quite ready to sympathize. Now that
the districts have been actually defined, we submit that
the change sought by the petitioners would involve
too many other changes to be justifiable, unless it were
the only method of correcting a serious error in the
apportionment, or to provide facilities actually lacking
and necessary which cannot be provided in any other
way.
It is submitted that it is not proper to assume at this
time that the inclusion of the banks of Northern New
Jersey in the Philadelphia District will result in such
inconvenience, such loss of business, and such reduced
efficiency as the petitioners contend. Any division of
the country into districts must be expected to result in
some initial inconvenience to banks near the boun­
4




dary lines, but it is believed that the actual incon­
venience to such banks will soon be found to be very
slight. Personal visits of representatives of member
banks to the Reserve Bank while often desirable, will
not probably often be necessary. The mails, the tele­
graph and telephone are less expensive than visits in
person, and for the purpose of transactions between
member banks and the Reserve Banks can in most
instances be as effective. Measures can be taken
whereby all necessary information as to credits in con­
nection with re-discounting will be readily available to
the Reserve Bank at Philadelphia. Banking and busi­
ness generally need not be more confined within the
respective districts than heretofore. An opportunity
should be given for the terms of the Act to be made
more fully effective and the possibilities and practical
operations of the Federal Reserve Banks to be more
clearly realized and understood before any reapportion­
ment should be attempted.
The petitioners aver that if their reserve is kept else­
where than in New York City large balances will have
to be maintained by them in New York banks not only
at a loss in earnings, but also to the detriment of all
the manufacturing communities of the section because
of the diminished loaning power of the banks.
In this connection it is proper to consider how far
the requirements of the new system need change pre­
viously existing conditions.
If the very moderate collection charges imposed by
New York banks influenced many banks in Northern
New Jersey, as averred in petitioners’ Brief, to open
5




deposit accounts in Philadelphia, which have been
maintained to mutual advantage for over ten years,
it would seem that it would be no great hardship to
continue to maintain deposits in Philadelphia under
the requirements of the new system.
As of October 31st, 1914, all but fourteen of the 132
Northern New Jersey banks now included in the Phila­
delphia District reported deposit accounts in Phila­
delphia.
The aggregate gross deposits of the Northern New
Jersey Banks on that date were reported as follows (in
thousands):
Demand........................................................ $137,571,000
Tim e.............................................................
16,359,000
Total......................................................... $153,930,000
Their aggregate reserve deposits reported were
New Y ork............................ ........................
Philadelphia.................................................
Other Cities.................................................

$13,860,000
4,528,000
666,000

On the basis of these deposits the total reserve re­
quired under the new system would be
12% of $137,571,000...........' ......................
5% of $16,359,000..................................

$16,508,520
817,950

Total.........................................................

$17,326,470

Two-twelfths of this total, viz: $2,887,745, would be
all that would be required to be deposited in the
6




Philadelphia Reserve Bank under the new system for
the first year, as compared with $4,528,000, the actual
amount of reserves deposited in Philadelphia before
the new system became effective.
On the basis of aggregate deposits as above stated,
the Northern New Jersey banks would be required at
the end of twelve months to increase the amount of
their reserve deposits in Philadelphia from $2,887,745
to $4,331,617 (i. e., three-twelfths of required reserve);
at the expiration of eighteen months to increase the
amount to $5,775,490 (four-twelfths of required re­
serve) ; and at the expiration of twenty-four months
to $7,219,362 (five-twelfths of required reserve). For
eighteen months therefore these banks could comply
with the new reserve requirements and keep larger
balances on deposit in New York than they reported
October 31st, 1914, without exceeding the total of
their reserve deposits in both cities on that date.
Of the reduced reserve now required the Northern
New Jersey Banks can keep five-twelfths on deposit
with their reserve banks in New York for the period
of one year, at the end of two years, after gradual
reductions, but two-twelfths and after three years
none.
Even after three years, however, in view of the re­
duction in the required reserve and the fact that it has
been the practice of New Jersey banks to keep large
deposits in Philadelphia for the reasons indicated,
they can comply with the new requirements and still
maintain substantial deposit accounts in New York
without diminishing their present loaning powers to
any material extent.
7




A comparison of the old and new reserve require­
ments as affecting the Northern New Jersey banks,
based on such figures as are available, seems to justify
this statement. The Northern New Jersey banks re­
ported on October 31st, 1914, as already stated, the
following aggregate gross deposits:—■
Demand deposits........................................ $137,571,000
Time deposits..............................................
16,359,000
T otal.................................................... $153,930,000
The reserve of 15% formerly required,
on the above total would amount t o . .. .

$23,089,500

The reserve required under the new sys­
tem is
1 2 % of demand deposits...................

5% of time deposits.........................

$16,508,520
817,950

Total...........................................

$17,326,470

For the purpose of comparison there may be added
to this last total the 5% redemption fund to secure
circulation, counted as part of the old but not as part
of the new reserve. Based on a total circulation of
the Northern New Jersey Banks, amounting to $12,464,737, as shown by the report of the Controller of
the Currency for 1913 (which total may be expected to
be considerably reduced by 1917), the redemption fund
would amount to $623,236, and this it may be noted
is less than one-half of one per cent, of the total de­
posits as above stated.




Deducting from the reserve under former
requirements............................................
the reserve under new requirements....................... $17,326,470
together with redemption
623,236
fund...................................

123,089,500

17,949,706
$5,139,794

leaves a balance of

which by the new system is released from reserve.
This may not be sufficient to constitute the deposit
balances which petitioners consider it necessary to
maintain in New York. It is fair to assume, how­
ever, that the deposits maintained in New York and
Philadelphia were larger than the amounts required
as reserve, and it would certainly seem possible
that they will be able to maintain sufficient New
York deposits for all practical purposes and still be no
more restricted in their loaning powers and efficiency
than under previous reserve requirements with the
balances they have maintained in New York and
Philadelphia in the past. If this is so the fact that
these banks are included in the Philadelphia Dis­
trict need have little effect on their business, or their
previous business relations.
Section 16 of the Federal Reserve Act provides in
part as follows:—
“ Every Federal reserve bank shall receive on
deposit at par from member banks or from Federal
reserve banks checks and drafts drawn upon any
9

N e w J e r s e y B a n k e r s A s s o c ia tio n
B a n k in g

and

C u r r e n c y C o m m it t e e

P. O. BOX 5 8 9
NEWARK, N E W JE R S E Y
W A L T E R M. V A N D E U S E N , N e w a r k , C
R O B E R T D. F O O T E , M O R R IS T O W N
B L O O M F IE L D H. M IN C H , B R ID G E T O N
H E N R Y G . P A R K E R , N ew B r u n s w ic k
ED W ARD C. ST O K E S, TRENTO N

Sept

25, 1914.

Federal Reserve Board,
Washington, D . C *
Gentlemen:
We beg to transmit herewith, petition duly signed
by one hundred and twenty three member hanks in northern New
Jersey, asking that the northern part of New Jersey he trans­
ferred from Federal Reserve District number 3, (Philadelphia)
to Federal Reserve District number 2, (New York).
The aggregate capital and surplus of these hanks
amount to $31,226,427. Their deposits to £156,456,000.
Nine hanks in Northern New Jersey with a capital
and surplus of f1,177,500,. and with denosits of £5,310,000,
have not signed the petition. We append herewith a list of
the hanks not signing, and their reasons therefor.
Farmers National Bank, AllentoY/n, N. J., located
in the Southern corner of Monrcouth County, ana somewhat
nearer Philadelphia than New York City.
Belvidere National Bank, Belvidere, IT. J. This
town is in the extreme Western part of the State, and has
direct train service to Philadelphia, and is the only town
in Warren County which does not have direct train service
to New York City.
Hunterdon County National Bank, Flemington, H. J.
"It is immaterial to us whether we are in the Philadelphia
Keserve District or the New York Reserve District. We are
within 50 miles of both cities, and it makes no particular
difference to us one way or the other.’1
Union National Bank, French town, N. J., located
on the Delaware Biver, in the Western part of the State.
Train service to Philadelphia is more direct than to New
York.
Lamhertville National Bank, lambertvilie, N. J.,
located about one-half way between New York City and Phil­
adelphia, it is immaterial to thee which district they are
in.
Fanasquan National Bank, Manes anan, N. J., located
in the lower part of Monmouth County, about equally distant



h a ir m a n

Holdings of the National Archives

2from Hew York City and Philadelphia. When the vote was taken
by the organization Committee they voted in favor of Philadelphi a .
First National Bank, Kilford, II. J., located on the
Delaware River with more direct service to Philadelphia than
to New York City*
Second Hatl onal Bank, Phillipsburg, IT. J #, located
on the Delaware River in the extreme Western part of the State
somewhat more convenient to Philadelphia.
National Bank of Horth Hudson, West Hoboken, II. J.
They say they would much prefer to be affiliated with the
Hew York District, but fear signing a petition would embar­
rass your Honorable body.
We also transmit herewith twenty copies of a brief
setting forth our reasons for desiring to have the change made,
and are accompanying it with copies of a map of Hew Jersey
showing the division line which we suggest.
We would appreciate your consideration of our peti­
tion at your convenience, end request an opportunity to be
heard orally in the matter.




Respectfully yours,
Banking and Currency Committee
Hew Jersey Bankers Association




of its depositors, and when remitted by a Federal
reserve bank, checks and drafts drawn by any
depositor in any other Federal reserve bank or
member bank upon funds to the credit of said
depositor in said reserve bank or member bank.”
If, as it seems reasonable to expect, checks on the
Federal Reserve Bank of Philadelphia or on any
member bank in the Philadelphia District can be made
available as cash at par through the Federal Reserve
Bank of New York, clearly some of the inconveniences
anticipated by the petitioners may be eliminated.
As to the transportation of currency, no great change
from previous methods is likely to be necessary. When
it is cheaper and more convenient for Northern New
Jersey banks to send their currency to New York they
can still do so. It would seem possible to obtain from
their correspondents drafts on the New York Reserve
Bank, which would be accepted for deposit by the
Philadelphia Reserve Bank. When they wish to obtain
currency by messenger from New York it would seem
quite possible to do so from their correspondents there
by means of checks on the Philadelphia Reserve Bank
or reserve notes from Philadelphia, redeemable in New
York.
Indeed, most, if not all, of the serious objections
raised by the petitioners can be eliminated, provided
adequate deposit accounts may still be maintained in
New York without loss of earnings or diminished
loaning capacity. This, as has been indicated, we be10




lieve can be done. It is true under the new system
they may not receive interest on their reserve deposits.
But this we believe will be more than counterbalanced
by the new facilities and advantages which the Federal
Reserve system will afford.
Certainly sufficient time has not elapsed, nor have
sufficient changes in the relations of banks of Northern
New Jersey with those of New York been made or
shown to be probable to demonstrate as yet that the
apportionment by the Organization Committee was
not the best under all present circumstances. We
believe that as the result of experience it will be found
that the relationships of the banks of Northern New
Jersey with those of New York will not and need not
be materially changed. If, however, in the course of
the year during which the reserve deposits required in
Philadelphia are so small, or the two years during which
the transfer of reserves is gradual, it is found that
inconvenience has resulted to Northern New Jersey
from the existing apportionment which should be
removed, or loss is threatened which should be pre­
vented, it is submitted that even then a change in the
boundaries of the districts should not be made unless
a change in the general apportionment throughout
the country is practicable. If experience shows that
the apprehensions of the banks of Northern New
Jersey are justified, it would seem that every material
objection raised by the petitioners would be removed
and every convenience would be accorded them of
which their inclusion in the Philadelphia District might
tend to deprive them, by the establishment of a branch
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bank in Northern New Jersey such as the Federal
Reserve Bank is required under the Act to establish
if and when occasion demands. This, in our judg­
ment, is the only possible change that should be con­
sidered in the interests of the banks of Northern New
Jersey, and this only if, after further experience, it is
found that their needs are not otherwise properly met.
Our answer to the Petitions of the Banks of Northern
New Jersey can therefore only be this:
The Federal Reserve Bank of Philadelphia must op­
pose the removal of Northern New Jersey from its
district to the New York District unless other terri­
tory, supplying equivalent capital and deposits, is added
to the Philadelphia District. Otherwise, the capacity
of the Reserve Bank of Philadelphia to properly meet
the needs of its district will be impaired. The addition
of other territory to this District necessarily would be
at the expense of an adjoining district which in turn
would be entitled to additional territory to offset its
loss and so on, perhaps until all of the twelve districts
were affected. We consider that a trial should be given
to the system by the banks of Northern New Jersey
under the present apportionment at least during the
period while the requirements for deposits of reserves
at Philadelphia, in connection with the reduction in
the prescribed reserve, can affect them to so slight an
extent. If, after such trial, some change is found to be
necessary for the accommodation of Northern New
Jersey, every practical requirement could be met by
the establishment of a branch bank within the territory,
a far more feasible method of supplying such needs as
12




the petitioners set forth than one leading to the ex­
tended readjustment of districts which their assignment
to the New York District must now involve.
Respectfully submitted, on behalf of the Federal
Reserve Bank of Philadelphia.
CHARLES J. RHOADS,
Governor.
PA R K E R S. WILLIAMS,
Counsel.

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