View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Reproduced from the Unclassified I Declassified Holdings of the National Archives

Reproduced from the Unclassified I Declassified Holdings of the National Archives




0 **“

Washington, D. C.

January 20, 1915*


Reported by
Rexford L. Holmes,
Shorthand Reporter s
322 Southern Building,
Washington, D. C.

Reproduced from the UnOiasslfied I Declassified Holdings of the National Archives









JAN 1 r»1914



In the matter of


S s n d 3,



Hon* Chas* H. Hamlin, Governor of the Board: Gentlemen,
we ©re ready to hear this petition now* I suppose the hanks
of northern lew Jersey, heing the moving parties, would have
the rigfet to open ant olose, ant I would suggest, if it is
agreeable to you, that the opening take a half hour, with the
right of the ot&ier parties to reply, and they will reply, for,
say, an hour; them they may have the right to ©lose for half
an hour| then they may have the right to ©lose for half an
hour; and if then, at the end of that time, either party de­
sires to sum up for not exceeding five minutes, we would he
very glad to give them the opportunity. So i f the counsel or
representatives of the Hew Jersey hanks will open the ease, we
shall he glad to hear them.


Gentlemen of the Board:

As I said a few moments ago

Reproduced from the Unclassified I Declassified Holdings of the National Archives





|I (referring to statement made before the hearing
began), we are \

here simply as bankers and business men to put a proposition
before you whioh we feel is simply a business proposition. We ;
feel that it affects very materially the conduct of our business, and would also like to point out that the condition in

I this petition before you 1b different from the other ease*






which you have had* This is not a contest between cities; it |
Is simply a feeling on our part that we hay© been placed in an i
unnatural district, and it is simply our request that we be
plaeed in our natural district* It is different from the other
oases of counties or distriots that want to b© changed which
will m m before you later in that *
The Governor of the Boards (interrupting): Excuse me
Just a moment* I forgot to state that the Secretary of the
treasury, owing to an unexpected emergency, is unable to be
here this morning, but of course, the entire arguments will be j
taken stenographioally, and he will go over them carefully*
Mr* Tan Dusen {continuing) s As I was saying,
none of the
other cases that will come before you later of the counties thatj
desire ohamges are as closely related to the federal reserve
city as is northern lew Jersey. We therefore feel that there
should be no confusion in this case as compared to the others, j
We have not seen any offlol&l statement of the
reasons that
prompted the Organ!:
zation Committee to assign us to the Phila*



j delphia district • Our friends in Philadelphia knew that it was j
done so as to equalize the distriots, but at that we hardly

Federal Reserve Bank of St.i Louis



Reproduced from the Un6lassified I Declassified Holdings of the National Archives







j understand why places several hundred miles distant from lew
| York City, like Buffalo and Syracuse and Rochester, and the
| entire western part of the State, were put in the lew York dity :
j district, and the communities™ the important ocramunitieB1
j contiguous to H
ew York City were not put in that district,
| communities that are very closely related both in a business
j way and in a financial way, to lew York.
1 am going to run over just a few of the points of close
| contact between the hanks of our section and Hew York Gity#
j fhey are set out in some detail in our brief, and I am not at
i this time going into detail about those, because I know that
i you gentlemen will give veiy careful consideration to the facts i
j that we have put In the brief.
I would like to mention one point before going into that,
. and that is in regard to the wishes of the northern lew Jersey
banks . We have filed with your Board petitions signed by one
I hundred and twenty-three of the member banks located in the
\ district which we asked to have changed* 2?he capital and surI plus of those banks signing is something over thirty-one million!
| dollars; their deposits are over one hundred and fifty -six
| million dollars* She petitions were not signed by nine banks
j in that district, the capital and surplus of those not signing
| being a trifle over a million dollars, end their deposits a

| lit t le over five million dollars. £he nine banks that aid not
| sign were banks located along the dividing line of the district, I

Reproduced from the Unclassified / Declassified Holdings of the National Archives

j most of them being up on the Delaware 'Hirer, which is served
j by the Belvedere Division of The Pennsylvania Bailroad Company;
I and their trains ran down to fronton, s d there make close oonj motions with JMladelphia trains. Many of those banks stated
j to m that they were half wey between, and it was immaterial to
| the®* lone of them positively refused; none of them opposed
| our efforts; and these petitioners did not at any time solicit
I banks,
Orginally we asked the banks of northern lew Jersey i f
they\ desired us to present a oase for the change for them* and
Imost of them replied in the affirmative# We then sent out pe~
| titions without any solicitation#
Originally the Organization Committee took a poll of the
| banks of the country as to the reserve city they desired to be
J affiliated with, fhe poll shows that of lew Jersey one hundred
land eighty-eight banks voted. Shis is in the entire state. Of
j those, one hundred and twenty^two voted for Hew York, and sixty* ;
!fire for Philadelphia.

Shat ia almost the exact proportl on of

|1 member banks lying in the northern part of the State, and in
the southern part of the State, and while we hare not access to
I| the poll, of course, to know what banks voted for particular

j cities,

yet the proportion, shows very clearly that the banks of
[northern lew Jersey voted for lew York, and those of southern
|lew Jersey for Bitla del phia,~~ their natural districts,
Chose ©f you gentlemen who are familar with the geography
j of lew Jersey know that the State narrows in the middle Just

Reproduced from the Unclassified I Declassified Holdings of the National Archives




— Ii; about at Trenton*

It is,, very thinly populated section across
| the State right there, and there is a very clear division of
J the connections of the State right there, northern le w Jersey
being contiguous to Hew York, and having the hulk of their
ibusiness with them, and southern lew Jersey being very close
to IMladelphla, with excellent communications, and having most
; of their business with Biiladelphla.
1 might also mention that at the preliminary hearings
■Philadelphia never asked for northern lew Jersey a© part of
Jtheir District, and I am very sure that our friends at Phil a-*
| delphla were folly as much surprised as we were at f indlng they
had had northern M m Jersey given to them.
I do not want you gentlemen to think that we are attacking
the Organisation Committee* l?hat is the farthest from our
thoughts* But we feel that they laid down certain principles
to guide then which were not followed out in this particular
case* We feel that that was probably due to a lack of realizajtloauon their part of the intimate relations between our section
of the State and of lew York City* fhey laid down certain
;principals that I would like to call to your attention, fhis
sis from the Secretary of the treasury *s report, in which he
[prints the decision of the Organization Committee of April 2,
S1914* fhey say:
”imong the many factors which governed the committee in
determining the respective districts and the selection of
the cities which have been chosen were:

Reproduced from the Unclassified I Declassified Holdings of the National Archives

"First . the ability of the member banks within the dis­
trict to provide the minimum capital of f4,OOO,000 re­
quired for the federal Reserve bank, on the basis of six
per cent of the capital stock and surplus of member banks
within the district*
"Second* The mercantile, industrial, and financial con­
nections existing in each district and the relations between
the various portions of the district and the city selected
for the location of the Federal Reserve bank*
"Third. The probable ability of the Federal Keserve bank
in each district, after organization and after the provi­
sions of the Federal Reserve Act shall have gone into effect,
to meet the legitimate demands of business, whether normal
or abnormal, in accordance with the spirit and provisions
of the Federal Reserve Act.
"Fourth* The f&ir and equitable division of the available
capital f6r the Federal Reserve banks among the districts
As I said, that has been the only point that we have heard
on which we feel they could have based this division, and as I
said before, we hardly understand why a point several hundred


miles away should be included in the Hew York districts, and
points like ours, two miles away, were not included in making
that equitable division*
They go on to says
"Fifth. The general geographical situation of the district,
transportation lines, and the facilities for speedy communi­
cation between the Federal Reserve bank and all portions of
the district.
"Sixth. The population, area, and prevalent business ac­
tivities of the district, whether agricultural, manufacturing,’
mining, or commercial, its reoord of growth and development
in the past and its prospects for the future."
The guiding reasons in laying out the district were very
Iwell summed up by Professor Hicks.

He said:

Reproduced from the Unclassified / Declassified Holdings of the National Archives




"First. Geographical convenience, which involves trans­
portation fac ilitie s and rapid and easy communication with ;
a ll parts of the d istrict.
"Second. Industrial and commercial development and needs :
of each BeetIon, which involves consideration of the
general movement of commodities and of business transact!one
within the districts and the transfer of funds and exchanged.
of credits arising therefrom.








,f2!hird* !The established custom and trend of business, as
developed by the present system of bank reserves and
checking accounts* In laying out the districts and estab- ;
lin in g the headquarters for reserve banksf every effort
will be made to promote business convenience and normal
movements of trade and eomneroe#11
low you know without my quoting it , the provision of the
law which lays down that the districts shall be laid out "with i
due regard to the convenience and customary course of business.w
3?he framers of that law put in only one qualification, one guides
post in the laying out of the districts* fhey made no other
qualifications except that one* £hey were very wise in putting
that qualification in. they saw clearly that banking business
follows the natural course of commercial business. It rises
out of —* grows out of — the commercial business, and there­
fore they put in that guide-post for the laying out of the
districts, that one qualification, and we feel that the Organ!asation Committee, probably through a lack of the intimate knowledge of our close communications with Hew York, did not appro*
elate the closeness of those relations.
low I am going to take just a few moments to point out to

you some of the points of relationship. A very good .criterion
of the relationship of the banks to the commercial houses is

Reproduced from the Unclassified I Declassified Holdings of the National Archives

the volume of checks tshich the hanks handle on particular cities
We find in our banks through lew Jersey - north©am lew Jersey becoming more so the closer we get to lew York* that probably
it will run ©lose to ninety per cent, and in many eases more
jthan that, of the checks, as compared with the two cities of
^Philadelphia and lew York, that are on lew York.
We have also obtained statistics from the railroads of
northern lew Jersey, * from the principal trunk lines that run
llhrough there* We asked them for the number of passengers that
they transported between ITew York and points in northern lew
(Jersey, or vice versa* $he replies.which we have receired show
jfeft&t over sixty million passengers a year are transported
between northern lew Jersey and lew York Oity, or vice versa,
$ver trank lines, and there are many of them running: through the
3jiortherm part of lew Jersey.
A net-work of railroads tends
Reward lew York; they center at lew York, and the fa c ilitie s
|or transportation there are very rapid* In fact, one of the
distinguished members of your board contributed very largely to
1jhe facility of transportation between our Strte and Hew York
through the tubes which are laid under the Hudson Hivor; and
i)t rather surprised us that after putting, us three minuteB .
from Mew York in another capacity he aided in putting us three
hours from Philadelphia •
W# have placed in the brief here, beginning at page nine,
aj statement of th» time that it takes to go from &own town

Reproduced from the Unclassified / Declassified Holdings of the National Archives

I lew York to various points, the principal Indus tria l centers
j in northern Hew Jersey* f© have contrasted that time with the
I tlm© that it takes to go from downtown lew York to various
1 parts of Hew York Gity itse lf, talcing the entire confines of
| the municipality there, and I hop© that you will give consider*
j ation to those when you come to consider this matter. I ass not
! geiiag to go into a ll of them, hut I would like to mention just
! one or two. Of course in Jersey 01ty the hanks there — the
; principal hanks there — can go to the principal reserve bank
} in flew York in five minutes# ifrom lewark, we can go from our
ji bank to the federal Reserve Bank in lew York in half an hour
j fwenty minutes is the time for the through train, whereas even
\ to go to uptown lew York, twenty-third Street, or Fifty-ninth
ii Street, or On© Hundred and Twenty-fifth street, those large
I centers, takes considerably longer.
There is one peculiar situation in lew Jersey also that
j really is not tree of any other section of the country, and
j that is the tremendous number of commuters which we have living
| out there, who go into flew York on business. If fact, I think
j that a very large number of the banking officials and directors
| of Hew York live out. in lew Jersey, - a very considerable pro|
| portion of them. That commuting element ties our section up to
j lew *ork as no other suburb and seetion is tied up to any other
j city, because of the congested nature of lew York’ s population.
j ®hey have got to get out i n t o t h e c o u n t r y , and a o i n g b u s i n e s s

Reproduced from the Unclassified I Declassified Holdings of the National Archives


In Hew York, it is natural that their trade follows there very
I largely, and many of those men are connected with the local
1i banks in their towns* fhe Board — the stockholders
of the
\ local hanks are almost —
- are yesy largely,
in thoae comI muting towns, made up of the lew York business men, and that
j tie is extremely close# 5?hen, on account of the Hew York banker#
j living out through northern lew Jersey, they come into contact
|6 and know the needs end requirements of lew jersey very intimately*
then there are situated in. northern lew Jersey a number
j of very large industrial centers, some of the largest in the
j country# Almost all of those large industries have Hew York
| offices § in faot, I do not know any considerable industry in the
j* city of Newark that does not have a New York office, frequently :
i a veiy large amount of their business is handled from their
j Hew York office, .and in addition to that, many of them keep New
I York bank accounts! consequently we are in vexy close com­
petition with the New York banks for the business of our own
j people * That is one point where it would be extremely injurious
; to us i f a barrier is erected between us end our natural center*
!j We are a ll having that used against us by the lew York banks*
I fheir solicitors are pointing out to them that the placing of
j northern lew Jersey banks in the Philadelphia district will
| affect their handling of their business, and therefore they
ji should transfer their business to lew York, i f they have not


















Reproduced from the Unclassified / Declassified Holdings of the National Archives


jalready done so.

She faot that eo many of the Hew York bankers and the

5 directors of those hanks live out there in lew Jersey, and
| that they are connected with these lew Jersey industries, the
? fant that so many of these industries keep a portion of their
I hank accounts in Hew Torkf the faot that eo many of these in! iustrie® are financed in lew York, and the fact that so many
i of them borrow heavily through selling their paper on lew York
j brokers, because the lew York brokers have a peculiar knowledge
j of the needs of northern lew Jersey and of their industries,
j are a ll matters that should receive serious consideration#
The election of directors of th« [Philadelphia bank demonj strated to us conclusively that it is impossible for us ever to
i hope to elect a director from northern lew Jersey in that bank* i
I The preponderance of banks against us in Pennsylvania who were
| naturally following state pride prevents this entirely. The
i only representation which we can have is by the grace of the
| "federal Beserve Board. "e cannot hope far any representation
| of right * low you my say that the same thing will be true
! in lew York, fe- admit that it is* but it is not material to
/Bew York bank, i f we were attached to that
|district* because of the knowledge - the acute knowledge * of
(Hew Jersey Industries and conditions which 1 have just mentioned.
|In fact, the lew York bankers probably have a broader knowledge
jand a better knowledge, generally speaking, of our condition and

___ rTrxronniprinnin^^— ~i i

- j ,i i 1|u i|

.j.niig.m'.fHM-'ii. ">

uw.' -— ••

Reproduced from t ie Unclassified I Declassified Holdings of the National Archives



! needs, than any bankers in northern Hew Jersey, because of
j necessity, the protection ant the knowledge of the northern
I How Jersey banker is circumscribed to hie own localityt because
I there is no north lew Jersey center of commerce and. industry
! except lew York*
She foreign exchange business of course, of northern lew
! Jersey is .quite extensive out of and through lew York; the
j foreign business* also the purchases end sale© to foreign
| countries are handled entirely through lew York concerns, fh®
j shipment comes in, for instance, consigned to a lewerk house,
i and the Bewerk banks is instructed almost Invariably to turn the
j papers over to a -Mew York broker to handle* It Is extremely
j convenient to handle that business through lew York City*
Our friends in Philadelphia pointed out that in our brief
| we underlined the word - the provision of the law ~ where it
; says that due regtrd shall be given to convenience and the
: course of business* We underlined the word "sh all”. They came
back and said we ought to give equal emphasis to the word ffdue”f
j «*** "due” regard shall be given. ,We turned to Webster's dietIionary* and In that connection we found that the definition
|! there of the word "due” was "adequate#" and we are very glad of
jthat suggestion from them, because w© feel that it simply
j strengthens ■our case, that Instead of the word M
due" being
jqualij^lng or limiting, it is governing and the essence of one


of our main contentions is that adequate consideration was not

Reproduced from the Unclassified / Declassified Holdings of the National Archives


;.." " " ............... ................


j $iven to Hi© customary course of business and of banking.
The state Institution in lew Jersey ere very strong and
! active competitors of ours, &M we are on a pretty even basis
! in our competition with them. They of course have freedom,
I perfect freedom, to place their reserves in their natural centers!*
! ant we have got to meet that competition, and should not he
!i placet at any disadvantage in meeting it#
There is another point, and a broader point, of view to
| take in regard to the state institutions. It is the deeire of
| you gentlemen, I know, to get the state institutions In as
! members of this system. To make this system its fullest success j
j requires the membership of that large number of strong Institu| tions under etatqay*terns - under state charters. How from my
3 knowledge, of those institutions, in our section of the state,
| they will not consider joining the system with the handicap of
! an unnatural d istrict. That positive statement has been re: peatedly made*
low we are seeking the success of this system just as sinj oe£ely as you gentlemen are, and we simply ask that you give us
j the fullest opportunity to develop it successfully, and we point
I out to you that in getting the cooperation of the state instiI
j tutions, this has erected almost an impassable barrier to that.
Some of the other departments of the Government recognize
j the ordinary course of transactions there, for instance the
j exchange of Post Office Department transfers; the Postmasters — i







Reproduced from the Unclassified / Declassified Holdings of the National Ai chives












| tike local postmasters — transfer to the postmaster at lewark
§ their receipts, - their money order receipts*
One of the banks in. sending in that transfer to their
| loeal postmasters sent a check to the postmaster at lewark reI
j ©ently on Philadelphia , and the postmaster at lework returned
j it with a polite note stating that he could only accept lewark
or Hew York exchange, that Philadelphia exchange was not aoi
j oeptable there* The same-thing is true of the internal revenue j
j department, the head of the fifth district is located at Hewark i
| and they refused to accept any cheeks except- those drawfc on
| Newark or lew York.
fhere .are two gentlemen here from Hoboken, and Jersey City, i
II w|o would Ilk© to make a little special statement
to you on
| their behalf, and If they may at this time, it will only take
j a very few'minutes* Mr* Edwards, of the first Rational Bank
| of Jersey City*

Gentlemens I Just want to read you a little brief that
| I dug out of this as it relates to Hudson County, which is on
i the border line of lew York, as you a ll know, that part of
1northern lew Jersey which is within the metropolitan district,
sad I have written this so 1 will be able to give it to you
I complete! {Reporter’ s notes- The following is a verbatim copy of
j Mr* Jtward*s argument, as rea£ and submitted by him to the Board
In typewritten form.)
___ „__..................... -..
j ...... .

j I
Federal Reserve Bank of St. Louis

i ■■

Reproduced from the Unclassified I Declassified Holdings of the National Archives



E. I . Edwards, , CASHIER AHD DIRECT OK 01


| $0 fHB nDffiUl RS8XBVI BOARD.

Cashier and a Director, while agreeing with the able brief and
argument made by the New jersey Banker a* Association In favor
of the inclusion of North Jersey in the territory of the federal
Reserve Bank of New York, rather than in that of Philadelphia,
desires to add a few words on behalf of the Banks in Hudson

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 New

four of our banks are members of the New York Clearing

louse itself, and clear ftaily through that institution, as do
I the banks within the City of New York.

We can send a messenger

in less than five minutes fria our■ bank to the Federal Reserve

| Bank of New York; Indeed we are nearer in time and distance
than nineteen^twentleths of the Banks in the Borough of Uanw
hattan itself*

Our Bank, as its low number will show, came into the

Reproduced'ftd'fri the U n c tflffie d I Declassified Holdings of the National Archives

national Banking system immediately upon its organization and
established its course of dealing with the Heir York Banks*


reserves have always been kept in Hew York, never eiaywhere else.
fhe great bulk of the checks drawn on our Ban* are paid
through the Hew tork Clearing House.
from Ootober l f 1914 to January 16, 1915 (79 days) our
average daily lew fork exchange was $1,019,646.96.

from January B, 1916 to January 16, 1916 inclusive we paid

jthrough the lew York Clearing House B4,89© oheoks aggregating
|$11,121,351.64, while during the same time from all other

|sources, including our counter, we only paid 13,708 checks amounting to #8,239,676.86.
When we require credit or currency we can obtain it from
lew York City in less than an hour*

Our fiorth Jersey Banks egnerally do but little business

through Philadelphia; this bank absolutely none at all*
By reason of our large daily draft on lew York we are re-


Iquired 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 Philadelphia


would amount to $360,000^ and would be so much dead money as
this Bank has not been a borrower in many years.
The tendency in Jforfchern Hew Jersey of late years has been
to the organisation 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

I predict that if we are not transferred to the lew

j________________________________ ____________________________________



Reproduced from the Unclassified / Declassified Holdings of the National Archives

York District, there will not be a National Bank left in Hudson
or Essex Qountles in five years time.
Many of our customers are large manufacturers having their


factories in lew Jersey with their offices in Sew York; most of
these would leave us if we cleared our oheoks through philadelphia, involving from four to six days delay rather than through

Hew York, where the result is known the next day,

betters have

already been sent by lew York Banks to many of these large
dealers sailing their attention to these disadvantages and so­
liciting their business*
the federal Heserve Act was passed to facilitate and not
to hamper balking, and the exchange of credits; the act says
that the districts shall be apportioned with due regard to the

convenience and customary course of business and shall not
necessarily be coterminous with any State or States.
fhe draftsmen of that act were shrewd business men, know*
lag of Just such situations as the one now before you; they
provided for the contingency.
fhe mere fact that the change would somewhat dearease the
capital and deposits of the Heserve Bank of Philadelphia should
mot weigh a moment with your Board: the act seeks not the ag­
grandisement of any locality but the convenient and customary
course of business.
fhe whole matter resolves into a very narrow compass i

the Banks of Northern lew 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
distant business centers, but active discount business banks

Reproduced from the Unclassified I Declassified Holdings of the National Archives

having their main business with Hew York City, and turn over
over 25/S to 30% of their assets every day at the call of their
They are accustomed to the methods of Kew York and so are
their customers*
With Philadelphia as their reserve city active hanks would
simply have to put by 6 $ for a reserve for that city, where it
would he of no value and yield no income, and at the same time
keep up their reserves and deposits with the Hew York Banks
in order to cover the daily drafts of their customers. This
would he hoarding money,
Mr, Rhoads in his brief for the Reserve Bank of Philadel­
phia, able hanker as he is, appreciates the weakness of his
cause, and suggest ^several palliatives which mi&ht he put in
operation. But he can make no promises that either the Hew
York or Philadelphia Bonks will accede thereto.
But the most naive suggestion made by Mr. Rhoads is
that i f the necessities of Northern Hew Jersey should require
it a Branch of the Philadelphia Reserve Bank could be estab­
lished in Norther Hew Jersey. This begs the whole question.
?/hy go to the expense and detail of a branch bank here, when we
have in Hew York a Reserve Bank which fu lfills our requirements?
Mr. Rhoadsr 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.
Respectfully submitted,

Reproduced from the Unclassified IDeclassified Holdings of the National Archives

I would Ilk© to submit that to the Board.
Mr# Walter M. fan Dusen; With your permission, I would
also like to introduce Mr# t* w# Young, of the First National
Bank of Hoboken*
Mr# W. W. Young: Grentlemea, I have written a short memo­
randum here with referenae to our position in Hoboken and
Jersey City in connection with this subject which I will read
to you;
(Reporter1s note: - fhe following Is a verbatim copy of
Mr# Young’ s argument, as read and submitted by him to the
Board, in typewritten form*}

Reproduced from the Unclfssified I Declassified Holdings of the National Archives


i f . W*



fhe Federal Heserve Board

In support of the able argument by the Chairman
of the Banking and Currency Committee of the New Jersey Bankers
Association, I wish to make an apical 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 #Sf


in which the National banks of our County were placed by the
Federal Heserve Organization Committee, to District #2 (New York|,
because Hudson County is New York from every business and bank- I
ing standpoint, and we feel that in this connection we are in a j

stronger position to object to our present assignment than banks j
of any other section of the country•
i r 1........... 11 r


Since the days of civilization, ferries have


connected the City of New York with Hoboken end Jersey City, and^
the completion of the MoAdoo Tunnels has placed us within a few j

minutes reach of the center of New York*s financial district*
We have five (5) National banks in the two cities j,
four (4) of whom are Clearing House members, having been affil- j
lated 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 Philadelphia will not only radically
change business methods, but will result in a loss of accounts

Reproduced from the UnclSssiffed / Declassified Holdings of the National Archives


|evidenced by the faot that at present many of the Hew York bank- |



jlug institutions are soliciting business in this oounty on the



!grounds that better and quicker service oan be had with Sew fork j


City banks than with Hudson County banks clearing through Phila- !



When our national banks applied for membership in mad


Iassented to the provisions of the federal Reserve Act* they did





so under the impression that the.Districts would be apportioned



with due regard to the oonvenienoe and customary course of busi- j
ness, and with that idea in mind, they feel that the Committee*s j

|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




I data compiled by the Banking & Currency Committee, as set forth

j In their brief, but the importance of this question to our lew

York Clearing House banks cannot be too strongly emphasised.

We oan go to federal Reserve Bank in Hew York in a



matter of minutes, but to the federal Reserve Bank in Philadel­
phia it means hours, and should it be necessary to rediscount
I paper with Philadelphia, this very difference In time will make

1 It

next to impossible to secure the accommodation on the day

| that it Is needetf


Your answer to these objections may be that a branch



of federal Reserve Bank #5 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

Reproduced from the UnclSSsfffedJ Declassffied Holdings of the National Archives




additional expense to fee borne by the stockholders, who are . .




m 6st desirous of availing themselves of the facilities already
established in federal Reserve Bank of Hew York*
Competition with state institutions has been and is
keen, but we feel that it is not the desire of the Federal Re­
serve Act to handicap the national banks in meeting this com­
petition or to hamper their usefulness in communities in whioh
they are located, but rather that the desire is unanimous with
the Board and the banking fraternity of the country to perfect
and organize the system so that the State institutions may be
induced to join the association, thereby fathering the best
interest, financial strength and credit protection of the
fo that end our member banks are most anxious to co­
operate with the new law, and trust that the rules and regula­
tions that are in future to govern them will permit them to do sc.
We, therefore, earnestly request that a change In the
asslg&ment of ludson County be made to the Federal Reserve Bank
In Hew York on the grounds that this county is as much a part
of Mew York City as though it were within its confines.
Respectfully submitted,
First Nat*! Bank, Hoboken, 3T.J.
(Signed)W. W. Young, Cashier.

Hudson County National Bank
Jersey City, JUJ*
Second National Bank

Reproduced from the Unclassified I Declassified Holdings of the National Archives

Mr* Walter M* Van Dusen: And Mr* Hue, president of the
Second national Bank of Hoboken, would like to say a few words
in connection with this, i f he may,
m a m m f of mb*

* * mm, presided of the skcohd ’

Mr* Chairman and gentlemen: Whatever 1 might say would
be cumulative* We feel that It has all been gone over very
thoroughly* I represent, as president, the Second national Bank i
of Hoboken, organized in 1887 with a capital of on© hundred and
eighty-five thousand dollars* We have now a surplus of three
hundred thousand dollars, and have been having dividends ever
since our organization* We are a busy little bank; we are eight
minutes from lev/ York by the tube,— not quite as close to Hew
York as the First national* We send our messenger there with
ourrenoy two or three times a week, to gladden the hearts of
our Hew York banks* We are building up a large manufacturing
center. Although many of our citizens have offices in Hew
York, they keep accounts with us. We represent five trust com­
panies and a savings bank which deposit with us* Their checks
are paid on the next day after deposit with us, in Hew York,
! through the clearing house* It would be a great inconvenience
; for us to be compelled to remain in the Philadelphia district.
I may say we have kept an account in Philadelphia ever since
we have started* I have been the president, and know we have
kept an account there for purposes of collection, and items in

Reproduced from the Unclassified I Declassified Holdings of the National Archives

that direction, and this has facilitated our business, but if
we shall have to go into it as the act contemplates, it will be
a great hardship*
I thank you for having given me the opportunity of speaking
to you*
Ion* John Skelton williams, Comptroller of the Currency*
would like to ask Mr* Edwards a question.


Mr. Edwards, I see

that you say here (referring to typewritten manuscript previous­
ly read by Hr. Edwards, and then submitted to the Board); "many
of our customers are large manufacturers having their factories
in lew Jereay with their offices in Hew York* most of these
would leave us if we cleared our checks through Philadelphia,
involving from four to six days* delay, rather than through
lew York, where the result is known the next day.”


in making that statement you are not looking forward to putting
the clearing system in operation by which checks would be olear.ed through the federal reserve banksf
Mr. Sdwards: How could we send them to low York if we are
in the Philadelphia Reserve listriotf
She Gcmptrolter of the Currency: fhe idea is that checks
would be worth par in both Hew York and Philadelphia, in all
probability, or approximately —

practically par.

It is expect­

ed there would be no difference between the oost of Hew York and
Philadelphia exchange in the language of the Federal Reserve Act. I
Mr* Idwards:

In Jersey City we have a tobacco factory, the

largest plant of the Amerloaa Tobaooo Company, as



know; we

have tie Amerloaa Sugar Refining Company, the largest plant they


Reproduced from the Unclassified / Declassified Holdings of the National Archives

have; we have the Joseph Dixon Crucible Plant, — the pencil
and crucible plant, the largest in this country; we have the
American Atlantic and Pacific fea Company, the greatest dis­
tributor, probably, of tea in this country; we have, — those
are the only ones I can think of quickly# fhose accounts are
very, very large; those are the people who are being solicited,
to ray personal knowledge, because I have letters from the banks
in Hew York which were sent to me by those companies.
fhe Comptroller of the Currency: But you make out a dif­
ference of five days between Hew York and Philadelphia?
Mr. Bdwards: I send exchanges in the morning. It leaves
our bank at nine o'clock. I think you will recognize this. We
b ill the sheet and send it to lew York; it goes throiigh the
clearing house at two o’ clock* I have every check back that is
not good, or that is short, or anything the matter with it*
fhe Comptroller of the Currency: Do you mean on lew York
Mr. Edwards: I mean on Brooklyn; of course it is a ll Hew
York City now, but within a radius, I suppose*of fifteen minutes
from the center, — Is it not, pretty nearly? I have those
checks in the bank at two o*clock on the same day. They must
be back before three#
fhe Comptroller of the Currency: Where d© the five or six
days come in?
Mr. Mwardss If we sent to Philadelphia it would take a
much longer time. We send to lew York three or four times a

Reproduced from the Unclassified / Declassified Holdings of the National Archives





day. Suppose we sent to Philadelphia at eleven
or twelve o’ clock^
[ or half of the day* 8 business to Philadelphia. Philadelphia
I would have to send those back to lew York, would they not? If
■they were New York checks, then the return would be made to
I Philadelphia, and then returned baok to us from Philadelphia.
Then we might be accused of not using due diligence. We might
be "stuck" for checks good on the day given us, and not good on \
the day returned. It is a very grave question with us. We
have to send our stuff through as fast as It is possible to send
it through, for the convenience and welfare of the bank and the
}customers* I might be mistaken in saying it would be four or
| five days longer, but it would be several days.
The Comptroller of the Currency: On that principle, you
jwould have to send every check to every bank on which it is
; drawn?
Mr. Hdwards: Through New Jersey. We have correspondents
a ll through Hew Jersey*

The Comptroller of the Currency: You would not claim you
would have to make direct collections by sending checks to the
particular cities on which the checks are drawn, would you?
Mr. Edwards: I cannot understand how I will get checks
back that might be short or something the matter with them from
]Philadelphia in time*
The Comptroller of the Currency: What percentage of bad
checks are there?
Mr. Awards: You cannot figure out any percentage* One



Reproduced from the Unclassified / Declassified Holdings of the National Archives


•f ten thousand dollars is as bad as a thousand for tea dollars*


fhe Comptroller of the Currency s Irobably would be oneene~hu»dredths of one peroent?
Hr. Idwardss

Might be, but I doubt that.

fhe first

national Bank of Jersey City Is very conservative, and always

lias been*

W* do not loan any money won the street* in Sow

fork* as they tall it, but only to business men in Jersey City*
and then we keep our reserve in lew York, and any more that
is there our reserve agent in lew York loams*

f# do not know

the people In lew York*
fhe Comptroller of the Currency:


fhe only objection comes


in the

matter of clearing checks, does it not?

Mr* Edwards $ fo, several things#

fhe Comptroller of the Currency*

You would be surprised «*•
What are the other

Mr. Bdwardsi

®ur being members of the clearing house

means muoh to us*

You take the banks in ludson Courty that

are members of the olearing house and those, not, ani compare
th$ assets and deposits*

We olaim to give every possible con**

ventenoe and speed in our bank that would be possible in lew

York Oltjr.



fhe Comptroller of the Currency 2 As far as borrowing money


is concerned, it is immaterial to you?

Mr* iSdwards:

We try not to borrow money*

■mat, but we try not to#

We never buy pspsr, because we feel

we do not know enough about it#

Some day we

We know the people in Jersey

Reproduced from the Unclassified / Declassified Holdings of the National Archives

; City and their needs, and loan them a ll we ©an* If we have
any surplus, we send it to Hew York City* and they use it as
; they please, subject to call.
The Comptroller of the Currency: Of course you have
| relations with Hew Tork banks?
Mr. Edwards: We are turning over large deposits every
day, twenty-five to thirty percent, — I think I can go a
little further than that and say from thirty-five to forty
per cent of our deposits every day, as you can see. I give
you an average of seventy-nine days of exchanges there in
. which our average deposits are six and one-half millions. It
might reach to seven, but I doubt it very much# I mention
that fact purposely to show how vast our exchanges are, and
our demands, so that the reserve w© must keep must necessarily
| be large. You know that the fact of these banks clearing
through the clearing house in lew York forces us to keep a
balance that will warrant our .doing that, and we try to do it*
We can — I can leave the bank, and I do not think I am stretch­
ing it a particle when I say I can get there in five minutes;
I have done it hundreds of times, not to the federal Reserve
: Bank* but to banks in that vicinity. W
© are across the tube
j at JSxchange Place at the ferry just a half-minute from the
j tube, and we land a block from Broadway on Cortland street,
j and it is about five blocks, so you can see for yourself, and
; Mr. MeAdoo has made it possible for us to go across there in
j two minutes. X think the running time is two minutes.

Reproduced from the Unclalsified I Declassified Holdings of the National Archives



Mr* Van Dausen:

Three minutes*


Mr* Edwards (oontinning): Threo? I know it is a very short
It is a case of T,0 n again, off again, Finniganl”

Gentlemen, the nature of this proceeding is euoh that the
sjrgume&ts can he handled nmol hotter by bankers than by coun­
sel* there are practical fuestions of convenience concerning
tjhe operation of this system that counsel would be very bold to
lire tend or claim that he could answer*
We natimlly do not wish to put ourselves in a position of
opposition to.this convention of the lew Jersey banks* fhis is not
oase similar to the proceedings held before yom last week or the I
wjeek before, where there were rival claims of two cities to be
mjade reserve cities* It is merely the request of certain bankers


ljn our territory to be removed to a district where their convenience
wp.ll be greater, and we entirely sympathise with a ll that they
sjay of the reasons which.they adduce why they should be a part
ejf the Hew York district*
It would be Impossible in view of the record of the pro*
to maintain ■*«* we could not if we wanted to — that w#
ajrfced for northern lew Jersey, We are very glad to have northern
4 w Jersey, but we neither asked for it nor expected it in even
tjie larger district that Iff. Hue, representing .Philadelphia be\
tjwre the Orgimlsation Committee, asked for on the basis of ten
d istricts throughout the country* It included southern
af ..
..lin e .




Reproduced from the Unclassified / Declassified Holdings of the National Archives

frenton, and



other cities *

in the smaller district

he asked for* He asked for Pennsylvaniaf southern lew

Jersey9 Delaware and the eastern shore


is of course

the whole of









whole of lew Jersey,

and about two-thirds of Pennsylvania,

and all of Pennsylvania east of the



We have a compact district; it is tne smallest of all, and well
adjusted, we think, to take care of Its needs on the basis of
Its resources and Its industries#

low, to take away from us

these one hundred and thirty-two banks of northern Hew Jersey
(would amount, roughly, to thisj

A reduction in our subscribed

capital from $12,628,000 to $10,677,700, and in our deposits,
as of December 11, 1914, from 119,359,000 to |16.,m,000.

Bow, that might not be important on the basis of our seekng an aggrandizement for oiax district, but it does seem to me
(important on the basis of preserving an equitable division, and


impairing our ability to take care of our needs#

^e are read!" to admit the


Of course

financial and commercial rela*-


*|ions between northern Hew Jersey and lew York.
^possible to controvert


It would be

of the statements in the petl-


'Honor9s brief on those points, and if the matter of convenience
end of trend of business -were the only ones that the organisa­

tion Committee —
sjittee -

were the only factors the Organisation Com-

had to oonaider in apportioning the districts, there

sjeeras to be no doubt _whatever but northern Hew Jersey would
have been l^ol^aed, but there ar© other factors, and as Mr* fan

Reproduced from (He Unclassified I Declassified Holdings of the National Archives

--------------------------- ---------------------------------------------------------------------------------------------■


jpuaea has read from the

report, the two factors that seem to


be most in point, and to have afforded the reasons whioh have

(influenced the Organization Committee, were the ability of thei


Idistriot —

the probably ability in future in normal and ab~



normal times —

to take oare of its own needs, and secondly,

'the equable divisions of the reserves throughout the country;

jand it must have been

. as Hr* Van Deusen points out, there

la no ground set forth as to why northern Hew Jersey was included*

;It was not expected by those who appeared before the Organ!m tion Committee that it would be included, but a consideration
iof these factors referred to by the Organization Committee in

jtheir report showed clearly it was such reasonsas these that
|overcame the natural division, and got northern Hew Jersey,
Just as western Connneotiout, out of the district of Hew York
I with whioh they are most closely assoiiated*
I need not enlarge on the oareful consideration given by


the Organization Committee to all theee faots*

Anyone who did

not attend the hearings, but who has the six or eight weeks

j necessary to read the stenographic reports o f them, would have
j any doubts as to the oareful consideration of these various

j questions eliminated*

Our position is that we think that no

j territory so important as this should be removed from our dis-

j irlet without a corresponding territory supplying equivalent
| eapltal and deposits being added, and we feel that should only
| be done as an unavoidable necessity, because it would open wide,


taking territory at the expense of another district, & re­

Reproduced from the Unclassified / Declassified Holdings of the National Archives

adju s tment all over the country, and it is just a question
Whether the actual inconvenience resulting to northern Hew
Jersey under the present apportionment is such as to justify
such a wholesale reapportionmant of the twelve districts.
do not think our view is "based on timidity.
If we had either
including Pittsburg
the western part of Pennsylvania/or the territory including
Baltimore added, I suppose the first thing to he done "by either
of those/would he to take the reserve hank away from us.1 (Laugh­
ter on the part of the Board.)
But it is the idea of the
actual task Involved and does the actual situation to-day
ju stify that?
How, I feel an embarrassment in seeming to oppose the
statements on.behalf of northern Hew Jersey, because I recog­
nize them a ll, and to oppose or ‘b elittle inconveniences which
they set forth would hardly seem in good taste, and yet it
seems to he justifiable.
flow, as to how this apportionment
Will affect the close relations previously existing between
northern New Jersey and Hew York. I shall take very little
time a ll told on general discussion, but I would like to qliote,
as stating the theory better than I could do it, Mr. Willis*
testimony in one of the hearings in Mew York.
It is reported
on page 141 of the stenographer’ s notes, and this is what he
says, on the general theory and effect of the apportionment:
"Under this b ill there is nothing whatever to pre­
vent existing banks from going on keeping their funds with
correspondent banks in New York just as they have done here
The b ill distinctly authorizes them to keep such
funds with Mew York banks for a period of three years* x

Reproduced from the Unclassified / Declassified Holdings of the National Archives

x x x
Moreover, the h ill further so reduces the aiaount
of reserve which is required of such hanks that they can
continue to keep balances with the Hew York correspondent
hanks if they so desire after the end of the three year
In other words, under this h ill, with the
greatly lessened required reserve that it presents, there
is absolutely no reason why existing relationships between
Hew York banks and banks a ll over the country should not
continue exactly as they do at the present time should It
prove that the Federal Heserve system does not take the
place or perform the functions now performed by the cor­
respondent banks in Mew York. "
I subiait that forecast has not yet been shown to he wrong.
How, as to this question of credits:
The Secretary of
the Treasury expressed himself on the subject at one of the
Few York hearings and expressed the thought that/seemed so clear
t p me far better than I could do.
In the course of the
testimony of Mr. Page, the Secretary of the Treasury said this,
reported at page 206:
•The point I wanted to make with you is that the
regional bank is not primarily the judge of' the credit,
because the paper comes up to it.from the member bank.
How the regional bank of course must have intelligence
enough to judge of the paper presented to it by the mem*
bu bank, and also must satisfy itse lf that the endorse­
ment of the member bank is itse lf good aside from the
paper that is presented to it.
So it is not so thorough­
ly important, I think, as you seem to feel it is, that the
regional bank itse lf shall have the same degree of intimate
knowledge of the makers of the paper as the member bank
must inevitably and will always have; but of course the
larger knowledge it gets the better."
As to the time consumed in going from northern lew Jer­
sey to Hew York,, and vice versa, I do not wish to belittle
the difficulties that are set forth in going from northern
ITew Jersey to Philadelphia.
I do not mean to belittle the
case of the bank officer of Newton, Sussex County, who, start­
ing at 9:10 o*clock can only reach Philadelphia at three o’ clock



Repro®c§’d frdrti the U ncilslfi'e d I Declassified Holdings of the National Archives

in the afternoon* whichcase la quit© pathetic* if he wants to
get there in time to tranaact huaineaa in office hours, hut
lit' mtms that the nature of the huoineaa between theae momhar
raanka and the reoarva .hank is wry rarely likely to be auch
h to make theae personal visita so neoeeaary* and th© important
oature aaem to be, aa haa .been aontionod in various instances
ijn the hear Inga, the ability to mall a letter in the afternoon
the ©author hank, which will reach the reserve hank the
x\vxt corning, and vice versa* Of couroe there are occasions
tojhon it would he very aecirable, and I am sure I ©paak for .Ur.
Rhoads, if I aay we ahall he r?.lad to fceap open a little while
linger on the days whim our friend from Sussex County will want

crnlce hia viaita to Philadelphia. But X think the occasions
will he rare when that will he naceaaary*
itow, I have tsald mom in this general way than I was
j justified in aayinr, because 1 think the question ou**ht to he
to aaaantiala, and I am only giaouaalng the matter on
tjhe theory that we think •auch a great Change ie involved that
the actual inconvenience should ha sifted and determined aa
clearly aa possible, before that great change throughout the
ojountry ahould he undertaken.
i?aw, the whole matter of the hardship' to northern ;!ew
Jpraey, 1% aeeas to me, would depend upon this essential
feature* Will the required depoaIts of reserves in Philadel|
under the now ays tern, and the deposit balance® they will
t i l l find it neceaaary to mintaln in Hew York in order to conto

Reproduced from the Unc®sslfied / Declassified Holdings of the National Archives


tinue their relations there and maintain their present facilities, result in tying up so much money and cutting it out from
loaning purposes as to lose earnings and lessen their efficiency?
Sow ^he petitioners in their brief state that they have maintained balances in Philadelphia to avail themselves of the free
collection charges as compared with the charges imposed by New
5fork. Mow, I think it is appropriate, as those balances were
fairly large, to
to the nature of that free service to
Philadelphia as testified to — as stated by Mr* Hue — at the
Philadelphia hearing. He explained it better than I can do.
The matter was under discussion with regard to these collection
charges as compared with Philadelphia's practice of collecting
checks free.
The Secretary of the Treasury said, "But you
collect checks free, I believe?" To which Mr. Hue replied,
page 1,045:
"Only nominally free, Mr. Secretary, for this reason.
Philadelphia has an arrangement which X think is unique.
We do not, like other cities, allow interest on check as
soon as it reaches our banks, whether it be on San Franj
cisco, Oalvaston, or Jacksonville, Florida# But Philadel|
phia banks have arranged a schedule of time allowance
based on actual experience, and if a bank from out of town
sends us a check, say on Jacksonville, Florida, or San
Francisco, a time allowance is made on that check until
the bank receiving it can get the actual returns back, and
interest is not allowed until that time is consumed."
Mr. Hue further stated on the next page:
"Of course we do not want to give secrets away as to
our methods of doing business, but you know people in this
country hate to pay a direct charge. They will stand an
indirect charge where they will object strenuously to a
direct charge, x x
(Page 104?) "By such plans as X stated a time allowance is made and in many cases they require a free balance









Reproduced from the Unclassified I Declassified Holdings of the National Archives

from, country bunks* We do not allow interest on all of
those balances, but not only take that fciae allowance but
require a balance "to ba retained with us without interact*
And if' tlmt dooc not work out profitably, all the larger
banks keep an analysis departr*mt and at. the end of each
jaonth we know how an account stands, and even after all
these device a I have da 3 crib i to you i f our banks com out
'losers, wo charge to the h rt the expense* of operating and
the actual loos, so they do m/t get free exchange**
Ho'j, quite large balances were maintained by the How
Jersey banks* ri'hls testimony is a matter o f record, and it
neerns a matter appropria' a to refer to*
■m computed on "He basis of deposits referred to on
October 51st ju s t to show what difference was made on the
b a sis of the deposits of northern Hew Jersey reported to the
.Comptroller of the Currency October 31, ju s t "before the act
the deposits
went into effect* On/ the banks o f northern Hew Jersey reported ,
the reserves that they would have been required to d eposit in
P hiladelphia would be v-2 ,S6? , 746, that is, on the b a sis o f de­
p o s i t s araoun~1 1 * to, I think, one hundred and fifty-thro ^
.•million odd dollar®. AH but fourteen of the one hundred and
:th ir ty b * ,s kept deposi ts In Philadelphia, and o f the
$lfKS,950, 0Q0 deposits, 2/12 o f the new reserves with v, 'ich they
had to open th eir reserve account in Philadelphia to la s t a'

th$r actually
;reported deposits in Philadelphia of over four a i l 11on and a
ih alf d o lla rs .
How, i t does not seem a threat hardship to com­
ply with the requirement of keeping v£, 800, 000, aa compared
with their actual deposits voluntarily maintained there to #at
■this free collection syeten as described b ' r* Hue. The-*

would amount

to ^2, 88? , 745.

On that day

Reproduced from the Unclassified / Declassified Holdings of the National Archives

| increases required would be smell that it would be eighteen months,
j before they would be "required to keep larger deposits in Philar- !
j delphia than they actually kept before the aot went into ef5
j feet* low,'again, I am mot minimising their inconveniences
] and objections at a ll* But it does seem that all tho objeoi
| tions to whioh they refer would be eliminated,^ or practically
j a ll, i f they can continue without inconvenience laaintaining
j their deposit accounts in Mew York. Our feeling is that we
j quite agree with the idea that it is necessary, i f suoh a change
|is to be mad©, that it be made at onoa; but our feeling is that
1 sufficient time has not elapsed to -demonstrate that these ap1
Iprehensions are Justified. Of course it im provoking to dis(
fa$vefr a line coming between you and a district you expected
jto be Joined with, but it has been done and much would be in~
Itolvea in making this-proposer; change; and although our sugan
Igostion may be "naive*1 as to establishin^exohan^bank in Newark,
]it a * ms that is a fundtin the aot makes nmndatoxy, and that
would take care of every possible remaining objection*
If our suggestion as to the ability of maintaining balances 1
jin Hew York would not meet the situation
Jersey City seems
Ithe most extreme case possible. We have tho metropolis of Cam!
Iden at the end of our Market Street ferry, and at the end of
jthe possible tube some day, and we would be very unimaginative
(if we could not see what it meant to Jersey City, which is the
jsaae as Mew York for a ll business purposes, to have a real
[change mad© which 'would' affect its relations*
Oar contention ;

Reproduced from the Uncffsslfied J Declassified Holdings of the National Archives

la that even m to Jersey-Cityfwhils not m convenient naturally
to have their reserves in Philadelphia, it will not result in
such tremendous .interference with their business relation® and
preatige as to -oake them lose very;large amounts* of their
naming® * very &any o f th e ir accounts.
And, the ref ore f we
;mve to take th is p osition o f opposing the northern New Jersey
petition,politely* — not at all bitterly, unless there is added
*io ue territory which w ill give us nn equivalent amount o f
capital and deposits fo r those we should lose if northern Bow
Jtt*ey is taken away from us* I f not, our a b ilit y to take oar*
o f our no ode is likely to he impaired.
!:ow i f we are given
joore te r r ito r y , that \flll he at the expense o f an adjoining
district, and i t w ill w ish t& he r.mde whole, and w ill claim
n aturally to ha kept in the same p o sitio n , and we think

j-h&t involves too great a change to ‘make -until the act and the

^iew system have

he cm given a tr ia l* u n til

ue find

that th eir

^ preh en sion s are J u stified * or such hardships are iajminent

in such case they will be
Corrected, and
s t i l l do not think the hardships expected
f i l l materialise s u ffic ie n t ly as to ju s t i f y the change asked fo r .
I f hardships exist and inconveniences continue, then we w u l
unguest that a t r ia l be jaada o f the branch bank that is author^hould ha



and o f course

Jjaed, and I cannot sec* how i t could f a i l to remove even the dregs
C'f the inconveniences,

which we think i t wi l l .

Mov? I shall

atfcenpt to take the hour that was a llo t te d to ia©, because
the nature of our answer in such as X have indicated* and I



Reproduced from the Unclalsified / Declassified Holdings of the National Archives


- ^




think tli© faote that have been presented are just the things
that this Board
I mean the gentlemen from northern lew
will wiah to consider those f&ots in tonmeotlon
with the aatual operation of the eye tern, which this Board
is better able to determine than any aotmsel or even any
I thank yon very smoh for your kind attention*

Reproduced from the Unclassified I Declassified Holdings of the National Archives

The Governor of the Board: Have you any reply?
Mr. /alter M. Van Denson: How muoli time have I?

I do not

think I will take very long*
The Governor of the Board; i?e are getting so many oonr*
plications here I should say about twenty minutes, adding all
the time together*
Mr* Van Deusen: I think that will he sufficient* I made
some notes in regard to the Philadelphia
our friend 1 s-brief
filed by Philadelphia, and they really have introduced nothing
new, so to save time, I will follow these notes rather closely*
As to the point that they make, that it will be necessary
to re-adjUBt the d istricts, probably, which may involve all
of the districts a ll over the country, I disagree with them
entirely there. X do not think — I think this is a very
simple proposition, and oan be solved by just this one change,
without involving any other changes in any oth; r districts,
and it oan be mode more easily now th‘*n before the Act has
gone more fully into operation. If you put into operation
the oleoring house functions, as completely as some of you
gentlemen I know desire to do, that will involve a very great
machinery, and after such a ohange goes into effeot it would
be much ha der than it is now, while only a portion of the
machinery is in operation. Therefore thi£ change should be
made at once*
How our friends from Philadelphia state that they should
be compensated i f nny change is made* A study of the figures,

Reproduced from the Unclassified I Declassified Holdings of the National Archives

I know they are dry things, but i f yon will consider this just
a minute , it will nhow that they ore in error in their con­
tention th,<t i f tiie northern part of Ho?/ Jersey ho removed. .
from their district, it leaves them as they stated v?ith a
subacribed capital of §10,577,000. Mow, that is larger than
the subscribed oai>it . 1 of eight of the other bonks even after
that change i ;7 made* I take these figures — I only went to giiD
round numb ers - fro i the report of the Organisation Coimaittee,
as given in the re port of the ijocrot ry o f the treasury* I
will just hurry through them:
Boston «— you will rem rnber those figures wore ten million
five hundred thousand odd dollars, — Boston, (}9,900,000; Rich­
mond £6,300,000} Atlanta, $4,600,000} at. Louis, ^4,900,000}
Minneapolis, §400,700,000} Kansas City ^6,500,000; Pallas,
•>5,500,000; Han Francisco, ‘7,800,000; and the remaining three
d istricts, that is Cleveland, with a capital of a trifle over
twelve million dollars, a little over a million and a half
more th?m what Philadelphia wonld be; Chicago, twelve million
dollars alraoat five hundred thousand. dollars, — or little
lea>: than two million dollars more than that ; Kevr York, with
twenty million six hundred thousand odd dollars, but of course
the larger figures for Hew York are due to tha largo number
of big hanks located in that city. But v/e do not feel that
is any good reason why northern Hew Jersey should be placed in
an unnatural district* rt?h© simple faot that it would enlarge
Hew York somewhat and even when we consider as I pointed out
to you, the banks in the northwest part of Hew York, several

Reproduced from the Unclassified / Declassified Holdings of the National Archives



hundred mitmm nwayt mm in that dlftttfiot* and m x friwdn f v m \




iii th« report of tfco Organisation




II*#- William aaya •«* point*'out on* foatwe



fh# principles

that guidod t h m I# that *?hioh ho foola $or#m*& tl&ast in


apportioning thin ditrfcrlot* m& th«t in that It wt« thai?

A m im that tii# tattle* might mo^t th# l«gitim*ie ftam&isAa for


bmtm»Bis# whathar no*ml or nbnorii&l1 in noooirditno*} with tho
provisions* of th«t Fodowtl IlaiUir?# <i«t«



At m v& M l &Qnt*ir®min± that w« Had doim in ?'hil&dalphlat«~j




I ksmm it mis atatod to m down tharo thvt thoy f«lt thero wwi


not m irorjr graat horswing ioswid in. tha Mfstjriot#


nosaa of



th* tfeiiiJc® in Philadelphia mad* thin at&tomont that th©r« *&*


not n voty groat borrowing doemnt In th* dlatri*t»



thought that th# I’hiladolphla di*triot would probably fe* ona af1
th# atrongaat within itaolf* and th w *tQ r* mn o f tha first


to b* aall«d upon to h*lp oth^r difrtoriat**
pill ha borne out Iqr this fig**#**


How I think that

havat of oow§«tf unfor­

tunately not a*aa»* to tto® official reports of th# banka, and
oannot giya oxaat figures, but fh# publish^ report of tha
Comptroller oov«ring ciot^btr $% ®how« / total borrowing*, both

bills risHltifoomtod and btlfefN^rabl** in th* third dintrioi, * H



oar th* Jrhiliidalphin Diatriot, of a little tinder *a?*n million

| dollar©*




tho f-ntire di^trioi*

Xii Bm Jart?*? the totals

| borrowing* for th« m tiro atata wara #$,&®0 t00o# including

| M I X © paynbl# and billn j^&uoibl#*


in oth^r wojrd^* about

I o»o*4ialf of tho total borrowiiigii of th® imtisro di«tiflot*
j I thiiik It in #nf© to & w vm that bm m tm of tho isaportant



Reproduced from the Unclassified I Declassified Holdings of the National Archives

Industrial neuter® in northern lew Jersey, a considerable porj tlon of that borrowing was done in that section. I know I
i went over the onlyidetailed report# of the hanks accessible
\ to me, and I taow that they reported f 948,§00 in h ills payable,
! or in that one city alone, one-third of the total borrowings
S of lew Jersey, and a bout one-seventh of the total borrowings
j. of the district* t h e r e f o r e we contend that instead of weakj aning the Philadelphia district, it would if anything strengthj en it , by removing from it northern lew Jersey, ■
— an active
borrowing community* fhe nature of the business of northern
1 Hew Jersey, the nature of manufacturing and industrial centers
| there, males pretty heavy demands on us in the fourth district,
| and there are no other sections of the Philadelphia district
that are extensive borrowers, and they would be very amply
I able to take cara of a ll of the rest of their district. And
j we therefore do not feel that you should be confused by that
issue, but should consider o r petition solely on the ground
of the injustice and the inconvenience to which we are subjects^
fhe other points of the Philadelphia reply are reallyminor points, and do not need any extended argument*
fhey oontend that our suggestion as to Inconvenience and
[ disturbance are not well founded, hut a ll of their arguments
| in reply see® to be based on the facts that a re up to the
j present time suppositions*
For instance, the e&Ueotion feature. low personally, I

classified I Declassified Holdings of the National Archives

have always bean a very enthusiaetio supporter of that clause
of the M il* but you gentlemen know better than I do th©
tremendous difficulties of that problem, and you know that
there are many people heartily interested in this system who
are even opposing the federal reserve banks taking checks
outside of their own districts, and we have a circular from
the Philadelphia Federal Reserve Bank very recently that
rather disturbed us because of some of the questions whioh
were asked, *«- the line of thought shown in those questions,
fhose questions tended to show that there was a possibility,
i f not a probability, that checks of one district would not
be taken by another at absolute par# Of oourse you under­
stand that as closely related as we are to lew York, that would
be absolutely fatal to the national banks that are in com­
petition with the state institutions, and the very fact that
there is a radioal severance of the ordinary lift©a of com­
mercial business cannot help but oause friction and incon­
venience and loss,

Reproduced from the Unclassified / Declassified Holdings of the National Archives

Then as to the point that Mr# Williars mate in regard to
| the personal contact; low I would like to look at that from a
little broader point of view than he tools in his statement. I
feel that these federal reserve banks, - and I sib sure that yon
I will agree with me in this, » are something more than credit
dispensers; something more than currency dispensers; they are
leaders in their districts; they are put there to solidify the
hanking of their districts; and with the new rules for hank
: examination, they have wonderful possibilities as counsels and
as guides to the banks in the district* They can lead and mold
| the banking opinion there; they can, by their constant watch-*
! fulness, lead the banks along conservative lines* How that can
; be done best, as you know, by a personal contact# If the federal
I reserve bank is in IMladelphla, gentlemen down there do not
j see our people from northern Hew Jersey very often. They do
not gfct that close personal touch, knowledge aM close contact
with them that will give their advice w eight. If they go
to advising them in a critical time, or i f they feel that a
I bank is doing things - not wrong, but things that are injmdiclops, i f they have that close personal relationship that would
i naturally come from constant association, they will have much more
weight, and would -understand the thing better#
I think, * I do not want to minimize the importance of per­
sonal contact, in the matter of ortdits* I do not think we can


make loans satisfactorily over the telephone, and in fact, I can

Reproduced from the Unclassified / Declassified Holdings of the National Archives

j see places In ssmller ceirataities where It ml-tht &e very in! jurions if cga officertfcere called tip over the telephone to make '
'& loan* and it got oti* It might be faiseonstruea,
the b&alcf and this would be true even in the ease of the larger
banks, i f we should talc© sny <juanity of notes by mall, and
thoy were lost* fery few art, ho*ever; it is a remote con­
tingency, but possibly it woul$ cause very serious Inconvenience*
We can take thaa ia and explain e^oh note arctch more satisfactorily
; th&a to supply printed statements and suoh things; and the
i federal reserve banks are going to go late the credits? to a
, conelderable exteat# 2 thiak you gentlemen already have plans
; for or edit departments in these banks* I know we have already
reoeived inquires from some of the federal reserve banks as to
©remits* letters from them showing' that there is to be an in­
vestigation of credits*, and that they are not simply to be taken
on the simple endorsement of the bank*
low la reg^rfl to that Maintaining of balances la Hew Yorks
Is to the difference 'between the fifteen percent reserve-** the
old reserve-- v m the a a? one* they point out we could maintain
i the oi?her three per coat la Hew York end s t i l l mlnuain eon| si&erable balances there* rhnt is turef but that would really ■
j Involve penalising the banks of northern new Jersey bb oommred
| ^ith banks of other parts of the district* •'(me of the dls| tinguiehed
financial officers of the (kmmnneai have frequently
; — have recently called attention to the feet that the reduced
; reserve requireiaeats are an answer to those b? nvs * e ooiaplaln©4

Reprtxluced from the Unclassified I Declassified Holdings of the National Archives


jof lose of later©at due to the regional banks not paying injterest on deposits* Ottr friends from iMiadelphia practically
Isay these benefit® cen be availed of by all banks of the!r dls»
trict except thoee of northern Bow Jersey, thy should we be ex­
cepted and put to that.addition©! cost m & expense, except in

to us

j*oiBpetitlon with non-member banks*

it looks/H^peifell King jbms*

balances that hare been-carried in iliiladelphle ha ve not
been cash balances, but almost entirely collection accounts,
land the bulk of them have been in transit* they were not true
|reserve *
Kr* Parker
Williams? fhey were reported a© reserves


jwere they not?
Mr* *am Deusen : Yes, legally they could be carried-as
reserve, but this new act tes come doira to the real essence of
reserve* '^hey have recognised the fact that the old reserves
were very frequently not true reserve as under the oil law, we
jcould carry oar' entire bank reserve in Sam teanscisco, which
1is extremely illogical, -and one of the features ox this law is
Ito bring the banks eventually to doing practically a ll of their
!business with the federal reserve banks, with their reserve
jcenters, and. (icing practically a ll of their business with them*
And again the checks, for instance, the checks that they
|draw on the federal reserve bank in Billadelphla are not at
iabBoiut® par In Sev York.

I m there are'some very considerable state institution®

Reproduced from fhe Unclassified / Declassified Holdinas of the National Ardih/fis

jover there, ** a number of large 021©8 , so large that they do net
jearry accounts in oilier bunks* low onx sheo&sgiven to them *
tend, we have to remit them very large smounto of money — oiir
jehecks on Biiladelphia are not acceptable to them, absolutely
!nott. beoauee they would have to send those cheeks to a hank In.
jJMladelphia for collection, Involving a lose of some days hej
jfore they actually get the money, «* in other words before they
[could use It* Our checks might he taken toy a national hank
tin lew York, and oould he deposited in the federal reserve hank
In $ew York oity, but there are so many large starts Institu­
tions there and so many large concerns doing business with
those et/'.te institutions* * brokerage end banking houses, •
and they would not receive a eheak on Philadelphia at absolute
par* 1 pointed one phase of that out to you in regard to
the Post Office end Internal Revenue departments*
And then as to the eol.leotlon of items, it is not so
much the colleatlon of the item, which is very important in
itself,, i admit, but eecause of the delay in presentation*
for instance, in sending, - we have a very large volume of
cheeks on $ew York Cltyy and in sending those checks to Sew
York by way of Philadelphia, we would delay the presentation,
even i f one a day, and if anything happened,to the maker of
one -of those checks, we would profc&fcly under the law he accused
of lack of due diligence*
i*he Comptroller of the Currency: Do you send them out

Reproduced from the Unclassified I Declassified Holdings of the National Archives


|by messenger and get them In the same night?
Mr. V m m m m i ’* m % m in Newark sent a m m m m r every
fim Oomptrolier of the currency? Gould yen not continue
|to do that?
Mr. van Iteusem Y*a, i f we chose to maintain extra
Ibalances In J*ew York, icb, m Philadelphia pointed, out,
\we oouia a.o on the extra three percent, which would not be
j sufficient hourever*
fhe Comptroller of the Currency! Is i t necessary to rei
|i§in large balances on lew Yofck in order to get the benefit
ji of that relation!
Mr. fan Deusens Tee.
ilie Cdflroller of the tiurrenoys Why?
Mr* Van i%ueens they are not Handling those cheeks for
York and it is a constant expense to handle those cheeks*
fhe Comptroller of the Currency: Xou mean on lew York City?
Mr* Van A%nsens She clerical help, etc, would be m
Iexpenae *
She Oomptroller of the Currency: I do not see where
! that comes in; certainly not very much expense would be in;


Mr* Van ^eu&mt lot very much, but considerable .
She Oomftrolier of the Currency: Would it be a hard*
jt ship on. you. to collect lew York checks by direct remittance,
j as at present, and send all.others to the TMladelphia bank?

Reproduced from the Unclassified I Declassified Holdings of the National Archives




Mr* Van Denson i %m*
The Comptroller of the Currency* How?
%* f m M s ® ! Because of the extra balances that we
would have to Maintain there*
5Phe Oomptorller of the Currencyi that is the only trouble,
! •** extra balances?
Mr* Van l>emssn§ Yes, then there Is also what I wanted
to point omt,* what I intended to point out, was the faot <£t
the return on the items. It 1® important, as Hr* Edwards
pointed out, to kaos?,» especially in the case of large checks
; to know promptly i f those arc not paid, ant he cans# it is
frequently necessary to cat oh. the balance in order that they eani
he charged baok to the balance of the man depositing them* Than,
for instance, a cheek on our section where we have so many
transactions with lew York, supposing a case of a check of
a imnnffecttring account to a
house broker, that broker
; was a sa&nufaoturer in Bateraon. fhey would not clear that
trans&stlon until they kna; the; check is good* i f he deposits
j that i|i a Jtew Yoxk bank, and it sends to !Mladelphi&#~ they
I put i t in a fedsral reserve bank in Hew York and they send to
j .Philadelphia, and they ©end to Paterson, they s t ill fake a
| oomple of days at the quickest, and possibly more, and to get
: the knowledge it is paid will double that time* low the de*
: positor of that cheok in a fiew York bank—they deposit in a
; Sew York federal reserve bank, and they send it to ^aterson,

Reproduced from the Unclassified / Declassified Holdings of the National Archives

gets the advice beck in fully onc~half the tine that would ho
other* i e requiredf and those trens- ctions very rfreaueitt
on account of our cloce relation-

Reproduced from the Unclassified I Declassified Holdings of the National Archives

m i p with that ©iff*

fhe Comptroller of the Currency!

la the principal objec­

tion the requirement you may he called m to keep additional
balance• la Hew fork as well as Hi iladeliii la?
Mr* fan Deusem

No# our principal objection is the faot

that it is a severance of our customary course of business,
fhe Comptroller of the Currency*

Is It a severance?


It involve that!
Mr. fan Beusent


fhe Comptroller of the Currency:

Mr* Tan Deusen:


In mime rone waye that we have pointed

out9 in the carrying of our reserves in an unnatural district*


and we feel that a strict compliance with the law would in­
volve that*
fhe Comptroller of the Currencyt

Tom will continue to

carry accounts in Hew fork if you choose to do it?
Mr. Tan Beusenj

But we are penalised as against other

member hanks,
fhe Comptroller of the Currency*

fo the extent you may

he required to carry balances there at interest ifoidh you would
not carry otherwise at interest


the bank was in lew fork*

Tou say you would still carry balances?

Mr. Tan Beusenj

I do not think so*

fhe Comptroller of the Currency!

lould you keep all fed*

eral reserve balances in lew Tor? t
Mr* Tan Deusen*


fhe Comptroller of the Currency!

At ones?

Reproduced from the Unclassified I Declassified Holdings of the National Archives

Mr. Van Deusens Yes.

fir# Comptroller of the Currency! Of course you itust af~
j ter three years, but at once?
Mr. Van Xtousent Probably not.
The Comptroller of the Currency* Then you are not penal­
ised because you are carrying balances in Haw .York, which you
; carry anyhow.
Mr. Van Deusent ?e are speaking of the ultimate workings
; of the thing.
The Comptroller of the Currency: Thmo years hence?
Mr. Van Deusenj And know that m muat keep our reserves
| in cash or in the federal bank.
The Oomptroller of the Currency* Then you look forward
; to three years hence* flhen you have a ll balances in Hew York
: banks, and m other accounts with Hew York banks!
Mr. Van Deuaens I feel we will do a ll our business with
■ the federal reserve bank.
The Comptroller of the Currency* Only then it will be
; applicable, this hardship!
Mr. Van Pousens Yes*
The Comptroller of the Currency! Only at the end of
? three years!
Mr, Van Deusen; But the change can be mad© more easily
; now.
The Comptroller of the Currency* Yes, but the only hard­
ship will be at the end of that time*

Reproduced from the Unclassified I Declassified Holdings of the National Archives








Mr* Va;a Beuaens Yea*
The Comptroller of the Currency: But you. would keep
your balances there i f the federal reserve bank war® In lew
York? You would continue to keep your accounts In New York*
would you not?
Mr* f m Beuaeru How mon Trill you put into effect the
altering house funotion of the Act?
The Comptroller of the Currency: Suppose that should
he put into effect at once!
Mr* 7m Deusem If piaeed in our normal district* we
would undoubtedly| —* most of the banks would undoubtedly —*
keep up the other balances with the federal reserve bank.
The Comptroller of the Currency:- And not with their
lew York correspondent®?
Mr* Han Deuaen: And not with their Hew York correspondenta*
The Comptroller of the 'Currency: That


intcreating to

Mr* Van Deuaen: I think that would undoubtedly occur* I
know tliat would be my feeling.
The Comptroller of the Currency: You could keep your
j balances in the federal reserve bank if you chose, if Biila?*
I delphia exohaage were on a par with New York?'
Mr. Van Deuaen; But Biiladeljtiia exchange would nearer
be on an absolute par with Hew York*
The Comptroller of the Currency: That is begging the
question, is it not?

Reproduced from the Unclassified J Declassified Holdings of the National Archives

Mr. Tan Beusenj If m sent a check to on© of the large
state institutions there, in payment of a sum owing to them,
; or involving a transfer, they would not take it at absolute
j par. They would not accept a c&teck on a noa-mesher clearing
j house bank, located up-town, for Instance, at par, — ■up-town
In Hew York, For instance* —■I do not. want to mention names
i of banks, but you know two or three of the large state banks
’ and trust companies, some of the oldest in New York City* and
suppose we sent a check to one of them on an up-town non-memj ber of the Hew York clearing house* They would not accept It
at par.
The Comptroller of the Currency* If the national banks
I would take at par, if you wanted to pay a state bank you could
i give a check on a national bank if you chose*
Mr. Van Beusens That goes back to our keeping balances
The Comptroller of the Currency: But there would be no
great hardship if the exchange were on an absolute parity 'be­
tween Hilladelphla and Mew York!
Mr* Tan Deuseat That*s impossible to assume.
The Comptroller of the Currency: I know, but suppose it
| were possible*
Mr. Van Beuseni I do not think it is.
The Comptroller of the Currency: But you do not answer
^ the question*
Mr. Van. Deusen: Mo, that is only one |tiase °f fit^ I
think this has got to be looked at in the broader - */a broader

Reproduced from the U nctsslfied I Declassified Holdings of the National Archives

point of view, I think that personal Intercourse between
tii© member bank and the non-member bank is of Tory great
importance, and one little feature was brought

Reprodoced from the Unclassified / Declassified Holdings of the National Archives

to ray attention Just a day or so ago. You are putting, I
think, your offlot ia putting the national bank examinera un­
der the Head of a chief examiner in the diet riot, with hia
headquarters in. the federal reserve city. low your examin­
ers 1 offloe there have done their real work in northern Hew
Jersey in being able to catch crooks Who have been driven at
out of lew fork Cityj they have been able to do that by their
location in Hew York City, and their oloae touch with condi­
tions there. They te ll me it has been very common, When
orooka have been driven out of Hof York Oityj they have been
able to do that by their location in Hew York Qity, and their
olos'i touch with conditions there, They te ll me it haa been
very common, when orooka have baen driven out of Hew York,
for them to come over to the banka in New Jeraey, and they a»r
phaaisse the value of that-Hew York contact#
The Comptroller of 'the Currency; then they drive them out
j of Mew Jersey* where do they go?
Mr. Van Beuaens To ja il*
The Comptroller of the Currency: That ia the next step,
j is it , from Hew Jeraey? (daughter*)
Mr. fan Deuaens Ho, but we sent one of them Juat recent| ly. There la a oaae in point, and that contact la of very
| great benefit certainly — ia an illuatration and with^ regard
| to the branch bank there I feel that their auggeation of a
[ branch ia a conoeaaion of a ll of our oontentiona. If our
| contentiona are not true, there ia no neoeasity for any
| branch. If our oontentiona are true, and they so locate a

Reproduced from the Unclassified I Declassified Holdings of the National Archives






| & byan#i* they have suggested it be plaoed in Newark. Ihy Newj ark for the branch you would naturally hare located in the
j financial ©enter of the community? New the financial and ooa| aereial center of northern Hew Jersey —* in other words the
| proper location for a branch — is Hew York City. ‘There is
j no other financial and commercial center of northern Hew Jerj sey, so if you locate your branch in the proper place, you
j would have to put it in Hew York City* and the whole thing
j oan fee simplified by simply over to our proper and
| natural district* and we oertainly ask that that will be done
| for the very good reasons that we have given you* and we feel
jthat it oan be done at once, much better than later*
te thank you* gentlemen*
fhe Governor of the Board: A request has been made by one
j of the Board that a. oounty map of northern Hew Jersey* showing
S on the map the banks of New Jersey now in the olearing house,
!j be prepared.
Mr, Edwards: It can only be in three cities in Jersey
J County: Hoboken, Jersey. City and Bayonne. In Jersey City*
| the First National Bank and the Hudson 'County Bank* and the
\ Third National Bank, and 'the Mechanics Trust Company, in Bayj onne. Those three cities are the only part of Hudson County
!I Which take almost a ll our Hudson County in the metropolitan
| district* that can join the clearing house* That answers
j the question, does it?
The Governor of the Board: That answers it.
Mr. Van ieusens I prepared ten saps that 1 got from the

Reproduced from the U rfclasitfif^f I Declassified Holdings of the National Archives

CkioXogloaX Survey here, propared with a rad ink line drawn
across it where we ask for a change* Those are large ©ape,
and 33r* Willis, I believe, has those in. hie possession* they
were sent to him at the same time as our brief*
mmitm of mb.

E tn


, of net


Gentlemen of the Board: Mr. Williams raised the ques­
I do not know whether he is satisfied in his mind as
%o whether we should penalise Hew Jersey* 1 oome from Hew
Irunswiok, and I can not see where we will have any oooasion
to use the national reserve banks, fhat is the measure of
damage in the first year to our institution? Twenty-four
hundred dollars, money worth four per cent, for the sixty
per cent we have deposited in the national reserve bank. We
must maintain our balances in Hew York, because their payment
must oome through lew York* We have kept account0 in Phila­
delphia for many years for collection 'purposes, but we have
never drawn against these to satisfy the demand of custom, but
simply to transfer balances to our reserve institution in Hew
York nheare used for distribution* We do not borrow any money.
The Oomptroller of the Currency: Which is your bank?
t The national Bank of Hew Jersey. W
think very hl^ily of the Philadelphia institutions, and our
relations with them have been very pleasant, and I want to s^
that is irihere we are penalized by reason of the loss of money
and interest.
The Oompt roller of the Currency: You would lose it in
'~4&+~3e* Yerk bank?

Reproduced from the Unclassified I Declassified Holdings of the National Archives







........... ■




I Io# indeed.





The Comptroller of th# Currency* I mean the federal rej
servo bank In Hew fork, fhey would pay no in tern *•
: Tery tame, but ire have no occasion to
have deposits in Hew York*
The Comptroller.of the Currency* torn would not?
: Thar© would be no occasion for it,
fhe Comptroller of the Currency; You would expect to
close them up?
? fee,
The Comptroller of the Currency! At the end of three


y e a rs ?


: At once, if we could get the clearing
The Comptroller of the Currency: If you could get the
clearing features?




t Tee| sir* low we have a state institu­
tion in our town, and I am sure they will take advantage of
this situation if we are'penalised* fe have some large in*
dustrise in Sew Brunswick, and clear about twenty-f ive or thirty million oheoka drawn all over the United States.




They will

get that business, and Hew York lias been soli aIt ing that bus-

lneas already from us* fe have lost two accounts on that ba­
Mr. Parker S. William*:

I Shall ®er*ly rely on the die-

oaaeion in our answer of various points referred to by Ur.
Tea Ueusen and these other gentlemen in this hearing.


Reproduced from tl^U rtetassifled I Declassified Holdings of the National Archives

Bhoads wishes. to say a word !o the Board, and I am very glad
to have hia do so, to ©quallss© my position against sueh an
array of opposing counsel.


Gentlemen of the Boards I do not wish to m m to op­
pose the situation of the northern Hew Jersey banks. 1 mere­
ly would suggest that some of the points which they have rais| ed are capable of being handled without-the difficulty that I
think they contemplate. Arrangements oould be made to send
j cheoks to the federal reserve bank in lew fork, — direct
from lewark to any other point in northern Mew Jersey, for
credit t© the account of the sending bank through the books
i f the Philadelphia reserve bank. That is a detail easily
Mr. falter H. Van Beusens Are you going to. collect
checks outside of your own dirtriotf Has that been settled!
Mr. Rhoads: I do not see how we can fa il to do it. fe
have to do it. The law is mandatory. It looks to me that
way. It has been stated by some of these gentlemen if they
had their account with the federal reserve bank in Hew York
i they oould close out a ll other New York accounts. I would
question whether that would happen, because they must handle
non-aember checks, and must keep some channels open to do that
I can see no difficulty in re-arranging the clearing system,
if afterwards the district should be re-defined. It Is a mere

Reproduced from the Unclassified / Declassified Holdings of the National Archives



;j detail of bookkeeping* ant we are a ll the lime changing our
i method of routlag checks* and that could easily be done.
legatin g the reduction of our capital* I think it ah©mid
j bear some proportion to our line of deposits, and I think the
Oomptroller of the Currency has brought that matter before the
| country in his last report.
In dealing with the amount of borrowings in banks in Dis! trlct Ho. §* Mr. Van leusen alluded to direct borrowings or re\
I discounts* talcing no account of emergency currency* nhioh ^iculd
j figure in this calculation* and the emergency currency taken out
j in our district Should be added to the amount of borrowings of
|j banks in District No. $« I think that will '.be found fuite a sub*«
j stantlal sum. In our circular of inquiry* rchere Mr. Van Deusen
| suggested some of the questions that pussled him as to what is to
|'i $e done outside the district* we merely wished to call attention
j to the fact that you can not get away from time and distance in
j such problems* and time and distance between lew York and
; delphia are minimised* whereas time and distance between Hew
| York and San Francisco are at the extreme.
As to the penalty of carrying large reserves* iwhioh we sugj gest is possible for them to do without reducing their present
j borrowing fa c ilitie s* the amount of your reserves, after a ll*
! is determined by the character i f your deposits rather than by
1 mere statutory limitations* Any banker knows one bank can run
on a five per cent reserve on a ll time deposits* and another
| must carry twenty per cent reserve if he has a rapid turn-over.
I merely suggest theee thou#ts* and thank you for the

Reproduced from the Unclassified I Declassified Holdings of the National Archives

privilege of speaking to you, gentlemen of the Board.
The Governor of th© Board: Gentlemen* we take the case
under advisement, and will duly notify you of our oonoluaion
in the matter.

(Whereupon the hearing was adjourned*)


Papes^ 0

to ^ V ^ represent the hearing

of .January, 2.7, 1915,

They were turned over

to Mr, Allen’s "‘office,

when found they shot Id

be inserted at this place.