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Reproduced from the Unclassified I Declassified Holdings of the National Archives
Reproduced from the Unclassified / Declassified Holdings of the National Archives
APPEAL TO THE FEDERAL RESERVE BOARD
FRQK THE ACTIOH OF THE ORGANIZATION COMMITTEE
HI DESIGNATING RIGKMOKD, VIRGINIA, AS THE R$3ERV$ BAM OTTER
•OF THE FIFTH DISTRICT
-INSTEAD OF BALTIMORE, MARYLAND.
HELD AT UNITED STATES TREASURY DEPARTMENT,
fASHIKGTOH? D* C.
January 6 , 19X5.
Reported byi
Rexford L* Holmes,
Offioial St@no3 m1ih.0 r
of Hearings,
$33 Southern Bl&g. i
Washington, D. C*
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1
5?h© .Pr©iild©nt of th© Board i
Gentleman, this As a
motion for th© review of th© nation of th© Federal Basorve
Bank Organisation Ooraraittea, in daaigniting Richmond as
th® iaiaral Baa©rv© City for the Fifth M a t riot*
Petition©
hav© boon duly filad, and brio.ff» also hav© boon filed,
to the order of proaatfar® on
opening and oloaing# I would bo gl^d to hour from both
aid©# as to that point#
I
would like
to a nk fir sit »a
Mr* Chari©a ftarleell, Ooufcaal for th© City of Baltimore
Xf th© Board pl©&s©, w© aattuy* that following th© ordinary
praoe**nr© of l©g©l tribuzutla, it would b© our right, a©
app©lla©a, to open and elo»© th© argument, it having boon'
our intention to provide m opening and ©losing argument*
Th© ?r©aidant of th© Board t Th© D o m s ©1 for Mohmondf
we would b© glad to hear from you*
Mr#
1©
Legh R#
as^tra©
th^t
fag©,
Caunael for th© City of liiohmonds
that would b©
th©
©our a© of proceedings, if
on th© part
member© of th© Board* "a shall b© entirely willing
leave thla matter to the d.ls'ort'-tlon •■f tha Board*
there b© no objaation to suoh procedure
'l?he ^r©aidant of th© Board?
me
to
As X understand, th©
Boird ha© allowed two honra for thi> hearing*
to
of th©
th%t Baltimore, being tho moving p*.rty,
It asanso
—
that thay
should have th© right to open and olos©, and th© Board
would suggest an opening-, of ©ay# thirty minuta#, and than
Biahraond an hour, and th© remining ’time to b^ t^ken up
by Baltimore} and.
of
th©
1
would suggest that either or
aitia©
should.
both
have
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an opportunity for five minutes to sum tip at the close; and.
the Board will be glad to extend th«t time; so i f that ie
agreeable to you a l l , we will consider that as settled*
(?!& are mking a desperate effort to have that clock fixed-*
indicating a cloak in the room
hut we will get the time
as nearly as possible in some other way.)
3e will call on Baltimore then to open*
Mr* Charles Marke ll, Gounsellfor the Gity of Baltimore
If the Board please, before opening the argument , vte wish
to make on behalf of Baltimore a preliminary motion which
we assume will be unnecessary, but which we feel it our
duty to make* and th t is , under the rules of the Board
requiring oil questions of jurisdiction to be raided at
this time, we wish to move that, when the Board takes this
cane up for consideration and deciBionof the case be par
ticipated in only by the five appointed membrra of the
Board, and that there be no participation by either of the
two ex officio members of the Board, who are also, as such,
members of the Organ155 ati on Committee, whose action is the
cause flfir this appeal# The act of Congr^as, — the terms
of the act of Congress regulating thi*s right of review
ar<* extremely brief* The aot doea not go into details, as
many procedural a Hs do, i f dealing with technical legal
matters, because it was intended that this? Board should
not be #ovarne<- by technicalities, but we assume in the
acts of the committe by this Board, it wee not intended
by C0ngre88f and nothing is in the ^ct indicating such
intent, to depart from
ordinary
principals
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of jurisprudence underlying a ll law, one of which principal#
is that Such a review should be before an unprejudiced
tribunal, which has not formed an opinion which would dis
qualify its members. from reviewing the ease with., open ;^inde^..
With that view, which seems to us the clear spirit of the
act, though expressed in brief language, it would seem that
this appeal should be heard by the five member® m d that
the hearing should not be participated in by the other two.
Of course those general considerations are only strengthened
if we look to the Organisation Comittee, because the
Organisation Committee comprises the two g& offio 1c jERSjabers,
who are representative o fficial officers of the Government,
who are evidently put on the Board because of the eminent
desirability that in the practical working out of this act,
the Board should be in touch, as it is mde in touch by the
presence of those two members, with the important financial
departments of the Government* That reasoning does not apply
to a matter not looking to the practical working of the act,
but to the origination of the act, the putting of this act in
motion. There is no occasion for having the joinder of these
Treasury Officials with the Board, but on the contrary the
appointed members under the act, are required by the President
to be selected with a due regard 'to the geographical divisions
of the country# so it seems that we » y properly press this
point, not only in view of the fundamental requirement that
a review should be a real review, bef-cre a court which has
not expressed its views ©r arrived at a decision, but in
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this case also t a review by the Board with representatives
of the districts of the country,
not merely an official
hoard at Tashlngton. So much for that point; and with that
preliminaryt X will >rooeed to what we consider the merits
of the case*
The President of the Board: May I ask if you raise that
as a question of lawf or as a question addressed to the dis
cretion of the Board?
Mr* Mark»ll: t?e rai e the point in both respects; we
think it i» eminently a question of discretion* i f the
Board Bhoald feel any doubt as to the legal rights of the
parties. As a matter of propriety, those two gentlemen
should not participate* But wo also raise the quootion
as a natter of law, because we think a right of review
given by the statute means a real review# — a real re
view not participated in by judges whose minds have already
been made up* * nd who have already sat in that case*
fhe President of the Board: I would like to know
whether lUchraond aocjuiesoes in this suggestion; what their
attitude is in regard to it* ffe would be very glad to hear
from you/
fhe Counsel for the City of Richmond: fhe City of
Richmond wo Id be very glad to defer to the discretion of
the Board with regard to this matter. We are entirely
willing to let the matter rest In your hands* The act
provides the m nner of review, and the question that has
been raised presents a matter of law and a matter for the
discretion of this Board*
feel that the Board is able
to determine that question.
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afAfsssif or teu c& jam MBm &9 Qomnm foa tm
Q t n .a? u v z w m u
If th» Boa*# piosae, that bo inf? aubudttod for tlio
o o ^ t a u m t i o n of tha Bo&rd* X wish now to nrfttead wij#l
tfea m i n argiaiant m tbs write of t M s appeal*
It is tli© oontontioa of BaXtiaore tbat wo tbtn& ia
bob « # ont# and Is irrosilatably borne ontf by tlio feet*
diaouasiad ia more detail by omr brief* that tbe City of
Rle&ti**** abenXd be am da tkt Federal l^senrc Bank eentisr
i«at£$d of tb* City
Btob»on«*
?re aim only refer to
tfe**e petntr in tke limit*# time a l l o w s
wo oont nft that tbe oonvtmionoo and emetomary eonrae
of buain*«f»v wit« a duo Toward for tba ouustomry oonree of
Iraatneaa wMob ia Tttinira4 toy the aotf absolutely re$u*re»
tb&t Baltimore be designated a a tbe Heaerve City in tbia
fifth Mfttriot* instead of Hiobmond* and fnrthraaore * wo
want you gentlemi-B wbo aontftitnte thia ,3oar& Of review
to etamthe tfea *»*t»!*otttn$ -of tba comittee itse lf* Ton will
ftad that *tho re*aefetM£ of tfca eowrattt*** tb* nrimeipala
on whlefc they fa*,t?d ins rvnottaalXy avary otbar d i s t r i c t ,
escort tMa, r*cjntrea the t*w.o resu lt$ and e till faarfcJ*ert
we mint yon ta .look to the Tory a^blt and energetio oonteet
m^de 'fey the Oity of Biehmond ita ^ lft and their argument bofore the Org^ntsatlan £ommitt*e* *h*ae ar-niraanta not on ly
Aid not onll fa* prabordtnating the City of Baltimore to
Blahftand in the dlatrlot to wfeieli both ?boftl& belong* bat
they never breamed of belng m& 6* a Baaerve eityf exoept
in a diatriat whioh would not inelnda Baltimore.*
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Taking
that
up, and re fe rrin g to some o f our reasons,
f i r s t and foremost we say that Baltimore is the commercial,
fin a n c ia l and in du strial c a p ito l of th is whole d i s t r i c t ,
the point at which and to which the business o f the d is
t r i c t n aturally converges, that in every esse n tia l respect,
so fa r as fin an ce, commerce, and industry are concerned,
Baltimore is about fiv e times as important as Richmond.
How we present an array o f s t a t is t ic s on that su bject
in our b r ie f and it would not only be impossible in the
time allowed, but a waste o f time I think, when the matter
is set out there, to weary the Board at th is time with a
mass o f s t a tis tic s *
I w ill only, by way o f illu s tr a tio n ,
hurriedly run over one or two o f these fig u re s :
The population o f Baltimore in the 1910 census was
558,000;
the population of Richmond was 127,000.
The
manufacturers o f Baltimore, — th a t1s another matter that
is s t a t i s t i c a l , in the sense that i t is covered by the
United States census, — according to the 1910 census the
c it y o f
Baltimore, and th is means the c it y lim its , which
are very lim ited, as you
know had
2,502 establishments*
Baltimore Metropolitan D is t r ic t had 2,668, while
The
Richmond
had 380... The amount o f c a p ita l according to the assessment
in Baltimore was 164,000,000 in the Metropolitan d i s t r ic t ,
199,000,000;
and in Richmond
31,000,000*
The value of
manufactured products in a year in Baltimore is
000*00;
mond
in the Metropolitan d is t r i c t
$47,000,000.00.
1186,000,
$260,000,000; in Rich
71,000 wage earners are employed
in
Baltimore| 81,000 in the Metropolitan District* and 14,000
In Hiohmond*
Sfhere9& the ratio of fully five to on©# low, of course#
we dl&aUB3 jobbing, transportation, anct other details in
our brief* I only mention the above in pausing* Many other
details we also disousaed, shipping of oourse, though there
is no ratio there, beoause Hiohmond has no shipping in any
substantial sense• In Baltimore you have a great Atlantis
seaport, a city that ranks second to Hew York with respeot
to exports, and as we shall show hereafter, this matter of
export trade it s e lf is of vast importanoe under the aot*
Baltimore, In its foreign trade, had 1117,000,000 of
exports and f 715,000,000*00 of imports in 1918* fhe fig
ures for JUohraend are aero, so we oan have no r- tio thercj
there is no basis for oomparisen* And the shipping in
Baltimore, in addition to its foreign trade, la enormous#
fhe report of the government shows the value of the comraeroe
—* foreign and domestie trade amounted to over %43H#000,000
daring 1913*
How thOBe are sipply illustrations that we go into
in detail, and the only dlfferenoe between ;>r;e item and
another wonia be not a question as to whether .Baltimore
or Hiohmond in ahead, but how muoh Baltimore 1® ahead,
whether fiva tidies, or two times, or ten times* ”he ratio
differs, but th«? relation is always the same*
low these figures always show that Baltimore Is
* £ P P m * * f l R 555S
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W
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e
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far shsad of Richmond la svsry branoh of oomjwros and i»~
duwtry, sad *vs*y gtsat aiasslfioation of
and I**~
dustry* But ths figures also show that this nas* *f 1m*~
Imi
In Baltic r# haa a mo*t l&tisaats ralattaa ta this
vt*y distriot itself#
jm
£*td»*d| nhsn y#u examine the tw % n ,
will find the Organisation Oomlttoe, In laying out the
Halts of this district, Has pioked out
a
district tffvleh la
alvays ootasmlma^ and that the talma of eojamaroe always
prsdrat&ates in Baltimore.
0nly
an illustration or two
of
that* -- then to pass on to other points*
Is refer la «m* brief to the enornous voltnaa of t*ha
shipping trade in Baltimore* tunning up into the mi&liens*
$00*00$ in 191$*
a vs*
How that i*3 not only largo in
Itsslf j but that shipping trade is almost entirely dons in
• tills r%r? Fifth Bistriot* and the figures in the *?rl#f that
data haok to ths reoord before the organisation domittos
show over seventy per m n t of the products of Baltimore
shippers and muuf&eturers distributed in this Fifth M s triot alone.
fii<3 m m # is true in asaMmls ds?#li>pra®&t<»
The great
Baltimore ttust ocwpsnlss %nd the Baltimore savings hanks —
and Eiahmoad hat rather showed a slight lag attitude toward
tooth trust so»panias and savings banka* for the vary asosss**
ry reason that Kialmond has not very
ttacre has* —
mmy
of those and BaJU
tot these very .Institutions that ao-iatitute
so iapertant a part of taeriean huslmm lift have thair a#»
tivltlea Imsdlatsly ,cilrested to the vary darslopasnt of the
othsr parts of this 41st riot that are now taade the fifth
Bistriet*
the savings banks ~
ths Matual savings banks —
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P
in Baltimore, liar© figures showing 123,000,000 invested by
three of the mutual saving* banka alone in bond# in south
ern enterprises, and of course everyone knows that not only
banks but the trust companies especially are almost exclusive
ly or largely devoted to economic development in the South,
this makes up a volume of business which makes Baltimore in
comparable with Richmond in alas and Importance* and moreover
a volume of business which Baltimore does in and for this very
Fifth District, and which creates a constant stream' of busin
ess from the district to Baltimore* and makes Baltimore the
center, not only of business in a general sense* as a large
city, but in a special sense as the financial* commercial and
industrial capital of this district.
The same is true as to banking figures* Those figures
are set out on page 19 of our brief, and Mr*
has
commented upon these tables which simply show la ocular form
that which is shown in figures in the brief* and those tables
make it possible to grasp with the eye, without ay mentioning
the figures* the utterly incomparable relation between banking
resources in every detail between Baltimore and Richmond. If
members of the Board will examine the briefs, and look at the
tables, they can see this difference at a glance. It is un
necessary for me to take more time to call your attention to
the matter, fhe ratio is greater in some items than In others*
but in every case the enormous preponderance is in favor of
Baltimore over Richmond*
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Something has been said by the organlast Ion Committee
and ia the Biafcmond brief, m to what bank will be ©on-*
sidered. Tlell, now, the Organisation Committee very summarily
disposed of the matter by ignoring state bank® and trust
companies* ©le Hiohm>nd brief is an arbitrary way, combined
national and state banka, ano. ignores trust companies and
savings banks. It seems to ms perfectly clear that any
comprehensive view of this Federal Beserve aot will show
immediately the faot that Congress, in passing the aot,—
and everyone who has to do with the administration of the
aot understands this point| no line knows better than this
Board the importance and neoftaaity that at sometiiie the
state banks and trust companies must a ll be regarded as
independent of our system j and it is he desire of every
body, and one of the important problems of this Board is
to work out how they will be coordinate with the national
basks* they may be brought in as teohnioal members, as
the act provides, far o tslde, like non-members of ole?'ring
houses. But it is futile to ignore sach banking capital
that happens to be outBide the mere national banks* But
it is not neeesaary for us to dwell longer on thin point,
for the same reason that I have already indicated, because
whether we compare Hiohmond and Baltimore on the b sis of
national banks or whether you include state, trust and sav
ings banks f or whether we form any kind of n combination
such as national and state basks that 3blie mind can suggest,
or imagine, — the only difference is not a question as
to whether Baltimore or Hichmonci stands aheadf the only
thing we can debate about is the degree of predominance
p ill
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not Juggle the figure® any way that will show that
Richmond predominates over Baltimore. You ©m
m juggle them
some way so the difference will be two to three or four to
fir® i or five to ® lxf .or seven to eight, or tan to one, but
it seems to u® fruitless to' debat® question® of-multiple®,
fh® point that our insistence is laid upon Is the fact that.
Baltimore 1® predominantly the city, and that when w® sake
our estimate we would ®ay about fire times a® large a® Bidhmondf hut it 1® fruitless to go into detail with them, A® we
point out in our brief, it 1® Impossible to take a vl«w of
thl® situation without considering a ll the banks, and it Is pe
culiarly appropriate in the ease of Baltimore, there its
trust companies and savings banks are primarily, you might
say, a ll helping the development of these southern state® that
go to make up the Fifth Diet riot.
How so much for those details, and as 1 say, they are
mentioned merely by way of illustration* The more you go into the®, the more details you get, the more emphatic becomes
the abac lute predominance of Baltimore over Richmond, and th®
impossibility of comparing the two*
Finding that situation to be the ease, namely, that
Baltimore does predominate in population, banking resources,
finances, manufacturing, commerce, and when you come to ship
ping# the foreign trade itse lf presents auoh a comparison be
tween mm and a large quantity, as to emphasise the predom
i n a t e of Baltimore over Richmond*
f® next look at the action o f the Organisation Committee,
and we naturally suppose that, in a condition like the one on
whicih we find the Organisation Committee has undertaken to
You oan
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•a
subordinate Baltiraor© to Richmond, wa would suggest that their
action evidently as a general rule has not indicated that
they paid mob attention, to (juestlons of sla© and import
ance, because we would naturally expeot that Baltimore had
been singled out for such diaorigination apart from the rest,
when we do actually look at what the cobbs ittee did in the
other district*. The fact la that in practically every
other case except Baltimore the coxc<tee was absolutely
guided by uhat 1® a perfectly proper thing to be guided by,
namely* by the fact that the largest city — the city that
stands ahead in population and business ought, by reason of
that fact, to be tha reserve city in the district, What did
the cottalttee itse lf do? Determine now fmm the facts, and
apply to their own reasoning those facts. fhy# thaae are
the facts: In ten out of the twelve districts the coaaittse
selected as the reserve city the largest city in population..
In that district. In only tiro districts did the committed
undertake to subordinate a large city to a smaller# and thoaa
two districts were the lew Orleans and th# Baltimore dis
tric ts. low even In the Hew Orleans d istrict, they subordin
ated law Orleans to Atlanta* which has a population of onehalf the »im of Hew Orleans, but sven there the district was
formed In such a peculiar way that everyone knows, as the oobi^
mittee remarked, that the course of business in that district
is mot from Atlanta to lew Orleans; the course of business Is
from the Gulf toward the East; and whether 'Em Orleans has
bean badly treated or not,, we are not her® to ask* Bo that
even If they gave recognition to the largest city in that
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13
d istrict, we would have had to turn the course of busJAess
backward, so that does not parellel the Baltimore situation*
But in our d istrict, i f the Board pleaae , they had not only
subordinated on© dity to a smaller city, hut two citie s,
Baltimore and Washington, — that are bo closely situated
goographically, that they practically amount to on© enormous
city, and they have subordinated both cities to the city
of Biehmond; and in addition to subordinating large cities
to snail cities, they undertook to do the very thing they
said they would not do in Bew Orleans, to turn the oourso
of trade backward, by sending business from Baltimore to
Richmond , when everybody knows, and when the committee
has said, in the report that the c o u r s e of business 1b north
ward from the South* Te ask you to apply the reasoning of
this* committee its e lf, and aea what the re milt a would be*
Baltimore., the seventh oity of the Union, and Washington
the sixteenth are subordinated to Richmond, the thirty
ninth, and in a Edition to that the course of business is
attempted $o be turned backward, and only one other city
in the United states, Few Orleans, has been subordinated
to a smaller city; and that was In a district where it
is necessary to turn th« course of businews backward? Where
as in this case they did both#
In the Cleveland district let m see what has been
the case* $hyt in the Cleveland 3istriot the Organ!nation
domraittee disposed of the problem in two sentences* Curiously
enough they put it under the head of Mohnond district. I do not
know why they should call attention to such, an anoinallyI The
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And that1 a ail the Kfca Organisation Committee said about
Justifying
thei? •eleetion o# Cleveland,
cor.para Cleveland with Baltimore*
oity in the United Statea*
How, lot ua
Cleveland la the aixth
It baa 561*000 people;
Baltimore
ia the seventh, with 588,000 people, and Pittsburg is the
eighth, ^ith 535,000*
All throe are p%ctioally the mm*
aiae, ao far aa papulation la oenoemed* And not t^o of
tfcoa* oitlea are 1*> tho v#ry same di at riot*
Cleveland and
»Plttaburg are praotiaally tha aa&e alae, and fx x ttw x praotJbalJr
the aaisa alaa at aa Baltimore*
do?
*nd *hat doea tha Ooir^lttee
The ooiralttaa aaya without any further argument, that
tha faot that Clevojiand la the *lxi)r oity,ojtlthou$i Mttaburg,tha eighth la almost tha aama alaa* la tta sufficient in
it^lf*
Tha sixth large at oity 4-* that is in itseltenaughto
justify saakln^ Olevelant the reserve oity* and
throw-
Ing Plttaburg into Ihe discard* and yat with three thousand
iin population separating Cleveland and Baltimore, they
atop at the sixth city, and isastaad of applying the a*me
reasoning to tha seventh olty, they take the seventh and
■sixteenth oitiaa together, and taok them on to tha thirty
ninth olty, and in addition to that try to turn the oourae
of hualnaaa backward, i n ordar to do th%t!
low, gentleman* v* ask you to apply tha masoning that
•the official
"
the Organisation Committee applied to the esae of Cleveland
and Pittsburg* that are the facts about Cleveland and
Pittsburg? It is that according to the conditions* there
is no single reason that the committee reached in other
districts that ©imported a selection of Cleveland over
3?irtsburg except the me* weight In population* «hen you
come to examine th© sta tistic s whioh the members of the
Board pretend to be guide<> by in the Richmond case,
Pittsburg outclasses Cheveland in ©very point* I have not
tine to delay your honors, — the Members of the -!»oard
with that but it is so striking* £et me run over the lasjr
two tables in the Organisation Committee *& records, showing
the figures for national ra ti l all banks j
Members of national bantes in Cleveland, seven; in
Pittsburg 21#
Capital and surplus Cleveland, #14,000,000*00, P itts
burg, *46,000,000*00*
ter dapita, Cleveland, ^§,000,000; Pittsburg, $88,000
000*00*
Individual deposits^ Cleveland ^40,000,000; Pittsburg, #1£0,000*000*00.
X^er capita, Cleveland, |78,000,000*00, Pittsburg
$285*000,000.00*
Loans and discounts, #! §8,000,000; Pittsburg,
*030,0 10.00,
^er capita, Cleveland, $112,000,000; Pittsburg,
^233,000,000*
And then, when you go over a ll the figures pertaining
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Eluding not only national banks, bat others, you h«ve the
pame thing through the whole l i s t ; Cleveland Is far be~
lilnd Pittsburg in ev«ory single Item., ?>o th t is why the
^Organisation Comnlttee thinks in other d istricts, In every
ftlstriot, exoeft in a partial sense, the Hew Orleans dis
tr ic t, — that's what they think, namely, that the i®~
|>ort«noe of & oity bein>* the largest oity, the mere pre
dominance of the sixth over the eighth, 1b enough to
Dutweigh a ll this inequality in banking resources, so far
#B Pittsburfc and Cleveland are concerned; bat In the ease
#f Richmond, Baltimore and Washington are both thrown out*
Thlle on that point w® may take up another question*
*nd dispose of it , so far as oral argument is concerned,
$noth r point that P.lohaond leys great stress on, and that
is this pol^ of banks, one of the things the Organisation
<|oHiialtte© refers* to as justifying their selection of
$iohaiond rather than Baltimore# What about that pole of
banks? There are three answers to that; First, and moet
Obvious la that Congress doee not say anything In the law
*j?bout a vote of banks being t ken as the basis #tfr selecting
tlhese cities# It woiild fieera to us, i f there was any subject
ttihat was absolutely argt*ed in Congress, and that nothing more
cjould be added to, It was, how far the banks sho Id, and
tjhe pitblio or the Board should have a say in determining
tjhe operation of this act, and when Congress gave the hanks
tjie rite to vote a certain way on certain questions, and
gjfcVe this Board and the Organization Committee the duty
and right to pick oat reserve c itie s, the inference is olear
that Congress realised that this was not one of the things
to ho determined by a vote, hut by national cons idera t ions;
and yet by petty oampaign methods among the hanks* in a dis
tric t. So i t aeetns to us that Congress nev^r intended a
matter of this kind to be determined by a vote, and there
are obvious reasons why it is so* A vote of bnnks is de
termined largely by sentimental consideration^ and it
is obvous that the pole in this oaset — It is obvious
that state pride would lead Virginia tomfcs to vote for
Hiohmond* Eleven did not do so, notwithstanding state
pride, but state pride would load Virginia banksto vite
for Bichmond, regardless of business considerations;?*! and
i f you analyze the vote, you will note that as to th©
second choice votea, nobody in Maryland ever loted for
Richmondf for second or third choice, and yet the Virginia
brinks voted very largely for Baltimore as second and third
ohoioo* In addition to that, the vote th*t the committee
itse lf took over the whole United States shows what the
country thinks of this district as a whole* Over & thousand
votes that the committee took contains suggestions not only
from the districts p rtioularly interested in and contiguous
to this Fifth district, but from a ll over the country, and
over a thousand bmks, suggested that Baltimore should be
one of the eight of twelve reserve citie s, and only three
hundred — some odd — sug ested Bichmond, and tf you
compare the rge centers, Hew York, Illin ois, Ohio,
where the larger banks hnve been situtated, Richmond
did not get a handfull of suggestions from those
iKtuc&f from me Urrdassified /Declassified Holdings of the National Archives
3
localities**
But, gentlemen, aside from the fact that this wa* a
mutter to be decided, on national ground® and on broad
consideration* and not by drumming up votes on any very
energetic and very able basis, as it may be, the realt truth
afr*he matter is that these facte do not indicate anytlling
more than the fact that a larger numbers of banks
voted for BichMond, and the vote itse lf shows that the
predominance among the bankers, if you .measure their votes
by their weight of business, is in favor of Baltimore*
that is disdussed in our brief, and I cannot delay any
longer upon its but the exclamation is simple, and that
is that down there in Virginia and the Carolina* they have
rnny sta&lX banks, and if you count one bank one vote, and
ten banks with $25,000*00 capital each as ten times more
than our Baltimore bankers with isillicns of dollar* in
capital and surplus that is the way you get a predominance
of votes in favor of Bichmond over, Baltimore, but if those
votes were taken according to the weight and size of the
banks and volume of business, the predominance would be in
favor of Baltimore* In addition to the fact that the law
doe* not authorise thi* question to be decided by a vote of
banks, and in addition to the further fact that the voting
itse lf if you give might to the sisse of the bank, emd not
merely to the nuiaber, would favor Baltimore, the committee
itse lf does not pay any attention to the vote of the
banks because you only have to look at the Cleveland
district where everything was in favor of Pitteburg, aAd
, l l l '??epfai,u iyd from'the Unclassified fo e c k s ifle d Holdings of the National Archives
against Cleveland, except tb#
and glad)
and what
was
pm m m M am m
in
the vote there? Of the
f
votes there
Cleveland got about one hundred and ten votes out of six hun~
dred and some, Cleveland got less votes, barely one-third
as many votes as Pittsburg* and barely half as many as Olnoinnati in its own State, and in Ohio there were more cities
voting for Cincinnati than for Cleveland. How.-, gentlemen*
that shows what the vote amounts to, even with the Organisa
tion Committee Itself. So much for the question of votes!
low, Just a word more on what the people of Richmond
themselves think of the situation, and that must be summed
up in a words Hlohaiond went before the Organisation Cojaaittee and had a very carefully prepared brief, prepared by Mr*
Saye, which expresses the governing idea of the entire brief
in one of the opening sentences. The text of that brief was
just such as might have been prepared by any able lawyer, al
though Mr* Saye is not a lawyer, and that text was stated in
the first sentence, that * Nature had mapped out a perfect dis
tric t, bounded on the north by the Potomac.* How, the whole
of Richmond* s argument in their brief, and the argument they
made at the hearing before the Organisation Committee, was an
.elaboration of that text. They realised that they were con
tending primarily with Atlanta, in a district south of the
’Potomac, and m far as Baltimore was concerned, so far as
their problem was concerned, their district ought to be bound
ed on the north by the Potomac. They realised that if you put
Baltimore in the district, it would be the head of the district;
tne of the
men
fro®
South
Carolina
.1 Il l l U M llM IW IIl W . M . ..
I
I
.HHM1IU IH IHHl. H W tJ .l -
l^6f)foduc6d from the Unclassifietff Declassified Holdings of the National Archives
showed that clearly* They asked him about putting Maryland
in the district, emd he immediately answered, *1 do net think
it would he a good thing to hare the reserve hank away ftp
in a corner of the district. That would mice Baltimore the
head of the d istrict, by putting Maryland in the district**
That is the only logical reasoning*
My time is almost gone, and I shall only want to
refer very briefly to one other point* It Is our conten
tion that Baltimore is geographically the logical location
for this bank, --geographically in a real sense* That is
already answered by what we have said about the relative
importance of the banks, because locating a bank is not
a geographical question, not at least in any such an im
portant sense as Richmond would indicate* The most im
portant geographical question is to put the bank where the
largest amount of business is, not where the outside business
c«*n go with least inconvenience, that is close to its own
doors* And in that sense Baltimore being five times
as great as Hichmond, would have had the advantage«
Then there are other reasons, and a ll are in favor
of Baltimore* One is, the coiraaittee realised in the Hew ftadte
Orleans district the most important question about geography
is not the question of distance to the reserve bank, but
the course and direction of business* How, the direction
of business in this district is nearly all from the South,
and when you put a bank in Richmond, so far as Baltimore and
Maryland are concerned, it is not a question of distance, but
of trying to make water run up h ill, and change the course
of business, and when you put Baltimore at the head of this
Declassified Holdings of the National Archives
Ot
d istrict, Baltimore Is in tha direction from whldh the bus
iness coses, at the north of the district* This la a simple
argument, and not original with us, but at Richmond,—when
Richmond went up to the Organisation Committee, asking for
this diat riot* Richmond contended th%t *Hatura had mapped
out tor it a perfect d istrict, bounded on the north by the
Potomac Elver.* Mr* at ye, their spokesman, in testifying be
fore the oonmlttss, said that district had an incontsetIbis
position, being situated at the northern limit of the dis
trict* So far from being an argument ag%lnst it , it was
their text supporting their case*
low .Baltimore is near the northern, limit of — not the
district that Richmond aaked for, but the district they ac
tually got. I do not mean to overlook the fact that after
Richmond had filed their brief, and after they had covered ap
parently every question at the hearing that the district migfrt
be maned out differently, Hr# Saye, very clearly and ably
wrote a letter a month later when he filed the brief, and
pointed out the fact that notwithstanding Mature*s action In
mapping out the district, you could Just aa well put Balti
more in the d istrict, and put. a branch bank in Baltimore!
That showed great cleverness in adapting his argument, but It
was a pure admission of the superiority of Baltimore over
Richmond as a reserve center*
My ttee has expired*
The President of the Boards lour motion took five min
utes*
Mr. Markelli How much ttee have I left?
The President of the Boards Five minutes* The motion
Reproduced from the Unclassified / Declassified Holdings of the National Archives
toefc five or six Minutes*
Mr* Marfeellt I as, glad to know just how umdh time I
ft* VS left*
On this question of distance, then, I can say & words
Primarily, the course of business is of isuoh more importance
than, the distance, and If you want author it y on that* go to
Richmond* and that point Richmond had In her brief j but the
Organisation C onitt m is also good authority for that* mid
*varyon® seems to agree about that* and everyone agreed that
the course of business flows northward toward Baltimore £vm
th® south* In addition, to that, distance is absolutely unisaportant in this district* fhyf Because of th© faot that
the whole district is so compact, that Baltimore is within
seventeen houra of any other point in th© <11stric t,—any other
city of considerable al*o,~~ so there is only one buaineea
’day dividing on# end of tl a diet riot and another, whether you
put th# bank in Baltimore or Richmond* Mow* our friends from
Richmond make a curious argument on that* They say that hours
make a difference* because clearing house meets in the mom*
ing and it makes a differenoe what tine the business ean
reach the reserve oenter* As I understand* this bank, so far
as it operates as a clearing house* will be automatic* open
so long as the day lasts* so distance is not Important anyhow*
It would not have been unimportant out in Kansas City* It is
very important there* If anywhere* because in Kansas City the
reserve city is one thousand milm away, separated by one
thousand miles and. by the Hooky Mountains from Emnta# City*
and yet the Board thought nothing of that* and
properly so*
The* put the bank in Kansas City,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
9
in nine of th© twelve districts this Organisation Com
mittee has selected a reserve city at or practically on the
very edge of the district, and no one found fault for doing
*o* How th® further circumstance about th® geography of
Baltimore is that Balt lmore, as a matter of fact, really is
nearer th® banking business than Richmond, and that again is
the same thing I have discussed In referring to the poll of
banks* fhs only essential matter to be considered is the
difference between number and volume, fe have in the appen
dix to our brief enumerated every national bank city in the
district. W
e took national banks simply because it made the
problems smaller than if we included others, although the
national bank comparison Is more favorable to Richmond, be
cause Baltimore and Maryland are stronger In trust companies
than Richmond, and even on national banks alone we show, al
though there are more national banks which are nearer geo
graphically, not by air line, but by mailing time, Kiohnond
than Baltimore* when you take the total resources, by far
the greater number is accessible to Baltimore than Rioftoondj
and when you take those resources and divide them by hours
and even the average distance in mailing hours from Balti
more to all of the banking resources in the d istrict, it is
7*3 hours, and to Richmond is §»1 hoursf so the real truth
about this geographical argument, speaking candidly, Is we
do not think it should be controlling, but so fax as it is to
be considered, It is in favor of Baltimore, because Baltimore
is really nearer the density of banking business than Richand
, WM
------------- ------------------------------ ,--------------------------------------------------------------------------------------------
—
..-^V........ ....
Reproduced from the Unclassified/ Declassified Holdings of the National Archives
O^A
*<
zsond.
fh# q,-u##ticn
of
proximity to i&ilad#lphia has m m mm~
aad th# Organisation OoauiltiM auggeatad that waa tha
raaaoa for not putting a bank in Baltimore* and that that waa
on. th# oontrary a ro&#o&. fosr aatabliahiag it. in Hlohiaoad*
IBay* it puts Baltiaor# that i&uoh naaxor to K*ilad#ii$ila,. New
York, Chicago, and Boaton, tfhiofe ar# th# bank* that Balti**
more will bo moat in touch with, and th# only other r###rv#
o iti m that it i&ora&aaa. th# dittany from ar# Atlanta and
Ballaa* and m oan r#f#r |«u goatlamon to th# ‘Richmond t#a~timony a# to th# inportano# of Atlanta, fit# whol# w#ight of
th# Richmond ©aa# b#for# th# 0xganiaatt#n ®omittaa waa put
on thai* intona# d#*ir© not to be tiod to amythin^ aouth #f
tham*- and th# on# thing stiaking out throng th© ©aa# i# tltay
did not want anything to do- with Atlanta
that ca# a
borrowing dl#triat. ftxttin^ this bank at Haltlaor# m&kaa
that bank that muofc nearer th# other raaorv# aitioa, and U*
or#a«#» th# diotano# free th# Atlanta and Ballaa banka, and
th# Kiohmond paoplt hav# j&adt oleax, batter than we oouldj,
th# faat that th# Ritih&ond bank will not ha?# large r#lation#
with thoee alt lea*
On th# iispo;rtaii0 ## ro,£&rcft#aa of diatanee, of th# ooura#
of trainee#, I oaitt#& to oall attention to Richmond1# atat#~
mont th&t &i#tmno« &o#$ not m m m $ to anything, tot th# di**
root ion d ***, and on that X would only ref or you* gegtlmeA,
##
to th# toetimony of th# South Oarclina witn#a#/f or Rioh»ond,
and th# lnt#na# f©ar'they exhibited of b#iag f&atenad to At
lanta* th#y said It would be a calamity to be attached to a
tion#d,
I Declassified Holdings of the National Archives
plaoe eouth of me* low yom gentlemen of course 3m m that
Baltimore i* »tt@h further geographically f rom South Caroli
na and lorth Carolina than Atlanta ia, tot those people eaid
It would be a o&l&mlty to attach thsm to a plaee south of
them, that they would fool that they worn hanging on to a
dead and* They muted to be connected north of them, booauae
th© oourae of bueineee l& north*
In conclusion,. gentlemen,
this Organisation Commit-
too has done to the people and toainase of Maryland and Balti
more la to impose on them the exact calamity that the South
Carolina people asked to be delivered from; they have instil-'
ed that Baltimore and Maryland shoald bo tagged on to a city
aoiith of the®*, although the course of business is from the
south northward; and they have insisted that the course of
business should be turaed backward, or a .futile attempt should
be made to turn the course of business baox from the north to
the south, and in addition, to doing that, thoy have subordin*ated the seventh and sixteenth cities of the United States to
the thirty~niath city, which is one-fifth the »i3e of Baltimore,
one-third the also of faahimgton, and leas than one-seventh
the sise of the tiro combined.-
Reproduced from the Uncfassffied rDeclaasified Holdings of the National Archives
8U1
apsmim arobmsct ot
tsm . k. Pa®,
0 ? RICHMOND, VA., IJT FAVOR Of TH8
W8SISHATXOK 07 HIGHStOKP AS IBB'WAI.
RJSSjSRVJ? CITY TOR THS IfIJTH JSnSRAfc
R9SSRVJS 331STRICT,
MR# FA08I
I shall confine ryself in opsiting this
case largely to a presentation of the purposes which
€kmgress had in view in enacting what is known as the
federal Reserve Act and to sun endeavor to point out the
true tests, or criteria, by which the Federal Reserve
Cities should be designated, the designation of the Dist
ricts, as amde by the Federal Reserve Organisation Co®**
mittee| not being in review here#
It would s®em that such & course was orderly and
logical in all cases, but it is particularly se in the one
at bar for the reason that the brief filed on behalf of the
City of Baltimore sho^s in our opinion a total misoonoep*
tien both of the purposes of the Act and of what is re
quired of a Federal Reserve City,
I , in presenting our
case, 1 state a matter well 'known to you, or of an element**
ary character, I do se from no id*a that you are not
acquainted with tha subject, for I have never yet appeared
before a “body wi»r« I fait* on account of the great
practical experience and learing of its members* greater
incapacity to randar tha Board assistance la arriving at a
correct conclunion of the questions at Issue$ but stata-*
ments of such jaattara ara necessary in developing the point a
wa rely upon to sustain tha decision of tha Federal Reserve
Organisation Commltteo in designating Richmond as tha
Federal Raaarva City of District Ho# 0#
?roa a general knowledge of previous afforta at
legislation on the subject, aa wall aa from a oareful ra~
view of tha debates in Congress during tha different stages
of tha enactment of the law* wa consider tha definition of
the purposes of the Act, as given Isy tha learned author
op Magee on Banka and Banking, last edition* as brlcft
though comprehensive, as can ha found*
the definition
there given is as follows I
a careful study and review of the provisions of
the M i * It must he observed that Congress has enacted a
aeasura Intended to regulate the more equal distribution of
money for the use and benefit of comerce* throughout all
sections of the United States, and to destroy centralised
reserves♦"
Assuming that this definition correctly sets forth
the purposes of the Act, we shall endeavor to point out tha
T
Reproduced from the Unclassified J Declassified Holdings of the National Archives
SKiS-3
true tests or criteria h? which the deslf*natloii of the
federal Reserve City of a &1striot should be made*
While
tha Act requires that the federal Reserve PI strict# shall
he "apportioned, with due regard to convenience and the
customary course of business** It does not express3y
state that the Organisation Committee must he governed
by the same considerations In regard to the selection of
the federal Reserve Oltles, hut It has “been assumed through*
out the hearings had before the Organisation Committee and
In the arguments of counsel that It was the intention of
Congress that "convenience and the customary course of
business” should have the same influence in the decision
of the location of federal Reserve Cities as in the case
of the apportionment of Federal Reserve Districts*
In re*
viewing the several briefs filed by various cities making
application for designations as federal Reserve cities
before the Organisation Committee* we find practical
unanimity of opinion in respect to the requirements of the
Act| except in the case of Baltimore*
tn the petition filed on behalf of the City of Cin
cinnati* prepared under the direction of fisdericfc C*
Hicks* Professor of Iconomlcs and Commerce of the University
of Cincinnati we find this clear
of the statute in this respect?
and
comprehensive view
Reproduced from the Unclassified t Declassified Holdings of the National Archives
SKS-4
*yirst#
biographical convenience* which involves
transportation f a c ilit ie s and rapid and easy ceiamtmica*
tlon with a ll parts of the d istrict#
"Sccond*
Industrial and
constwsrclal development and
needs of each section, which involves consideration of the
general movement of cojsmo^itiaa m& of business trans**
actions within the d istric te and the transfer of funds
and exchanges c f credits arisin g therefrom#
•third#
Th* established custom and trend ©f buslnesst
as developed “by the present system o f hank reserves and
checking accounts#
In laying out the d is tr ic ts and estab
lishing the headquarters for reserve hanks* ev$ry effo rt
w ill he aade tc promote business convenience and no.mal
movements of trade and ceiaiiaree**
*The sme general ideas are b rie fly expressed in th®
petition file d on bebalf of the c ity c f Olevcland* Ohio*
Uiey are as follows!
*(1>#
Satisfactory communication
throughout the
wmmtok* d istrict#
(2}
Proxlmlty to center of t r a ffic and exchangee
of tha d istrict#
(3)
fin an clalf coaiaereial* industrial and civic
strength In its e lf#
(4)
Satisfactory relations with the entire d istrict#
t/ndas^eci;feedfes^[ed Molcfings oftfe National Archives
3'n
SEB5
And In a petition filed on behalf of Louisville, T y ,,
and subscribed to by Meanr*.
0X1 1 ©
£. James, Swager Sherley,
HI chard Knott and |ohn W« Barrt Jr#ft almost the identical
language Is found;
wfa)
Geographical convenience *
(b)
fhe industrial development of the section*
(e)
fhe established trend of business.
(d)
The extent to which, each section is able, inde-
ptadently, to finance the needs of its own region,"
The city of Washington presented a paper at the oral
hearing before the Uederal Reserve Organisation Committee
which fully sets forth the requirements of a Federal Reserve
City*
Mr* A. 0* Austin, for fifteen years Chief Statistician,
of the ITnited States Bureau of Statistics, quotas it with
approval at page B9 of tha original petition of the City of
Richmond*
It is too long to read hers today, but we take
the liberty of referring you to it*
It thus appearing that ths bankers and students of
finance, put forward by the various comm l t l e s to repre
sent their claims for a federal Beserve Bank before the
Organisation Committee* agree with singular unanimity upon
what is required ot a city desiring such designation, it is
aot surprising that the Federal Reserve Organisation Commit*
tee should Itself have eome to a similar conclusion. la the
nepnxRiceQ Trorntne un
i orthelM onal Archives
31
3KB6
dedalon of the federal Beaerve Organisation Committee,
determining tha Federal Reserve Districts and the location
of the federal Beaerve Banlcs, at paga 361 of the record,
that honorable body
thnn summed
up the question*
"Among the many factor® which governed the decision® in
determining the respective districts and tho ©election of
the cities which hare been chosen, were:
*Mrat*
fhe ability of the member banks within the
district to provide the minimum capital of $4,000*000* re
quired for the Federal Beaerve Bank* on the basis of 6 per
cent of the capital stock and suprlne of member banka within i
the district*
"Second,
fhe mercantile, industrial, and financial
conneetiona existing In each district and the relations
between the various portions of the district and the city
aeleoted for the location of the federal Beaerve Bank*
*$hird*
She probable ability of tha Federal Beaerve
Bank ia each district, after organisation and after the
provisions of tho Federal Reserve aot
shall
have gone into
affeot, to meat the legitimate demands of business, whether
normal or abnoxmsl, ia accordance with tha spirit and pro*
vialone of the Fedaral Reserve Aot#
"Fourth*
fhe fair and equitable division of the
available capital for the federal leaerve Baiika among the
district created*
"Fifth*
fh e genera1 gaographical aituation of the dia-
trict, transportation lines, and the facilities for epecdy
comgrnnication between the federal Reserve Bank and all por
tions of the dllatrict#
"Sixth#
The population* area, and prevalent business
activities of the district* whether agricultural, manufac
turing, mining, or commercial, its record of growth and
development in the past and it a proppeot for the future •*
On the other handt Baltimore, throughout it® brief,
filed with thin honorable body, lays the greatest
8trees
upon the also of Baltimore aa compared with that of Hichmond, and m&km no effort to prove, and it i« unable to
prove, that it better fulfils any of the requirements of the
Act, aa understood by the financial world at large, and the
Federal Reserve Organisation Committee, than Bichmond*
If,
therefore, we oan show that Baltimore has a wrong concep
tion of the purposes of the Act, and of what is required
of a city deairing to be bamed as the Federal Beserve City
of a District, it follows that lie evidence hag no bearing oil
the fxteati&na at iseue and that its arguments are misdirect
ed*
t e illustrate our contentions in these reelects, we
refer, firfit, to page $0 of Baltimore* a Brief, where it ie
Reproduced from the Unclassified ^Declassified Holdings of the National Archives
SK38
said s
"Without
of the
undertaking
Federal
a lainute review of the
Heserve Act, with which this Board is famil
iar, it may he said
that
a cardinal feature - i f not the
cardinal feature - of the new system is its
ness#
present banking
fhe
system
It had been found to create an
the money
of
provisions
had
comprehensive*
been found inadequate#
artificial concentration
the whole country in Hen York City {and to a
lesser extent in
fhis
OMeago)*
it
concentration,
has
thought, made the banking system too dependent upon
lation
in the
of
stock
laarket and toe
the more
strictly
commercial and
country#
Congress
set out
to
little
specu
adapted to meet
agricultural
correct these
been
needs
of
conditions*,
the
not,
however, primarily by forbidding* the practices which have
been deemed undesirable or
system,
but mainly by
unduly
ojepanding
prominent in our hanking
the system and
providing
new (and supposedly more efficient) channels by which the
money and
banking•resources
of the country isight naturally
flow towards the commercial transactions, as distinguished
from speculation in stocks*”
At page
,fWitb,
this further definition appears:
perhaps,
a more accurate sense of proportion,
it ml^bt fairly be said that the federal Heserve Banks
1it i L . 1. i Ml. ii .i i imiiHii
iL«ia^w Lw i|jjim *uw .ui,Ji -L.ujmuii'rij.:^uin ui „ j it
,*j ' ‘. w i " ■
'
Reproduced from the Unclassified/Declassified Holdings of the National Archives
OA
'-f:<*2.
tL
SKR9
with
are banka vested (X)
not Tested
In
other
in
of
transactions
certain important
whioh are
banks
belonging
great
or
importance,
pov-er to
the business of banking» eaeoept
with
hut
expressly
of
banks, and (2) with general
conduct all branches
tfcut f
special powers
the public#
routine
the;/ may not perform
functions
of
ordinary
by implication referred
same
united
hacking*
to the
member
aye tern*"
The learned authors of Baltimore **3 Brief, when next
approaching this subject* at page 3f of the brieft quote
with manifest approval the editorial reply of the Journal
of Commerce* of April ?Af 1914* to a letter which had been
sent that paper by the Richmond Committee* which letter,
however, if? not printed in Baltimorefs brief*
In the
editorial in question theBe novel views of the purposes of
the Act appear*
rffhe Richmond Committee says that in the middle and
southern portion of its district as designated* the three
Statef, Virginia, North Carolina and South Carolina« have
| nearly 6t000#000-population and 1,£&S banking institutions,
: while the northern part*, in whioh Baltimore is situatedt has
leas than 5f000*000 population and only 494 banka* It also
shows how much more convenient for railroad and mail aommni*
; cation Richmond is than Baltimore to this large portion of
3KB10
the district*"
Further gvtetlngt
*fo our mind this km ver? little to do with the case*
It is not a question of area and distances* or of popular
tion and number of bankst so much as of density of popula
tion within certain areas, volume and charact«?r of transactions and number of daily coaimunio&tioust to bo made*
A limited area might bo mailed out in this city containing
a greater population than any ono of the three rtates named,
and another in which more commercial and financial business
te transacted in a day than in all three of them, while
there is only a fraction as many banka in the whole city as
in the states which constitute the southern part of the
Bichmond District*"
Evidently not being satisfied that the facte and con
ditions surrounding Baltimore justified the designation of
that city by the federal Reserve Organisation Committee as
the location for a Federal Reserve Bank, the learned
authors of Baltimore1 a Brief again define the scope and
purpose of the Act, giving it this remarkable construction:
"the principal purpose* of Congresst however, in
devlsine this addition to our existing system, was evidently
not so n e h to improve conditions at ordinary times as to
T
SOI 1
provide a more satisfactory system in times * ± stress*
ffcs
occurrence of panics and the inadequacy of the present
system to deal with panics wore undoubtedly foremost In the
mind© of Congress, as thoy have been in tho mind* of all
who have interested themselves in banking and financial
refora in this country*
Bxeept for certain m called
seasonal strains (whloh have not been greatly felt elnee
tha panle of 1907) , our existing system has been fairly
satisfactory in ordinary times*
It 1* 1st times of stress
that the weaknesses of the present system become manifest#
Shese weaknesses It waa the prime purpose of Congress to
cure**
fhe above being fair samples of the understanding of
the authors of Baltimore's brief of the purposes of the Act
and of what is rofaired of a Federal Beserve Oity, it is
natural that they filled their brief with matter wholly
irrelevant and immaterial$ unless, perchance, Baltimore,
realising that she did not possess the true requisites of a
Federal Beserve City, m required by the Act, resorted to
the expedient of extolling her general virtues, her possess**
ion of which Is undisputed, in the hope that she mi^ht
still he designated#
I regret that 1 shall
be unable, on account of the
ahortneea of time allowed for o m l argument, to call your
attention to the overwhelming weight of evidence.ia support
of eur claim
that
Kichmond
meete*
all of the re$uireraente
of tho Act, aa understood by ihofse learned In finance, and
that Baltimore fails to do *o#
tho
oaae
I © h a H leave this part of
to ay aaaoelate, tho Honorable Eppa Eunton, Jr.,
who ia peculiarly well qualified for tho undertaking* and
I shall devote tho rest of my time to a few points which
in ay opinion ahould have groat weight with you la forming
your deeialon*
First, it mm plainly contemplated in tho Act that
Federal Banka should act not only aa clearing houaea for the
member* In their own districts, but between district®#
fhe
clearing between diatrleta, we believe, will develop into
enomoui proportions and that the bank most advantageously
located for clearing tranaaotiona of any large ©ection of
the country will havo a great aervloe to perform.
We claim
that Richmond rather than Baltimore oooupiea thia petition*
3Phe Federal Beeerve Organisation Committee having, for
obvious and juat ream na, selected the cities of Boaton,
Hew Tark, and Bdladelphia, in geographical order, aa
Beaerve Cltlea, could not have accomplished a proper diviaIon of the banking power of the Eaat and of the territory
generally, by naming the nearby city of Baltimore in the
3K313
northeast eomtr of the Mstrict to* $ m the fourth olty
a!sag the Atlantic seaboard*
Second;
fhe overwhelming preference of the banks and
of tho people in tho District for Richmond over Baltimore*
assuming that they had intelligence enough to know what was
best for their business interests* founded on present hanking
connection# and the customary eourte of trade* should, and
doubtless did* have great weight with the Federal Reserve
Organisation Committee in locating the Federal Heserve
City o f Di?5trict Ho# & at Richmond rather than at Baltimore*
Further* I would respectfully call your attention in
mm& detail to the fact that although Baltimorefs hanking
resources are greater than tho«e of Richmond, they are not
to the same extent available for the requirements of District
Bo* 5* and also tin the failure of Baltimore and of Maryland
to keep apace during the last decade with the growth in
hanks and hanking resources, and in commercial and lndus~
trial development generally* with Richmond and Virginia
and with north and f<outh Carolina* with which Richmond la
inseparably connected*
On page 21 of the Baltimore brieft the division of her
hanking
power
ia
given as follows *•
fetal Banking Resources*
39
national Banks* • « • • » » * » » * * •
msiA
1224* 975,000
State Banks, trust companies,
and otook savings companles* • * * * «
Mutual savings banks*
80,183,000
108,708,000
fotnl » * * * « • * » * •
fE97|864|000
fhe resources of mutual saving* tenlce and truat companie® are §182,000*000* or 60 per cent of the entire
banking resources of Baltimore*
Srust companies have a
field of their own and they cannott as at present consti
tuted, enter the eastern*
Mutual savings bank?? cannot, in
the nature of their business, become members#
Again, we would point out that la the itemised state
ment of ro^ources on page 19 of the Baltimore brief, the
fact that #1&8,000 ,000 , or 45 per cent of the who la, are
"investments, bonds, securities, etc»w
fhe actual use Baltimore is makirif of its banking re
sources, as well as its rate of progress in the world of
finance, oan best be knoim and understood by referring to
its
ora
estimate of these matters when not engaged in en
deavoring to promote its claims as the financial capital
of a Federal K*serve District*
Such evi&once as this? can
be found in the report of the Commission for the Bevislon
of the 'Taxation Astern of the State of Maryland and the
City of Baltimore, appointed In pursuance of C a r t e r 779 of
the Aots of the General Assembly of Maryland, 1913*
fhe
rep ort is signed by th e following responsible citizens of
the Stat# of Marylands~ Henry >% Baker* J, Karry Mahool, 1*
Stanley 0ary, J# H* 0a»briH, Jr*t Williaai M-* Cooper, and
Y e m o n Cook* (See page# 28f and £88 of said rep ort) *
fh© truth of what the distinguished Committee has
said of Baltimore la connect ion with the
lack
of progress
in th e banking world is borne out by statistics both in
regard to the City of Baltimore and to the State of Mary
land*
for the pur^os# of comparing the growth of the City
of Baltimore and the ftate of Maryland with the City of
Eichmoad and the £tate of Virginia, we refer you, first,
to the reports made to the Comptroller of the treasury,
oa March 4t 1914, by all of the lational Banks of each of
the States? la M a t riot Ho« 0, and then to the combined
statement of lational and State banks in said Metrict*
AG0RJS&ATS RESOtJBCBS.
1913
Xncroase
Maryland* * • • #30,575,000
#66,989,000
186,414,000
86
Baltimore • , «
aBf019f000
110,989,000
28,877,000
35
Virginia
38,220 #000
100,£95*000
62,075,000
162
Richmond .• * » 16*730*000
56#576,000
39,846,000
238
Borth Carolina
18,865,000
62,459,000
43,094,000
831
South
13,724,000
42,082*000
£8,358,000
207
1908
« * •
Carolina
2»er C<
am e
COMBIllKD
Of
BAflOBAI* & SfAfB BAH3CS*
190E
1913
Virginia (Inolud#94,7£S,000
ing Richmond)
Increase
Per Ctnt
§818 ,211*000
fl85*483,000
ifco
Berth Carolina
53#3£fc,O0O
117*315*000
8&*994*000
zm
Sonth Carolina
ZB.138.000
95.185.000
67.047.00C)
208
0156,188*000 f43O*71£*OO0
#874*584*000
178
West Virginia
Maryland fInclud
ing Baltimore)*
# 75*484*000
163,766*000
80,512,000
109
128,613*000
199,8£8*000
71*918*000
81
from sworn special reports submitted to the Coffixatroller
of the freasary, it appears that the national Ban&a in
Richmond were lending in the thirteen southern states on
January IB* 1914* more money than was being loaned in those
Stfrtes by the national banks
try, exeept lew York*
of
any other city in the eoun~
The tetal loans and discounts in
the thirteen Southern States by Baltimore* Washington
and
Klehracmd are as follower
Baltimore,» * » * * « * « *
$6,891,000
Washington* * * • • » • * »
915,000
Kiehaonft* • * * * • « • * «
33*4?&t00O
fheae figures show that in those portions of District
go*
& outside
of the States of
Virginia
and Maryland* the
Hiehmond national banks ere lending twice as m m h money
as
~42
m ?
all of the national banks of Baltimore and Washington com
bined*
They also show that although Richmond was not a
reserve city* the banks and trust companies in the thirteen
Southern States had on deposit in the national hanks of
Bichmcmd on February 'Id* 1S14, $9,876,000* or slightly
more than the baiiks of this section had on deposit in the
city of Baltimore, and four tlme« as much as they carried
in Washington, although these two cities have long enjoyed
the benefits of being reserve cities*
In conclusion, the present position m have shown
that Hichmond occupies as the financial center of the
District; the wonderful progress she has made in the last
ten years and the ceftalnty that that rate of progress w l H
he maintained and increasedf founded as it is upon the
unprecedented development of the great natural resources
of the Bistriet; her intimate Jcnowlddge of the people of
the District, of their industries and finanoial needs;
her central location and unequalled transportation connec
tions with every section of the District; and, lastly, the
overwhelming expression of the wish and desire of a great
majority of the hanks of the Mstrict to continue to do
business with her#made it entirely fit and proper that
the Federal Reserve Organisation Comittee should have
Reproduced from the Unclassified /^Declassified Holdings of the National Archives
SE818
named Richmond ms the Federal Reserre Citjr of District lo*
6f and will lead this Honorable Body, we confidently eabrait, to
Hunton;
state
ment
follows
a
like eonetaeion*
am
Kdraoneton
follow*
HOlKCS
Federal
BeSOTTO
Board
1/eAs
ISsO > M*
AfiftftOSB? OF Mlu I I B HOTWOB, OK HICBEOIB TA*, Iff
FATOE OF fHl DI5SI#»Af tOB Of HIOHMOID AB
fKDHEAL K3SBKCB'
OXft FOB fHH FIFTH m&mkTi
BISfHIOf.
If the Court pleases* the Federal Beserve Just leaves
it to the Organisation Cosaaittee to determine the reserve
cities of each district, subject to review by this Board#
The Act itself fixeis no criteria by which to determine tho
reserve oitiaa*
An examination of the terms of the Act
will* however, throw much light upon the intention of 0on~
gress la this respect, aad it seems to m that tha best aid
which I can give to this Board la reaching a conclusion
la this matter is to point out thou* eonslderatleas which
seem to ladleate Baltimore aa the reserve city for the
district, aad tho^e which seem to ladieate tiehmoad, aad
whoa those eoasidorations are before the Board, to balance
them and see where the balance lies*
I will first consider Baltimore*
Hr friend, in his
opening, has indicated that he relies very largely upon
its sisey which m admit and recogalze*
fhe record dis
closes* and the Board will recall, that at the hearing
before the Organisation committee Baltimore was first
heard, and that at that meeting she insisted upon her
else being the determining factor* fhere were two other
considerations that she urged very forcefully and very
earnestly upon that occasion, namely, the number of baalcs
*
Reproducedfrom the Unclassified;! Declassified Holdings of the National Archives
45
3K8B
second,
in the fifth d istrict; kxa£ other business organisations
which favored Baltimore; and third, that Baltimore had a
preferential freight rate*
Not’?, I will endeavor to show that the only considera
tion which favors Baltimore is its size* aad that when the
facts are ascertained, the other two factors vanish, she
possessing neither as against Richmond# How, my friend has
said that the vote of the banks amounts to nothing, because
In the Act there is no reference made to a vote of the
banks, yet he says that the determining factor should be the
sisse and the ropal&tion of Baltimore, as I f there were a
statement in the Act that that should be the guide to con
trol this Board or the Organisation Committee in reaching
its conclusions# Eow easy it would have been to have pre
scribed in the Act, had that been the intention of Congress,
that the largest city in each reserve district should be the
reserve city; or, i f It was not the intention of Congress
to make it simply the largest in population, how easy it
would have been to have said that i f there is In any disbas
trie t a city whichkte twice, or three or four times the
population of any other city, that it should be selected
as the reserve city# But there is no mention in the Act
of that, and it is clear that it was not the Intention of
Reproduced from the Unclassified ?Declassified Holdings of the National Archives
SKIS3
Congress that that should T>e tJia Bole determining factor.
Shore is no question that it is a factor of weight, a
factor that will carry consideration, and which, i f other
factors combine with i t , will determine the location of the
reserve city# But *AhS" says ray friend to the Organiza
tion Committee, "you established the reserve cities in the
largest six cities in the United States, and when yon got
to Baltimore f you skipped i t , the seventh in eise% and
criticism is made in the brief and in the oral argument of
the Organization Committee and its published statement,
along with its decision, which my friend has quoted* My
friend says that after enumerating the first six largest
cities in the United States, the seventh, should follow in
a
the next naming of Jflm reserve city, but he fa ils to em«*
phasize this factor stated by the Organization Comnittoe
in the announcement of it s decision* that geographical
situation and a ll other considerations fully justify their
selection*
I f that had been true of Baltimore, the seventh
city in si3e# it also would havo been selected, but it is
the absence of those considerations that has led to tha
Organisation Committee passing over the city of Baltimore
and fixing Hichmond as the reserve city for the fifth
d istrict,
That Baltimore is not geographically situated
is not due to the fact that it is at the northern end of
Reproduced from the Unclassified ?Declassified Holdings of the National Archives
4?
SKB4
the A1strict* but It is due to the fact that the Act pre
scribes that the five appelated members of this Board
shall be appointed from different districts* or that not
more than om of them shall be from any resorre district*
and that they shall be distributed geographically over the
United states* low* i f you were to make Baltimore a re
serve city* you would put four of the reserve cities of the
Atlantic states* Boatem* lew York* Philadelphia and Balti
more, la the extreme northern part of the Atlantic seaboard
States* and leave none between Baltiaoro and the Gulf*
with the exception of Atlanta* More than that* you would
make the reserve city of the fifth district a city not
intimately m i not distinctively a southern city* and not
intimately connected and familiar with the distinctive
crops of that district* and not intimately familiar with
its banks* Its bankers and its banking situation#
low* it is conceded that Baltimore has courierclal*
Industrial and financial power somewhat with reference to
its else* but this record will show clearly that the larger
portion of its financial transactions are with the terri
tory to its north# &y learned friend came v^ry near asking
that statement In his opening argument* The record will
air.© disclose that a lar^e part of its commercial* and I
imagine of its financial transactions, are with the west*
Reproduced from the Unclassified.^ Decfassified Holdings of the National Archives
48
3KE5
and tM« record will demonstrate that instead of Baltimore
■being the financial * commercial and industrial capital of
the fifth district, the credit belongs? to th® city of
Bichmond.
fhey claimed that the vote of the banks, for instance*
in their original hearing before the Organisation Committee,
and the campaign of the city of P.lchmond, to which my friend
has alluded, - a campaign was also waged by the city of
Baltimore and it fe ll down, as results were not produced
there by it*
Baltimore was heard first by the Organization
Committee, and she presented to the Organization Committee
the fact that a number of baj&s in the District favored
Baltimore, and a number of other business institutions,
and you will be astonished, after the argument of my friend,
to learn that I believe ton pages of the fifteen page
brief filed by the city of Baltimore was devoted to that
factor in their case« But they were not aware, then, of
what had been the results of the Richmond campaign, con
ducted upon as high a &ro\m& as that of the campaign of
the city of Baltimore, but when they discovered that the
Richmond ease was presented to the Organization Committee,
we hear nothing more of the effect to be given to the votes
I&ter,
of the banks, except in their
(vln
their oral argument, they say that no importance should be
Reproduced from the Unclassified I Declassified Holdings of the National Archives
*9
SKB6 •
attached to thaii because they are not mentioned in the
Federal Boaerve Act* Fow, that was an enonaous factor in
favor of Baltimore when they believed that a m jority of
th© banl-o w’ore in itfi favor*
It is a factor of no conse
quence when it is demonstrated that it ha& not a pronounced
majority, but that a overwhelming
Jonty of the banks in
the district is in favor of the city of Kichraond* riore
te n that, at Baltimore's hearing before the organisation
Committee, before Richmond's cane had been presented, it
vms claimed that it lm$l a preferential freight rate over
the city of Richmond, rmd that that drew th© eurreiita of
comneroe and of tmsHness to the city of Baltimore, and that
that was a detominin^ factor in fnvor of the city of Bal
timore, they boing unaware tof the fact thevfe when Richmond* o
casio wr.a presented, instead of Baltimore h&vbc a preferen
tia l freifcnt rate an &£&inrt Richmond, Richmond, froa hor
£eo£?rftj>hioal location, had a preferential freight rate o?or
>3 *'
fche c it ;/ of Baltimore, and that there preference of 11*8
per cent j?er hiimtredweipht u; on a ll goodu or oomo&ilies
of the class going through Kichiaond, a difference of thir
teen per cent# I ??entod to 8:iy thnt that v;as developed
u,;;on the hearing of the City of Hichmond, and since that
hearing, eitlvr in the orrsl argument nor or in the briefs,
have we heard a nln&le reference made to the
II JJJ ,
IUHIIBI ■I.HIIIII UNI, I |l II
Reproduced from the Unclassified/Declassified Holdings of the National Archives
factor of a preferential freight rate in favor of tho
Gity of Baltimore aa dot training nhather it should be tha
reserve city or not#
So that I say tha claim that Balti*
more was tha choice of
the
banks has been disproved by tha
evidence* tho fact that Baltimore had a preferential freight
rate has "been disproved by the evidence, and it leaves no
factor in favor of the Gity of Baltimore, except its
size,
which was been dwelt upon this morning, and which the act
Itself shows was n 1 ‘ *
‘ “*
~
“
n~
trolling factor*
conditions that existed as to the six largest cities of
the United States, wo did have controlled it, but it does
not in the case of the Gity of Baltimore* its business
being largely done with the territory to its north and
with the territory to its west*
There can be no further
or stronger illustration of that fact^*** the fact if stated
say colleague that in January, 1913, the national banks
of the City of Baltimore were lending less than #¥*000,000#
to the entire thirteen southern states, and at the srune
time the City of Richmond was lending to those same southern
states nearly $34*000,000*1 nearly five times as muoh as
a city that comas and claims to be the financial capital
of the fifth district*
It seems to ne that we might leave
Reproduced from the Unclassified fDeclassified Holdings of the National Archives
them this claim of the City of Baltimore that she in the
financial center of the fifth district, as it is absolutely
rehutted by the fact that at & single time the national
banks of the City of Richmond, which i if claims is only one*
fifth its sisse, were lending nearly five times as much te
the southern states as the City of Baltimore# Therefore,
we claim that the only factor in favor of Baltimore! awl
we think that due weight should be given to it , is that
Baltimore lias a larger population than Richmond, but that
it does its business vary largely with the territory to
Its north and the territory to its west#
How, let us consider for a moment what are tha factors
that we claim point to Richmond as tha federal reserve
city#
•
fir s t, the selection of Richmond instead of Baltimore
would distribute reserve cities more evenly in the different sections of the country* I have already allu&edl to
that* One of the purposes of the aot, as I understand,
is to prevent too great concentration of resources and
banking capital in any one section, and to concentrate
more in other sections so as to give to the whole country
a more even distribution thereof* Bow, i f you put a lar^e
part of the banking resources in the four cities of
5 2
9
Boston | Mew Tor^i Biiladelphia and Baltimore, you will
have violated the spirit of the aot, which 1 wndtrst&nd is
af proclamation of f inancial freedom to this eonntry*
Mors
than that| you will hays violated the territorial and
gaoipraphical division, and you will have le^irhut on# single
federal reserve city in tha Atlantic states between Balti
more and the 0«if, not a oontrolling factor, hy any means,
hut one of a nuiah^r pregnant with moaning to tha gantleman who have devoted intelligent study and time to this
question, and who* it seems to
me,
must in;vltahly design
nata lie too nd as this reserve city*
Tha second is that Kiohmond has closer relations
and a more intimate taowled^e of the distinctive orops
of tha district than Baltimore* Tha South Atlantis statas
have thraa peculiar orops, cotton, tohaoco and peanuts*
Tha anntml value of thasa thraa crops are approximately
as follows:
Cotton, #25$t000,600#j tobacco, #3^,000,000*1
peanuts, #l§>00Ot0OO* Thara can ha no question that a city
whioh is in tha area of production of thasa thraa crops
must l:now hatter their financial needs« They must ha mors
int a lii gently financed from within thaA from without*
Richmond is within tha area of produotlos* Baltimore is
not* It seems to me that at this time there oould ha no
hatter illustration of t&at than tha statement that tha
Richmond
an<^ bankers are infinitely more familiar
with the cotton si it Mation in the south now in the time of
this c risis in that industry# I think m may assume that
It Is hardly probable that the area of cotton production
should come to be limited by legislation* This important
and vital matter in that great industry ?aust he brought
about by personal influence and by financial pressuret
and the bankers of the City of Richmond* from their knowledge
and familiarity with the bankers of these cotton states
and the State of Tirglnia* are in a better position to
reduce the area of cotton production in this country than
is the City of Baltimore* which is to the north of it#
Again* there are four foreign governments* or their
boyars of cotton and tobacco* who have their headquarters
in Richmond* and this shocking statement* it seeas to ae*
shows the distinctly peculiar relations of Richmond to
these peculiar crops* In 1913 40 per cent of the tobacco
crop raised in Virginia* Worth Carolina And South Carolina
came directly to Richmond for re*handling and manufactur
ing* and Richmond paid out in connection with It the
enormous sum of $53*000*000* or 86 par cent of the total
value of the crops of those three states*
A portion of
this* however* went to Kentucky* which is not in the fifth
district* fhose facts show the Intimate relations of
wm
Reproduced from the Unclassified; / Declassified Holdings of the National Archives
u
Richmond with
thra# distinctive crops of
the
is,
district| and user belief
the fifth
though the record dons not
show, and 1 presume that statistic® would he difficult to
obtain* that in the financing of the peanut crop it is mor#
pronounced than
1 ha third
is
it
is
other three*
as to the
preferential freight rates,
already alluded to#
ahloh
I
hava
Mr# Hawco,mert when testifying for
at
Baltimore **4 Washington, saids'
•Freie^it rates are
and
sal#
trade
in
oomoditiesi
of
coiamarcial
advantages
the prime factors
correct
ti^a* that
it was
ential freight
that it is to
Mr* Hawcoaer announced
proposition)
of
the
geographical
quicker
rate applies
to
all
doubtless due
to
this
certain
freight
ratei^
JTot
only is
that
delivery
commodity
one to
and this
freight rate
cities in
four days
preferential
and class rates#
preferential
Tirginia
it turns out
preferential
position*
Richmond than In Baltimore,
the
had the prefer
when
But it is true
Richmond that
but thara Is a
in
flow
believing, however, at the
perhaps Baltimore that
rates#
belongs from its
tonnage
shapire the normal
of freight rates lower than those established**
absolutely
in
purchase
and manufacturing centers enjoying the
It seen# to tm that
true,
and In
in the
1913t
freight
It is
that
In Horth
the
RepMuced from the Undassified / Declassified Holdings of the National Archives
55
a*
Carolina, South Carolina* Oeorftla &nd Florida reached the
enormous amount of
2,238,906 tons* and of this from
Richmond alone there was 6219,495 tons*
those figure# for Baltimore*
How, we have not got
We knew that thay were there
for Richmond| and we had thought they would produo# them
because we believed
Baltimore
they would show th® inferiority of
aa the commercial center of the fifth district
aa clearly as the loans from the national banks of tha
fifth district show that it is inferior aa a financial
canter, and I hava seen from this record that there wars
independent investigations made by the Treasury Depart*
ment, *nd it appeared that those independent investigations
disclosed those facts as to Baltimore#
Richmond is more convenient than Baltimore to a
larger number of banks in the district*
These ars 484
national banks in the district9 and 1,1$2 state banka*
There ars in Virginia, Iforth Carolina and South Carolina
1,123 banks, leaving 483 in the rest of the district*
All
of these banks in Borth Carolina And South Carolina are
about four and one~half hours nearer to Bichaond than to
Baltimore*
The same is true of most of the banks in
Virginia*
Bi^t counsel for Baltimore in their brief say?
•Practically the whole district being An within one
Reproduced from the Unclassified ^Declassified Holdings of the National Archives
business day of either Baltimore or Richmond, the question
of distance obviously becomes immaterial#
The exact hour
of the :iay at which a mail transaction is consummated is
unimportant *•
I agree with w
friend that the exact hour of the
day at which a hank transaction is accomplished is unita*
portant, with this single proviso, and it is an important
one| and that is that it he received in time to he cleared
on that day| otherwise it is very material*
How, such is the connection of Richmond with Worth
Carolina and South Carolina and with a greater portion of
Virginia and a part of West Virginia that its mails reach
there
we know that the hanks,
and
especially the country
hanks send out their mail after they close in the evening,
and
from that territory the m i l reaches Richmond largely
bgr the time the hanks open, so that Immaterial as the time
aay he at which the mall nay arrive, provided it is in time
«
to he cleared,
it reaches the
to he cleared that day#
Richmond hanks in time
We know that the clearing houses
generally close at about eleven o#clock, If a transaction
comes too late to he cleared
a day#
that day there is fhcA'#aj*/ef
A
How, if you take the distance from that territory
to Baltimore, many of these transactions it would, he
Impossible to clear on that day, "but they would ho delayed
and would only bo completed in tho transactions of tho
next day#
So that whil® X a^rao with sty friend as to tha
exact tiiae at which mail arrives is uniaqportantt I do main
tain that it is of tha utmost importance that it should ha
received in time to be cleared on the same day#
A^ain, another factor in favor of Richmond is the
relative increase in the banking resources of Richmond and
Baltimore*
That Richmond*s resources have increased much
acre rapidly than those
of Baltimore has been established
by my colleague upon authority of tha Baltimore people
themselves, but I do not know whether this Board cau^it
the faot that that document was appended to tha name of sgr
distinguished friend who so ably represents Baltimore with
h t.
accept it
.« < u . . C l ™ . « d . . » « A—
as an absolutely jfalr and impartial — * I would not
say
th«r«for«
like
to
^rr^f^amant of the national banks of Baltimore#
the national banks in Richmond in December* 1904,
capital and surplus of $3,115,000* in Harch, 1914, $9,314,000,
an increase of 199$*
In September* 1904, the Baltimore
banka had capital and surplus of #18*868,000, and in March,
1914, #19,205,000, an increase of only B%.
.
How, it seems to me that 1b a very Important factor
Reproduced from the Unclassified I Declassified Holdings of the National Archives
58
3KS15
to "be taken notice'of, that Richmond1*? increase was 199J&,
Baltimore's i no re as©
while
It is more
striking
was only
tate s to th© south, that
with the
section of the country which has, I am hap^y to say, assumed
such a position of progress and of prosperity in our entire
country that has made
and development
Increase
The
and state banks
give
cluding
the
is just
Virginia,
marked and looked to for
investment
for progro/e *
in
sta tistics
the
them for
and
it
aggregate
as
resources
striking* ?he
of th© national
record does not
for the two cities, hut it does give
including Richmond, for Maryland,
Baltimore, and for the other
States
in
in the district,
from 1908 to 1913:
Virginia
(including
Richmond), 1908, #94,788,000$ 1913,
£216,821,000; per cent of increase, 130$*
Maryland fincluding
#199,525,000,
1913,
So
Baltimore),
an increase of
1908, *123,613,000;
61$*
that the financial, industrial and
commercial
capital of this district, assuming that all that my friend
claims for it is true, would m o n vanish unless it got re
newed*
In
1902
resources
Maryland had nearly
than
Virginia, while
in
$29,000,000
more
bank
1913 Virginia had nearly
Reproduced from the Unclassified / Declassified Holdings of the National Archives
SKB16
|l9„000#000 more
resources of
bank
Horth
resources than
Maryland*
The "banking:
Carolina had increased in the same time
252%* of South Carolina, Z W $ 9 and of West Ylrginia 109$,
but of Maryland only 61%*
seems
It
only has the Organization
that has the
is
to me that that
most
an important factor*
Committee
designated the city
intimate financial relation with the
fifth district, and .has the largest transactions
fifth district, but
and progressing at
not
it
with
the
has selected the city that is growing
a steady,
nearest to the section that
healthy rate, and which is
is
increasing normally and
rapidly*
Another factor in favor of Richmond Is that tha cus
tomary course of business in the district is with Richmond
and not with Baltimore*
nothing
will
of
more fclearly indicate the trend
business
be
in the district to Richmond than the banking relations
tween
Richmond and the other States In
the
district*
In
considering these banking relations it must he remembered
that
Baltimore was one
that
Richmond
as the
was
of
the original reserve cities, and
never a reserve city until its
Federal reserve
city
of the
fifth
designation'
district*
From the Comptroller1® report for 1912 it appears that
there are 580 state and national banks in Virginia, and
Reproduced from the Unclassified / ’Declassified Holdings of the National Archives
SO
8KI17
that they carry in the Richmond hanks 528 accounts« In
Borth Carolina there are 429 banks, and they carry in
Rlohmond banka 397 accounts* In South Carolina there are
346 banks, and they carry In the Richmond banks 182 ac
counts* In West Virginia there are £97 banks, and they
carry In Blehaond banks BE accounts*
The raaximua deposits carried In Richmond banks in 1913
by banks from Virginia, Itorth Carolina, South Carolina And
West Virginia are $12,653,769* The maximum deposits carried
in Richmond banks by individuals, firms and corporations
from north Carolina and South Carolina are f4,64£,366» The
maximum o£ deposits by banks, individuals and corporations
from llorth Carolina in Richmond banks is #7,690,820, and
from South Carolina f2 ,343,766*
From this It appears that banks, corporations and in
dividuals in the d istrict, exclusive of Maryland, carried
on deposit in the Richmond banks over 117,000,000.
The maximum of loans made by banks in Richmond in 1913
to other banks In Virginia, Barth Carolina, south Carolina
and West Virginia was 16,174,175*
The maximum of loans made by banks In Hlchmond in 1913
to individuals, firrae and corporations in Borth Carolina
was |5,M5,451, In South Carolina 13,129,815*
Reproduced from the Unclassified ^Declassified Holdings of the National Archives
Hi
smiB
fhe m xim m of loana to ban s, individuals and corpora
tions in Horth Carolina was, therefore, 17,445,931, and in
fouth Carolina
553,730*
To moot the demands for crops and other purposes,
Blchmond during* the year 1913 shipx>ed f‘14t0*v0t000 in cur
rency into the southern States#
How, we have not those figures as to Baltics©re* I
wish we had*
1 hell ere that they would show that the claim
that Richmond is the financial cent or of the fifth district
would be established by them, and I trust that it is true
that the independent investigation made by the freasury
Departmentt which it was not in our power to make, will
establish the facts as to those things as to the city of
Baltimore, and X feel assured that it will confirm the
wisdom of the Organisation Coaamittee and lead this Board to
affirm its decision in designating Blchmond as the reserve
city*
It is a difficult matter to show clearly that Baltimore
is not the industrial and commercial center, but I accept
the statement of one of the witnesses for Baltimore that
convenience is the servant of commerce, and that it makes
the trade currents which create financial and many other
business relations*
Assuming that that is a correct prin-
Reproduced from the Unclassified ! Declassified Holdings of the National Archives
o
SKK19
ciple, and X believe it to be, it is irresistibly establish
ed that Kichmond, with its preferential freight rate, along
with the distinctive character of it s crops, is the conrniercial and industrial capital of the d istrict, and not the
city of Baltimore*
We
com©
now to what
my
friends have labored with, and
I am not going to deal with the to ll of banks taken
by
the
city of Richmond, but I am going to deal with it as taken
by the Organization Committee* I believe in the poll of the
banks in the district made directly by tho Coraprto11er*s
office Bichmond received 167 votes to 1S8 for Baltimore,
and that was a factor that my friends thought should have
an enormous amount
of
weight when first they appeared be
fore the Organization Committee* and which they have de
voted ao much time in their brief to minimizing and ridi
culing* Those figures do not Bhow the fu ll force of Rich
mond^ position, because in the poll 28 votes were cast
for Columbia, South Carolina, by banks in South Carolina,
and 19 for Charlotte, by banks in North Carolina, while
Washington1®
IS votes were cast
for
itse lf*
It ia clearly
established by the testimony that tho banlcs voting for
Charlotte and for Columbia favored Richmond as their second
choice, and we may assume for the sake of argument that
bank*
the
second choice#
Charlotte and
choice
by
of banka
Adding to Richmond
Columbia* and adding
in
f a m r of
the oity
a ll
the
number
and that in
of Richmond 214,
that
her second
would make the
me
their
by
second choice
to Baltimore
It seems to
moat conclusive factor of
and
her
the city of Washington, it
favor of Baltimore 140*
tee
as
of Washington way© in favor of Baltimore
that that is the
Organisation Commit
this Board has before it in determining this matter
primarily, this banking problem of the selection
reserve city#
The banka know
which la
of
the
the city of conven
ience, and where is the customary courae of business*
fhey
are not controlled by even so adroit a campaign as the city
of Baltimore which
controlled
by
could
fhey
not get a majority*
sentimental reasons, as evidenced by
are not
my
friend*s statement that a lot of banks in Virginia voted
for the city of Baltimore,
fhey
are hard headed business
men determining business requirements
iness that
they
they
know that
have had,
and
by the
course of bus
by their convenience,
and
it is to Richmond that they must look for
more intimate acquaintance, for
the knowledge
of
their
a
fin
ancial needs, and for the knowledge of their peculiar crops,
and that is why
one
of the witnesses before
the
Organisation
Committee said that he would be a little way from home to
Reproduced from the Unclassified / Declassified Holdings of the National Archives
SXBB1
go to Baltimore*
Mow, I say that the best evidence of convenience and
the euetomary course of business is the showing of these
/
214 hanks, as against the 140 for the city of Baltimore;
that they know what are their financial needs; that they
know that it is to Richmond that they mmt go*
My friend has referred so much to the unwillingness
(7l!ccJiof tfee-MtrMre* to go into a district of which Atlanta was
the reserve city, and I recognise it9 but not because it
was not to the north of it, as my friend would argue, but
because Atlanta was a borrowing community and Richmond was
a lending community, financing the cities to the south of it,
and lending #34,000,000 approximately at a time when Balti
more was lending less than $7,000,000, and that was the
reason why the cities did not desire to go to Atlanta, but
wanted to go to a city as tk x. their reserve city where
their financial needs could be met and where they had been
in the habit of having their financial needs met.
How, my friends say that we nevor dare to talk about
Richmond, as compared with Baltimore, in a district where
Baltimore was a member of the district*
Let us see whether
my friends are not in error in that respect also*
At the hearing in Washington before the Organization
---^"T
Reproduced from the Undasslfied/declassified Holdings of the National Archives
65
HOES
Committee M*# Norwood, of Greenville, South Carolina, and
Mr* Shett , of Columbia, South Carolina, while testifying in
favor of Bichmond &s the reserve city, both stated that
Maryland should be added to the district*
Mr* Bruton, of Wilson, north Carolina, testifying in
behalf of Hichmond, said that he would feel that "we would
be a litt le way from home to take us to Baltimore"*
Before the action of the Organization Committee Mr*
George A* Holderaess filed a brief for the Horth Carolina
Bankers Association, adding ?£aryland to the d istrict, and
makes a strong argument In favor of the selection of Bich#
mond as the reserve city of a district which includes Mary
land*
It is difficult to understandt therefore, how this
statement can be made in the brief for the city of Baltimore|
I quote;
"It cannot be too strongly stated that before the
action of the Organisation Committee no one ever thought
of comparing Richmond with Baltimore, or questioning the
commercial and financial pre-eminence of Baltimore in what
has now been made the fifth d istrict*”
Yet there In the testimony of these gentlemen showing
that while the district, as mapped out by Bichmond, did not
include Maryland, that the fact that it might include Hary-
Reproduced from the Unclassified / Declassified Holdings of the National Archives
SKS23
land was contemplated, and
mond
this
that
the answer was at111
Rich
in preference to Baltimore*
Row, X want
to say this*
matter as a
matter de novo,
It
seems
to me that talcing
that the weight of the
testimony and the record establishes the fact that instead
of Baltimore being
the
financial, indUBtrlal and commercial
capital
of the fifth district, and being the moet conven
ient to
the
where
the
customary course of
convenience of the
would he best
subserved*
business.
customary
this
is
course of
Richmond
business
I say, as an original'proposition,
that is tine, but this does not come
proposition, as
It
Board
has
up
as an original
held when it gave to the
city of Baltimore the opening and the conclusion of this
presentation,.
It comes up not
as
an appeal, but as a re
view of the action of the Organisation Committee by the
Reserve
Board, and may I
pause
for an instant to say that
a review is a common method used by the
courts,
that a
petition for a re-hearing is not an unusual thing, and ac
cording to my recollection, though I
stances,
this
has been the
case
cannot
give the in
in this country, that where
appellate courts are made up of the judges of the lower
court, that the judge deciding tha case in the lower court
has been a member of the
tribunal
to re-hear and review
Reproduced from the Unclassified I Declassified Holdings of the National Archives
&KEB4
themselves.
How* I say that this
Organisation
Committee visited
eighteen different cities in their efforts to reach wise
conclusions*
and hearings wore
given
to over two hundred
cities thet came in touch with the financial men and the
business men of all sections of the common country.
wore authorised to employ experts and
counsel
sec how
delicate
of
this
counsel
‘
They
- I do
not
could aid so mu eh in that difficult and
discussion* for which* even in tho presentation
view
of
It, I feel that 1 am so poorly
qualified -
but they had the authority to employ experts and to make
independent investigations* and i say that the decision of
that Organisation Committee
is
courts*
primarily right in all
both State and Federal* and should carry as much weight as
is
given
to the wisdom of a jury or to the report of a
master or special master* and the rule* I believe* in almost
every jurisdiction is that such a report
shall
not
be
over
thrown unless it is plainly wrong* and the burden upon my
friends is not such as It was before the Organisation Com
mittee* !£he
burden is upon them
to
establish to
the
satis
faction of thie Board that the action of this Organization
Committee
is
clearly wrong; otherwise* as the Board has
done in giving to them the opening and conclusion* following
Reproduced from the Unclassified i Declassified Holdings of the National Archives
68
♦
3KB25
the
legal
its
decision, with
have with
principles in each
it
oatters,
the greater
unless
plainly
familiarity that
they
hearings
that they gave in these eighteen
hundred
cities, anti from the personal hearings of the two
cities, as the trial court, seeing the
testimony is
courts,
witnesses
and hearing
able thereby to give more intelligent
judgment and the proper weight that
say the
must
from their personal touch with the situation
from the personal
their
wrong:,
is
due to them, - so,
unless plainly wrong, it must be affirmed*
I want to say that I do not believe that our friends
realise the progress that the city of Richmond
has
the last two decades, more especially In the last,
made in
and
I
can understand their disappointment that in a controversy
of this sort, friendly upon our part at least, that the
prize,
which
could
be given to but one, case to ittchmond
Instead of to Baltimore*
to our own
.people
It may have been astonishing even
to know what the development had been,
because thirty years prior to those two decades a large
part of the city was in ashes*
Its wealth had been swept,
away, the flower of its manhood had 'been given in response
to the call of her State*
T he struggle during those thirty
years was a slow and laborious one, and
in this controversy that
we
remember even
in that hour when
we
were
Reproduced from the Unclassified / Declassified Holdings of the National Archives
d9
3XS86
passing through the valley
slater city of
aid
that
she
Baltimore
did
not
of death
for sympathy,
that if the decision of this
city
by
And we
never
turned to our
encouragement and
and
respond promptly
we do not forget that today.
affirmed
we
efficiently, and
believe
Organisation
and we hope
Committee Is
this Board, that the time will come tshen the
of Baltimore at
least *111 not
he ashamed of
the
regional hank of Richmond as a worker In the development
of this great financial machinery which is to bring finan
cial freedom and
equally
N
to all
sections
and all parts of
this country, and give flexible and stable currency, under
your wiffe administration of this Act
the financial history of
this
which is
country*
an epoch in
Reproduced from the Unclassified / Declassified Holdings of the National Archives
7 0
3KS27
OWBJMCr
IB
ARGTOBHT
OF ME*
FAVOR OF THE BBSIGlfAflOB
VERHON C O O K ,
OF
Gentlemen
VB DISTRICT.
the
of the Board, in
short
for oral discussion it ia impossible for
you
an
a ll tho many ways In which
advantage
City*
We
Richmond
over
can
How, as
argument
I
see it,
the
time
ue* to
for the location of
touch
a
reserve
on some of the
underlying theme or text of the
for Baltimore 1b this,
reservoirs
lay before
argument*
that
as wo look about the
country and find that the hills and valleys
natural
that remains
Baltimore, as we see it, has
therefore only briefly
more salient points of the
HD*,
BALTIMORE AS TS2 EBDERAL
ClfT K)H TEH FIF^H .FBDISRAL
BIS.EKV1
OF BAIfflHOHB,
for water, so
the
-make
certain
course of business and
the eaAgenoiee of trade form certain natural reservoirs
f o r surplus banking capital, and we claim that Baltimore
is, and always has been, one of those natural
banking capital,
and that Richmond
reservoirs
for
never wa®, and in the
nature of things, for a great many years to come never can
be
such
a
natural
reservoir
for money*
We claim also that Baltimore is not only a natural
reservoir, but a natural reservoir for this particular
fifth district, including these Statee* the Virginias, the
Reproduced from the Unclassified / Declassified Holdings of the National Archives
1
330128
Carolinas, Maryland and the District of
do I say this?
Columbia*
low, why
My opponents on the other side have mad®
some very startling; statements* it seems to me, but none
m ss
Mr.
hk)re
startling
to
me here
Hunton that Baltimore
the south, but has its
than
the statement made by
does not have
business
it s
business with
with the north.
Those of
us who live in Baltimore have been hearing for many years
about Baltimore*s
southern
trade, ono of the things we
always talk about# one of the
things
that wo work for, one
pf the things we pride ourselves upon possessing.
the facts?
Does Baltimore have its business in the south
or in the north?
11,
and m
What are
We have the figures in our brief on page
show that of
all the products
or
goods
raanu-
or
factored maak distributed by Baltimore, there is 137,000,000
worth distributed in the State of Maryland itself, and that
in the rest of this district there la '*>1 ,0 0 0 * 0 0 0 worth of
products distributed*
Bow, when we add those figures
together, the result is that TOp of our manufactured
products, and 70$ of the goods which our great jobbing
houses send out go right into this very fifth district*
Those are the figures on authorities that cannot be ques
tioned, cannot be doubted, and. they are net forth in our
brief.
trict*
We say, therefore, our business is with this dis
from the Unclassified / Declassified Holdings of the National Archives
# tJ
Take the great jobbing houses of Baltimore, turning
out as they do and selllne millions of dollars worth of
goods in the south*
The Baltimore Bargain House
75t000 accounts in the south*
Brothers has 10,000
result of
natural
this?
flow
accounts
The
alone
has
well known firm of Hearst
in the south*
What is* the
The result of this is that it makes, a
of money from the south, from this district,
into Baltimore#
These goods
are sold by the Baltimore
jobbers to Baltimore manufacturers and merchants in the
south#
They are sold on
credit, and when the time of the
year comes around when the southern
people
have harvested
their crops and have gotten in their money, they pay their
debts to Baltimore; then a flow of money comes in from these
thousands
over
of
accounts*;these
thousands
of
merchants
all
the south, who owe Baltimore, begin to pay, and there
is a perfect streme of money flowing from this
Baltimore*
district
to
After the crops -are harvested, after the great
demand for money In the south lets up, it flows back to
this city as the natural
place for
it to be as a reserve
center*
Then, in addition to that, not only
is
there the
flow of money from the southern merchants to tha Baltimore
wholesalers, but another great current that has set in
Reproduced from the Unclassified / Declassified Holdings of the National Archives
*7' O
&O
SKE30
toward
Baltimore
evidencing the
coupons
more
is the payment
of th©
is
interest that
dividends and
investors*
ingly of
a
the savings hanks
because
word or two,
in Baltimore
could
fifth district*
filed in the
not
How,
of
the capital of
the
be any good to
what
brief from Mr.
Baltimore savings banks which have
largely in
therefore
bonds,
is no
which ray
60#000*000 bonds
S3t0:X) ,000 f
States
low,
to the
good
rest of this
In
the let tor
E* Edmunds, the great
our
their
opponents
throe principal
money invested
would
south, Mr*
38JS,
represent
coupons
have
Bdmnnd
you think
out
says that
investments in
ten
come due, there is another current,
as I say, of money into Baltimore,
trust
further than that, there
companies in Baltimore alone
fiscal agents for E00f0'X>f000
fifth district alone*
southern
savings hank
of the Potomac and east of the Mississippi*
when these
are three
them
held by these three savings banks alone,
or more than
south
a
are the facts*"
Hichard
slight
dismiss
Baltimore, and
statistician of the south, he says that
of
the
due to the Balti
Bow, ray friends on the other side speak very
with
of
of
that
act as
southern securities in the
low, when the coupons on those
securities are paid, that all necessarily has to
be cleared through Baltimore*
Now, iisy opponents say that Baltimore does not under-
Reproduced from the Unclassified / Declassified Holdings of the National Archives
(■V 4
i
3KB&1
the
stand
industries or
the
crops of this fifth
district,
and th e y call attention to the fact that their three great
crops are cotton* tobacco and peanuts, and they think we
do not understand
much about
Mont of
them.
that
tobacco,
as a matter of fact* is shipped through Baltimore*
We
think we hare a good deal to do at times with the financing
of the cotton crop*
considering
the
Hot very long ago* when this Board was
matter
asked to raise only
of the cotton pool, Richmond was
$1*000,000,
and Baltimore was asked to
raise 12*600,000 toward that pool*
of my
opponent's argument
tobacco conditions, to
those
are
the
in Ms
But the significance
mention of cotton and
my mind is this*
It is true that
three products of the Virginias and the Oar-
olinas* and it
lit
because they roly so largely on these
three products that they never can become a great
reserve center for
surplus ffcmds,
because*
as
in a
natural
manufac-
taring plant it la necessary to keep your plant going as
many aays
ness
time#
in
the year as possible* so, In the banking-
it is important to
A state
that
keep
busi
your capital working all the
has three crops
only,
tobacco* cotton
and peanuts* can work a hanking capital only through•a
part of the yeax^
has only a seasonal demand* but the
places that become great banking centers and centers of
Reproduced from the Unclassified / Declassified Holdings of the National Archives
K\ '
i
3KBSS
reserve toads art
the cities that
cities, but cities that
capital,
only large
a diversified demand for
to In Baltimore have use for capital not only
In the tobacco,
season
use
days
for it 365
far you
hare
are not
and
out
the
peanut season, 'but
of the year*
1
do
not
gentlemen are familiar with Baltimore
real position,
but
wo say
we have
know how
and it s
the
in our brief that it is
leading city in the country in the manufacture of m e n ’s
clothing, in copper, in tin and sheet iron products, in
fertilizers, in
tanning
cotton ducfc,
and preserving
Baltimore
not
ufacturers,
business*
only handles
but it
is a
great seaport*
city
of
is
in straw
hate, and in the
In addition to
the business of
this,
it® own
man
a great transfer point; I mean it
With the exception
Baltimore has more
exports
of
lew York, the
than any port on the
Atlantic Coast* We are ahead of Boston, and we are very
largely ahead of Philadelphia in the import business.
How, then* another thing w x n t not be lost eight of*
One fifth of all the capital of these reserve banks ie
contributed by the Baltimore banks; approximately one
fifth of all the deposits in this Richmond bank, the re*
quired deposits come from Baltimore*
mean?
That
How, what does that
means in effec t that one fifth of
a ll
the
Reproduced from the Unclassified / Declassified Holdings of the National Archives
3KB33
business
that It
this bank does, and one
is
go!ng
to
do
nmst
fifth
come in and out via
You cannot get away from that*
business
of all the
Baltimore*
When tha season of the
year comes when the South ie paying its debt to Baltimore*
and when
surplus
funds begin to
accumulate
in Baltimore,
we will send tip the proper proportion of them to Richmond,
and
when the season
comes
strain, and everybody
around again for the greatest
warta
reverve
to get' these
funds
at Blohaw&d, one fifth of them must come out via Baltimore*
because
known,
the re
if the facte
will havo credited more than one fifth of
the paper eligible for
discount
How, a merchant in
who had
fifth of
a
that Baltimore,
sources, but it ie a fact
could be
contributes
Baltimore not only
merchandise to
foolish man indeed if
north
in
this
district*
Carolina or
South
ship to Richmond would be
he
Carolina
a
very
sent it up to Baltimore, with
instructions to turn it around and send it back to Bich-
mond,
yet,
gentlemen,
money in thie district
is
that
if
exactly what we do with the
yon permit the reserve city
to
stay in Richmond, because at every season of the year when
the .flow of money comes that way, we would have
in
to
Baltimore and back to
Richmond, making
it
flowing
a round trip,
whereas if you allowed it to come to Baltimore, allowed
these things to bo cleared in Baltimore, allowed these
Reproduced from the Unclassified / Declassified Holdings of the National Archives
£ £
3&I34
resources to 1)® piled up in Baltimore*. the s ituation would
bo Tory m noh simplified*
Those facts
are not new*
is anything discovered
already
been recognised
ment of
the
the
when
act*
If
we go
'by
that has
the
1364*
back to
Govern
which
national banking aot was passed*
reserve cities were created,
regional
recognized
and been
Unitod States*
was
X believe
It is something
by us*
that that
am not claiming
1
Baltimore was
1 think 19 of
one
of
those
them* by the
cities; Richmond
was not* My opponents seem to think that gave Baltimore
a somewhat
artificial advantage over Hlchmond* but that
Is not the case, because a later act provided
city
with*
1
think* very little
population or banking
its bankers saw fit*
capital, could* if
that any
reserve city and oould bo made such*
be
made
Here is the
most
ask
to
startling thing in this proposition, that until
law
was passed
Hlchmond
was a
never considered apparently that
proper place to be a reserve city*
in and asked for such a thing*
city, Washington in
Charleston, South
this
Baltimore
They
was
a
Hlchmond
never came
was a reserve
District was a reserve
Carolina*
new
banking system, the
creating this new
bankers
this
a
reserve city*
city,
'They were
the natural reserve cities, and Bichmond had not even
T
Reproduced from tie Unclassified / Declassified Holdings of the National Archives
73
SKB36
asked for it *
r-ov;
low* my opponent® cite a great number of argument©
ant reasons which they contend make In favor of Bichmond*
Let us look briefly at one or two of the®*
It if* said in the first place that Bichmond lends
more money in the south# as it ie put in the report of
the Organization Committee, and also in the brief*
£hey
claim that Bichmond lends $93,000,000. la the south, and
Baltimore only .$6,000,000* fhose figures might look very
important, but what are t&ose figures? 1m t us analyse
them a moment* what do they mean by the south' Why, when
you come to read through the report t you find that what
they mean by the south, the thirteen southern States,
includes Virginia but does not include Maryland* So that
when you say Bichmond lends #33,0>0,000 in the south, it
simply means that Bichmond is lending most of that right
in Ztlehmon&s it aimply means that Bichmond is lending more
in Bichmond than Baltimore 1® lending in Richmond,
But
i f you want to make a fair eepa^arison, a real comparison,
and tabulate figures and see in this district what banks
are lending the most money in the district, or in the
south, including Maryland, what banks are lending the
most money, there is not the slightest doubt la the world
that these figures will be entirely reversed*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Q
How, farther -.than that* another point that Is made
by our opponents is the point that they are nearer the
geographical center of the district.
JUst a-word on that.
What has the geographical center of a district to do with
a Question like this?
If we were going to establish the
point for a water rower plant, the geographical center
might hare certain advantages, but we are establishing a
center here for the banking business.
fore, where the banking business la*
You must go, there
If you anarxg were
establishing a bank in Hew York City, and the directors of
the new bank in Hew York City should propose to put it out
in Central Park because it is nearer the geographical
center of the city than fall Street, would not they simply
make themselves a laughing: stock in the eyes of everybody?
Has the committee paid any attention to the geographical
centers in any of these d is tr ic ts , with one or two possi
ble exceptions?
They have n 1 *
If you take the #ew York
District, lew York City is in the southeastern end of that
d istric t*
If you wanted the geographical cantar, you
would have to go up State somewhere about Utica*
If you
, take the northern 3)1 at riot and want to find the geographical^of that, I believe it is somewhere in the white
Mountains*
If you went oujr to the San Francisco D istrict,
and tried to find the geographical center of that, perhaps
from the Unclassified 1 Declassified Holdings of the National Archives
80
SKB37
you
might hit Reno Instead of San Francisco*
So,
you could
go all through those districts ana Bhow that the geograph
ical center
has
nothing to do with it*
TTe are not her©
like a lot of school boys trying to solve a problem in
geometry*
fhe
lines of banking and the course of trade
pay no attention to
attention to centers
constructed*
of possible
the
districts that may ‘
he
that the great cities and the great
hanking centers are of one of two
west*
they pay no
On the contrary, we find that when we look
country*
over our
geographical centers*
clansee
in the middle
fhey are the great railroad centers, particularly
great
railroad transfer points*
Host noticeable, of
course, are Chicago and St* Louis, and ^hea
we
airay
get
fro® the middle west and come nearer the Pacific Coast,
we find
that
these great centers are invariably
seaports of the country*
the
great
In Chicago and at* Louis the
railroads link together the eastern and the western lines,
and on the coast
the
other termini of these railroad lines
link themselves with the ocean liners, and these seaports,
therefore, are kept constantly
buey
because they have not
only their ow n business, but they have the handling and
re-handling of the business of the other sections
of
the
Country, something that is goi^g on all the year round*
How, our opponents say particularly that this Com-
Reproduced from the Unclassified / Declassified Holdings of the National Archives
3038
mitt© 6 , whose
report
is now up
for
review, lays a very
great stress upon what they ©all th# per capita argument.
That argument ie this*
7 hey say: ’’True, Baltimore is a
larger city; true, Baltimore has more hanging c a p ita l", and it ie not *?hown by them how great the disparity is - -
hut they say yiu must look not only at that* hut you must
look at the per capita* and then it is figured out that
the per capita
hanking capital -in Richmond
greater than it is in Baltimore*
ie considerably
At first blush that
might eeera to hare some force; it might seem to indicate
that perchance the people of Hichmond had some particular
aptitude for the banking business that leads them to put
their money into i t -in greater proportion than ether people
do.
What do you mean by banking per capita?
That means,
of course, the banking resources* divided by the number
of people*
that*
There are two factors there ’which will vary
A large banking capital, or a large bamrlng popula
tion tends to decrease th® per capita, hut a small popu
lation equally tends to increase the per capita.
We show
in the brief how this argument for Richmond is reduced to
an absurdity when we compare other cities with it and
show yon that the per capita In Richmond is larger than
the per capita in Philadelphia, Chicago and Hew York*
But it becomes even more striking to my mind when we
Reproduced from the Unclassified I Declassified Holdings of the National Archives
S&S39
compare It to p-ome of the small cities*
How, the Organisa
tion Committee laid almost controlling stress on the fact
that Richmond had a capital and surplus and banking capital
of #73 per capita, higher than Hew York* Philadelphia and
Cleveland.
Bow, le t na look at a few small towns#
1
do not know
whether you are fam iliar with this place, hut we have a
little town called JSllicott City a few miles out B id e of
Baltimore, not noted as a hanking center, but very re
markable for its banking capital#
£he fppulation will show
that while Biehmond has $73 per capita, Illicott City,
with something like a thousand population, has a per capi
ta of |130 , almost twice as much as Richmond*
If we take
the mining t o m of Oakland in western Maryland, we find
that it has a per capita of $187; we find that Hockville,
f
not very far from here,^as a per capita of |200; Centervilie, on the western, shore of Maryland, has a per capita
of f2S5, as against Biehmond* a |73*
So that when we see
these figu res, the result evidently in- that your large
per capita argument simply proves that you are a small
city, and it is evidently all that it does prove.
low, then, the next point made is on the growth of
banking capital, and there m j opponents take great delight
Reproduced fiom the Unclassified # Declassified Holdings of the National Archives
>n>
O
SKE40
first of
all
in citing
that was appointed
of
the State
of
a
report of a Maryland
to study and
revise
all the
commission
taxing laws
Maryland, ana they apparently see® to
think that they have mad® a great point by quoting this,
because I
mission,
which
of
to he one of the
members of that com
and they read a long eaetract In which we showed.,
was
Maryland,
the
happened
undoubtedly the
which
fact,
that the taxing laws
imposed a Tory high
rate,
of
of taxation on
national banks, had tended to retard the development
national banking capital
is this*
My opponents
Maryland*
But the point
on the other side, not
Maryland* and not knowing
there, appear to be
in
exactly
peacefully
living
what we are doing:
in
out
Ignorant of the fact that
partly as a result of that report ,
in
which I had some
little hand, the last jg^l@latur* of the state of Maryland
JUuS
taxation of our national
entirely new system,
banks, and they have' established an
an entirely new method of taxing the ban % very similar
repealed this burdensome
to the lew
York system,
with banking capital
in
of
tha
one
per cent tax*
Bo
that
I aryland relieved of this heavy
burden, we have the right to
look forward
with a reasonable
expectation to the rapid development of Maryland banking
capital In the future*
than
that, what does
But aside from that, and further •
this
growth of Richmond In its
Reproduced from the Unclassified J Declassified Holdings of the National Archives
Si
SKE41
pant
banking capital in the
that
Richmond
growing;
is
tm
Why it
years show?
that is all* It does not show
it has gotten anywhere near Baltimore as jet*
deal with the
future*
present,
shows
not
with
the
past
or
We have
with
What is the proper reserve city today?
to
the
If
Rich
mond ever does grow to proportions where it ia near to
or
Baltimore
the lifetime
superior to
of
Baltimoret i f
that comes
within
any man in this room, why this Board, or
some other hoard, can then change it* and take the reserve
city
hack from Baltimore to
Blchaond
simply
veloping city
the
But the fact
that
has grown faster in the past ten years than
.Baltimore
and is
Biehmond*
means this, that a growing city,
a
de
- Blohmond is that* as ray brother has said#
notv^ftilly reviving fro® the disastrous effects of
Civil
War -
what
you might call a
young;
arid developing
city naturally grows faster than a city that has already
fully developed*
That is simply for the
a young child growe faster
prove any
is just
superiority
beginning
than
a
man*
same
that
reason
That does not
of the child over the man*
Hiohmond
to revive from the calamity that it
suffered many years ago, and we are
reviving so rapidly*
a ll
glad to see it is
We know Hiohmond has made progress,
and we think that we in Baltimore 2mve had some hand in
it*
How
many Richmond
securities have been sold in
Bal-
Repioduced from the Unclassified I Declassified Holdings of the National Archives
SKE42
tinm m ?
Why it
was
only
a salesman
office that
Virginia securities,
time*
yesterday as I was
0 am©
to
in. wanting
leaving my
sell m
some
and that la what we have all the
As Mr* Edmunds tells
you,
and it was a minimum
estimate, the amount of Baltimore capital invested in the
southern
States
below the Potomac Is 1200,000,000.
Another point
much discussed is
the poll of
Wei;, there are two polls of the banks*
raond poll*
the
banka*
One is the Hioh-
I have never been able to tinderstand that*
.1
have looked at it and tried to figure it out from their
brief, and
I
got -this far, that according to the
Richmond
poll Baltimore got nine votes in the whole district*
in
we have sixteen banks
satisfied
from that *
1
Baltimore*
How,
1 was immediately
did not g:o into it any farther*
the poll taken by the committee shows 167 banks voting
for
Richmond,
and 128 noting for Baltimore*
two comments I want to make on that*
at the time that the poll
did not
the
know ,
districts
you will
choice
was
fhere are
In the first place,
taken, the aouthern banks
nobody know, Just what the boundaries of
would be, and if you read the proceedings,-
evidently find that the southern banks had a
between Atlanta on the one hand and
Richmond
on
the other, and the- majority of them, the great majority
them, said that they
wwntod
to be connected -up with
of
Rich-
Reproduced from the Unclassified /Declassified Holdings of the National Archives
o
SKE43
6
raond, because th# ©ours® of business in this district was
from the south to the north, not ffcom the north to th©
south* As ono Borth Carolina banker salds * I f you con
nect us with Atlanta* you connect us with a dead end#”
According to our opponents, that is a ll right* to connect
Baltimore with a dead end* In Jact, the whole situation
here, from thoir point of view* as to this d istrictt seems
to he that they started out with a litt le district they
mapped out for themselves south of the Fotomac* fhey
wanted to he at the north end, because they thought the
city at the north end would have the advantage* and they
mapped out the Virginias and the Carolinas, and presumably
they took in Rome more southern cities with it*
Then when
it began to be apparent that Atlanta was making strong
claim©f and that Georgia would naturally go with Atlanta,
the
then A
Virginia and Carolina district had to look around
for something else to make it £ac a full grown district*
fhey figure it out in on© of their speeches or briefs
somewhere here* which contains the expression that Biiiaa
&el phi a t being
district made up of Pennsylvania* MaryN
land wae le ft as a so;rt of floater* and they did not know
Just where to put that, m my friends from Blchmond then
come forward in a sort of supplementary brief or letter
and show that Maryland* being le ft in this p itifu l con-
Reproduced from tile Unclassified ) Declassified Holdings of the National Archives
67
3K344
dltlon of a floater, that they will kindly open the doors
and let us In to their district#
fhat is their whole
attitude# tf?hey will let us in* £hey look to us for the**
resources, one dollar otit of every five they get from \im.§
yet we cannot have this bftfck because we are too near Phil
adelphia, and I understand Mr* Bunton to say, what ie a
surprise to me* that Baltimore was an extreme northern
city*
I have lived there a ll ay life * and I oan say that—
Mr. EOTfOI:
I did not say that; at least I did not
intend to say anything of the sort#
Mr* COOX:
I f you aid not say i t , that is the end of
it* but I understood you to say that i f the fotir hanks
were given to Boston, Philadelphia, Hew York and Baltimore,
you would h&vo four in the extreme northern part of the
country* We have been taught to believe that Baltimore
is sort of on the boundary line, eo to speak, and in con*
sequence mainly and largely has been a southern city! and
we feel it ie the gate to both the Routhern and northern
States# we feel It is the gateway between the north and
the south, ai3d as that gateway it is entitled to recognition
by reason of the securities it holds, by reason of the
business that it does*
How, look at this Juot another way* Suppose you
gentlemen were the real owners of this bank for the fifth
Reproduced from the Unclassified /iDeclassified Holdings of the National Archives
$ 8
3KE45
d istrict, and suppes# you wanted to put it in the place
where it would ho a success and m ke money for yourselves
as stockholders or for other stockholders, oan any man
within the sound of my voice hare a shadow of a doubt that
you would place thiB bank in Baltimore where you could get
hold of seme business, rather than in Bichmond where you
would not have anything like the chance?.
£ook at the things which Baltimore business men look
at# £ook at our foreign trade# Socle at the grain we are
exporting right now to the warring nation® in JSurope, and
the hank acceptances, the foreign hankers1 acceptances
that are Bold in lew York* Bichmond in her hrief says
they can s t i l l be sold in Hew York, and Baltimore 1® not
going to suffer.
That is not what we arc here for* We
are not mktn$ an argument for the benefit of Baltimore*
It is true that our pride 1st somewhat hurt that we are
passed over, the seventh city, as we claim the sixth city,
in the Union passed over for the thirty**ninth city* and 1
appeal to you, not for the good of Baltimore, but for the
good of this fifth reserve d istrict, to put this bank
where it belongs, and put it where it can get business*
Bo not sit down and say, as my friends do5 l»et lew York
gobble up that foreign acceptance business as it always
has*” We say: nIo# send this bank over to Baltimore where
Repi
mtheUndass
3046
I HoWings of the National Archives
It can make a fight for It, and where it east get it* w
And I say to you that we are not her© asking for this
bank for Baltimore* s benefit#
Perhaps it may benefit
the banks of Baltimore in s»ome respects, in drawing
Borne local business, but we want this bank to be a one*
cess, and we believe it ie goine to be a success*
I
believe you can m k e a Federal regional bank work anywhere* even if you pat it in the back woods* but we want
to make it work well and against the least resistance*
Water ©an run down hill but you can force it up hill if
pumps,
you construct an artificial system of^reservoirs and pipes*
I say you can make a regional barik work anywhere, but if
you want to make it work to the best advantage and with
the least friction, you nuot m k e It work according to the
laws of nature* according to tho laws of business and the
course of trade* you must put it* and I appeal to you gen*
tleswtt* to put It not in an artifioial reservoir where you
have got to be pumping all the time against resistance to
get thin money to Bichmond, but put It in the natural
reservoir whera it belongs, and which
we
insist is Balti
more*
$he OHAIHKABi
We want to express our appreciation
of the great ability shown by both aide* in presenting
\
Reproduced from the Unclassified / Declassified Holdings of the National Archives
32847
thia case.
v;e will take it under advisement and later
advice you of the decision.
(Whereupon, the hearing wai; adjoitrned) •
@FedFRASER