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37B35

Before the Federal
! Reserve Board
|

IN T H E M A T T E R O F A P P L IC A T IO N
OF BA N K S IN E A S T E R N W ISCO N SIN
T O BE D E T A C H E D FR O M F E D E R A L
RE SE R V E D IS T R IC T N U M B E R N IN E
(M IN N EA PO LIS) A N D A N N E X E D
T O F E D E R A L R E S E R V E D IS T R IC T
N U M BER SEV EN (C H IC A G O ).

REH EA RIN G B EFO R E TH E FEDE R A L R E S E R V E BO A RD ,
W A S H IN G T O N , D. C.,
A U G U ST 8-9,1916

B rief on B ehalf of the Petitioning Banks,
Appellees.

J. W .

P.

LO M BARD ,

C h a ir m a n of t h e P e t it io n in g D eleg a tio n

REXFO RD




L. H O L M E S ,

C ounsel

j
j^
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Before the Federal Reserve Board
IN THE MATTER OF THE APPLICATION OF CERTAIN
BANKS IN EASTERN WISCONSIN TO BE DETACHED
FROM FEDERAL RESERVE DISTRICT No. NINE
(MINNEAPOLIS) AND ANNEXED TO FEDERAL
RESERVE DISTRICT No. SEVEN (CHICAGO.)

REHEARING BEFORE THE FEDERAL RESERVE BOARD
WASHINGTON, D, C., AUGUST 8-9, 1916.

BRIEF ON BEHALF OF THE PETITIONING
BANKS, APPELLEES.
FOREWORD AND HISTORY OF THE CASE
This brief is filed in accordance with permission granted by the
Federal Reserve Board at the close of arguments heard during a
rehearing on August 8-9, 1916, on the appeal of certain Wisconsin
banks to be transferred from the Ninth to the Seventh Federal
Reserve District.
The case was originally heard before the Federal Reserve Board
on May 20, 19 15 , at which time arguments were presented to the
Board by the petitioning banks, appealing from the decision of the
Reserve Bank Organization Committee, placing the petitioners in
the Ninth Federal Reserve District instead of in the Seventh Dis­
trict as petitioners desired. As a result of this hearing the Board
determined the matter, stating:
After a full investigation of the matter the Federal Reserve
Board has arrived at the conclusion that there is no present
necessity for any change in the geographical limits of the said
Districts Nos. 7 and 9 at this time.




2
In the letter which was sent out on behalf of the Board by Vice
Governor Delano it was stated:
If future developments should indicate any necessity for
such change the Board will, at a later date, give consideration
to the matter upon the application of banks desiring to be trans­
ferred. The Board, however, is very hopeful that the results
under the new clearing system will make a transfer unneces­
sary.
The Board has given careful consideration to the views
presented and has reached the conclusion that it would not
be justified in making any alterations at this time.
And in the decision it was stated:
It is ordered that said petition be dismissed without preju­
dice to the rights of the signers to file an amended petition
at a later date.
On July 26, 1916, the Board notified the petitioning banks by
telegraph that the case would be reopened, as follows:
' Board today voted reopen petition filed by certain Wis­
consin banks for transfer from Ninth to Seventh Reserve
District. Informal hearing of oral arguments Washington,
August eighth, three p. m. No briefs are necessary but may
be filed if any bank desires. Applications of banks in northern
peninsula of Michigan desiring to intervene in this petition
will also be considered at the same time.
(Signed) C. S. H A M LIN ,

Governor.
As a result, a rehearing of the case was held in Washington on
August 8-9, 1916, before a committee of the Federal Reserve Board
consisting of Hon. Charles S. Hamlin, Governor of the Board,
Hon. John Skelton Williams, Comptroller of the Currency, and
Hon. William P. G. Harding, Member of the Board, at which time
full arguments were presented by the petitioners in favor of the
proposed transfer, and by the Governor and Counsel of the Fed­
eral Reserve Bank of Minneapolis, protesting against any re-districting that would involve the change requested by the petitioners.




H

0

+

2 562

,3 7 3 3 6 '

3
A t the conclusion o f the latter hearing, Governor Hamlin stated
that an opportunity would be given for the petitioners to file a brief
for further presentation of arguments up to and including September
I, i g i 63 and that the counsel for the Federal Reserve Bank of
Minneapolis might reply thereto within five days thereafter.
In pursuance of and in conformity with this permission granted
by the Board, petitioners beg leave respectfully to submit to the
Board the following brief in substantiation of and enlargement
upon arguments and facts hitherto presented.

I
T H E E F F O R T S OF T H E ORGANIZATION CO M M IT T EE IN ITS O RIGINAL
DIVISION OF T H E C O U N T R Y INTO R E S E R V E D I S T R I C T S A R E
TO BE S T R O N G L Y COMMENDED.

There is no disposition on the part of the petitioners to offer the
slightest criticism of the decision of the Reserve Bank Organiza­
tion Committee in assigning the petitioners to the Ninth District
instead of to the Seventh District when the original districting of the
country was determined. The difficulties and vexatious problems
confronting the Committee in its deliberations were almost in­
conceivable. The situation of the banking and business interests
of the country was one of uncertainty and perplexity. The out­
break of the European conflict resulted practically at once in a
serious upheaval of international financial relationships throughout
the whole commercial world. European holders of American securi­
ties frantically endeavored to convert these securities into money in
the New Y ork market, which resulted in an alarming decrease in
the price of stocks, while the country was threatened with a serious
shortage of gold. The ability of borrowers to meet their obliga­
tions became doubtful, while country banks manifested a tendency
to curtail accommodation to their clients. High-grade securities
could find no market, while the foreign exchange market evidenced
a situation the like of which had scarcely been experienced there­
tofore. It was not remarkable that at such a period the financial
and commercial interests of this country were in a state of extreme
unrest, and there were many expressions to the effect that the




r« 0 7 5

4
organization of the newly created Federal Reserve System should
be deferred until the resumption of normal conditions, not only in
order that the success of the new system might not be jeopar­
dized, but in order that the existing precarious financial situation
might not be further complicated by superimposing upon it a new
and untried financial system.
Such was the situation which confronted the Federal Reserve
Board immediately upon the assumption of their new duties, and
such was the alarming condition of affairs when the Reserve Board
Organization Committee undertook the initial division of the
country into reserve districts. The petitioners, following the dic­
tates of reason and justice, can express nothing but commenda­
tion of the Federal Reserve Board and of the Reserve Board
Organization Committee for having the courage, in the face of the
unparalleled and adverse conditions which have been briefly set
forth above, to determine to be guided by their own estimate and
analysis of conditions, and to conclude to proceed as early with
the organization of the new banks as was consistent with good
business management and efficiency.
According!)', among the decisions rendered by the Organization
Committee in order to get the new system into effect was one
in which the petitioners have been for all these months so vitally
interested. And while having no word of criticism of the Organi­
zation Committee in its splendid work, petitioners feel that they
would be derelict not only to their own interests but to their duty
to their clients and communities if they did not at this time bring
before the Federal Reserve Board, acting under Section 2 of the
law as an appellate body, those facts and circumstances which,
in the light of experience, have shown that possibly the Organiza­
tion Committee might more advisedly have placed the petitioning
territory within the confines of the Seventh rather than the Ninth
Reserve District.
Unfortunately most of the petitioning banks had absented them­
selves from the original hearing held in Chicago before the Organi­
zation Committee. Jt has been stated that petitioners felt that they
would naturally be placed in the same district with Chicago (the
Seventh District), and that a branch bank might well be established
at Milwaukee under the new system. It is difficult to excuse the lack
of presentation by the petitioners at this initial hearing before the




5
Organization Committee of those facts and arguments which would
have substantiated and justified their desire to be affiliated with
the Seventh Reserve District, or to explain the seeming careless­
ness of petitioners in not offering at that time their vigorous ob­
jections to having the customary course of their business diverted
from its natural channels as must follow if they were to be united
with the Minneapolis or Ninth Reserve District. Had they done so,
the Committee, in the light o f the facts thus presented, might, in the
first instance, have decided that naturally and equitably the petition­
ing district should be a part of the Seventh rather than the Ninth
Reserve District. With the facts before it, however, a n d in the
absence of the arguments which the petitioners n o w c a n se e c le a r l y
should have been presented to the Organization Committee at t h a t
time, the Committee, in its anxiety to make a beginning a n d to
establish at least a tentative districting of the country w h ic h w o u ld
enable the new law to be put into effect a s s p e e d ily a s p o s s ib le ,
decided that1 the northern two-thirds of W i s c o n s i n s h o u ld be
affiliated with the Minneapolis Reserve District.
II
T H E D EC ISIO N S OF T H E O RGAN IZATIO N CO M M ITTEE A R E S U B JE C T
TO R E V IE W B Y T H E F E D E R A L R E S E R V E BOARD.

Petitioners are glad to remark a disposition on the part of the
Organization Compiittee not to establish any sort of “ pride of opin­
ion” in its own decisions. On the contrary, the Organization
Committee, composed as it was of men of broad vision and large
financial and business experience, has at all times been ready to co­
operate with the other members o f the Board, sitting as an appel­
late body, in giving an accurate interpretation to further presenta­
tions of argument and fact, even though such consideration might
lead them into declaring, as they have done on several occasions,
that their original decision was in error, or in the light of newlv
adduced facts and circumstances, inadvisable, and that it would be
equitable and fair to all concerned to reverse themselves, and to
decide in favor of the petitioners for change. A s illustrations of
this reversal o f opinion of the Organization Committee by the




6
Board sitting as an appellate body, and composed of all members
of the Board, including the members of the original Organization
Committee, may be cited:
In the matter of the petition of member banks of northern
New Jersey for change in the geographical limits of Federal
Reserve Districts Numbers Two and Three.
Hearing January 20, 1915.
Petition granted.
In the matter of the petition of certain counties of the State
of West Virginia to be transferred from the Fifth Federal
Reserve District to the Fourth Federal Reserve District.
Hearing January 27th, 1915.
Petition granted, as to Tyler and Wetzel counties.
In the matter of the petition to transfer a portion of southern
Oklahoma from Federal Reserve District Number Eleven to
Federal Reserve District Number Ten.
Hearing February 10, 1915.
Petition granted.
A presentation of further arguments on behalf of certain
petitioning banks of Western Connecticut, desirous of being
transferred from the Boston Federal Reserve District to the
New York District.
Hearing March 4, 1916.
Petition granted as to Fairfield County.
That the law did not contemplate that the decisions of the Organ­
ization Committee should be final is evidenced by the fact that the
Act itself states that:
The districts thus created may be readjusted and new dis­
tricts may from time to time be created by the Federal Reserve
Board, not to exceed twelve in all.
In the second annual report of the Federal Reserve Board (pp.
114 -12 0 ) , aftpr a discussion of “ Changes in Federal Reserve Dis­
tricts," and a presentation of lists of counties and banks that had
been transferred to that date, the Board stated (page 120) :




7.
The Board’s announcement on the whole subject, while go­
ing as far as it has been deemed practicable under existing con­
ditions to take action, is not at all to be regarded as final and
was not intended to be so. The right to act further on the mat­
ter is reserved for future exercise as that may be necessary
and at any time. Although there has been no express state­
ment to that effect, it is a clear inference from the opinion
handed down that future action will depend very much upon
the course of events in the districts as they are now made up,
and will be determined by the conditions that are disclosed in
the operations of the banks.
Under the section of the Act above referred to and the pro­
nouncement of the Board just quoted, the petitioners feel justi­
fied in presenting their further arguments before the Federal Reserve
Board as an appellate body, while indulging the justifiable conyiction that after such presentation and its consequent enlighten­
ment upon the subject from the arguments and facts to be submit­
ted, the Board will recognize the advisability and entire justice
of permitting the petitioning banks to become affiliated with that
District to which they most naturally and necessarily belong.

I ll
D ESCRIPTION OF T H E NINTH F E D E R A L R E S E R V E DIST RICT , AS A T
P R E S E N T CO N ST IT UT ED.

The following territory is embraced within the Ninth Federal
Reserve D istrict:
Square Miles
State of Montana .................................... ...................... .......146,997
State of North D a k o t a ......................................................... 70,837
State of South Dakota .................................................. ....... 77,6 15
State of Minnesota ................................................................ 84,682
North two-thirds of W isco n sin ............................. ..............41,000
Northern peninsula of Michigan ....................................... i5<7°~

Total

........................... ..........................................

436.833

On page 3 17 o f the second annual report of the Federal Reserve
Board is a brief description of the extent and principal interests of




8
this District which may prove of value in considering this petition
for transfer:
The territory thus determined extends from the northern end
of Lake Michigan to the Montana-Idaho line, a distance of
approximately 1,500 miles east and west. Its greatest dis­
tance north and south is from the southern boundary of South
Dakota to the Canadian line, or approximately 600 miles.
Minneapolis was designated as the location of the Ninth Fed­
eral Reserve Bank.
It is a territory of peculiarly diversified interests. North­
ern Michigan is a heavy producer of copper, iron, and lumber.
Wisconsin is one of the leading States of the Union in the
dairy industry and agriculture and has important lumber
interests in its northern portion and an important shipping
business at its Lake Michigan and Lake Superior ports. North­
ern Minnesota is a heavy producer of iron and lumber, while
the remainder of the State is largely agricultural. North and
South Dakota are mainly agricultural. Eastern Montana
is an agricultural and stock country. Central Montana is
first in the United States in the production of copper, and
western Montana is a very important producer of lumber,
with large areas devoted to fruit and agriculture. These are
the principal interests which the Ninth Federal Reserve bank
was established to support and serve. The territory had, at
the time of the organization of the Ninth Bank, a population
of 5,724,895 and member (national) banks to the number of
709.
IV
FOUR PO SSIBLE SOLUTIONS OF PROBLEM .

There are four possible determinations of the present controversy
available to the Board, any one of which will be satisfactory to the
petitioners, namely:
( J ) Separation from the Ninth and addition to the Seventh
Federal Reserve District of petitioning territory alone;
(2) Separation from the Ninth and addition to the Seventh
Federal Reserve District of petitioning territory with the excep­
tion of the rounties of Delta and Iron in Wisconsin;




9
( 3 ) Separation from the Ninth and addition to the Seventh
Federal Reserve District of petitioning territory and the four south­
ernmost counties, namely, Dickinson, Iron, Menominee, and Delta,
of the upper peninsula of M ichigan; and
(4) Separation from the Ninth and addition to the Seventh
Federal Reserve District of the petitioning territory and the entire
northern peninsula of Michigan.
Tables, charts and facts will be presented in the addenda and
elsewhere in this brief in order to indicate to the Board the com­
plete results of each of the possible solutions above indicated.
W e will now consider the first of the solutions suggested, namely,
the granting of petitioners’ request that petitioning territory, com­
prising 35 counties in the northeastern part of Wisconsin, be sep­
arated from the Minneapolis or Ninth District and included with
the Chicago or Seventh District.
V
P E T I T I O N E R S SHOULD NOT B E P E N A L IZ E D FOR D E L A Y IN ASKING
RELIEF.

A somewhat academic and technical objection has been raised to
the petitioners’ request by counsel for the Reserve Bank on the
ground that having acquiesced in the formation of the Seventh
and Ninth Districts, petitioners are guilty of laches, in that they
slept on their rights of appeal for a period of several months before
appealing to the Federal Reserve Board from the decision of the
Organization Committee.
The Federal Reserve Act did not constitute the Federal Reserve
Board an appellate judicial body to the extent that every possible
technical and quibbling objection,— the elimination of which from
American legal procedure has been the subject of much anxious
and critical thought on the part of leading members of the Ameri­
can B ar,— could be employed, even sometimes to the defeat of jus­
tice and right. W e will readily concede, o f course, that the great
and fundamental doctrines of estoppel, laches, etc.. have their right­
ful place in law and are not to be generally considered as neces­
sarily media for the delaying of justice; still it must at once appear




IQ
that the Act never contemplated that mere technicalities o f an y kind
would be permitted to interfere with a full consideration by the
Board from time to time of all facts and considerations that might
perchance lead to a wiser or more equitable distribution o f the
country among the twelve reserve districts than had previously
been effected. The law did not contemplate that appeals from the
decisions of the Organization Committee must be made within any
particular period of time, for in Section 2 the A ct states that “ The
districts tluis created (by the Organization Committee) m ay be re­
adjusted and new districts may from time to time be created by
the Federal Reserve Board.” It may often occur that the Board
may, in a given case, reverse the decision of the Organization Com­
mittee. and still later, conditions having changed, or new facts and
argu m en ts h a v in g been presented, the Board may reverse or alter
its 'o w n decision, and thus the contour of a given district m ay be
ch an ged or altered several times. The Act contemplated, and the
Board at all times in its interpretation of the Act have endeavored
to effect, a districting of the country in the wisest possible man­
ner, and it is notpresumed that th e Board will permit a mere
question o f d e la y in thepresentation of full arguments and facts
to w o rk a h ard sh ip on a large and important section of the country,
such as is rep resen ted by the petitioning territory.

VI
PROMPT COMPLIANCE BY PETITIONERS WITH T H E R E Q U IR E M E N T S
OF THE ACT WAS N ECESSA RY TO P R E V E N T A F O R F E IT U R E OF
CHARTER AND IS NOT TO BE CONSIDERED A S E V ID E N C E OF
UNNECESSARY DELAY OR LACK OF INTENTION TO A P P E A L .

Furthermore, the objection of respondent that the petitioning
banks are estopped from petitioning for transfer by their action in
complying with the terms of the Federal Reserve A ct and sub­
scribing for stock in the Minneapolis Reserve Bank, thus involv­
ing not only too great a delay in presenting thejr appeals, but
indicating a lack of intention to appeal, is without basis in reason,
as is also the point made by respondent that one bank, namely,, the
Commercial National Bank of Oshkosh, was a participant jn the
execution of the organization certificate, which action wag not,




II
respondent claims, consistent with an intention to appeal from the
decision of the Organization Committee.
The Act itself provides that
E very national banking association in the United States
is hereby required, * * * to signify in writing within
sixty days after the passage of this act, its acceptance of the
terms and provisions hereof. When the Organization Commit­
tee shall have designated the cities in which Federal reserve
banks are to be organized and fixed the geographical limits of
the Federal reserve districts, every national banking associa­
tion within that district shall be required within thirty days
after notice from the Organization Committee to subscribe to
the capital stock of such Federal reserve bank * * *.
A ny national bank failing to signify its acceptance of the
terms of this act within the sixty days aforesaid shall cease
to act as a reserve agent * * *
Should any national banking association in the United
States now organized fail within one year after the passage
of this act to become a member bank or fail to comply with any
of the provisions of this act applicable thereto, all o f the
rights, privileges, and franchises of such association granted
to it under the national-bank act, or under the provisions o f
this act, shall be thereby forfeited.
It will thus be readily seen that prompt action on the part of all
national banks, including the petitioners, in complying with the
terms of the Federal Reserve Act, was necessary, or such banks
would have been penalised in accordance with the terms of the laze
just quoted by the possible loss o f their rights, privileges and
franchises.
N or was the prompt compliance with the terms of the Act by
petitioners due solely to a fear on their part of the penalties that
might be imposed by reason of non-compliance with the mandates
of the law, but petitioners were genuinely interested in the welfare
of the new banking system which they believed was destined to ac­
complish salutary results for the banking and business interests of
the country. Petitioners had no thought or desire but to work
for the success of what is recognized as one of the most beneficial
legislative enactments of a generation, and this desire was evi-




12
denced, we submit, by prompt action on the part o f petitioners, in
complying with the provisions of the law.
Similarly, the Commercial National Bank o f Oshkosh participated
in executing the organization certificate by reason o f the fact that
the Organization Committee, under the terms o f the law, designated
certain banks to execute such certificates o f organization, and having
been one of the institutions thus designated in this particular dis­
trict. the Commercial National Bank o f Oshkosh had no other
legitimate course than to participate with the other four banks
designated in executing the certificate o f organization o f the Min­
neapolis Bank.
Under these circumstances above set forth the contention o f coun­
sel for the Minneapolis Bank that the petitioners proceeded to
subscribe for stock in the Bank, thereby givin g it the requisite
capita], and that one of the petitioners, the Commercial National
Bank of Oshkosh, even participated in executing the organization
certificate, which actions were not consistent with an intention to
appeal and should be held to constitute the petitioners guilty of
laches in presenting their appeal, is highly technical and not en­
titled to serious consideration.

The petitioners, particularly the

Commercial National Bank of Oshkosh, not only, under the terms
of the law. had to do what they did by way o f assisting in the
launching of the Reserve System, but any other attitude on their
part would have shown an open hostility to the new system which
they hoped would bring economic and financial relief not only to
their section but to every part of the country.
V II
IN REVIEWING THE DECISIONS OF T H E O RG AN IZATIO N C O M M IT T E E ,
THE BOARD W ILL OF CO URSE NOT H E A R W IT N E S S E S IN
ORDER TO SECU RE NEW TE8TIM O N V OR E V ID E N C E , B U T W IL L
NOT REFU SE TO CONSIDER A R G U M E N T S O F C O U N S E L OR
ORAL OR PRINTED ST A T E M E N T S T H A T M A Y T H R O W N EW OR
FU LLER LIGHT ON AN Y GIVEN SIT U A T IO N , TO T H E EN D T H A T
JU8TICE AND RIGHT MAY B E DONE.

Respondent has contended that the Board is bound by the evi­
dence introduced before the Organization Committee and that no
new evidence may be considered.




*3
It is true that in Regulation No. i adopted August 28, 19 14 , the
Federal Reserve Board decided that on appeal “ the Board will not
hear testimony, but the facts will be limited to the record before the
Organization Committee.” Doubtless the Board would not care to
examine new witnesses in any given case, but it is not believed that
the Board would refuse to listen to arguments or consider printed
statements of fact, and thus deprive itself of information for which
it may have a real need in order to do entire justice in deciding on
appeal the important questions that must necessarily come before it
for determination.
I f the Board should decide to adopt the narrow and technical
policy contended for by respondent, namely, that no new evidence
not in the record before the Organization Committee could be con­
sidered by the Board, the Minneapolis Bank would have but little
in the original record before the Organization Committee upon
which to stand. A careful analysis of the testimony taken at that
time fails to disclose material evidence to the effect that the “ con­
venience and customary course of business” of the petitioning ter­
ritory was toward Minneapolis. On the other hand, there was
ample evidence before the Organization Committee, quite a number
of quotations from which appear infra, to the effect that the trend of
trade in the petitioning territory was toward Chicago. As illustra­
tions before the Organization Committee favorable to the proposi­
tion that petitioning territory rightfully belongs with Chicago and
Milwaukee in the Seventh Reserve District, may be cited the fol­
lowing excerpts from the brief presented by petitioners at the first
hearing on appeal of the present case:
Insurance losses in Wisconsin are paid by draft on Chicago.
Testimony o f H arry A . Wheeler, Page 1220.
The location of Chicago, its proximity to the Canadian line,
fixes the northern line naturally.
Testimony of A . C. Bartlett, Page 12 33.
I prepared a brief statement of the conditions o f our business
as it applies to this territory around Chicago. Illinois ranks first.
Iowa second, Wisconsin third, Michigan fourth.
Testimony of John G. Shedd, Page 1242.




J4
Illinois, Iowa. and Wisconsin are our first three states.
Testimony of John G. Shedd, Page 1243.
Taking in Wisconsin we would get $6,621,000.00 added to the
deposits and $1,553,000.00 added to the capital. Now we think
that there would rest our district probably if there are to be more
than eight banks.
Testimony o f James B. Frogan, now President of the Fed­
eral Advisory Council, Page 1264.
The territory which Mr. Frogan indicated as belonging properly
to Chicago, we should feel that, however large a number or small
a number of banks should be established, that that ought to be by
all means in our territory. So summing up our territory under
these rules, it might probably be regarded to consist of Indiana,
Illinois, Iowa, Michigan, Wisconsin and possibly a little of the
southern part of Minnesota.
Testimony of G. M. Reynolds, Page 1291.
Asked by the Secretary of the Treasury to name the states that
should go into the Chicago District, Mr. J . G. Rounds included
.Wisconsin.

Testimony, Page 1334.

Asked by the Secretary of Agriculture to name the states that
should go into the Chicago District, Mr. Frank Epperson included
Wisconsin and Upper Michigan.
Testimony, page 1355.
In response to another question he included Wisconsin and all
of Michigan. Page 1356.
The claims of Minneapolis, covering one hundred pages of the
testimony, i« without intimation of request that any part of W is­
consin be attached to the Minneapolis District. A map was pre­
sented including part of Wisconsin, but it was stated in response




*5
to a question of the Secretary o f the Treasury that Wisconsin was
excluded for the purpose o f presenting the matter to the Com­
mittee.
Testimony of Joseph Chapman, Pages 13 7 3 and 1374.
The written statement for Minneapolis, read into the records,
concedes Wisconsin to the Chicago District.
Testimony of F . A . Chamberlain, Page 1452.
In the summary of banks’ capital and surplus to go into the
Minneapolis Reserve Bank there is no mention of a single bank in
Wisconsin. Testimony, Page 1436.
St. Paul made some pretension to part of northern Wisconsin,
but this was based solely upon the theory that only eight districts
are established.
Testimony of John R. Mitchell, Page 1472.
(The western and northwestern portion of the State of W isconsin,
consisting of L a Crosse, Trempeleau, Buffalo, Pepin, E a u Claire.
Pierce, St. Croix, Dunn, Chippewa, Rusk, Barron, Polk. Burnett,
Washburn, Sawyer, Bayfield and Douglas Counties are not joined
in the petition herein.)
So even on a narrow construction o f the matter o f introduction of
new evidence, which it may be assumed the B oard does not contem­
plate, the petitioners can rely on such evidence as w as given before
the Organization Committee to indicate the justice and wisdom ot
the annexation of the petitioning territory to the Chicago District.
Whereas, by the same token, the respondent must absolutely fail,
inasmuch as practically no evidence appears in the record in
favor of including the petitioning territory with the Ninth Dis­
trict, The petitioners are indeed regretful that the testimony hear­
ing on the matter at issue before the Organization Committee was
so inadequate, but, as stated, such testimony as appears in the
record is materially in favor o f petitioners’ contention, and upon
a strict interpretation o f the rule that no new evidence will be
admitted upon a review o f proceedings, the petitioners must pre­
vail. F o r ft is a, well recognized rale o f law that the judgment




i6
of a trial court unsupported by evidence will be reversed by a court
of appeals. The decision of the Organization Committee was not
only unsupported, but was actually contrary to the evidence.
Counsel for respondent has stated that
The Organization Committee could have located the re­
serve cities and the districts without taking any testimony
at all, and it did, as a matter of fact, hear unsworn state­
ments which related directly to the matter of selecting the
reserve bank cities, and only incidentally to the designa­
tion of districts. As to the boundaries of the districts,
there was not, and in the nature of things could not have
been, any testimony taken, sworn or unsworn. The de­
cision as to boundaries rests on the good judgment
of the Committee.
Thus counsel contends that the Organization Committee could
not have heard testimony relating to the establishment of boun­
daries of districts, and yet elsewhere he contends that new evidence
on the point would not be admissible. Apparently, therefore, coun­
sel for the Bank assumes that the various districts in the United
States were established without the possibility of evidence being
taken, on the theory that evidence can not be given on a case not
known, and then he contends that no evidence could ever be admit­
ted before the Board in the future for the purpose of reviewing the
various decisions of the Organization Committee. The result will be
that all districts will be established by a sort of “ waving the wand”
legerdemain, unsupported by evidence past, present or future, and
unsusceptible of review, since there would be no sense in any re­
view unless evidence or facts of some sort were to be considered.
Counsel’s contentions when thus reduced to their lowest terms ap­
pear to be without substantial foundation.
A s a matter of fact, testimony can be, and has been, given, at
least indirectly, which the Organization Committee doubtless con­
sidered very carefully, as to the establishment of boundaries of
districts. On pages 1291-92 of the evidence taken before the O r­
ganization Committee, the Secretary of the Treasury stated, as
follows:




T h e Secretary op th e Treasury :

It would be decidedly

*7
useful to the Committee if in considering that question you
would indicate just what part of these states should be divided
between given cities. Y ou gentlemen know, for instance, about
southern Illinois better than we do. That is one o f the pur­
poses we have in mind in having these hearings, to see what
would do the least violence to the ordinary course of business
and exchange and commerce in the different parts of these
states, in creating this system.
The interests of various sections were discussed repeated­
ly before the Organization Committee. The customary course of
business of various localities has been established by evidence be­
fore the Organization Committee. Important excerpts from such
evidence have already been quoted in this brief (pages 1 3 - 1 5 ) .
The evidence given before the Committee did not relate entirely to
the matter of the establishment of the reserve city in each district,
but quite as often had an important bearing upon the division of the
country into districts. And in the record before the Organization
Committee there is ample evidence sustaining the contention of the
petitioners that the customary course of business of the petitioning
locality is toward Chicago rather than toward Minneapolis, that
doubtless was of weight with the Organization Committee in its
division of the territory to the Seventh and Ninth Reserve Districts.
Counsel continues:
I f the Board on this or any other appeal should under­
take to review the merits of the decision (of the O rgani­
zation Committee) it will have to rely upon its better
judgment or upon information more reliable than that
which the Committee received. It may take the state­
ments made to the Committee for what they may be
worth, but it cannot be bound by those statements or by
the absence of testimony any more than the Committee
was.
But how, may we ask, is the Board to “ rely upon its better judg­
ment or upon information more reliable than that which the Com­
mittee received” if it is not to be permitted to hear statements of
fact that will throw new light upon the situation? Now that the
case is known it is possible to have fuller evidence on the matter
of the establishment of district lines. It is difficult to understand in­
deed how the Board could have any “ better judgment” in the
premises if it cannot have the best information available at the




i6
present moment with regard to the needs of the petitioning terri­
tory presented for its full deliberation and decision.
That the Board, however, does not regard itself bound by any
such highly technical interpretation of this regulation, namely,
that no evidence may be considered unless it appears in the record
before the Organization Committee, was made manifest at the re­
hearing of the present case.
When counsel for the Bank proceeded to read a clipping from
the Houghton Morning Gazette, of August 5, 19 16 , Mr. J . W . P.
Lombard, the chairman of the petitioning delegation, ventured to
ask:
Does this not refer to a matter we are not presenting to you
at all at this time?
And Governor Hamlin remarked:
W e desire to hear everything that everyone would like to
suggest. We think it is perhaps better. In the long run it
will save us labor.
(Pages 64-65 Rehearing transcript.)
A t the same rehearing the attitude of the Board with respect to
new evidence was manifested by the Comptroller of the Currency
in a colloquy between the Comptroller and counsel for the Reserve
Bank (page 48 of the transcript), referring to the possible change
of attitude of certain banks with regard to their proposed transfer
from the Ninth to the Seventh Reserve District:




T h e C omptroller : They (certain banks) have all
changed their views since, though? Have they come around?

June® U plan d : Not that I know

of.

T u t Comptroller : la that proof that they have?
Ju n es XJtiAVD: That I do not know.
hair's breadth outside of what I know.
T a t CompTbotxer :

around, or do you?

I will not go a

You will not deny they have come

19
Judge U elan d : I will assert and will probably show
that the sentiment-----T h e C o m p tro ller: / do not think we care so much
about how they stood at that time. Of course we do care about
how they stood, then and now, but it is more important to know
how they stand now than how they stood then.
That the Board early realized the futility and possibility of in­
justice that might result from a strict rule not to permit any ex­
pressions on appeal that might contain information not presented
to the Organization Committee was also evidenced in the hearing
before the Board held on February 10, 19 16 , entitled “ In the mat­
ter of the petition to transfer a portion of Southern Oklahoma
from Federal Reserve District Number Eleven to Federal Reserve
District Number T e n . ” During the course of the proceedings G o v ­
ernor Hamlin askecj the following question of Senator Robert L.
Owen of Oklahoma, who had delivered a lengthy argument o n b e ­
half of the Oklahoma banks:
T h e G o v er n o r oE T h e B oard : Senator, I was
asked by a member of the Board to ask you as to w h a t in your
opinion is the meaning of that clause in Section 2 , " T h e d e ­
termination of said Organization Committee shall not be sub­
ject to review except by the Federal Reserve Board w h e n or­
ganized.” That is the word,— “ review.” Does that mean th a t
we are to review a record of the Organization Committee, or
does it mean that we are to take up the matter entirely anew,
as if it were a separate organization ?

Whereupon Senator Owen replied:
S en ato r Owen : M y interpretation of that language
is that it is to review the action and not the rccord, because
nobody knew where this line was until announced. How could
there be any primary presentation of evidence upon a situa­
tion that was not known until after it was determined ? And
when you consider the task that the Organization Board had
before them to draw these lines and to draw them rapidly,
because they had to go all over the United States, three thou­
sand miles long, and fifteen hundred miles across, it was ob­
viously impossible for them to put a microscopic examination
on the evidence as to proposed plans here, there and yonder.




20
They did very well, indeed, to get out of it alive! And evi­
dently a review must mean a review of their action, not a re­
view of the evidence, because you cannot submit evidence on
a case not known. I f Oklahoma had known that that line was
proposed, and Oklahoma had presented this evidence, and
had had a hearing upon such a division, then it might be
properly contended that Oklahoma should be committed to the
original record, but to confine Oklahoma to a record which is
impossible to be made, is asking the impossible, and no one,
I think, will really wish to do that
And again in the same hearing Mr. Delano of the Board inquired
of Senator Owen:




M r . D e l a n o : I would like to ask a question: The
act shows this language: “ The districts thus created may be
readjusted and new districts may from time to time be cre­
ated by the Federal Reserve Board, not to exceed twelve in
all.”
S enator Ow e n : Yes.
Mr. Delano: You understand that leaves it discretion­
ary with this Board to determine how extensive these read­
justments might be?
S enator Owen :

I think it does.

Mr. Delano: Suppose, for instance, we chose to make
different alignments other than suggested? For instance, in
this case, on petition, would we have the authority to do it?
Senator Owen : You would have the authority.
Mr. Delano:

On our own knowledge of the conditions?

Senator Owen: Or any other district. The inten­
tion was to give the Board the power of the government itself
'in dealing with this system, and so far as it would be ex­
pedient to do, and as the law indicates.
The Governor op th e Board : That is, the general power
of re-districting would point to the future?
S enator O wen : Yes.

21
T

he

G o v er n o r

op t h e

B oard:

Whereas the power to

review would refer to the past?
S enator O w
T

he

en

G o v er n o r

Y es, sir.

:

of

the

B oard:

S o ten years in the

future, if we want to re-district, we may?
S e n a t o r O w e n : Y e s ; you would still have the right
in the future to change these lines.
D r . A. C. M i l l e r ( m e m b e r oe t h e B o a r d ) : Would that
extend to the power of reducing the number of districts?
S e n a t o r O w e n : The law gives twelve districts.
I
think that it would extend even to the power of reducing the
districts. I am speaking now merely of the power.

D r . M ie l Er :

Yes.

But it is needless to pursue the question further. The Board
desires the fullest possible information without actually again hear­
ing witnesses, in order that it may perform its high functions ac­
ceptably and in fairness and justice to all concerned.

VIII
A N Y “ IN TERW OV EN CONDITIONS” T H A T NOW E X I S T A R E NOT BE
T W E E N T H E P E T IT I O N E R S AND M IN N EA PO LIS, B U T B E T W E E N
P E T IT I O N E R S AND CHICAGO.

Counsel for the Minneapolis Bank have argued that
Meanwhile the relation between the Reserve Bank and
the member banks in the territory covered by the petition be­
came more and more interwoven, and the dissolution of it now
by a reversal o f the decision would involve much labor and no
inconsiderable expense. (B rie f filed by Judge Ueland in
hearing of M ay 20, 191 5. )
It is difficult to understand how counsel could have arrived at
such a conclusion. Present at the rehearing before the Board on
August 8-9, 19 16 , were a delegation representing 4Q of the peti­
tioning banks. Let us note how these gentlemen feel about the




22
“ interwoven conditions” between their banks and the Reserve
Bank of Minneapolis!
On pages 8 and 9 of the transcript of rehearing, Mr. Arthur H.
Lindsay, Vice President of the Marine National Bank of Milwau­
kee, Wisconsin, in indicating the attitude of the petitioners, stated
that a poll of the banks of the petitioning district taken in March
indicated that 49 National banks out of a total of 61 joined in
the petition, and that this number was practically unchanged from
the date of filing the first petition for appeal, thus demonstrating
that the banking and business relations of the district with Chicago
remained unchanged even after the Federal Reserve Law had been
in operating effect for over a year.
This would indicate that the “ interwoven conditions” are not
between Minneapolis and the petitioning banks, but are as always be ­
tween Chicago and the petitioning territory. Mr. Lindsay con­
tinues:
The protesting banks still find that the great bulk of their
business was with Chicago and Milwaukee, and not with the
Twin Cities, although the banks there had made strong ef­
forts to alienate them from their old friends in Chicago and
Milwaukee.
Mr. Walter Kasten, Vice President of the Wisconsin National
Bank of Milwaukee, in addressing the Board at the rehearing,
made a statement that does not well substantiate the supposition
of “ interwoven conditions” between Minneapolis and the petition­
ing banks suggested by Judge Ueland. Mr. Kasten stated:
There are at the present time, to the best of our knowledge
and belief, 363 banks located in that section of the State
which we desire to have transferred, of which 292 carry ac­
counts in Milwaukee and Chicago, and only 7 1 in the Twin
Cities. There are 204 banking towns in that section, 202 of
the towns carrying their accounts in either Chicago or M il­
waukee, and 46 also carrying accounts in the Twin Cities,
which to my mind shows conclusively that Chicago and M il­
waukee are the logical places for them to do their business.
At the rehearing, Hon. Thomas Konop, Member of Congress
from Wisconsin, in speaking of the long period during which the




23
“ customary course of business” had existed between the petition­
ing territory and Chicago, stated:
I have 19 banks in my district, and every one of these—
that is, National banks— and every one of these banks signi­
fies its interest in this matter. They want to do business
where business tends to go— Chicago and Milwaukee.
It would seem that if the “ interwoven conditions” referred to by
counsel for the Reserve Bank existed between Congressman Konop’s
territory and Minneapolis, the unanimous verdict of the 19 banks
of this section would hardly have been that they wanted to do
business in Chicago!
Perhaps one of the strongest statements showing the interrela­
tionship of commercial and financial interests between the petition­
ing territory and Chicago was presented at the rehearing by Hon.
Edwards Everts Browne, Member of Congress from Wisconsin,
when he said:
I represent seventeen national banks in my district. Th ey
have written me and requested me to appear here * * *.
Now the first thing in the National Reserve A ct which I
remember distinctly, when it \yas passed, was this, that the
districts shall be apportioned “ with due regard to the con­
venience and customary course of business.” * * * There
is no question whatever but what from a geographical stand­
point, from the standpoint of connection of railroads, tele­
phone and telegraph, it would serve their convenience greatly
to do business with Milwaukee and Chicago. (R eferrin g to
the seventeen national banks represented by Congressman
Browne.)
* * * I will say this, that before this district was
created, almost every bank in my district wrote me and were
against being placed in the Ninth District. Their relations
had been from time immemorial with Chicago and M il­
waukee, and they wanted to remain there, and if the Board
will look back upon this subject, they will find my letters
filed here protesting against this change * * *. In politics
we could call this a sort of “ gerrymander,” having the banks
placed in a district that they have never been placed in before.




24

But I think much stronger than the argument in favor of
convenience is this other proposition,— according to the “ cus­
tomary course of business.” Now what is the customary
course of business of these banks that we are talking about in
Wisconsin? They have done business for fifty years with
Milwaukee and Chicago. The fathers of the present officers
in many of these banks were well known in these Chicago and
Milwaukee banks, and credit was extended to them. T he mat­
ter of credit is dependent upon acquaintance— favorable ac­
quaintance. They have built up a credit— these banks have,
in these localities, these business men that do business in
these banks— from fifty years of keeping their promises. So
when one of the sons or grandsons of one of these men that
has built up northern Wisconsin goes down to a Chicago or
Milwaukee bank, they do not have to investigate his fam ily;
they do not have to investigate the personal relation, the mat­
ter of honesty; they simply see from a long line of business
relations extending over a period of fifty years, that that
man has done business with them, and his father has perhaps
done business with them, and that these men have alw ays
been prompt and always meet their obligations.
It would only be a matter of going through the transcript of
statements presented by a large number of petitioners and dis­
tinguished representatives of Wisconsin at the rehearing, to dupli­
cate many times over such strong statements as have just been
quoted above. Certainly any “ interwoven conditions” that may
exist are not between the petitioners and the Minneapolis bank,
but are now as they always have been, and probably always shall be,
between the petitioning territory and Chicago.
IX
THE LIGHT OF EXPERIEN CE HAS PROVEN P E T IT IO N E R S’ D E S IR E
FOR T R A N SFE R TO BE JU ST IF IE D .

The Reserve Bank has argued that the provision in Section 2 of
the Act, giving the Board authority to readjust districts, is merely
to enable the Board to meet future changes in conditions, and is
to be acted on “ in the light of experience and not by way of a
review of the Organization Committee’s decision.”
Well and good. It was indeed a happy foresight on the part of
the legislators to anticipate that changed conditions would arise,




25
.
or that new facts and arguments might be presented to the Board,
which would indicate to that body, having an appellate power, that
the original districting, carefully undertaken and carried out though
it was, would, in many cases, need review and correction. There
have now been presented to the Board by the petitioners in the re­
hearing held in Washington on August 8-9, 19 16 , those incontro­
vertible facts which are a result perhaps not so much of “ change in
conditions,” but of “ the light of experience,” and which, it is sub­
mitted, ju stify petitioners in their request for transfer.
X
T H E “ C O N V EN IEN C E AND CU STO M ARY CO U RSE OF B U S IN E S S " OF
PET IT IO N IN G T E R R IT O R Y IS TOW ARD CHICAGO R A T H E R THAN
TOW ARD M IN N EA PO LIS.

The commercial and financial relations of the business men and
bankers of the petitioning territory, and of their fathers and grand­
fathers, have for decades been with Chicago and Milwaukee. State­
ment after statement was presented by the bankers constituting the
petitioning delegation and distinguished members of Congress at
the recent re-hearing before the Board, proving this proposition
beyond a shadow of doubt. Several such strong statements have
already been quoted supra (pages 22-24) in this brief, under the
heading “ Interwoven conditions.” Space forbids the inclusion of
but a very few more of these vigorous statements by the leading
bankers and statesmen of Wisconsin, showing the trend o f business
of the petitioning territory to have been with and toward Chicago
for years, and the hardship that would necessarily be consequent
upon any artificial diversion of this established customary course of
trade.
The Wisconsin Bankers’ Association, which happened to be in
session at the time of the re-hearing, sent the following telegram
to the petitioning delegation, representative of the unanimous sen­
timent of that Association:
The Wisconsin Bankers’ Association in Convention as­
sembled hereby expresses its appreciation o f the reopening of
the question o f the redistricting of Districts Nos. 7 and Q, for
the purpose of giving consideration to taking a portion of




26
northern Wisconsin, and possibly northern Michigan, from
District No. 9 and placing it in District No. 7, where we be­
lieve it logically belongs, the commercial centers o f Chicago
and Milwaukee having always served the banks of this dis­
trict very acceptably.
Therefore, Be It Resolved, that we respectfully urge your
honorable body, the Federal Reserve Board, to give consider­
ation to the arguments which will be placed before you by the
delegation of bankers from Wisconsin which will appear in
Washington at the time appointed by your body for this hear­
ing, and if their arguments seem to you sufficient, as they
seem to us, we request that this change be made at once.
Mr. Walter Kasten, Vice President of the Wisconsin National
Bank, of Milwaukee, stated to the Board, in p art:
From reports we have received from the banks located in
that section (Wisconsin), we find that the items which have
been forwarded to the Ninth Federal Reserve Bank for col­
lection all originated from territory which made the collection
of checks through Minneapolis in a roundabout way. This
evidence, without any doubt, shows the direction from which
the business comes.
Mr. J. H. Puelicher, Vice President of the Marshall and Usley
Bank, of Milwaukee, in the course of his statement, said:




The long established relations between the banks of W is­
consin and those of Milwaukee and Chicago, the ability of
these centers to care for the needs of Wisconsin banks, the
desire of the Wisconsin banks to remain with their Milwaukee
and Chicago correspondents, should prove conclusively the
value of these relations to those concerned and should govern
in correcting the districting. * * * * .
The considerations of established mercantile, industrial
and financial currents and conditions are of the utmost im­
portance to the successful out-working of any Reserve Sys­
tem. Their disregard, to correct which this proceeding is
pending, would surely set back the clock of banking progress
in this territory to a great and incalculable extent.
Your Board is interested in getting the very best results
out of this constructive and far-sighted financial betterment,
known as the Federal Reserve Act.

N

27

Why, then, strike a blow at the established commercial
business and financial interests of all this Wisconsin territory
which is so clearly tributary to Chicago and Milwaukee, and
so manifestly alien to Minneapolis?
♦

*

*

*

Y ou r Board under Section Two of the Act is given the
salutary power of readjusting districts from time to time.
Is it not a fact that the changes already made in district
boundaries have resulted in greater harmony and a much
better feeling toward the reserve law?
Y ou have before you in our business territory a condition
which can not but grow more intolerable as time goes on.
Would it not be well to correct this now, as petitioned?
Hon. Michael K . Reilly, Member of the House of Representa­
tives from Wisconsin, stated at the re-hearing, in part:
I
represent the Sixth Congressional District, right below
Mr. Browne. It is composed of six counties. M y recollec­
tion is that there are some sixteen banks. I might say that
shortly after the Federal Reserve Organization Board adopted
this new district, Congressman Burke and myself were flood­
ed with protests from our constituents. Congressman Burke
has a district a little to the south of Representative Browne.
And we called upon Mr. McAdoo at that time to protest
against the districting of Wisconsin, specifically stating at that
time that if the Congress thought that the Federal Reserve
Board would so change the usual and established routes of
trade and business, there would not have been any votes for
the bill, for the reason that the bill distinctly provided that the
Organization Committee should pay attention to established
lines of business. * * * *
It was the intention of the legislature that this Board should
consider established lines of trade,— and nobody has ever con­
tradicted the fact that the Board did do violence to established
lines of trade when they placed these petitioning banks in the
Minneapolis district. The banks of my district have abso­
lutely no relation to Minneapolis, unless some of the larger
banks possibly keep deposits there for checking purposes,— in
that section only the larger banks. There are three banks in
this district that I understand are not in favor of this change,




28
as Mr. Browne says, on the ground o f loans, one in Fond du
lac, the Commercial National Bank, a bank in Princeton, and
I understand the bank at Berlin, Wisconsin. These prefer to
remain the way they are. Seven o f the banks have sent me
personal letters asking me to appear before the Board. I
will file these with the Board. They said they could not send
a representative down here, but from my talk with the busi­
ness men and the bankers o f the district, they have felt out­
raged. This sentiment has been expressed on all sides, at the
original order of this Board, placing that part o f W isconsin
in the Minneapolis District. I have been appealed to time
and again by bankers to point out where, by what authority,
that certain section o f Wisconsin was put up in the M inne­
apolis District, when they have never had any business rela­
tions with those banks at all. * * * * I do hope that
the Board will now rectify the wrong that has been done our
section of the S ta te . I can see how the form er division that cut
off Michigan and shut off the contiguous territory m ight make
the original division proper, but on this new proposition, where
you have continuous territory, and where M ichigan itself
asks the Board to change that relation, I can see no reason
why the business and banking part o f W isconsin represented
here today, * * * * should not be given the privilege
to do their re-discount business where they do their other
business,— large and small banks. A nd as I have said, that
is the intent of the law.

A m ong the most able statesmen in the United States Senate at
the present day are the two Senators from W isconsin, H onorable
Paul O. H usting and Honorable Robert M . L a Follette.

W e beg

to conclude our presentation of the present argum ent to the effect
that the “ convenience and customary course o f business” o f the
petitioning terirtory is toward Chicago rather than M inneapolis
by quoting from the strong addresses delivered before the F e d ­
eral Reserve Board by the two United States Senators from W is ­
consin at the recent re-hearing o f this case.

T h eir utterances are

o f such moment and their reasoning so cogent and logical that the
text o f their remarks should be set down here in full in the m ore
permanent form offered by this brief.

B ut lack o f space compels

the inclusion o f only a few o f the more salient portions o f their ad­
dresses, bearing particularly on the point now under discussion,
namely, that the “ convenience and customary course o f business”




29

of the petitioning territory is toward Chicago rather than toward
Minneapolis.
Senator Husting said, in p a rt:
Surely no one could expect, and I do not conceive that the
Organization Committee does expect or believe, that
they could make a perfect re-districting or districting of the
whole country. It was a stupendous task on a new subject,
and there were certain limits within which the Board had to
act, and so I for one believe that they performed a very com­
mendable job. I think they did well, and I feel, if I may
. be permitted to say so, that they ought to be congratulated on
the manner in which this great task was performed, and the
manner in which it has worked; but I also believe that the
Organization Committee must have had in mind that this was
not the last word on districting, that from time to time
changes would have to be made, and that they would be called
upon from time to time to re-district the State in such a man­
ner as would, in the light of later experience, seem to be
necessary and expedient.
Now when this matter was originally done, why, we under­
stand that there was a certain provision, I believe, which pro­
vides that regional banks must have a capitalization of four
million dollars or more. Y o u had to get that somewhere, and
consequently I presume the exigencies of the hour required
that in order to have these regional banks, you had to reach
over into Wisconsin, as a matter of necessity, and take terri­
tory and attach it to a regional bank with which the State had
little or no direct commercial relations, at least along the
lines of this act; and I suppose that it was only done because
of the fact that it was necessary to do it in the interests of
the whole system. Now at the same time I presume the Or­
ganization Committee must have had in mind that if the
time should arrive when this necessity no longer existed, why
then of course they would be prepared and willing and anxious
and eager to do justice to such sections, and listen to the de­
sires and demands of certain sections to be put where they
thought they really belonged.
Now, as I understand it, one o f the fundamental consider­
ations that the Board had, was to divert as little as possible
or to hinder and obstruct as little as possible the ordinary flow
of trade and business. N ow I was unfortunately absent yes-







30
terday afternoon, and I do not know whether there was any
dispute upon this point, but I take it as one o f the conceded
facts in this case, that the ordinary course of trade is recog­
nized by the Board as being from north to south, that the
business of Wisconsin not only now, but always, has been
in this section that is outlined on this map and that
this territory has done its business— its banking busi­
ness—with Milwaukee and Chicago. That includes upper
Michigan. I know that to be a fact, and I think anybody fa­
miliar with Wisconsin conditions knows that to be a fact, and
I think a study of the map will demonstrate it to be a fact, be­
cause all the railroad lines, of course, up and down through
that territory,— all lines converge into Milwaukee and Chicago,
so that I think it’s quite apparent to the Board, and I believe
if it is not conceded, it ought to be conceded by the gentlemen
who are opposing this change, that it is a fact that the trend
of business is up and down the State, and goes to Milwaukee
and Chicago.
* * * *
Now, we come here, therefore, asking that this change be
made, and that the original channels of business may follow
their natural course, and that business may follow the course
of least resistance. W E A S K T H A T Y O U P E R M I T W IS ­
CONSIN NOW TO H A V E H E R T R A D E F L O W A L O N G
IT S N A T U R A L, U S U A L AN D C U S T O M A R Y C H A N ­
N E L. We ask it of you now, because it is no longer a ne­
cessity for Minneapolis or for the system in general to have
this former districting as to our section prevail.
*

*

*

*

Now there is another thing. We all know that the North­
west has just started to grow. There is not any doubt in my
mind, and I do not think there is any doubt in the mind of
this Board, that in the next twenty or twenty-five years,—
well in fact, there is no use in setting any time limit on it,—
from now on, that great Northwest Empire is going to be­
come one of the most populous and richest regions o f the
United States, and consequently that this particular bank, this
regional bank that is just starting out now, under favorable
auspices, will become one of the strongest and most influen­
tial banks in the United States. Right on the Mississippi
Valley, this great empire, as I say, to the northwest, is hardly
touched. There is every reason to suppose that in a very

r

3i
short time, continually for scores o f years, and centuries, we
hope, this great section will continue to grow more populous
and richer all the time.
I do not think there is anything in the argument that if you
take this away you are going to impair that bank or that you
are going to hurt that system. I think that the Board will
recognize that instead of this being the maximum strength of
this bank it’s the minimum, because if experience is worth
anything in this country, in my community and in all com­
munities o f the West, instead of going backwards, we are
going forward and upward all the time, and this country is
going to be developed in such a way that probably in course
of time additional regional banks will have to be established
in the northwest to take care of this business.
Now, such being the case, the vital necessity of having W is­
consin taken into this bank no longer exists. W E C O M E
H E R E , A N D S A Y NOW , A S A M A T T E R O F JU S T I C E ,
A S A M A T T E R O F F A I R P L A Y TO W IS C O N S IN , W E
W A N T Y O U TO L E T U S R E S U M E O U R B U S IN E S S
R E L A T IO N S W H E R E W E H A V E O U R U S U A L A N D
C U S T O M A R Y B U S IN E S S R E L A T IO N S , A N D L E T U S
DO B U S IN E S S W H E R E W E W A N T TO DO B U S I ­
N ESS, AND W H ER E W E A LW A Y S H A V E DONE
B U S IN E S S , A N D W H E R E W E E X P E C T A L W A Y S TO
DO B U S IN E S S .
Senator L a Follette said, in p a rt:
I am quite confident th^t you now understand the situation
of the petitioners here. I might say, perhaps, in the begin­
ning, that in laying out these districts, this is a great country
with conflicting interests, and it would have been almost om­
niscient intelligence and understanding that would have been
able to make a perfect distribution of territory here at the
outset. Familiarity with trade conditions and the commer­
cial currents of business is absolutely, I take it. necessary to
a proper apportioning of this territory, if the spirit of this
law is to be complied with.
In the second section of the Act itself, it is said that “ The
Districts shall be apportioned with due regard to the conven­
ience and customary course of business, and shall not neces­
sarily be co-terminus with any State or States.” Now I sup­







32
pose there was every good reason for the proviso which I
have just read being incorporated in this Act. I presume it
is quite out of the question in banking matters, as it is in
every other relation of life, that you can make water run up
hill, that you can disjoint and disconnect and dislocate natural
conditions and natural relations, and I suppose that banks
were invited,—that that was an invitation for them to come
in, that it was a sort of tender to them, an assurance to them
that if they joined and came in here and gave support to this
great piece of legislation, that their existing trade and com­
mercial connections would be given fair consideration, and
that these districts would not be formed without due regard
to the convenience and customary course of business.
You, as business men, gentlemen, very much more than Sen­
ator Husting or myself, understand that when trade and com­
mercial relations are once established, they become deep-root­
ed; they grow in the confidence of association and acquaint­
ance and understanding: that it’s pulling life itself— commer­
cial life, at least—up by the roots to say that this thing shall
be turned in some other direction, that you gentlemen shall
do business with somebody with whom you have had no busi­
ness connections heretofore. And it is not necessary for me
to remind this able Board—this able Committee of the Board—
that the very basis of a successful operation of this law is that
these natural trade connections and commercial relations shall
be permitted to live, as they have lived and developed through
all the years.
Now you have the national banks of Wisconsin in this as­
sociation. but we have in that State some two hundred and
fifty-four State banks, and 1 know that it’s the purpose and
intent of this law, and it must be of the highest desirability,
that these State institutions should be drawn into this great
association.
I think I can speak with some knowledge of conditions re­
garding the State banks of Wisconsin for one not connected
with the business in any way. I had, as Governor o f the
State, much to do with the reorganization of the State bank­
ing law, and we built up a system that we feel in Wisconsin
is quite a model in its way. It has drawn those banks very
closely together, and I think I can say to you that you will
have: insurmountable difficulty in getting these State banks
allied with this association, if they are to understand that

33

they must do business where it is unnatural, and where it is
next to impossible for them to do their banking business.
*

*

*

*

Now, then, they do not need us. Business all up in this
great wonderful region off to the north and the west of St.
Paul and Minneapolis goes right that way. You can not
send it in any other direction. Montana, the two Dakotas,
northern Iowa, and Minnesota all gather right in here. You
know the vastness of that country, and the richness of it, and
it is simply on the edge of its production at this time.
M r . H a r d in g : It was stated here yesterday, Senator,
that the natural trend and course of business, not only bank­
ing but mercantile business, and all business in this section
of Wisconsin, was toward Milwaukee and Chicago. Do you
concur in that view ?
S e n a t o r L a F oll ETTE:
M r . H a r d in g :

I do, sir.

Emphatically so?

S e n a t o r L a F o ll ETTE :

*

E m p h atica lly so.

*

*

*

R e p r e s e n t a t iv e
B r o w n e I: I
would like to ask
Senator L a Follette if it is not the fact that the capital as well
as the population of central and northern Wisconsin comes
from Milwaukee and along the southern and eastern part of
our State.
S e n a to r L a F o l l e t t e : Yes, I think that is quite
universally true, and of course they maintain their old rela­
tions with the southern and southeastern part of the State.

It is true that the “ convenience and customary course of busi­
ness” is not the only point to be considered in determining upon
the division of the country into Federal Reserve districts, but that
the legislators believed this was a most important point for con­
sideration is evidenced by the fact that they so specifically mention
the point in section 2 of the Act, when they state in so many
words that “ districts shall be apportioned with due regard to the
convenience and customary course of business," and it is submitted







34
that while other considerations are of moment, the trend of trade
is perhaps the most vital point to be considered in determining up­
on the coniines of the several Federal Reserve Districts.
In this connection it has been contended that it is well nigh im­
possible so to divide the country into districts as absolutely to ob­
serve the convenience and customary course of business of every
community and city. It is possible that hardship must now and
then be wrought upon certain cities or communities, but this fact
need not cause our administrators entirely to abandon their en­
deavors to fulfill the plain provisions of the Act which require
that consideration should be given to the trend of trade. And al­
though there may be isolated instances of hardship wrought upon
certain cities and communities in this regard, it could hardly be
contended that such injury and hardship would be necessary in the
case of so large a district as is embraced within the thirty-four
counties comprising the petitioning territory.
In considering this important point, namely, that due regard
must be given to the convenience and customary course o f business
in the designation of the lines of the districts, it must be borne in
mind that banking business arises out of the general business rela­
tionships, and the course of business and the trend o f trade of a
c o m m u n ity m u st be observed if the commercial and financial rela­
tions of that community are to prosper.

XI
T HAT AT L E A S T A PART OF T H E PETITIONING T E R R I T O R Y IN
WISCONSIN ' IS CLOSELY A LLIED WITH M IL W A U K E E AND
CHICAGO, BOTH COMMERCIALLY AND F IN A N C IA L L Y , H AS
A L R EAD Y BEEN PR ACTICALLY ACKN OW LED GED B Y T H E
T R E A S U R Y DEPARTMENT.

When the Treasury Department suggested that every national
bank identify itself with an already organized currency association,
many Wisconsin banks located in Federal Reserve District Number
Nine asked to join the Milwaukee Currency Association, and that
Association was notified by the Secretary of the Treasury, under
date of Aug. 31st, 1914, as follows:
That portion of Wisconsin in Federal Reserve District No.
Nine lying east of a line forming the eastern boundary of Mon­
roe, Jackson and Clark Counties and south o f a line forming

35
the southern boundary of Taylor, Lincoln, Oneida, Forest, and
Marinette Counties is hereby attached to the territory of your
Association.
This communication was equivalent to an acknowledgment that
the interests of at least a portion of the petitioning territory are
closely allied with Milwaukee and the Chicago District, in accord­
ance with the customary trend of business.

X II
T H E R E A S O N S U N D ER L YIN G T H E LONG E S T A B L I S H M E N T OF T H E
C U S T O M A R Y CO URSE OF B U S I N E S S B E T W E E N PE TIT IONING
T E R R I T O R Y AND CHICAGO MAY B E FOUND FROM AN E X A M IN A ­
TION OF RAILROAD S C H E D U L E S, TRA IN F A R E S , T E L E P H O N E
AND T E L E G R A P H R A T E S , ETC., T H E A V E R A G E OF A L L BEING
IN FAVOR OF CHICAGO A S AG AIN ST MINNEAPOLIS.

T o substantiate our contention that the natural trend of business
from the petitioning district is in the direction of Chicago, and not
Minneapolis, and to indicate the underlying reasons therefor, the
following table showing railroad transportation facilities is
submitted.
While it is not considered feasible to give this
information for all points of the district, nor to set forth the
complete schedules of all trains, it is believed that the selection of
one point in each county comprising the petitioning district will be
typical of the situation in general, and in the preparation of this
table the county-seat has been used in every instance, and an at­
tempt has been made to show only the shortest routes and most
rapid trains. The passenger fares quoted apply by way of routes
via which short line fares are named. The schedules were taken
from the latest “ Official Railway Guide.” Statements showing the
difference in telephone and telegraph rates in favor of Chicago as
against Minneapolis, will be found on page 75 of the Addenda to
this brief.




C

T

o m p a r a t iv e

able

S h o w in g T

y p ic a l

R a il T

r a n s p o r t a t io n

F

a c il it ie s

From Petitioning District: to Chicago and Prom Petitioning District to Minneapolis
_____________________ (The counties of Menominee, Delta, Dickinson, and Iron, in Michigan, are included.)_________________
P u ll m an A c­
Name of
Passenger
T im e Co nsum­ Daily T r a i n s
County Seat.
Train Departs For T r a in A r r iv e s ed in T r a n s i t
commodat ions.
Fares.
County.
E ac h W a y

Waukesha ..

Taylor ..........
<
<

Clark ............

(«
Jackson ........
Monroe ........
Juneau ..........
41

▲dams.........
«
«
>t
Waushara ...
«
«

Waukesha

Chi. 3.05 P. M.

Minn. 10.35 A. M ..
Stop-over
Chi. 11.16 P. M.
Medford .
Minn. 11.16 P- M.
Stop-over
Neillsville
Chi. 11.29 A. M.
Stop-over
Minn. 11.29 A. M.
Stop-over
Black River Falls Chi. 11.30 P. M.
Minn. S.IS A. M.
Sparta ................ Chi. 11.58 P. M.
Minn. 4.56 P. M.
Mansion ............ Chi. 5.16 A. M.
Minn. 8.23 A.M.
Adams .............. Chi. 3.02 A. M.
Minn. 12.40 P. M.
Mantonia ......... Chi. 6.52 A. M.
M

5.55 P. M.

2 hr. 50 m.

lO1
^ P. M.
12 hr. 20
10 m. at Madis on.
9 hr. 59
9.15 A. M.
8.55 A. M.
9 hr. 39
Spencer 3 hr. 16 m.
10 hr. 46
10.15 P. M.
Merillan 15 mi n.
7 hr. 36
7.05 P. M.
Merillan 15 mi n.
7 hr. 35
7.05 A. M.
5 hr. 7
10.25 A. M.
7 hr. 2
7.00 A. M.
5 hr. 24
10.20 P. M.
11.40 P. M.
6 hr. 24
3.05 P. M.
6 hr. 42
8.50 A. M.
5 hr. 48
7 hr. 15
7.55 A. M.
1.15 P. M.
6 hr. 23

m.

4 hr. 37
4.00 P. M.
A . M.
Minn. 12.01 A. M.
8.55 A. M.
7 hr. 54
Chi. 10.35 A. M.
10 hr. 45
9.20 P. M.
Minn. 11 P . M.
10.05 A. M.
11 hr. 05
8 hr. 15
Chi. 7.45 A . M.
4.00 P . M.
Minn. 7.45 A. M.
13 hr. 10
8.55 A. M.
Stop-over Neenah 1 hr. 2 5 m.
Chi. 7.28 P. M.
12 hr. 2
7.30 A. M.
Minn. 6.10 P. M.
10.05 A M.
15 hr. 55
Stop-over Hennansville 2 hr. 44 m.
11 hr. 22
Chi. 9.58 A. M.
9.20 P. M.
14 hr. 30
10.05 A. M.
\ Minn. 7.35 P. M.

m.
m.
m.
m.
m.
m.

Winnebago .. Oshkosh ............ Chi. 11 .23
<
«
M

Delta ........... Escanaha . . . . . .
u
94

Menominee . Menominee . . . .




Crystal Falls ...
tt

Iron Mountain.

\

S to p - o v e r H e n n an s v ille

hr. 44 m.

m.
m.

Sleeper-p. C.
3
fi » O
>
v. ■ * w- Pt _T •
Sleeper-P. C.
5
Etc.
d -ft
2
«
c
1

S!oi

$7.49
6.43

Parlor Car . .

6.77

......

3.77

4
3
Parlor Car . .
12
Sleeper ........
5
Parlor Car ..
3
Sleeper ........
3
Parlor Car ..
2
2
Parlor Car ..
“
3
No through tr ains
16
2
3
Parlor Car ..
1
Sleeper ........
4
Parlor Car ..
2

6.17
3.70
5.71
4.08
5.16
5.11
5.04
5.14
4.85
5.93
3.96
6.93
7.87
8.83
6.34
7.89

m.

3

m.

3

vn.
m.
m.
m.
m.
mm.
m.
m.

*

m.
m.

4
1

m.
m.

2
1

“

«
"

........

Parlor Car . .1

/

7.76
7.5 8
7.06
7.58

Price .

Phillips

Oneida

Rhinelander

Forest

Crandon

Fond du Lac, Fond du L ac...
Green Lake

Green Lake

Marquette

Montello

Marathon . ■ Wausau
_
Portage _

Stevens Point

Wood .........

Grand Rapids

Waupaca .,

Waupaca

Outagamie

Appleton

Marinette

Marinette

Langlade_ ! Antigo
_
Ashland

Ashland

Ir on

Hurle y

Vi Ian

Knt'le R i v e r




9.15 A. M. 11 hr. 15 m.
Chi. 10 P. M.
6.175 P. M.
8 hr. 17 m.
Minn. 10.18 At. M.
9.00 A. M. 10 hr.
Chi. 11 P. M.
10.05 P. M.
Minn. 2.45 P. M.
7 hr. 10 m.
9.20 P. M. 11 hr. 28 m.
Chi. 9.35 A. M.
Stop-over 17 min. at Pel lean
No thr ough trains to Minneapolis
4 hr. 1 m.
4.00 P. M.
Chi. 12.01 A. M.
8.55 A. M.
9 hr. 35 m.
Minn. 11.20 P. M.
5 hr. 20 m.
Chi. 7.55 A. M.
1.15 P. M.
No thr ough trains to Minneapolis
Stop-over Stevens point, 6 hrs. 10 m.
9.15 A. M. 15 hr. 45 m.
Chi. 5.30 P. M.
8.55 A. M. 16 hr. 25 m.
Min*. 5.30 P. M.
Stop-over Stevens Point 6 hr. 5 min.
8.20 P. M.
Chi. 12.10 A. M.
8 hr. 10 m.
No thr ough trains to Minneapolis
9.15 A. M.
7 hr. 5 m.
Chi. 2.10 A M.
v
8.55 A. M.
6 hr. 50 m.
Minn. 2.05 A. M.
1.15 P. M.
7 hr. 45 m.
Chi. 5.30 A. M.
Minn. 1.55 P. M.
10.55 P. M.
10.30 P. M.
Chi. 3.44 P. M.
4.40 P. M.
Minn. 8.38 A. M.
5.55 P. M.
Chi. 12.25 P. M.
Minn. 10.35 P. M. 10.10 A. M
Chi. 9.25 A. M.
5.55 P. M.
No thr ough train to
Chi. 12.01 P. M.
8.20 P. M.
No thr ough train to
Chi. 7.05 P. M.
9.00 A. M.
10.45 P. M.
Minn. 3.35 P. M.
Chi. 8.30 P. M.
9.00 A. M.
5.05 P. M.
Minn 6.44 A. M
.
Delay at ABhlumi 1 hr
i Chi. 9.35 A. M.
9.20 P. M.
IMinn.

2
1
4
2
1
20
3
4

“

Parlor Car ..
Parlor Car ..

“

......

Parlor Oar ..

1
1

6.33
31.55
7.25
4.17
6.62
7.37
6.15

8
5
3
7

8.47
4.65
7.61
5.45
7.49

“
“

......
......

Sleeper and
Parlor Car ..

6.53
5.30
5.86
5.13

13 hr. 55 m.
7 hr. 10 m.
12 hr. 30 m.
10 hr. 21 m.

3

C.&N.W.R.R.
2 C.&N.W.R.R. Parlor Car ..
3 C.&N.W.R.R. Sleeper .......
No through tr ains

5.86
4.71
5.18
5.80
4.44
6.69
6.29
7.89
6.48
6.28
8.81
4.55
8.03
5.47

H hr. 45 m.

2 C.&N.W.R.R.
No through ti ains

7.87
6.90

9 hr.
6 hr. 46 m.
8 hr. 2 m.
5 hr. 30 m.
11 hr. 35 m.
8 hr. 30 m.

1
3
1
12
2
6

M in n e a p o lis
8 hr. 19 m.
M in n e a p o lis

5

Parlor Oar ..
“

...

Sleeper .......
Parlor Car ,.

C o m p a r a t i v e T a b l e S h o w in g T y p i c a l R a i l T r a n s p o r t a t io n F a c i l i t i e s
'From Petitioning District to Chicago and From Petitioning District to Minneapolis
_____________________ (The counties of Menominee, Delta, Dickinson, and Iron, in Michigan, are included.)___________________ _
Name of
County.

County Seat.

Sheboygan . .

Sheboygat. ........

Pullman Ac­
Time Consum­ Daily T rain s
Train Departs For Train A rrives ed In Transit
Each Way commodations.

Chi. 5.20 A. M.
Minn. 7.05 A. M.
Manitowoc . . Manitowoc . . . . Chi. 1.10 P. M.
Minn. 7.35 A. M.
Calumet
Chilton ............... Chi. 8.12 A. M.
u

«
Green B a y ........

9.00
10.55
5.55
10.55
1.00

A.
P.
P.
P.
P.

Min*.
Brown ..........
Chi. 6 45 A. M.
1.00 P.
10.10 A.
Minn. S .45 P M.
Kewaunee .. Kewaunee ........ Chi. 7.30 A. M.
9.10 P.
Delay at Green Bay
it
10.10 A.
Delay at Green Bay
Sturgeon Bay .. Chi. 0.30 A M.
9.10 P.
Delay at Green Bay
“
**
Minn. 2.00 P. M.
10.10 A.
Delay at Green Bay
O c o n to ........ Oconto .............. Chi. 10.03 A. M .
5.55 P.
K

M.
M.
M.
M.
M.

o hr. 40 m.
4 hr. 45 m.
15 hr. 20 m.
4 hr. 48 m.

11

4
13

Passenger

Fares.
3.31

Parlor Car , .
Sleepers, etc.

2

Cafe and Ob­
servation Car
No through tr ains
3
3

8.12

3.91
7.67
S. 94

8.12

4.75
6.71
5.64

M.
M.
M.

13 hr. 25 in.
13 hr. 40 m.

1
2

M.

19 hr. 30 m.

1

“

7.60

*
4

6.15

Chair C ars...

M.

14 hr. 40 m.

2

M.

20 hr. 10 m.

2

Sleeper ........

8 .11

m.

5

14 hr. 26 m.

2

Parlor
and
Obs. C ars...
Sleeper . . . .

5.81
7.41

6 hr. 24 m.
19 hr. 30 m.

2
2

Chair C ars. . .
Sleeper ........

5.59
6.63

Chair C ars...
2
No through tr ains
3

7.37
7.83
7.01
5.60

M.

Minn. 7.44 P . M
10.10 A. M.
Delay at Green Bay
Shawuno . . . . Shawaao ............ CM. 2.25 A. M.
9.00 A. M.
it
Minn. 2.40 P. M.
10.10 A. M.
Delay at Green Bay
Florence . . . .
Chi. 9.23 A . M.
8.20 P. M.
«
«
Minn.
T jific n ln , , , , , M e rr ill................ Chi. 9 31 A M
9.10 P. M.
tt
<
«

10.55 P. M.
Min. 9.31 A M.
Delay at Gr. Rapids


6 hr. 52

10 hr. 57 m.
11 hr. 39 m
13 hr. 24 m.

1

39
A fter a careful examination of the above table, there can be but
little wonderment that the “ convenience and customary course of
business” of the petitioning territory has developed during these
years toward Chicago rather than toward Minneapolis.
Taking one town in each county, usually the county-seat, as typi­
cal of all towns in that county, and using the fastest train in each
instance, as in the above table, and we find T H E A V E R A G E T IM E
F O R R E A C H IN G C H IC A G O F R O M A L L T H E C O U N T IE S
C O M P R IS IN G T H E P E T IT IO N IN G T E R R IT O R Y IS 8.6 0
H O U R S , W H IL E TO M IN N E A P O L IS T H E A V E R A G E
T I M E I S 1 1 .4 1 H O U R S, A N A V E R A G E S A V IN G O F T IM E
B E T W E E N P E T IT IO N IN G T E R R IT O R Y A N D C H IC A G O
O F 2.81 H O U R S O V E R M IN N E A P O L IS . Is it any wonder
that trade has developed in the direction of Chicago, or that busy
bankers and business men prefer to transact their business there
rather than in Minneapolis?
U sing the same county-seats and principal towns,— one from
each county of petitioning territory,— and we find also that T H E
P A S S E N G E R F A R E B ET W EE N T H E S E TO W N S AND
C H IC A G O A V E R A G E S * 8 * 'C E N T S C H E A P E R T H A N B E ­
T W E E N T H E S A M E T O W N S A N D M IN N E A P O L IS .
The same table discloses 188 D A IL Y T H R O U G H T R A IN S
E A C H W A Y B E T W E E N T H E S E R E P R E S E N T A T IV E
T O W N S T A K E N O N E FR O M E A C H C O U N T Y IN P E T I ­
T IO N IN G T E R R IT O R Y A N D CH IC AG O , A S A G A IN S T
O N L Y 48 B E T W E E N T H E S A M E T O W N S A N D M IN ­
N E A P O L IS .
The nearly four times as many through trains and average of
2 .8 1 hours shorter time between the representative towns and
Chicago as compared with Minneapolis would suggest a far su­
perior mail transmission service between the counties comprising
petitioning territory and Chicago as compared with the scrvice to
Minneapolis. This is of vital importance to banks in sending in
their daily quota of items to the Federal Reserve Bank, and trans­
acting other business by mail with banks and business houses in
the Reserve Center.
We believe we have proven conclusively that the trend of
business of the petitioning territory is irrevocably and permanently







40

with Chicago rather than Minneapolis, and by means o f the above
table we consider that we have pointed out some o f the fundamental
reasons underlying this condition, namely, more adequate, quicker
and cheaper train service, and better mail facilities. T o these funda­
mentals we may add the inevitable conclusion which we must reach
after reading the excerpts given above from the statements o f promi­
nent bankers from the petitioning territory and of distinguished
members of Congress, namely, that for years and decades the com­
mercial and financial relationships of the petitioning territory have
been firmly fixed with Chicago and the Seventh Reserve District.
It is inevitable that the Board must realize that lines o f trade so
deeply rooted and strengthened by such ineradicable conditions can
perhaps never be changed, and that any attempt to divert them
must only result in extreme hardship to the afifected territory.
X I II
SUFFICIENT CAPITALIZATION WILL RE MAIN FOR T H E N IN TH DIS­
TRICT TO FU LFILL THE CONTEM PLATIONS OF T H E A C T , E V E N
THOUGH THE PETITIONING T E R R I T O R Y B E W IT H D R A W N .

The inclusion of petitioning territory was not necessary at the
outset to provide sufficient capital for the Minneapolis Bank.
It is true that the Minneapolis District, if one o f the proposed
subtractions of capital be made from it, will not be one o f the most
largely capitalized districts of the country, nor is it such even at
the present time. The Minneapolis District is, in fact, one o f the
smallest in the country in point of capitalization. It is likewise true,
on the other hand, that Chicago is already one of the most heavily
capitalized districts in the country. But some district must have the
smallest amount of capital, while, of course, on the other hand, it
is necessary that some other district in the country shall be the
largest in point of capitalization.

I f all other reasons point con­

clusively to the advisability of attaching the petitioning territory
to Chicago, the mere fact that the capitalization o f the M inneap­
olis District will be reduced while that of the Chicago B an k will
he increased to a corresponding degree, may be regarded as inci­
dental, and as playing no vital part in the determination o f the
matter at issue; while by such transfer of territory every financial
and economic interest of the petitioning territory will be conserved.

4i
X IV
T H E NINTH DI 8T RICT, EV EN A F T E R T H E SU BTRACTIO N OF T H E
PE TIT IONING T E R R I T O R Y W IL L S T I L L CONTAIN FOUR S T A T E S
AND AN EV ER -I N CREA SIN G POPULATION.

It should be borne in mind that by dividing the country into
twelve Federal Reserve Districts, the average district from a geo­
graphical standpoint, comprises four States. Even though the peti­
tioners’ request be granted, four entire States, namely, Minnesota,
Montana, and the Dakotas (the average number for each reserve
district), and a part of Michigan will remain to the Ninth Federal
Reserve District, a vast and rich agricultural, lumber, and mining
district, the importance of which will increase rather than diminish
with the passage o f the years.
XV
IT 18 I M P R A C T IC A B L E TO T R A N S F E R M IL W A U K E E TO T H E NINTH
R E S E R V E DISTRICT . A FA R MORE A D V I S A B L E COURSE WOULD
B E T H E INCLUSION OF TH E PETITIONING T E R R I T O R Y WITHIN
T H E S E V E N T H R E S E R V E DISTRICT AND T H E E S T A B L I S H M E N T
A T M IL W A U K E E OF A BRANCH R E S E R V E BANK.

It has been suggested earlier in this brief, supra (page 4)
that one of the reasons why the petitioning banks failed to present
full testimony before the Organization Committee with regard to
the needs of the petitioning section, was that they had considered
that their territory would be included per se with Chicago and
Milwaukee, and that a branch bank would doubtless be established
in the latter city, which would thus bring the beneficent effects of
the new system almost to their very doors. Nor. in the light of
subsequent experience and of full information, was this early pre­
sumption on the part of petitioning territory inconsistent with
considerations of the highest good of the banks of the petitioning
district nor indeed with the success of the new system itself.
Hon. Carter Glass, Member of the House of Representatives,
from Virginia, speaking officially on April 4, 19 14 , regarding the
Federal Reserve Bank law, stated:
For practical purposes the branch banks are the real work­
ing elements of the system. It is these branch banks which,
in most instances, do the re-discounting. Under the terms
o f the bill the branch banks are to he administered by duly
appointed Boards of Directors and the management of these




;4
2
branch institutions will be distinctive and more nearly relate
itself to local business interests of the regional banks.* *
Representative Glass was thoroughly advised when he referred
to the certainty that “ the management of these branch institutions
will be distinctive and more nearly relate itself to local business
interests o f the regional banks.”

And it is submitted that could

a branch bank under the Seventh Reserve District be established at
M ilw a u k e e and the petitioning territory permitted to become a
part o f this district, the highest benefits possible under the new
system would result for the petitioning territory, and for the sys­
tem itself.
Su p p ose, however, th at the branch bank of the Seventh, or Chi­
cago, D istric t, is established at Milwaukee, and the petitioning ter­

rito ry is fo rce d to rem ain a p a rt othe Ninth District.
f

Then, the

in a n v s a lu ta r y benefitswhich would otherwise lie at their very door
m ust fo re v e r be lost to petitioners, because if they are a part o f the
N in th D is tric t th ey w ill not permitted to partake of the many
be
benefits w hich would inevitably in u re to them from connection with
the Seventh District if a branch of the Chicago bank were estab­
lished a t Milwaukee.
Nor w ou ld se rio u s consideration be given to a suggestion to an­
n e x M ilw a u k e e itself to the Ninth Reserve District and to establish
a branch bank in that city.

It is well known that from the early

history of the development of its commerce, the trend o f business in
the section of the country under discussion has been from north to
south rather than from east to west. The interests, both financial and
commercial, of Milwaukee and Chicago and the contiguous territory,
have become so closely interwoven with the passage o f the years that
to attempt now to disturb them and to attach Milwaukee to the Ninth
District and endeavor to divert its course of business into new and
untried channels would be so serious and impossible an undertaking
that such a course could hardly become the subject o f serious con­
templation.

Indeed, the permanent affiliation of M ilwaukee with

the Chicago District is at once logical and inevitable.
It has been conclusively proven in this brief by means o f tables
and arguments (pages 35-39) that the number o f daily trains pas­
sing each way between representative towns (one in each county) in




43
the petitioning territory ancl Chicago is nearly four times as
great as the number passing between the same territory and Min­
neapolis; that the average time by fastest train between the same
points and Chicago is 2 .8 1 hours shorter than between the same
points and Minneapolis; and that the average railroad fare between
these points and Chicago is about •g&'cents cheaper than to Min­
neapolis. It requires only a glance at the map to bring one to a full
realization that the advantages referred to as accruing to the peti­
tioning territory, if placed with Chicago in the Seventh Reserve Dis­
trict, will be even augmented by the establishment of a branch bank
in Milwaukee, inasmuch as the distance between the branch bank
center and the petitioning territory will be materially less even than
the distance between such territory and Chicago, and cheaper rail­
road transportation and quicker railroad service will be among the
certain advantages immediately to follow such a course. The estab­
lishment of a branch of the Chicago bank in Milwaukee would in­
deed bring the benefits of the Federal Reserve Banking system al­
most to the very doors of the petitioning territory. And, if we may
be permitted, we commend such a course to the future consideration
of the Federal Reserve Board.
XVI
THE

P R E S E N T MOVEMENT LOOKING TOWARD A T R A N S F E R OF
PE TIT ION ING T E R R I T O R Y FROM T H E NINTH TO T H E S E V E N T H
R E S E R V E D ISTRICT IS NOT A R E S U L T OF A NY CAMPAIGN PROP­
AG ANDA EMANATING FROM M IL W AU K EE, BUT AN HONEST,
E A R N E S T AT T E M P T , ON T H E P A R T OF T H E PETITIONING T E R ­
RITORY, TO CO N SER V E T H E COMMERCIAL AND FINAN CIAL
I N T E R E S T S OF T H E A F F E C T E D T E R R IT O R Y .

It has been suggested that the present agitation for the transfer
o f the petitioning territory is the result of a sort of campaign is­
suing from the city of Milwaukee, which city, it has been contended,
is anxrous to secure the benefits of the Federal Reserve system now
accruing to Minneapolis.
W e will not deny that the city of Milwaukee is anxious, and
naturally so, that the petitioning territory shall be annexed to the
Seventh District. T o pretend an indifference to such a dcsiradatum would be but hollow sham. Milwaukee is keenly alive to the




-

t. i ' •

-• " f

• •
•

V •

J

fact that its interests, as well as those of the petitioning territory,
would be conserved by such a transfer. And M ilwaukee is as
fully cognizant of the fact that serious harm and injury will con­
tinue to result to the petitioning territory if such a transfer be not
effected. Surely, there can be no crime in Milwaukee’s interest in
not only her own welfare but that of her sister territory.
Are the merits of the situation altered one way or the other by
M ilw a u k ee's in te re st? Shall the Board decide that a great hardship
and injury sh all be wrought upon the petitioning territory by a re­
fu sal to g ra n t their petition for transfer simply because a city which
m ay profit fro m the inclusion of the petitioning territory in the
Seventh R e s e rv e District has expressed an interest in the outcome ?
A n d it w e re indeed attributing to the city of M ilwaukee almost
hypnotic or su p e rn a tu ra l p o w e rsto a s s u m e that she has wielded such
an un usual influence over the entire banking and business com­
m unity com p rised w ith in the petitioning district as to cause the
said te rrito ry to becom e su d d e n lyimbued with a great and yearning
desire to be tra n s fe rre d fro m one r e s e r v district t o another. I f M il­
e
w au kee be endowed with any such necromantic powers as her M in­
neapolis frie n d s h a v e a ttrib u te dto her, she will presently be
p ra ctisin g h e r w iles a n d d e sig n s
upon a still larger territory, and
the

B o a rd ,

fo rso o th ,

m u st

n eed s
be ever-vigilant,

lest

this

a g g r e s s iv e an d a m b itio u s c ityshall, like a greedy vulture, attempt
to sw oop d o w n up on a ll th e
unsuspecting territory within the
confines o f n ea rb y S ta te s in an e n d e a v oto increase her own com­
r
m ercial and financial prestige!
But the whole contention that this entire and laudatory m ove­
ment on the part of the petitioning territory is the result o f inspira­
tion from a Milwaukee base rather than a genuine and honest con­
viction on the part of the petitioning banks that their needs abso­
lutely require their separation from the Ninth and inclusion in the
Seventh Reserve District, is refuted on its very face.

T h e peti­

tioning banks, representing by far the m ajority o f the na­
tional banks of thirty-five counties in the petitioning territory,
are among the strongest and steadiest institutions in the northmiddle-west.

In their earnest efforts to bring about this tran sfer

they are not blindly responding to the wiles and designs o f any
ambitious city or community.

It may well be that M ilwaukee has

assumed the lead in this matter, and that she has even taken steps




45
to weld together the influences in favor of the proposed
transfer o f territory, but the banks themselves in the pending peti­
tion have expressed almost the unanimous conviction of thirtyfour o f the richest counties of the north-middle-west that they have
been inappropriately placed in the Ninth Reserve District, and
that the whole future commercial and banking interests of their
territory depend upon a realignment by the Board of the lines of
demarkation between the districts in question, and the transfer of
the petitioning territory from the Ninth to the Seventh Reserve
District.
X V II
THE

D E C E N T R A L IZ A T IO N OF CA PITA L, W HILE A DESIRADATUM
U N D E R T H E LAW, IS NOT OF SUCH V IT A L IMPORTANCE IN
T H E F I N A L A N A L Y S I S T H A T IN ORDER TO BRING ABOUT ITS
A C C O M P L IS H M E N T T H E CO URSE OF B U SIN E SS OF A GIVEN
C O M M U N IT Y SHOUL D B E SOUGHT TO BE DIVERTED AND EX ­
T R E M E H A R D SH IP B E WROUGHT UPON TH E FINAN CIAL AND
C O M M E R C IA L I N T E R E S T S OF T H AT COMMUNITY.

Without question one of the purposes actuating the legislators
in determining to divide the country into districts and establish a
number of regional banks, was the thought that to decentralize
banking reserves would ultimately prove of benefit to many sec­
tions of the country, and provide a more wholesome financial situ­
ation throughout all the States. But at the same time Congress
did not concede that in order to secure a decentralization of bank­
ing reserves other considerations of a higher nature should be lost
sight o f; and particularly did Congress recognize that in practically
every community was to be found an established “ customary course
of business/’ and in their wisdom the legislators provided in ex­
plicit terms that due regard should be given to such customary
course o f business in each community before it was aligned with
any certain reserve district. The legislature did not state that
either feature would be controlling, but as between the two. benef­
icent though m ay be the general effects of decentralization of bank­
ing reserves where possible, it is incontrovertible that of far greater
importance is the maintaining inviolate of the “ customary course
o f business” of a community which perhaps for years upon years
has been established in certain directions. Certainly in the present




46
case the withholding of a large reserve from Chicago and its addi­
tion to the Minneapolis Bank would not offset to any appreciable
extent the hardships that will be wrought upon the petitioning
territory if the customary course of business o f this community
must be artificially diverted from the channel in which it has run
for so many years.
That the Board has been unwilling on at least two occasions to
cause hardship to certain banks for the sake o f distributing bank­
ing reserves, was evidenced by its action in granting the petitions
of certain banks in northern New Jersey and western Connecticut
for transfer to the New York Reserve District. W e hope the
Board will maintain a similar attitude in the present case.
X V I II
MINNEAPOLIS MAY NEED WISCONSIN IN ITS D I S T R I C T B U T NOT SO
MUCH AS THE PETITIONING T E R R I T O R Y N E E D S TO B E J O I N E D
WITH CHICAGO.

Senator La Follette contended at the re-hearing that Minneapolis
as a reserve center for the great States of Minnesota, the D akotas
and Montana, with their immense possibilities for future develop­
ment, would not absolutely need the petitioning territory in order
to insure the success of the Federal Reserve System.
There can, of course, be no doubt but that the retention o f the
petitioning territory in the Ninth Federal Reserve D istrict would
materially assist that District in attaining its full perfection and
success.

Similarly, if Illinois and Iowa and several other States

could be added to Minneapolis, the Ninth Reserve center would
prosper mightily, and speedily assume a position as one o f the
strongest and most important financial centers o f
try.

the coun­

But the Federal Reserve Act was not instituted in order

to assist the growth or enhance the financial reputation or prestige
of any given city or community. The purposes of the A ct w ere in­
tended to be beneficent, serving always the sumum bonum, seeking
ever to bring the greatest good to the largest number.

N o r could

the enhancement of the financial importance of Minneapolis and the
consequent diversion of the course of business and the dem oraliza­
tion of the financial and economic interests o f the petitioning ter­
ritory be considered as within the purview o f the legislators when
framing this most beneficent piece of legislation.




47)
H ere is a great territory comprising 28,000 square miles and over
900,000 population dependent upon the prosperity of this community
for their livelihood and success. Shall we forget their interests and
sacrifice their w elfare in an effort to build up the financial and eco­
nomic prestige o f a reserve center ? Shall we say to these 900,000
people: “ Y o u r interests are of but little moment. It does not matter if
you and your fathers and your grandfathers have done business for
several decades with Milwaukee and Chicago. It is immaterial if all
your banking and business interests are closely interwoven with those
of the Seventh Reserve District, and that now to attempt to divert
the course o f all this business will work untold hardship upon you
and upon your posterity. Y ou must sacrifice all of these things in
order that Minneapolis, as the center of the Ninth Reserve District,
m ay assume a commanding financial position in the great northmiddle-west.” And shall we say, at the same time, to Minneapolis:
“ W e expect to increase your financial prestige by adding to the Dis­
trict o f which you are the center a vast area unconnected with you
hitherto by bonds o f commerce or finance, but hereafter to be asso­
ciated with you, in order that your district may grow and that
your prestige as a financial and commercial center shall constantly
increase!" Such a possibility could never have been intended by
Congress when it framed what is considered by students of econ­
omy the greatest financial measure this country perhaps has ever
had written on its statute books. Admitting that Minneapolis needs
the petitioning territory, we must ever keep before us the vital
importance to the petitioning district that its interests may remain,
as they have been for so many years, linked with the Seventh or

Chicago District.
XIX
T H E R A T E FO R RE -DISCO UN T WITH T H E F E D E R A L R E S E R V E BANK
O F M IN N E A P O L IS IS HIG HER ON SOME P A P E R THAN WITH
T H E F E D E R A L R E S E R V E B AN K OF CHICAGO.

T he rate o f discount for re-discounting with the Federal Reserve
Bank in Minneapolis is the same on thirty day paper as with
Chicago, but is higher on sixty and ninety day paper. No doubt
the rate o f re-discounting with the Reserve Bank of Minneapolis
w ill alw ays remain higher until the western country is as well
settled as the eastern, and interest rates in the west decrease.




The character of the business o f this section w ill necessitate the
transacting of business with Milwaukee and Chicago banks in any
event.
XX
INCONVENIENCE AND UN NECESSARY O U T L A Y O F M O N E Y W I L L R E .
SULT FOR PETITIONING T E R R IT O R Y IF R E S E R V E S O F P E T I ­
TIONING BANKS MUST BE K E P T A T M IN N E A P O L IS .

If the reserves of the banks in this territory must be kept at M in ­
neapolis, it will necessitate carrying larger accounts with M il­
waukee and Chicago, not only at a loss of earnings, but to the detri­
ment of the manufacturing industries o f this section, because o f
decreased loaning power.
Even though the petitioning banks have large, capital invested
in the Minneapolis Reserve Bank and maintain their reserves re­
quited by the law, they will be but little benefited, because the banks
in this territory desiring transfer will not go to the Federal R eserve
Bank at Minneapolis, with which they have but little acquaintance,
to borrow their money, but will obtain their loans from their regu ­
lar correspondents with whom they, their fathers, and gran dfathers,
have been in closer relationship.
And it is conceivable that even though they did proceed to ask
for loans of the Minneapolis Bank, at certain times o f the y ea r
they might find accommodation at the hands of the R eserve B an k
a difficult matter. It is entirely possible that there m ay be occa­
sions when the Minneapolis Bank, having had tremendous demands
upon it by the grain producing States of Minnesota, M ontana and
the Dakotas, will have loaned at certain times of the year all the
money available for accommodation purposes, and W isconsin banks
asking loans will be forced to wait for their accommodation.
XXI
THE PETITIONING BANKS DESIRE TO TRANSACT T H E I R B U S I N E S S
SO FAR A8 POSSIBLE IN THEIR R E S E R V E C E N T E R W H E R E
THEIR RESERVE8 ARE MAINTAINED.

It has been suggested by Counsel for the Reserve Bank that peti­
tioning banks need not go to the reserve center to transact their
business, that there is nothing in the law to compel such action,




49
and that they m ay go to any city for the transaction of business. It
is true that there is no provision of the law which would prohibit
the transaction o f business in cities other than Minneapolis, but it is
equally true that the bankers of this district naturally want to trans­
act all their business in the same place, and that place should be
Chicago or M ilwaukee where their customary course of business
has tended for so many years.
Hon. M ichael K . Reilly, Member of the House of Representa­
tives from W isconsin, put this matter very tersely at the re-hearing
before the Board when he said :
In answer to the Governor of the Minneapolis Bank, when
in response to M r. Browne he said they do not have to do
business with Minneapolis, the fact is they have to do re-dis­
count business there, and the bankers of my district want to
do all their business with one place, where they are used to
doing business, and that is with Chicago and Milwaukee. If
the bankers of our district want to re-discount, they have to
do business with you people at Minneapolis; the other business
they do at C hicago; and under the terms of this law it was in­
tended they should do all their business in one place. That is
the clear intent o f the law.
Follow in g a brief discussion of Mr. Reilly’s point just quoted.
Mr. H ardin g of the Reserve Board said:
I understand the Congressman’s point, that when this act be­
comes fully effective, and no balance in a bank can count as re­
serve except in a Federal Reserve Bank, in the case of the small
bank, the averaged-sized bank, having no account anywhere
except with the reserve bank, except cash in its own vault, and
the balance in the reserve bank, they will naturally go for their
re-discounts where their money is kept.
R e p r e se n t a t iv e R e il l y :
M r. H a r d in g :

17 , 1917-




Yes.

That condition will apply on November




50
X X II
GRANTING THAT A METHOD FOR CLEARING CHECKS INTRODUCED
INTO THE FEDERAL RESERVE SYSTEM MAY OVERCOME SOME
OF THE DIFFICULTIES OTHERWISE TO BE EXPERIENCED BY
PETITIONING TERRITORY FROM INCLUSION IN T H E N IN TH RE­
SERVE DISTRICT, WHY PERMIT TH E EVILS TO OBTAIN IN
THE FIRST PLACE?

It has been suggested that the method o f clearance
adopted by
the Federal Reserve System m ay have tendency to correct
a
an y evils that might otherwise result to the petitioning territory
from its inclusion with the Ninth Fed eral R e se rveistrict instead
D
o f the Seventh District
toward which its customary course of
business constantly flows. We submit that there is but little need
to go deeply into this argument nor await the possible outcome
to
o f the new clearance plan, when we have by the granting o f the
here
present petition for transfer, a certain and immediate method of
rem edying and eliminating all of the injuries which have come
upon the petitioning territory reason of their annexation with
by
the N inth Federal Reserve
District instead o f the Seventh, to
w hich they naturally and of
right belong.
X X III
IF TH E PETITION IS GRANTED, FARM LOANS CAN BE PLACED BY
THE BANKS OF SOUTHERN WISCONSIN IN T H E AGRICULTURAL
SECTION REPRESENTED BY THE PETITIONING TER RITOR Y.

Counsel for the Federal Reserve B anhas contended as an ob­
k
jection to the proposed transfer oterritory that the granting of
f
the present petition and the separation o northern W isconsin banks
f
fro m the Ninth District, w ill
remove from that district the only
banks that can take farmmortgages from the agricultural interests
o f N orth Dakota.
Th is
may be a mere alarmist suggestion.
D oubtless the NinthDistrict will always contain many financial
institutions ready to acceptthe mortgages in question. B u t in any
event it m ay be said in reply the banks in southern Wisconsin
that
w hich are members o f the
Seventh R eserve District have now no
territo ry in which to make
farm loans, and by reason o f the fact
that m an y farmers are now
settling in northern Wisconsin, and this

SI
territory thus becoming more and more an agricultural community,
the banks of southern Wisconsin have actually a need for northern
W isconsin in the same district in order that these southern
Wisconsin banks m ay have an agricultural territory in which they
may place farm loans.
In connection with this point, it is interesting to note that at least
four o f the few banks o f the petitioning territory that have not joined
with the petitioners in their desire for transfer have given as their
reason the fact that they are now making farm loans in North and
South Dakota, Montana, etc., which they would not be able to do
should they be transferred to the Seventh District. We submit that
the very fact that these few banks can get a higher rate of interest
in States west o f W isconsin on a farm loan than they can receive
in W isconsin is a discrimination against Wisconsin, and a diversion
o f money that belongs in Wisconsin to help build up and develop
the States in the west, thus depriving the farm element of northern
and eastern Wisconsin of money they need.
X X IV
IF T H E P E T IT I O N IS G R A N T E D , T H E R A P I D L Y D EV E LO PIN G NORTH­
E R N P A R T O F W IS CO N SIN CAN OBTAIN LOANS FROM TH E
A F F L U E N T B A N K S OF S O U T H E R N WISCONSIN , T H U S P E R ­
M IT T IN G T H E N O R T H E R N AND E A S T E R N PORTIONS OF THE
S T A T E N O R M A L L Y TO D E V E L O P .

The Southern portion o f Wisconsin, a very wealthy part of the
State, including the large city of Milwaukee, is now in the Seventh
District. O f course under the law that portion of the State of W is­
consin can not loan upon north and eastern and north-eastern
Wisconsin lands. W e desire that this petitioning territory be
placed with the southern portion of Wisconsin, in order that this
rapidly developing part o f the State c^n borrow from banks in
southern Wisconsin, where they have money to loan, so that
the northern and eastern portions of the State may be permitted
to develop. W e submit that a sub-division of the State of W is­
consin should not be made that will be a detriment to the northern
and eastern part of Wisconsin, and a benefit only to the States fur­
ther west. W e do not believe that was the purpose of the law, anil
we trust that will not be the decision o f this Board.




TH E ACT WAS INTENDED NOT ONLY TO B E N E F IT T H E BANK8
THEMSELVES BUT ALSO ALL COMMERCIAL IN T E R E 8 T 8 AND
TH E PUBLIC GENERALLY.

It was the intention of the legislators in framing the Federal
Reserve Act not to impose hardship on any community (as has unin­
tentionally been done by including this territory in the Ninth Fed­
eral Reserve District), but to render strong assistance to the banking
interests throughout the country. And in this worthy aim Congress
did not lose sight of the fact that the prosperity of business general­
ly makes for the success of the banking interests, and the Act also
aimed therefore to conserve the best interests of the commer­
cial classes throughout the land. In &e final analysis, however,
the prosperity o f the financial as well as of the commercial interests
rests upon the foundation of the prosperity of the individuals that
go to make up the various communities of the country. Realizing
this truism, Mr. Harding, o f the Reserve Board, inquired of Coun­
sel for the Reserve Bank.

M s . H a r d i n g: How about the p u b lic ? Do you consider
the convenience o f the public in this
matter? They have no
interest indirectly?
J udge U e u n d

: I do not see, myself.

M r . H ar d in g : Take the manufacturing, farming, and
mercantile communities: Are they not interested as to whether
their business goes one way and the bankin" business another ?
I would like to have your views as to that. What considera­
tion should you give the public in this matter?

This, indeed, is a pertinent inquiry, and we submit that a con­
sideration of the business interests of the financial and commercial
classes, and of the public generally, leads us inevitably to the con­
clusion that the petitioning territory should be annexed to the
Seventh or Chicago Reserve District where the customary course
of naarly all its business has been for so many years.




53

XXVI
THE WISHE8 OP 8 TA TE BANKS A8 FUTURE MEMBERS OF THE FED­
ERAL RE8ERVE 8YSTEM 8HOULD BE CONSIDERED.

It is hoped that State banks throughout the country will rapidly
assume the benefits of the Federal Reserve System and become
members thereof. Their attitude as to the district in which they pre­
fer to be located is of importance, therefore, in view of the fact that
they will doubtless in the future become an important part of the
Federal Reserve System.
At the rehearing of the present case before the Board, M J. H.
r.
Puelicher, vice president of the Marshall and Ulsley Bank, of
Milwaukee, stated:
On page three, the written statement from M
inneapolis,
read into the record, concedes Wisconsin to the Chicago Dis­
trict. The long established relation between the banks of
Wisconsin and those of Milwaukee and Chicago, the ability
of these centers to care for the needs of Wisconsin banks, the
desire of the banks—the Wisconsin banks—to remain with
their Milwaukee and Chicago correspondents, should prove
conclusively the value of these relations to those concerned.
Then, too, a poll of the State banks was taken,—a poll of
the State banks in this district. This showed that OUT OF
254 STATE BANKS THAT ULTIMATELY WOULD
COME INTO THIS S Y S T E M , 249 FAVORED BEING
PUT INTO THE SEVENTH DISTRICT.
It is manifest also that if the State banks should not be satisfied
with the establishment of district lines, and should remain out of the
Federal Reserve System, the National banks will be placcd at a
disadvantage with the State institutions, and the greatest possible
development of the banks under national charters would thus he
retarded.

XXVII
DISCUSSION OF POSSIBLE ALTERNATIVE SOLUTIONS OF THE
PRESENT PROBLEM.

Objection to the proposed transfer has been made by the Min­
neapolis Bank on the ground that to remove the petitioning tern
*




54
to ry fro m the N inth F e d e ra l R e s e r v e D is t r ic t w ill le a v e t h e N i n t h
D istrict alm ost severed and co n sistin g o f t w o p r a c t i c a ll y d i s t i n c t
p arts, w ith the States o f M in n esota, M o n t a n a a n d t h e D a k o t a s
constituting one division and the u pper p e n in s u la o f M i c h i g a n c o m ­
p risin g the second section, the north ern p o r tio n o f W i s c o n s i n h a v ­
in g been rem oved from betw een these tw o d iv is io n s o f t e r r i t o r y .
T h ere is n othing in the la w that w o u ld p r o h ib it t h e p r o p o s e d
tra n sfe r o f petitioners’ te rrito ry fro m th e N in t h to t h e S e v e n t h
D istrict.

Section 2 o f the A c t p r o v id e s :

A ll districts shall be apportion ed w ith d u e r e g a r d t o t h e
convenience and cu stom ary cou rse o f b u s in e s s, a n d s h a l l n o t
n ecessarily be co-term inus w ith a n y S t a t e o r S t a t e s .
T h ere is nothing in the lan g u a g e o f th e A c t to in d ic a t e t h a t t h e
territo ry com prising an y district m ust lie in a s t r a i g h t lin e o r b e
contiguous. O rd in arily speaking, o f co u rse , c o n t ig u o u s t e r r i t o r y
w ould constitute each F ed era l re se rv e d istrict.

It w o u ld n o t b e

likely that the B o a rd w ould seek to jo in F lo r i d a w ith a p o r t i o n o f
Illin ois, or that C alifo rn ia w ould be u n ited w ith N e w Y o r k t o f o r m
one o f the reserve districts. In the p re sen t in s ta n c e , h o w e v e r , n o
such absurd proposal has been su ggested .

T h e u p p e r p o r t io n o f

M ich igan m ay rem ain, if the B o a rd sh a ll so d e cid e , in t h e N i n t h
R e s e rv e district with certainly as little in c o n v e n ie n c e a n d

in ju r y
to that section o f M ich igan as n ow resu lts fro m its b e in g ', u n it e d
with the M inneapolis R eserve D istrict.

T h e m e re f a c t t h a t W i s ­

consin is or is not a part o f the N in th D is tr ic t w ill n o t f a c i l i t a t e o r
retard mail service between the upper p e n in su la o f M i c h i g a n a n d
M inn eapolis; nor w ill the w ith d raw al o f th e W is c o n s in t e r r i t o r y
cau^e the northern M ich igan banker w h o w a n ts to v is it h is r e s e r v e
bank at M inneapolis one m om ent’s d e lay in m a k in g t h a t j o u r n e y ;
nor will said w ithdraw al o f territo ry a ffe c t o r c h a n g e in a n y w a y
the convenience and cu stom ary co u rse o f b u s in e s s b e t w e e n t h e
peninsula and M inneapolis.
W e submit that the northern M ich ig a n p e n in su la b e lo n g s p r o p e r ­
ly with the petitioning territo ry to C h ic a g o , but w h e th e r o r n o t t h e
B o a rd m ay decide in the affirm ative as to th a t m a tte r , t h e c o n d i­
tion and position o f W isconsin as a w e d g e b e tw e e n t h e n o r t h e r n
M ichigan counties and the w estern portio n o f th e N in t h R e s e r v e




55
District, as pointed out, w ill not assist or injure the conditions now
existing between northern Michigan and the Minneapolis Bank,
However, if the Board should hold that the territory of the
Ninth District should be continuous and contiguous, the petitioners
would in the final analysis agree to drop from their petition the
counties of Ashland and Iron in the northern part of Wisconsin,
in order to preserve the connection between the upper peninsula
of Michigan and the remainder of the Ninth District. It is felt,
however, that such a determination would be inequitable to the two
counties in question, since their interests are identical with those
of the remainder of the petitioning territory, but rather than sacri­
fice the interests of the whole, it were better that hardship be
worked upon a part, and for the greater good, the Board might
consider it advisable to sacrifice the interests of Ashland and Iron
counties to preserve the contiguous character of the territory com­
prising the Ninth District.
In the first hearing of May 20, 1915, before the Federal Re­
serve Board, the petitioners asked for the transfer of a certain por­
tion of Wisconsin territory from the Ninth to the Seventh Dis­
trict. In the present hearing the same territory petitions for change.
However, at the rehearing four counties of Michigan, namely,
Menominee, Dickinson, Delta and Iron, constituting the southern
counties of the upper Michigan peninsula, presented an unanimous
petition from all of the national banks in those counties (nine in
number), that they too should be transferred from the Ninth to
the Seventh District. F a r from interposing any objection to the
addition of these counties to the petitioning territory, the committee
representing the original petitioners would be glad to have the
four counties joined with them in the proposed transfer. As was
brought out by Mr. M. K. Bissel, of Escanaba, Michigan, repre­
senting all the national banks in the four Michigan counties just
mentioned, at the rehearing, their conditions and problems are
practically synchronomous with those of the original petitioning
territory. Mr. Bissel stated:
I h ave been asked to represent the four counties in northern
M ich igan ,— M enom inee, Delta, Dickinson, and Iron, and I
present here petitions from all o f the national banks in those




5^
four counties. There are nine national hanks, and they all
petition to be transferred from the Minneapolis Federal Re­
serve District and placed in the Chicago district. We did
not know until the 26th of July that the banks in northern
Michigan were to be given an opportunity to be heard in con
nection with this subject; consequently, we were unable in the
short time allotted to have a general meeting of the banks or
to secure petitions from the necessary number for the whole
of northern Michigan. The banks in the four counties men­
tioned, however, decided to act independently, and I am here
to represent them.
The petitioners therefore hope that the Board, in considering
their request for transfer, will not overlook the unanimous petition
of the banks of the four southernmost counties of the upper penin­
sula of Michigan for transfer to the Seventh Federal Reserve Dis­
trict, with which they naturally do their banking and commercial
business, and with which they naturally and of right belong.
Similarly the petitioners would be delighted were the Board to
decide that the entire upper peninsula of Michigan should likewise
be separated from the Minneapolis District, and annexed to the
Chicago territory. It has been objected by the Reserve Bank of
Minneapolis that two-thirds of the member banks of a community
seeking transfer must sign the petition asking for such change,
and that this has not been done by the entire northern peninsula
of Michigan. That is true, though by reason of the similarity of
interests with Wisconsin and because of the fact that the con­
venience and customary course of business of the upper peninsula
of Michigan, like the remainder of that State and Wisconsin, have
for years been toward Chicago and the Seventh District rather
than Minneapolis, it can hardly be conceived that this peninsular sec­
tion would be other than pleased by being included with petitioners
in a transfer from the Ninth to the Seventh Reserve District. And
even though the Act does require the signatures of two-thirds of the
member banks of a community seeking transfer, there is nothing
in the law to preclude the Federal Reserve Board, seeking to
serve the greatest good of the largest number, from affirmatively
making any realignment or disposition of any portion, of the country
that they may desire. The Board may, within their discretion,
without waiting for a formal petition from this territory, include the



57
northern peninsula of Michigan with Wisconsin in a transfer from
the Ninth to the Seventh District, and petitioners earnestly hope
that the Board will decide so to do.
Therefore, if the Board desire while about it to do full justice
to the situation, it may be that they will consider it within reason
and right to include the upper peninsula of Michigan, or certainly
the four southernmost counties of that peninsula, with the petition­
ing territory, in a transfer to the Seventh Reserve District. The
petitioners would be happy if the Board would so decide the case.
CONCLUSION

We may be permitted again, in conclusion, to call the attention
of the Board to the four possible solutions of the present problem,
presented earlier in the brief, namely:
( 1 ) Separation from the Ninth and addition to the Seventh
Federal Reserve District of petitioning territory alone;
(2) Separation from the Ninth and addition to the Seventh
Federal Reserve District of petitioning territory with the exception
of the counties of Delta and Iron in Wisconsin;
( 3 ) Separation from the Ninth and addition to the Seventh
Federal Reserve District of petitioning territory and the four
southernmost counties, namely, Dickinson, Iron, Menominee, and
Delta of the upper peninsula of Michigan; and
(4) Separation from the Ninth and addition to the Seventh
Federal Reserve District of the petitioning territory tand the
entire northern peninsula of Michigan.
In conclusion, it may be stated that no reasonable effort has
been spared to present in this brief for the consideration of the
Board full information of the most recent and up-to-date character
obtainable showing the sentiment of the petitioning territory with
regard to the proposed transfer, illustrating the effect of the grant­
ing of the petition not only upon the petitioning territory but on the
Minneapolis Reserve Bank, and in presenting full facts, figures and
arguments proving conclusively the wholesomeness and reason­
ableness r» petitioners’ prayer for transfer to the Seventh Reserve
f
District. We Iwive endeavored also to go into many o f the objec­
t i o n s (11; 11 have been offered by the governor of the Reserve Bank



58
for the Ninth District, and counsel for the Reserve Bank both
in his oral arguments before the Federal Reserve Board and even
in his printed brief filed at the first hearing on appeal before the
Board. We have sought to analyze these objections, and attempt­
ed to point out their fallacy, and to present to the Board a full and
complete discussion of the several points involved, accompanying
our arguments with proof in the way of facts and statements, all of
which we hope will be of some assistance to the Board in reaching
an equitable and just decision as to the merits of this appeal.
W hereupon , we, the undersigned National member banks of the
petitioning territory of Wisconsin, respectfully petition the Federal
Reserve Board to be transferred from the Ninth Federal Reserve
District to the Seventh Federal Reserve District.
Respectfully submitted,
1.
2.

3.
4.
5.
6.
7.
8.
9.
10.
1 1.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.

First National Bank, Antigo, Wisconsin.
Langlade National Bank, Antigo, Wisconsin.
Citizens National Bank, Appleton, Wisconsin.
Commercial National Bank, Appleton, Wisconsin.
First National Bank, Appleton, Wisconsin.
First National Bank, Black River Falls, Wisconsin.
First National Bank, Brillion, Wisconsin.
Chilton National Bank, Chilton, Wisconsin.
First National Bank, Clintonville, Wisconsin.
First National Bank, Crandon, Wisconsin.
First National Bank, Dale, Wisconsin.
National Bank of De Pere, De Pere, Wisconsin.
Fond du Lac National Bank, Fond du Lac, Wisconsin.
First National Bank, Grand Rapids, Wisconsin.
Citizens National Bank, Grand Rapids, Wisconsin.
Wood County National Bank, Grand Rapids, Wisconsin.
Citizens National Bank, Green Bay, Wisconsin.
McCartney National Bank, Green Bay, Wisconsin.
Kellogg National Bank, Green Bay, Wisconsin.
First National Bank, Kaukauna, Wisconsin.
First National Bank, Manawa, Wisconsin.
National Bank of Manitowoc, Manitowoc, Wisconsin.
First National Bank, Marinette, Wisconsin.
Stephenson National Bank, Marinette, Wisconsin.







59
25.
2b.
2j.
2S.
29.
^o.
V
/
31.
32.
33.

34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.

First National Bank, Marshfield, Wisconsin.
American National Bank, Marshfield, Wisconsin.
First National Bank, Menasha, Wisconsin.
First National Bank, Neenah, Wisconsin.
National Manufacturers Bank, Neenah, Wisconsin.
First National Bank, Neillsville, Wisconsin.
First National Bank, New London, Wisconsin.
Citizens National Bank, Oconto, Wisconsin.
Oconto National Bank, Oconto, Wisconsin.
Commercial National Bank, Oshkosh, Wisconsin.
Old National Bank, Oshkosh, Wisconsin.
Peshtigo National Bank, Peshtigo, Wisconsin.
First National Bank, Phillips, Wisconsin.
First National Bank, Rhinelander, Wisconsin.
First National Bank, Rib Lake, Wisconsin.
German National Bank, Ripon, Wisconsin.
First National Bank, Seymour, Wisconsin.
First National Bank, Shawano, Wisconsin.
German American National Bank, Shawano, Wisconsin.
Citizens National Bank, Stevens Point, Wisconsin.
First National Bank, Stevens Point, Wisconsin.
Old National Bank, Waupaca, Wisconsin.
First National Bank, Wausau, Wisconsin.
National German American Bank, Wausau, Wisconsin.
First National Bank, Weyauwega, Wisconsin.

(The nine National Banks of the four southernmost counties of
the northern peninsula of Michigan, namely, Delta, Iron, Dickinson
and Menominee Counties, also petitioned upon the re-hearing to be
transferred from the Ninth to the Seventh Federal Reserve
District.)

By
J. W. P. LOMBARD,
Chairman of the Peti­
tion ing Dclegation.
R E X F O R D L. H O LM ES,
Counsel.




ADDENDA




62

MAP SHOWING SEVENTH AND NINTH FEDERAL RESERVE DISTRICTS
AS AT PRESENT CONSTITUTED.

o

m ap show ing

1—Minneapolis District
2—Petitioning District
3 —Chicago District




s

% >-o4jiZj

petitioning

territory.

V




64

MAP S H O W IN G

NORTHERN

PEN IN SU LA

OF

MICHIGAN.




CHICAGO AND N O R TH W E ST E R N

R.

R.




66

CHICAGO, M I N N E A P O L I S A N D S T . P A U L RY.




3 0 0 L IN E .

$

68
N A M E S A N D L O C A T IO N O F N A T IO N A L B A N K S I N W IS C O N S IN
C O N S ID E R E D F O R T R A N S F E R F R O M T H E N IN T H TO
T H E S E V E N T H F E D E R A L R E S E R V E D IS T R IC T .

N am e of B a n k .

T ow n.

I n f a v o r A g a in s t
o f T ra n sfer
ransfer
(N o )
(Y e s)

C o u n ty .

A s h la n d N a t i o n a l . ....................... A s h l a n d . ..........

A s h l a n d ___

C it iz e n s N a t i o n a l .......... .
K e llo g g
‘4
.......................
M cC Jartnev 44
.............
N a t io n a l B a n k o f . .... -...............
FirRt N a t i o n a l ...- ...........................
C h ilt o n
‘*
.......................
F ir s t
* ‘
.......................
C o m m e r c ia l N a t io n a l.............
F ir s t
“
......................
F o n d dvi L a c * * ............... .
F ir s t
‘ ‘ ........................
G erm an
‘ 4 .........................
F ir s t
4 ‘ .......................
ct
<<

B row n .

t t

t t

t t

ft

< C

F ir s t
‘ 4 .......................
.......................
L a n g la d e
* ‘
C it iz e n s
‘ ‘ .......................
N a t io n a l B a n k o f .........................
F ir s t N a t io n a l................................
N a t io n a l G e r m a n A m e r ic a n .
F ir s t N a t io n a l.................................
S t e p h e n s o n N a t io n a l .......... --P e s h t ig o
‘4
...........
C itiz e n s
* {
..........
O c o n to
‘‘
.......
F ir s t
*4
...........
C it iz e n s
‘ 4
...........
C o m m e r c ia l
44
............
F ir s t
44
............
i i

11

ti

it

tt

it

it

t t

it

it

C it iz e n s
F ir s t

44
4‘

it,

t*

...........

...........

G e r m a n A m e r ic a n N a t io n a l.
F ir s t N a t i o n a l ...................... .......
tt

tt

t*

tt

tt

11

tt

tt

it

it

O ld
F ir s t

“
‘*

tt

.........

tt

tt

tt

.....................
....................

N a tio n a l M a n u fa c tu r e r s ...........




* I n d if f e r e n t

G r e e n B a y ................
t t

11

t t

C a lu m e t . ...

i t

C la r k . ..
FonddnL ac

t t

t t

R i p o n . .........................
<<
O r a n d o n ............
B e r l i n ............ .
P r in c e to n .. . . . . . . . . .
B la c k R iv e r F a lls
A n t is r o . ...............
t t

a n s a i i ............. ..
<t

M a r in e tte . . . . . . . . . . .
t

P e fih tiffo . . . . . . . . . . . .
O c o n to . . . . . . . . . . . . . .

t t

F o r e s t ...........
G reen L ak e

<i

<

t

<<
<<

t t

.Taokaon . .
L a n g la d e ...
L i n c o l n ........
M a n ito w o c .
M a ra th o n .
t t

M a r in e tte ..

t t
t t
i t

t t
t t
t t
t t

««

t t

i t

i t

Orontn

. .

t i

R h in e la n d e r ... . . . .
A p p le t o n .. . . . . . . . . . .

O n e i d a ..........
O u ta g a m ie .
t t

t t
t t
t t

(

€

t

t

e t

t t

t <
<<
<<

i

(

t

<

11

D a le .. . . . . . . . . .........
Kaukauna ..........
S e y m o u r .. . . . . . . . . . .
P ark F a lls ..........
P h i l l i p s .........................
S tev en s P o in t_
_
tt

S h a w a n o . . . . ..............
11

T ig e r t o n ... ..................
M e d f o r d .....................
Rib L a k e ...........
C lin to n v ille ...
M u nftwa....................
N e w L o n d o n .......
W m p a c a .................
W ftVflllW PM
M en a sh a . ......
N een a h . .......

*

t t

i t

t t

t

*
I t

t t

M e r r ill .. . ...................
M a n it o w o c .. . . . . . . . .

tt

t 4

e t

11

(

i t

t t

t t

11

W

t i

Y es
t 4
<t

t t

D e F e r e . . ...................
B r i l l i o n . .....................
C h i l t o n . . . . ..............
N e ills v ille ..
F o n d d u L a c ...........

No

t t

t t

P n r ta c 'P
t t

S h a w a n o ...
t t

<t
t t
t t

«*
t

<

i t

t t

t t

W aupaca...
t t

*
«t
t t
t *

t t

i t

t t

t t

t

<

W in n e b a g o

t t
t t

t t

t t

t t

t t

N
1 o V o te

69

NAMES AND LOCATION OF NATIONAL BANKS IN WISCONSIN
CONSIDERED FOR TRANSFER FROM THE NINTH TO
THE SEVENTH FEDERAL RESERVE DISTRICT.—Con.
Town.

Name of Bank.

City National..............
Commercial National.
Old
Citizens
‘*
First
“
Wood County **
American
*‘
FirBt
4‘
Total




Oshkosh........
<t

Winnebago

11

Grand Rapids.
i<

Wood Co..
11 •

11

Marshfield.
«i

61 Banks—1 Not Voting

I

County.

<<
<<

2 Indifferent

In favor Against
of Transfer Transfer
(No)
(Yes)
No
Yes

<<
<<
<<
<<
<t
c<

49 Yes

9 No

70

VOTES ON PROPOSITION TO TRANSFER CERTAIN COUNTIES OF WlS
CONSIN FROM NINTH DISTRICT TO SEVENTH DI8TRICT
Y es

No

0
2
4

0
0
4

Ashland...............
Calumet...............
Clark....................
Door....................
Florence...............
Forrest.................
Fond du Lac.......
Green Lake..........

2

2

1
0
0
1
5

1
0
0
1

2
0
1
0

0
0
1
0




Jackson................
Juneau.................
Langlade..............
Lincoln................
Manitowoc...........
Marathon............
Marinette.............
Marquette..........

2

2

1
1

0
1

2
3

2
3

0
0

0
0

2

T

o t a l ..............

If Ashland andiron
Counties are left
in N inth D is­
trict it would
stand..................

t e r ia l

N ot
V o t in g

0
0
0
0
0
0
0

2
2

0

0

0
0
0
0
1
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0

6
5

5
5

0

61

49

9

2
Oneida.................
Outagamie...........
Price....................
Portage.................
Shawano..............
Sheboygan...........
Taylor..................
Vilas....................
Waupaca.............
Washara...............
Winnebago..........
Wood........... ........

I mma­

2

N a m * of C ounty

2

1

1

6
2
2
3

6

0
0

0
1
0

5

5

2

59

1

2
2

49

1

7

Of the nine ( 9) Banks voting NO—four do so on account of investments
in Montana Mortgages; two (2) in Fond du Luc, one (1) in Lincoln, and
one (1) in Winnebago County.
W henever the restrictions to loans on real estate by National banks
have been modified it has always been Ithe policy to confine such loans to
the immediate neighborhood of the bank making the loans. It would seem
as if ithis reason for preferring to remain in the 9th District would have
little force with the Reserve Board when the real estate loans being made
are on property some 700 miles distant from the loaning bank.