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Z5M 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^ j j j 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 ......................... 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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.