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R K X F G R d sh o rth a n d L. h o l m k s repo rter R O O M , 3 3 2 S O U T H E R N BU ILD IN G W A S H I N G T O N . D. C. j HEARING BEFORE THE FEDERAL RESERVE BOARD Off BIHALF OF THE CITY OF_ LOUISVILLE, PETITIONING FOR A B E M C H FEDERAL RESERVE B M OF THE ST. LOUIS RESERVE'DISTRICT, j I fASHIIGTOI, D. 0., DECEMBER fcl, 1916 . •i i Present at the hearing were: Hon. Paul M. Warburg, Member of the Board, Presiding; Hon. Frederic A. Delano, Member of the Board; Hon. diaries S. Hamlin, Member of tiie Board; Hon. John. Skelton Williams, Comptroller of the Cur rency, Member of the Board; * ' -j Representing the City of Louis villa: s'".- Hon. Ollie S. James, United States Senator from Kentucky; Hon. Swagar Slierley, Member of the House of Repre sentatives from Kentucky; Hon. Embry L. Swearingen, President First national Bank, Louisville; Hon. John W. Barr, Jr., Director national Bank of Kentucky, Louisville; Hon. F. M. Gettys, Yioe-President Union National Bank, Louisville; Hon. H. 0. Johnson, President Seymour National Bank, Seymour; Hon. Percy H. Johnston, Yioe-President Citizens Na tional Bank, Louisville;"-' Hon. W. 0. Montgomery, Yioe-President First-Hardin Hational Bank.,.Elizabethtown. ] .1 REPRESENTATIVE SHEBLEY: Mr. Gh&irman, it I may be permit ted, it was not witn the idea so mticii of an open hearing, or V.i ■■ ' speech, making as it was that, growing out of the talk that I had had with the Board informally, some questions came up tsuck ing purely hanking matters with which I did not feel myself as■qualified to deal as hankers themselves. It was suggested that a meeting he arranged by the Board with certain represen tatives ...of the-St. Lotiis Bank present, and some of the Louis ville bankers also, in connection with Louisville*s applica tion for a branch Bank, and these gentlemen have come on in re sponse to that suggestion. I. do not know that it is necessary for me •to--en\aaerate the matters that we went over -at our former conference. • The proposition was simply this, that the situation that confronts Louisville is, to our mind, an intolerable one that no community could he expected to sit quiescent under, and car- : tainly one that, with all respect, the city of Louisville is not going to sit quiescent under, because it believes that as a result not only of the districting that was made, whereby -'-Kentucky was divided in half, the eastern part of the State -that in the old days used to be the pauper part of the State, and the government of which Louisville helped maintain through taxation, and which has now become one of the rich and growing sections, is absolutely denied to us through the arrangement that forced us to go to a, community that we never did any bank ing through in the old days, and we find that our customers are going to St. Louis by virtue of the better inducements that they could offer them under the system as it exists than the Louisville banks. It means, if it is to continue, we are to deal there and be bled to death, -or be compelled to put up a great deal of idle capital that is taken away from the ooaraanities that we serve in order to meet the advantages that are , by the existing arrangement 'under the law, given to the St. Louis banks. We believe that it was hardly to be expeoted that a Board whose interests, as reflected b}r its'personnel, were necessar ily more with St. Lords than with Louisville, should consider fully our situation; so that we wanted, to bring the matters di rectly here, and make the appeal here, and exhaust, at least, our resources with you gentlemen, before'considering other mat ters in relation to it. ■ And these gentlemen are here today to bear witness, as actual bankers, as to whs£t is occurring, and what will continue to occur, and the reasons why they have thought it is not only in the interests of Louisville, but in the interest of the sys tem, that we should have -a branch bank. I have understood, today that the Board has determined at its recent meeting that the time is not ripe for. branch banks, ana St. Louis lias wired that they acquiesce in that view on the part of the Board here. It m a y b e that I may be simply in the situation that the Member of the House was the other day, who was to speak on a point of order, and the Chair said, "I am pre pared to rule, but I will hear the gentlemanI" And of course we do not want to waste your time or ours under that condition. At the same time, the matter is as acute as the time I tried to present it to you before. I would be glad if the Board would hear these gentlemen. j THE GHAIRMAS, MR*. 1TJR8IJRG: lay I state first, that Gover nor Harding is exceedingly sorry that he is unable to be here today. He has contracted quite a severe cold, and is confined to his home. The next matter of regret is that I do not see anybody here representing the St. Louis bank. Governor Harding had arranged that some gsntlesaen might be here, but I do not think anyone has come. These other gentlemen here from St* horns are present with refersues to the Clayton matter and do not have any interest in this hearing. REPRSSE1TATIYE SHIRLEY: ' Mr. Chairman, we had a wire from Mr. Martin, and he expected to reach here at one o ’clock. His train may be here by this time. THE CHAIRMAN, MR. M l BURG: He may be here. We expected hiss to be present. REPRESENTATIVE SHERLEY: Mr. Chairman, perhaps it is fu- tile for us to take the matter up without somebody from St. Louis being present. That was the very idea of the meeting, that they might learn gust the situation-that confronts us, and that the matter might be discussed from all three angles, — the general view of the Reserve Board here, the St, Louis Banlc, and .Louisville, ^ THE GBSIRMAii, MR. WARBURG: That, of course, is not for ae to say, what your preference is, whether you desire to wait for Mr, Martinfs train, or whether yon want to proceed to present your case without his being present. 5 ': ■ ' REPRESSITATIYE SKERLEY: Well, Mr. Chairman, It seems to me, in order to get 'somewhere, I might say that we hare pre sented our brief to St. Louis. We have gotten no action out of St. Louis because thejr have constantly said the matter rested with you_gentlemen. Then, when we came here, the suggestion was made that the initiative mist come from St. Louis. And it was because of that, that I frankly said -I felt as though 1 had been playing 8pussy in the corner® for months, and it seemed to me we should come to a point where we.would know just who had the say in the matter and get a decision on it. own'initiative. I say that on mj Perhaps these gentlemen’may not agree with me. But, as I expressed very frankly to you, gentlemen, it seemed to me I m s just wasting your time and mine for weeks here in order to find out who had charge of the matter. THE CHAIRMM, ME.- WARBURG: But would we not be wasting sore pf your time now that you are here by not proceeding with the hearing? Would it not be 'better to wait to see whether Mr, ..Jlfartin arrives? MR. SWE1SIHG-1I: ville? May I speak for the gentlemen from Louis We do not believe it would be very satisfactory to have a hearing without having St. Louis fully represented. We also would like to have the pleasure of puseing the full Board, and v*e would be delighted to come back in January at any time the Board directed. THE CHAIRHM, MR. WJRBtERG: •Speaking for the Board, it would be entirely satisfactory to us. MR. SIEARI1GEI: -That would be better. We all have the - 1 l 6 Christmas spirit in our bones anyway, and everyone likes to be at home at this season, and we would rather come back in plenty of time, and have the St.,Louis men represented. THE CHAIRHAB, MR, WAB3URG: I am sure it is perfectly sat isfactory to us to fix a date that would suit you in January. (Discussion resulted as .to the time of arrival of Mr. Mar tin’s train.) THE GHAIEMAI, ME. WARBURG: state this for the Board: fhile w.e are waiting, let me You made a statement that the Board - had decided it was not time to open branches of the Reserve Banks ? , , REPRESENTATIV! SHERLEY: * I just heard that informally. I should be glad to hear the facts of the matter. THE CHAIEMAK, HR. WARBURG: I may state we have not reach ed any conclusion as .to that, and I may say frankly that the whole problem troubles us a great deal, because we cannot deal with Louisville alone without dealing with similar propositions other districts. There, is a question of administration in- volved there, and while we are certain that at the proper time these steps .are to be taken, it is a question whether the. pro per time is here. But we have not decided one way or the other, and so in coning here for this hearing you are not wasting your time. .*< REPRESENTATIYE SHERLEY: I was misled by a telegram I was shown from St, Louis, to the effect that the St. Louis Bank agreed with the Reserve Board that the tine was not ripe for the establishment of a branch bank. I just assumed from that . ? knowing that you gentlemen had been in conference last week, that there had been'some conclusion reached by the Board. I am very glad to know.it is not so.THE CHAIRMM, MR. WARBURG:. it is closed. Do not understand that, that It is not at all. MR. BEXiMO (Reading message just handed to Mm): train will arrive at two-fifteen. The It is due at one-five. It mist he in now. EEPRlSEB'TATIffiE SHERLEY: Mr. Chairman, it has been sug- gested, if you gentlemen have, as seems to be apparent, seise other gentlemen to hear on another matter, that we might re- • tire. That will probably take only a little while, and then if Mr. Martin appears, we can go on with this hearing this af ternoon. If he does not, we c9.i1 fix some time in January that would suit the Board. THE GH1IRMAI, MR, WARBURG; We could very likely go up- stairs and hear those two gentlemen, if you decide to wait here. REPRESENTATIYE SHERLEY: pi&ce. We would be glad to wait at either We do not want to disconmiode the Board. (thereupon a recess was taken, during which time Ir. Mar tin, representing the St. Louis Reserve Bank, appeared.) Shall we hear Louisville, first? Will the gentlemen from Louis ville tell us what they have to say first? ME* JOHI W. BABE, JR.! Mr. Chairman, and gentlemen: If we may, we should like to present this matter in a very infor mal way. I listened with much pleasure upstairs &p the way in wMo3a that <jiestion was presented, and at the same time we axe delighted that we nave waited until Mr. Martin arrive;!. manner "born lie is a Kentuckian. By the He lias been transferred to St. Louis, however, and we are delighted that he is here. I think it is only right that under the circumstances we should speak with the greatest frankness with regard to the situation, not discussing the law, of course, hut discussing the conditions which apply in-our particular case. Sometime in the early summer, we made an application,' that is to say, a large number of petitioning national banks in the State of Kentucky, a part of the Eighth Eegional Dis trict, and a number of banks tributary to Louisville located in the s outhern part of Indiana, asked for the establishment of a branch bank in Louisville, their theory being that the law was mandatory. With all due respect to you gentlemen, we fully recognize that the time is with you and also that the place is with you; >hat we take it that under the law, as enacted by the legisla tive body of the Government, it was intended that, branches should be established in due time and at the proper-places, low, the Situation in Louisville is this: le have a cos.“ sronity south of us and north, of us that has been doing business fox a great many‘years wi,th our city. -The course of trade and the course of banking has not been east and west, but north and south; and therefore the interchange of business has been with Chicago and with Sew York very largely, and not, as now, under the ruling of you gentlemen, with St* Lord a and Cleveland. Our 9 State, as you know, is divided into -two parts, the eastern part ■being in- the Cleveland portion, and the western part "being in the St.. Louis district. At the present 'time we feel this — and I am going to speak with absolute frankness, so that there aay be no misunder standing with regard to it. Many of the gentlemen in St. Louis are intimate personal friends of ours. We look on them with the greatest confidence. 1 j But there is, gentlemen, very frankly, i speaking, irreconcilable conflict of interests. there is to it. That1s all That *s what we seek for yon to set aside. I •say it to you with the greatest respect and confidence, because the gentlemen in charge of the St. Louis Bank are friends of ours. They have been aost courteous to us in many ways* their interests are different, separate and distinct. But low, it is natural, in a way, that advantage should be taken of this situation, and, in another way, I do not’think the law contem plates that undue advantage should be given to a particular 2Locality over any other lacality which may be within, the region. To illustrate this, — and it’s no personal grievance, it is simply a statement of fact, — of the nine directors i-n the v . Federal Reserve Bank at St. Louis, five of them are residents of St. Louis. i low, that majr be entirely proper, fend I am not deny ing that it is proper, but it shows that we have very little voice in the conduct of that business. low, it is not a matter of pride wl tiros, but it is a matter to be considered. We feel it would be a.benefit to that Bank, if we should come in more intimate contact with them, # j To illustrate: If paper is to -be passed on by the Bank in St. Louis, it!s quite essential, in our opinion, at least, that someone who is thoroughly-familiar with the paper which is considered for discount — and sose of it is of a peculiar na ture, namely, what is known as whiskey paper and tobacco paper,, which is largely restricted to Louisville and Cincinnati, I may say, and is not so well known to those other States.. Therefore, it is proper that someone in touoh with the situation should aid and advise in the purchase, or rather the settlement, o£ the question,' as to whether it is proper paper for discount or not* I pass that by simply as the conditions which exist, and with absolutely ho reflection on the individuals. It is simply a condition, and not at all personal. How, showing how there is an irreconcilable conflict, for that’s what it is, we ascertained that a large amount of busi ness in the form of bank deposits, not, only national bank de posits, but also State bank deposits and trust companies, axe Jseing diverted to St.. Louis. It’s natural that under the cir cumstances from the St. Louis standpoint they should he diverted there, low, they are not diverted to the Federal Reserve Bank there, but they are diverted to banks in St. Louis. The result of it is that the deposits in Louisville are not growing as they should, if we had a branch. The deposits are growing in St. Louis as they would not grow, if reversed. low, to illustrate that: We are required to keep larger balances in St. Louis with banks, as well as with the Federal Reserve Bank, than we feel is necessary. The result of that is 11 that that money is-idle; we lose tile, benefit of it; and fur thermore, gentlemen,' the position is gust tMs, that the plea has been made, and I say it again with no disrespect' to our friends there, it is very natural that when persons are told throughout the State, as they have been, that if you send your paper over to St. Louis, we know- every one there in the Bank, ana-they Know us, and we can have your paper explained, and all that, why you will likely get accommodations. low, of course, the result of that, and I speak purely from the mterial stand point, is that bank deposits throughout this territory, which we think should belong to a branch bank, are now going, and > will continue to go, to St. Louis, whereas it isn*t customary, according to the tradition of the past, that those deposits' should go to St. Louis. The same thing might apply if the Bank were located in Cincinnati, but nevertheless the*- are going then i in our opinion. We feel that that is detrimental to the State, - not only to the city, but also to the State. low, that'is the condition.' You can readily see that if checks- axe drawn on Louisville and then sent over to St. Louis, and then returned to Louisville, why the result of it is there is a delay of two days, whereas if a branch-were located in Louisville — not an agency, gentlemen, but if a branch were lo cated in Louisville — we feel that the Federal Bank would be ■ popularized; we feel that a very great deal of business would be done with the Bank which is’not now done with the Bank, and con cerning which some of our friends have asked us why it is net done with the Bank in St. Louis, and it is proper that that qaes 13 i tion should be asked. The reason It has not been done with St. Louis is. that that region does not feel at home in St. Louis. They feel they know the people in our region; they feel they can get on a trolley car and go to- Louisville in the morning, do their shopping, arrange to have paper discounted, if need' be, and get bade the same evening, whereas it is impossible to do that with the distance to St. Louis. The result of it is that a good many bankers in our State, which we f.eel should be tributary to this branch, now borrow their money in lew York » and Chicago and other banks, instead of patronizing, as we feel they should do, the Federal Reserve Banks.' We simply come here; we are members of the federal reserve system; we think it is a good law; we think that from time to * time it needs facts to be laid before you gentlemen, so that y.ou might rectify unintentional hardships which axe n:ow placed upon tis. I shall not go into the arguments with regard to distance, with regard to convenience, with regard to a great many other •things, which were presented to the Bank in St. Louis, on which we- had the most respectful attention. Those briefs are before you, gentlemen; we simply wish to lay before you, — and I hope that after we have done so these other gentlemen will have some remarks, — we have laid before you, and we say it with all seriousness and with all'^eamestness,'that we feel that under, the circumstances we are being unfortunately, and, in a way , unjustly discriminated against. Digitized for 'FRASER Tiese gentlemen have ably stated the oa.se. Mr, Sherley 1? i lias told you about it, and Senator James, and Senator Beckham, — they feel it is- a matter, not for Louisville, bat that the whole State at large is concerned. How, in that connection, may we -disabuse your minds of the question that we are asking for a re-districting of a State. We are not asking for that in any way.. The sole question is, as we wish to present to you today, that we feel that as the law is mandatory for the location of branch Banks, that a Bc,nk should he located in Louisville* low, the first question that was presented to us in regard to the location Of a -branch bank was, — Will it be a drag? Will it pay, or not? Will it be a detriment to the Bank in St. Louis?' After careful consideration of that, gentlemen, we came to the conclusion that it was onl]^ fair to do as Indianapolis has done, namely, to give a guarantee, which the banks of Louis ville, either collectively or individually, or any other way that is satisfactory to your Board, will make, namely, that If a branch Bank be located in Louisville, we will guarantee that it will be self-sustaining; and more than that, gentlemen, we feel, that we cannot only make it self-sustaining, but we feel that it will be a, source of benefit to the parent bank, that being a child to the parent bank at St. Louis. In other words, we feel, that we can, in that locality, popularize the Federal Reserve Act. We feel that we c a n 'be .self-sustaining where we are not ■ self-sustaining now. -We wi-S-1 bear the burden of it if we are not self-sustaining, as we confidently consider we will be. feel there will be an overplus, w?aich we will gladly, transfer We to the Bank in St . Louis* These other gentlemen are more technical bankers than I am* I am an officer of a bank, and therefore 'have never gone through the routine and detail* And here are ay friends who know well the details of hanking, Mr. Swearingen and Mr. Gettys, Mr. Percy H. -Johnson, and all these other gentlemen, who can answer any question in regard to technical Blatters, which I carmot. wish to lay this before you. I I felt some■embarrassment about it, I feared you sight feel that we were aggrieved in some way. We are not aggrieved, except that we feel, and we feel most ear nestly, that we are suffering materially, — suffering materially. the entire State is And the Federal Reserve Board at St. Louis,- I can repeat, and especially Mr. Martin personally, has helped us out of very serious trouble, which I sincerely appre ciate, Nevertheless, we feel that as the law provides for a branch, and no one will question the propriety of the location, it is only a question of the time, and the reason we feel that immediate action is necessary, is because we see in detail the loss that results from the present situation. I thank you very much. THE CHAIRMM, MR. WARBURG: sire to be heard now? Do any of the other bankers de * MR. F. S. GITTTSri'Mr* Chairman, I will be brief, I want to say first, I doubt ifA4 can answer;any technical banking cpes'4 tion. I have been a manufacturer until recent years.- The argu ments made some ninety days ago before the St. Louis Board nave been printed, and briefs have been sent you. If they have"been misplaced, we can supply others. Mr. Barr has gone over several phases of the matter, which I will endeavor not to touch on. Tour first interest, of course, is not so m e n with hardships that are "being, inflicted on cer tain cities or sections — .the weather, the tariff, and all en ter in to a certain extent — but your first and greatest inter est is in the success of this great system. Sow, to my mind there is a "bigger question than the mere lack of representation that Louisville might have on that Board, I think that we can get a patient hearing. Certainly we have had every possible courtesy extended to us by Mr. Martin, Gov ernor Wells, and liis associates. I believe we could borrow all the money we wanted there without any trouble at all, and with out being inconvenianced. However, I consider that there is a still bigger question in this matter than the mere hardship thafc is being worked on Louisville. We are prepared to make some sacrifices for the success” of this systen:. ested in it. We are deeply inter We feel we would not be patriots if we were not in terested i n :the success of this system. Sow, the question I re- ■ fer to is the fact that an- important unit of this system is. not going ahead. The St. Louis Bank is not performing the functions for which it was organized. loir, thatocondition is due to an utter lack of sympathy be tween our territory and the St, Louis territory, and I am not going to any great length about that. I will simply touch a few., points. Is Mr. Barr has said, these gentlemen are our friends. We wine and dine with, thesi. We enjoy tlisir society* They are as gallant a set of'gentlemen as ever “scuttled a ship”, fe believe that until these twelve regional banks are all maintain ing their constituents in close sympathy with them, the full benefits of the system can never be extended to the people. * low, here is this district lo. 8. important. It is certainly very We need not wait until the storm breaks before we prepare for the need of this Bank; and-we all recognize the \ fact that in these abnormal times the Bank has not had'an op portunity to demonstrate what it could, do. We have to make al lowance fox that, and we feel that just as the mere fact that we had a Currency Association in Louisville, well organized, the machinery all ready to start up oh August 1, 1914, and that we met a situation there, that it is important that we get this district' Ho. % synchronous all'the way through. low, these prejudices exist. We are not bad children, le feel that the banks of Louisville should be absolved from such .„,a little, narrow unpatriotic position as that. reasons for discontent. We have good We were disappointed when w e 'did not get one of the Federal banks. You have heard all about that, le are disappointed, and are 'still grievously disappointed over the districting; but that1s another-matter. le have been dis appointed and aggrieved oyer the attitude of seise of the St. Louis banks. Before the ink was. dry on that great Act, soae of them had emissaries in the field soliciting business, reflect ing on the integrity of the Board that was to be appointed and to be elected by the member Ijanfcs by saying, "You must have a 17 friend at Court when you send your p_aper up. somebody who can properly represent you.n You must have How, I ion*t mean to say that the lieads of those Institutions authorized any such statements' as that, but I do know that this solicitation went on after their attention had been.called to it; and I also know, and I want to pay tribute to one banker in St. Louis, who sent letters out protesting against such methods, which were stirring up feeling in -iOiir, territory, and stated very positive ly that nothing could be done by any St. Louis banks that could possibly note be done by any Louisville banks. We believe that these prejudices will eventually be broken down, but can we afford to wait for the natural course of - things? We have got to take human nature as it exists. There is absolute bitterness, outspoken bitterness, among some of our country banks against the St. Louis Bank, and yet, they all say, we know, that they have every possible courteous treatment from Mr. Martin and his associates. There is indifference and ^prejudice in our own minds against the proposition. low, .we believe that can be broken down quickly, — and we do not know when some financial storm will break over this coun try — by the establishment of a branch at Louisville at the earliest possible time. We can assure you results. said'all that we can saj^. as to the expense. We have We will do in sixty days under those conditions what it will take six years to do in the natural normal’course of events. These preju dices will all disappear in time, but we are human beings and it will .take a longer time than thisunit, one-fourth of this 18 ■ system, can afford to wait, in my opinion, ■ •Of course, as'has been stated, we cannot hope for those gentlemen — those five gentlemen, living over there, to di vorce themselves entirely from the St* Louis interests. would be unnatural to expect it*. We have felt at times a good deal like"the old .darkey who had caught a catfish. wiggling and trying to get away. It He was The darkey with his knife up raised said, ’’Wha’ foil you tryin1 to wiggle, you catfish? I *se not gwine t* do anything wit* you except- t 1 clean yof out, an1 eat you!® We have felt at times that after we were’’cleaned out and eaten "we would have a very sympathetic hearing over there. - low, my last word is to say that these gentlemen are all charming, delightful.friends of ours personal^, hut when it comes down to a business proposition, they are not thinking of our.troubles at all. le have certain rights over there, and we would like to know where we stand. It came oas'k to us that our petition had been passed to the Federal Board. When Mr. Sherley, flushed with victory, handed me some telegrams, he said the Board had nothing to do with it, that it was back to St. Louis, There is a game of cards called "passing the buck.” are not children. How, we We do not want to bore two sets of gentlemen. We will bore the St. Louis Board or we will bore you, but we would like to know which we should present our case before, and i the branch Bank is wait in g>:and needed there, without waiting for this storm to break, which will come some day. We know that you gentlemen will be actuated by patriotic j motives, and I. want to thank you and say in conclusion, if you have any technical questions, don11 ask there of me! THE GHAIRMM, MR.. WARBURG: Let us hear about those tech nical questions* SENATOR .JAMES; We axe "Passing the brick” again? REPRESENTATIVE SHIRLEY: Some question came up by Mr. D.elano as to whether there has been an actual guarantee of ex penses by the branch bank. The gentlemen are here to bear witness; they are prepared to do it, and not to limit that amount. Sr. Delano seemed to be of the impression that they would simply create enough business to make- earnings sufficient to pay some twenty odd thousand dollars, but that the actual cost was not guaranteed. I think I am authorized to say these gentlemen 'are prepared to make whatever guaranty is necessary* MR. BARR: Whatever guaranty is necessary will be forth coming, REPRESENTATIVE SHERLET: The other proposition was this: The statement was made they did not see hOF it was that Louis ville was at a disadvantage there, against St. Louis. I stated then I was not in position to go into the detail of it as I understand it, gentlemen, and amplify it. It results simply that through their correspondents they have a delay of a couple of days that St. Louis would'not have. In order to prevent the resulting loss.of interest, they are required to assure their customers that they will be credited immediately upon -sji.3 deposit, and in order to make that good they must carry in St. Louis a volume of money. That results in that much money being taken away from them to be used for the service of their customers, low, if that is not clear, why, I hope some of these gentlemen will amplify it. That was one of the proposi tions. Some gentleman on the Board made the statement that when you got all of your reserves in under the law, you could de** monstrate to the bankers of Louis ville that they would be as well off as St. Louis. X replied, for once, that we were from Missouri, and we would like to be "shown® about that, and if you could convince these bankers, I was through* I want to add one word. There is a fundamental thing in this matter deeper than all the claims of Louisville or any other section. I realize you gentlemen are concerning, your« selves with what you will have to do elsewhere in case you -give us this branch Bank at Louisville* I may answer that it is very little satisfaction to Louisville to be told that her rights cannot be granted because it would involve somebody else, somewhere else*. I want to express, and I think it will be borne out by my colleagues, those of us who have been in Congress, know why this>:iaw came to be enacted, and know that it could not have been enacted except by the positive repeated assurances made on the floor, made in caucus, generally, we were decentralizing the money power of America, that Those of 31 . . us wit© had studied the question realized that it was not pro.per to accept at its face value any proposition that looks to a denial of that basic purpose in the creation of the Federal Reserve' law, I. think the debates themselves will show that Mr. Glass, who had more than any other one man to do with put** ting this law on the statute book, stated that it was the ex pectation of the authors of the bill that most of the business of this system would be done through these branch banks. The law was written, as plain as it was possible for a human being to write it. It did not say, "you may.11 It did not say tfwe hope you shall," or ’’hope you will"; but said "You shall es tablish branch banks.w low, of course, that, of necessity, leaves a discreation as to time and place. It does not leave an arbitrary discre tion as to whether or not the branch banks shall be established IE. WILLIAMS: When we had a hearing in Indianapolis, the ’ ""-'■'Question was asked Louisville, "fill you not be satisfied with, a. branch bank?” ME. BIER: Unquestionably; and the understanding all through the consideration of this bill, from the time of its introduction until it became law, was that there to be this local control by the different sections of the country, low, I called attention the other day to the suggestion of Mr. Miller when he sopke about the fact that if there had been a less number of banks created, it would have been per- haps easier to establish branches; that whatever might be tlie merits — and I did not profess to put my judgment against M s as a banker — whatever might be the merits of centralization, neither . M s Congress nor any other Congress is going ever to permit more of a centralization by reducing tlie number of these reserves; and sooner or later, if the feeling that is being suppressed all over this country, touching various branches does not find an outlet, tlie lid is coxaing off as to tlie whole business, low, we had an illustration of tliat down at tie House tlie otlier day* ly. committee abolished in tlie bill that it reported tlie Baltimore sub-treasury, and Baltimore came over en masse to wait upon the Committee to protest, and finally went out on the floor and organised enough votes to upset the Canaaittee, and the Gomaittee on Appropriations. The thing got in more or less of a row* The Committee of the Whole proceeded to abolish the •Boston sub-1reasury, and I believe one or 'two others, and a .mm'oBx of speech es there were made that it will repay reading, not for the information they give, but for what lies back in the minds of the men who are making, them. Just as surely as I am talking'here, jast as surely the Congress is mot going to^sit content to see any great cen tralization built up at the.expense of other cities by the ma chinery of Law. Communities are not sensitive over the suc cess of rival communities when that success is earned in a fair 23* field of competition, tout they will not sit content, and ought not, to see that success earned by virtue of law that works to the discredit of one coaasanity and for the benefit of the other, How,- as you gentlemen know, I speak frankly. There is not / any use of mincing words. You are not going to get cooperation in the fullsense of the term on the part, of the territory tri butary to Louisville aslong as the situation exists that does exist now in regard to St. Louis, If you want that part' of the territory to help build up the St. Louis Bank, you have got to convince it that It’s not going to be' discriminated against. * There is many a banker today that is going to Chicago and go ing to lew York, and will continue to go to Chicago and lewJ York, for his accomodation, and will not go to St. Louis; ana [ St. Louis is limiting!: and will continue to limit, until all parts of the system are made to believe that they are going to be on terns of equality* Then, a branch Bank cannot succeed in Louisville without its helping the St. Louis Bank* If it does succeed, .it is simply that such benefit to the whole system. If it fails, it means, as to the guaranty that these men put up, that they are c that much out of pocket, so that their inducement is to make it ■■ succeed, and by succeeding to help the St. Louis system* le have been as patient as men could be. fe are not simply complaining out of pique over not having been chosen as a re serve city,, but we have seen our State cut in half; we have seen ; every natural law of trad© upset; an<& we see now our banks be-, ing robbed by a direct propaganda, and if we sat silent we. would deserve just what we get, being bled to de&$ii&. MR.- SWEARIIGEN: Mr. Johnston is our technical banker, and he m i l be the last to speak for Louisville, THE C HAIHMM, MR. WARBURG: We will be glad to near Mr. Johnston* HR. PERCY H:* JOHISTOI: Board: Me. Chairman, a.nd members of the Hr* Swearingen unduly flatters 'me* Iothin<|that we may say in this conversation, or bearing, do we want to be construed that we do not believe that this Federal Reserve Act is a great piece of constructive legislation* We want you also to feel and believe that we have entire confidence in your Board, in its loyalty and in its administration of tiiis law. le find our** selves in the peculiar position of being caught between two .mill stones-, and before we get ground to death,' we want to crawl out. And that*s why we are here. You gentlemen doubtless have received a copy of the brief' we filed with the Federal Reserve Bank in St* Eouis. More than likely most of you have not had time 'to go over it, and if you have, if you are like the rest of us, you have:-probably forgotten it* I would like you to bear with me while ,1 read one or two paragraphs from the brief of remarks that I make at that conference, ‘IBSBB&S:, tlie question ®f the establishment of branch, tanks ig' one ®f broad general policy, and this Board has beelx giving the quest ien, of the establish ment of a branch bank in this district its careful consideration, and. WHEBBiS, at the recent conference ©f federal Re serve Agents the opinion was egress,ei. that braaeh.es were not a@ei.ed at the present'time and, therefore, should not be establish®!, and WHESEAS, at the recent conference qf Governors the opinion was alsd expressed that branches were not needed at the present time and that all the needs of member banks could be s.d#<juately cared for by agencies and that, therefore, at the present time branches should not be established, and SKSEEA^, the experience of the federal Beserve Bank ©f St., iouis in Memphis has been that the re discounts of member banks located in that city can be passed on so promptly as to give entire satis faction to member banks and that,, through an agency» . the present needs of member banks can b© adequately cared for, and IHSBBIS., a conference has been eallet on the subject ©£ establishing a branehbaiifc.at Louisville, HlEEf.01®, BE IE BESQLYEB, that the Chairman of this Board b© appointed t® represent this bank at that,conference'and that he be ins tract eel to present to the conference, as the jndgaent of the members of this Soard, that, at the present tin©., conditions do not warrant the establishment q £ a branch bank in this distriet, though final action on the proposal be postponed until after a report has been received from the said cQiiferenc©,51 “GEBriLEMEHf:Mr. Barr and lir. Gettys have fully set forth, the purpose of the request'for this hearing and in a general way, what we want and a.sk is well covered by their remarks. However, it has occurred to me that it would be well to set forth the wonderful development that is taking place in the Eastern part of Kentucky.. In the mountains of Eastern Eentucky, scientists have said is contained one-fourth of the world1s visible coal supply, which at the present normal rate ©f consumption, they estimate would last the world for five hundred years to ©ome* Until recently, this marvelous deposit of un told mineral wealth, was practically untouched. Bur.lag the past five years we lave seen striking e v i dence of the imaense possibilities of this section of our State. During this brief period of five years, various,railroads have spent over one hundred mil lions @£ dollars building lines entering these vast fields and during the same period of time, large coal companies have expended.something like seventyfive millions of dollars in the preparation for operation - and still this great section of mineral wealth is in Its infancy of development. With the future outstretched before us, m i with prospect and possibility that this great sec tion of our state is destined to outrival the famous.Pittsburg district, small wonder is it that Louisville and its associated banks should feel keenly the division of our State and the un natural banking and trade alignments that have and will result therefrom. In Mr. Sarr*s statement, Exhibit lo. 8, it has been pointed out that the formation of a Branch St. Louis Federal Reserve lank in Louisville, including the eighty-five basks located in the territory ws ask to be allotted, would give the branch bank a capitalization of §5Q2,0O6 and deposits of ,'§8,072.191. It is further shown in Exhibit Ho. 11-A that if the branch was operated under 1 working" agreement with our local Clearing louse Association, that the expense for its maintenance and operation would be most reasonable. Under Exhibit lo. 11-A and Ho. 11-B, it is esti mated that the'branch would not only he self sustain ing, but that it coaid and would earn dividends of &% on the apportioned -stock with a reasonable likeli hood of something in addition. $hese statements and exhibits we are now prepared to discuss with you and we shall be pleased to have any of you..: gentlemen question us as to our calcula tions;- conclusions and reasons therefor. It esrtainly was not the intention of the framers of the Seders! Reserve Act to give undue advantage to the member banks located in the federal Eeserve Cities. The faets are, however, that in order to put themselves on an equal basis with the national Banks of St. 3iouis, so far as their country correspondents' are concerned * the Sational Banks of Louisyllle are now compelled to keep large excess reserves, without interest, with the federal Eeserve lank of st* Eouis, for the purpose of obtaining immediate credit for the drafts, &r&ra on the jjcmisTille banks in favor of the federal Eeserve Bank. With a branch at Louisville, these excess reserves would- be released to the Louisville banks. le now desir© to take up with you the' present method .of cheek collection "by the. Federal Eeserve Bank, and to. show you how it causes the Louisville member* banks to have outstanding daily in transit many, many thousands of dollars in items that to a great extent would be corrected by the establishment of a branch bank in our .city, which would eliminate largely the loss of interest on these items in transit." Therefore,.now speaking directly to the operation of the Bank in St. Louis and our own bank* a statement lias been made by Mr. Barr and ifc. Gettys that representation has been made that the memb&r of banks in St. Louis were in better position to serve banks located within our natural territory, Kentucky, than we in Louisville. To offset those representations, and to stem the tide of business being diverted to St, Louis from Louisville, the national banks in Louisville have made arrange ments with the Federal Reserve Bank in St. Louis to pay all customers receipts and charge to our account, therefore caus ing the national banks of Louisville alone to carry an excess of regular reserves in order to meet the competition of St. Louis. Similar conditions exist in the Cleveland district. Banks that never before dreamed of doing business with St. Louis or Cleveland are now doing business freely with them, and in the .-eastern part of our State we had no business whatever until this} -year, and last year the banks had loaned large sums in that territory* The same condition exists in the western territory, le have practically no loans from the western part of our State and southern Indiana, We have done-all we could to offset it, and the only solution weosee for It is- the establishment of a branch Bank in Louisville,, low, we believe that as business men if we were to make this proposition to any big wholesale house of manufacture anywhere in the United States, -"If you will open a branch in Louisville, we will guarantee you against any possible out come, n they would take the chance. That is pretty good busi-, ness we feel, and that's what we have come "before you to ask, that we he .not further punished* We know that you have a very trying position to please everyone, and we realize that in the division of all this ter ritory you exercised your best judgment, and the relief that we ask for now is something that we cannot help hut believe will he of benefit .to the parent Bank* le are shareholders in this lank, and we are speaking to you as shareholders in that Bank iniasking for the establishment of a branch in Louisville. We will he very glad to have any questions asked us, and we will endeavor to answer them. TEE 0HAIRMM, MR. IMBURGt fore we ask any questions? Shall we hear Mr. Martin be We have heard from Louisville with great deal of sympathy, and are now ready to hear from Mr. Martin. ME. HAB.TIH, BEPRESEHTIJfGr ST. LOUIS: I presume, first, before I undertake to discuss any of the statements sad© here, that 1 should read this resolution passed by our Board of Directors yesterday, explaining why I am here, and giving me authority to be here:. IQ, In ’uregard to this motion, I would like to state it was unanimously carried, SEIATOR .JAMES: Mr. Finley, of course, voting nho#. And all of the St. -Louis banks voting Hayenl MR. MARTI!: Tiiey did. low, Governor, May I speak a little further in regard to this'satter? THE CHAIRHAH, ME WARBURG: MR. MAHTIS (continuing): Proceed. Hot only the St. Louis^bank ers, but the representatives from Little Hook, seconded the motion, Ihe gentleman from E vansville voted "ayeB. In other words, the representatives on that Board, voted aayefl!. low, bow did that Board get elected? Mr. Hill was elec- •fced by banks in Group, by banks having a capitalization ex ceeding #100,000. How was M r . :loods elected? I am taking up these- St. Louis men, and gentlemen, in this regard please understand that I am tryihg to come to you as the representative of District Ho. 8, as far as I know how. .I am coming to you in that position, and I am attempting to present facts to you as disclosed by an examination of the district.: I be lieve none of you gentlemen will sit here and say that you have not got absolutely the fairest treatment, that could possibly be given in every request you have made through me on the St. Sbuis Bank. L, GETTYS: If it is not true, I want to know it. We have all stated that. MR. MARTIH (Continuing): I come to you now, and if your statements about St, Louie are right, let us know it. I want to know it as much as you gentlemen do. I take it, want to know it, If it is wrong, you low, let us investigate the sit uation. Is I say, Mr. Hill was elected by the bankers in Group..1, the banks having a capital in excess of $100,000. was elected by banks in Group 3, Mr. Woods, low, they are banks having a capital of less than |l00,000, and in excess of $50,000-. Those banks, some of them, in Union City, Tennessee, some in Kentucky, some in Indiana, voted for Mr. Wood and elected him. They did not have to do it* They did it, low, Mr. Finley, as you gentlemen know, was elected by the banks in Group' 3* Mr. Biggs was elected b$ banks in Group 1. in St. Louis, is a G£oup 1 man. Mr. Biggs, living Now, some of these gentlemen on this Board could have been elected by otlier groups, had they seen fit. Recently, Group 3 has elected a Group 3 man, Me. Ziegler, from Albien, Illinois, to represent it on the Board. Well, so much for that. , It seems to me that the banks in the district, and I am trying to give you this fairly, gentlemen, I have no partner ship in this matter, I am trying to get myself in an attitude of an impartial investigator of the situation. That*® what I have tried to do ever since I have had this position. low, the statement has been made here several times, and I have heard, it, that the St. Lords Banks are taking business away from the Louisville "banks, that they are taking the "business away from the Louisville "banks by unfair methods. And if that thing is true, we ought to know it. SSSATORDBEOH1M: you. Mr. Martin, I do not like to interrupt I have met in Kentucky representatives of St. Louis banks that were undertaking to do that in the "banks in small towns of the state. , MR. MiffiTIU (Continuing): right now. I am going to speak of that I am familiar with that. It is perfectly true* Louisville is a competitor with St. Louis to a certain extent. You gentlemen have your traveling representatives; lew York has] St, Louis has; all the other cities have. And I have not a doubt in the enthusiasm of getting "business that they have attempted to get business that want to Louisville, They al ways have. For fifty years they have been trying to take these accounts away from Louisville. tried it here. statements aade. I have not a doubt they The Senator has seen the®, and has heard the That proposition is tame. N.ow, to see what effect that has had, I have tried to investigate the situation and see what has occurred, I took the Comptroller's last report, in which there is a division where balances are kept, and I find this situation:: Taking 53 member banks in Kentucky, the territory tributary to Louis ville, I find from that that these banks have on deposit a total in lew York, Chicago, and St. Louis, of ^503,000.00, They have with otlier reserve agents, tliat is like Pittsburgh, Phila delphia, Cleveland, etc., $1,455,000.00.* ’low in St. Louis at tliat time these 59 banks, not counting Louisville -- these 59 hanks, had on deposit £98.3.15,00, and there were only 13 that had depostis there, and the total deposits of all these 59 hanks tributary to Louisville were just f96,000.00. On the other hand, 45 of those hanks had deposits at Louisville of over a million, showing that — I do not care what St. Louis has done; I do not care what its representatives have said,— Louisville has not suffered, according to this record. EEPRESEirTATIYE SHIRLEY: Will you permit an inquiry right there? HR. MART13: Sure. REPRESENTATIYE SHIRLEY: Is it not due largely to the fact that Louisville has met them "by putting sufficient Mieposite in St. Louis so that it could treat their accounts :the same as the St. Louis people? And is not the harm done to Louisville not simply in losing accounts, hut having to lose the use of six hundred odd thousand dollars worth of capital? MR. MARTIS: I willvjuaswer that Mr. Sheriey. I think that can be answered; and right there I hope that the fairness of the St. Louis Bank will he testified to. The very minute that you gentlemen called it to tlie attention of the St. Louis 34* ■/ - Bank that you were having touble because checks on you could not go the same way as checks on St. Louis , arrangement was made. low you cannot call that an excess balance, gentlemen; it is not that; “Ton cannot ©-alllwhat you hold there above your required reserve an excess' balance, becuase our books show it is practically all-used every day. Really you have an advan tage over the St. Louis banks in that, Mr. Swearingen, and I will tell you why.Some of your banks are using it. ■doing thisr You are The St. Louis Bank,-- and I am not holding a brief for the St. Louis Bank; I am just trying to show you, » and if you gentlemen see any merit in the plan, why get on to it and use It! The St. Louis Bank has to keep money in its vaults on which it receives no interest, to take up these checks against its account. do? What do some of y ou gentlemen - Evansville is doing it, and ons other city — I believe. Memphis, There is an arrangement with our bank where by -^if you choose you may keep money in St. Louis and get two percent on daily balances. If you want us to we will notify that bank so they can have a deposit over to us to take care of your withdrawal at the time it is needed. Therefore, •'St * Louis banks can get two percent interest right up to the second it is needed on t-K@ir balances,' I,ow let me tell you something else about that. The Evansville banks have got the thing down to a fine point. Some of the Louisville banks have, too* ■i o5 « MR. S1EARIIGEN:A May I interrupt you? le mi girt get two per cent on that,, but we might get sis per oent in Louisville. MR MARTI!!: But you would have to take oars of your checks, MR.. SWEARINGEN; Would be one day late. MR. -MARTINr Would be one day late. You could not bare (e'o) it out at six percent ana be meeting $50,000,00 worth, of checks at the same time. low you are getting two per oent interest on it, and also meeting your checks when they fall due. It seems to me, gentlemen, that if I were in Louisville and could work the St. Louis banks that way, I oould make a little some thing* MR. JOHNSTON: HR. MARTII* I would be much obliged to you. Are you not doing it? MR. JOHNSTON: MR SHEARING®i: I cannot tell you. Mr. Martin, your statistics there as to deposits in St. Louis banks are confined simply to mmmber banks in Kentucky. The petition does not come simply from member banks but (from the States banks and trust companies in the State of Kentucky. How the oases that came under my observation have been not only member banks but State banks in Kentucky that have opened accounts in St. Louis, because they were told by St, Louis, "le can help you in time of stress.® fhey have been induced to close accounts 'in Louisville and open accounts in St. i,ouis. Until those statistics are completed it does not seem to me they are of any great value, because you confine yotirselves to the .smallest percentage of the 'banks and trust companies in.the State. MR. METIS; ures. I would have been glad to get the other fig These are all that were available to work that out. I cannot understand that though, Mr. Swearingen, — * How can a State bank in Kentucky say that St.aiLcrais can do more fox it than Louisville? MR. SHARIGEI: In case of stress the St. Louis Bank can * provide them with money. We in Louisville have to go corres pond' with you and make that arrangement. We are behind time, at least that is emphasized by the St. Louis banks, and it is effective in getting accounts. THE CHAIR1AI, ICR. WARBURG: So member bank can rediscount ■ for a State bank without .the approval of the bank, nor as agent. MR. SWAKIIGEI: For as agent, — own paper, and lend the bank money. but they take out their This is a custom, and you cannot divide your customers up and say, ,fle cannot lend to State banks at all,1* Anyway St. Louis is using that as an argument, and getting deposits. I understand the point, but I do not understand how you could enforce it. If ire have a bank wanting to borrow money, and we are willing to lend, and do not have it here, should we not be able to borrow from the Federal bank in St, Louis? THE CHAIRMAN, MR WARBURG; If you would want to rediscount ^exy heavily, you would keep the door open for yourselves, and not be too anxious to use your rediscount power for all the State banks. It is an argument that ca.n be used both ways just now. MR- SIEAEIIGII: 1- great many State banks, Mr. Chairman, do not hold assets available for discount, even if members of the system, and they may borrow on absolutely safe security and effect safe loans, but the only way of getting help would be through some member banks, has not those statistics. small banks in Louisville. I am sorry indeed Mr. Martin Take our bank, which is one of the Our national bank deposits are about one-fifth of the banks deposits that' we have,- about one-fourth, I thinkmand the rest of them are State banks. A few days ago a case came under my observation where we had two banks in Jefferson, about eighteen miles away, that closed all their accounts in Louisville, though remaining with us, and opened accounts in St, Louis. That arguement was effect i v e there, and it is being used all over the State and every'Where where St. Louis comes in competition with Louisville. MR* MARTII: It seems to me, Mr. Swearingen, Louisville can counteract that argument, MR. JOMS'TOIT: MR. S1EAEDIGM: That is what we are trying to do now. Tgir suggest by....keeping money in St. Louis banks that would be. of advantage. I do not know today what the deposits of any of these banks In Louisville would actually be if all the checks drawn on them today were charged against the deposits.,: .’ ..rr; cf 1 Some checks are out a few days and some two weeks. It would be brought down, I expect, to thirty or forty percent, and we axe cut down to that extent by these checks cashed In St. Louis, those checks come in a day sooner than otherwise,they would come in, and if a day late our deposits would come in to more than meet them. MR. M I R T H : le would be glad to give you there the aver age account so far as our experience goes. How, in regard to any of the banks interested. in Evansville, I started to mention a while ago, — There is those gentle men there, I do not know how they have done-it,- they seem to work it out so they are able to handle checks drawn on Evans ville now with a remarkably small excess in our. hands, if you m n t to call that an excess, low they meet that situation, and I think, Mr. Swearingen, there are some other banks — I am not talking theoretically now; that suggestion came to me by i-eeing how some banks were using the situation. Evansville is, and she is getting two per cent on that interest, REPRESS! TAT I71 SHSRIEY: Do yon think it is a good thing, and in accord with the system that has' been established, to in duce additional money to be taken from the member banks and put into federal reserve banks, because if you do, you and I differ fundamentally as to what was intended. MR. MARTIS: Ho, sir. You are absolutely with me, Con gressman Sherley. I think, too, that the money should be in 39. that cocasunity, so tliat tlie Bank can lend at a reasonable rate to its customers, and it can be done through tlie Federal Re serve system. RIPRESEETATIYE SHERLEY: Putting it in St. Louis does not work tliat way, MR. MRTIH: not stay. lo, it does not put it there, because it does Sow look at this: Here is a balance of $100,000 today; you keep $50,000 excess to meet your checks, that is #50,000 on balance on our books in tlie morning, sad it meets all those checks. it night there is no balance; Toy another re mittance you build up youx excess to |50,000. It does not stay in St. Louis; it meets your iocal Louisville needs on checks. REPRESENTATIVE SHERLEY: It cannot both be'there and somewhere else. MR. J0H1TST01: One of our real problems is how we can create enough exchange in St. Louis to care for the incoming cheeks through the Federal bank, because our business does not go that way. We have no trouble whatever in osediting enough on Chicago and Hew York in the bank I am engaged with. We have been sending on an average of f?5,000 of lew York paper to St. Louis each day, and stand discounts of ten or fifteen dollars a day on lew TorFloans. costs us $ In addition we estimate it 100.00 a month tc: °keep a surplus balance in St. Louis banks, in order not to get below the requirement in your bank, and get the six per cent slapped on us for that. All 40. would be eliminated if we had a branch in Louisville* , MR. MIRTH': How about an agency In Louisville? Could you not do it with an agency as well as a branch? j MR. J0H1IST0H: I am not 'really prepared to state, be cause I do not know how fax an agency can go under general laws Agencies have different powers. MR. IARTII: We give you- full power of clearing checks from there. MR. JOHffSTOH: Loaning money? MR. MARTIF: No. REPRESEITATIYE SHIRLEY: That*s what we want. * MR MARTIJf: Memphis has found it all right. There will be no delay in that. MR. JOHHSTOIT: But we are offering you something that we think will make you money. ME. MARTI!: x. Fay don't you take it? We will, if it is a right thing, REPRESEITATIYE SHERIEY: I would like before you finish, if you will affirmatively- state — view — not simply negative our affirmatively state why you do not think a branch ought to be established. MR. MARTII: I do not want to interrupt. I think it is stated In the regulation. REPRISSKTATITE SHERBET: do not want a conclusion. lo; that is a conclusion. I have known that for months. I I want to know the reason on which the conclusion is based. MR. MMiflHt I will try and sum that up before I finish There have been some statements 3aere than Louisville does not say the "business exists there now. MR. BARR: Does it, Mr. Barr? Ho; we say it m i l popularize the Bank, and we can develop the business. MR. MARTII: It does not .exist noif? MR. BARR: Ho, but it will exist through Louisville, if a ■ ' branch Bank be established. MR. S1EARISGEI: Banks no^r go to Chic ago and lew York, which would develop some business with us. They would coae to us. MR. WILLIAMS: Mr. Martin, may I ask you one question? I an told the objection has been saade that there is one'banker in Louisville who is not in favor of this branch. He frankly states that he is not in favor of this branch, and he has given as his reason for wanting the branch there, that if the Federal Reserve branch should be opened in Louisville, it would do so much business it will take away some business from M s bank in Louisville. REPRESEITATIYE SHERL1Y: MR. WILLIAMS: Weawould like to know who he is. When I was told.that argument was used, I said that was an argument in favor of the establishment of. a branch Bank in LouIsvixleJ MR. BARR; E. wish we had brought that man along! (Laughter) MR. WILLIAMS: One of your bankers in my office this past week told me that there was one such banker in Louisville. I said that is an argument not against tlie branch Bank, bat in favor of it. MR. SlEARlJffGEI: Mr. Williams, I did hear one man say . lie did not care about the branch because it isould reduce tlie rate of interest, MR. BARRr Another argument in our favor! ME. WILLI M S : This was quoted to me. He thought it would give tlie 'branch Bank so much business it would tak e away some of the business from his own bank. Mr. JOHSSTOI: We have every bank •’ ■s. signature on this petition. SENATOR JAMES: it would help any I We might get. one of them to say that if (Laughter)) THE CHAIRMAN , MR WARBURG:: ' Proceed. MR. MARTIN: I. have also tried to find in looking into this thing — to see what the actual attitude of the St. Louis % banks have been to the Federal Reserve Bank. low, those gentlemen are not perfect. We all know that none of us are. We are all after business. At least, when I m s with a bank, we went after it, I guess all the rest of us do it, and this developed from the books, I think it is worth saying, St. Louis carrying seven-eighteenths of its reserve as a total. as of December 9tB.. This is Total of deposit with the Federal Reserve Bank of eleven million dollars; Louisville having six-fifteenthf had a depost of fl, 833,000. The other banks in the district, carrying five -twelfths, had on deposit in the reserve bank at St. Louis, $9,328,000. Mow that’s what they had to keep. Bow mail did they actually keep5 How much did Si $11,014,000. They had to keep that much. Louis.-have to keep? Well, it had to keep It is actually keeping $13,085,000. Louisville has to keep $1*^32,000, and Louisville is keeping f1,924,000. So that, according t6 that, f100,000 is all the excess Louis ville is needing to take care of all of its checks, provided it is not keeping any more than that. low, the other places in the district, outside of Louisville and St. Louis, have to keep §9,228,000. They are actually keeping |10,000,000. That* an increase of a million, I just bring that before you because I am impress, gentle men, with the fact that the Board of Directors of the St. Louis Bank are doing the best they know how. Speaking for rayself, I will say to you that I am doing the best I know liow, ^trying to come to a proper judgment as to what is good for a !Sederal Reserve system. Ind I do hope that I have a broader viewpoint than the federal Reserve Sank, just of St, Louis. The good of the entire system is ay chief aim. SEIATOR BECKHAM: You would be benefitting the Federal Reserve system if this bank is established. REPRESEITATI17E SHERLEY: MR. II&RTIil: That’s just what I want to know* Sow, I will summarize the things, if I am able, the things that to my mind make me feel that a branch bank is not warranted at Louisville* I have no objection to stating the facts upon which ay conclusions are based. First, the Federal Reserve Bank at St. Louis has been es tablished just a little over two years* The system has been operating just over two years, and it is not fully developed, I do not see any necessity of taking on a new function in m y hurry* That’s the first thing. Second, it is my opinion that through an agency at Louisville every clearing facility that could b© wanted can be given to Louisville, Third, based on our experience at Memphis, I do not believe that you can have a need for re-discounts that c a n H be passed on so promptly by the Federal Eeserve Bank of St. Louis that all of your needs will be taken cars of. And, gentlemen, in this connection, the only reason for a fullfledged bank is to take care of discounting such as exists* s- Fourth, it is stated in the brief that the business does not at present exist at Louisville, but that if the branch is placed.there, the business will be created, low, frankly when the system is only two years and a month and a half old* I cannot see why there is a necessity of putting in an agency to create something that does, not exist right at this time* There was one other thing that came to me while I was talking her9 , but I have forgotten what it was* - MR. JOBHSTON: MR. MARTII: 45, Mr Martin, may I ask a question? Sure, maybe you will recall t M s point to me „ MR~. -JGHNSTOI: Just the last few weeks half a million dollars of paper has gone to St. Louis for discount, which would have been put into the branch Bank. HR. MART Ilf; Gan you say that now, Mr. Johnston? Memphis said”given us an agency; we will give you two and a half aillion and thirty-one thousand dollar a. She had what looked like the business in her hands on this cotton crop, tot her promise was not fulfilled. MR, S1SARIIGEI: las that going east instead of to the St. Louis Bank? MR. H U T U : I think it was going to Chicago, lew York, Boston, and soiae of it went there anyhow. MR. SWEARI&GEE: If you had not put a branch in Memphis, you would have probably have had that one there anyhow. MR. MART 1ST; Ho, sire; no, sir; I want to say for the Memphis bankers, I believe they put everything through that would normally have come to any branch or anywhere else,. I do net believe they would have put in a cent more. yiij- REPRESENT AT IVE SHERLEY: We believe you have made a system which, according to the existing machinery, requires trade to run in channels that it does not run in naturally. low, to say that because it does nor run, it does not exist, is to try 48. a conclusion the facts do not warrant* It does exist, but it wfollows the natural law and course of trade, and will con tinue to do it, and unless you afford it §* facility equal to that, itgoes along its old and natural course* I know of two of the "biggest financial houses in Louisville who do all of their M g "borrowing east, and do not do it at home at all. low, that ought not to be a healthy condition there for St. Louis or for Louisville. It can be remedied by a branch bank. But you cannot by any law that you will pass, or any system, com pel them to go to St. Louis against their interests. They are 1 not going to go. MR. MkRTHfl Some of that is due to local conditions, Hr. Sherley, I think. fHE GHAIBMM: Mr, WARBURG; that. I would like to understand Ton said they had two houses that did business away from home? REPRESENTATIVE SHERLEY: business away from home. two mercantile houses that do But they do not go to St. £,ouis because they have never had connections there, THE CHAIRMAN, MR.. WARBURG: Hid they ever bank to any extent in Louis vilie before the system was started? REPRESENTATIVE SHERLEY: Louisville. A certain amount of banking in A n could nolrbe done there; perhaps, on account of limited capital,, but it could be done there through a branch Bank. 46* SHE CHAIRMAH: MR-. WARBURG: I do not quite follow. Be cause it oould only be done through, your local banks? REPRESESTATIVE SHERLEY: Yes. THE-GHAI5MM, MR. WARBURG: If your, looal banks wanted to re-discount more for those houses, they could do so through, St. Louis. j REPRESEITATITTE SHERLEY* I think you could get those people- to aid in the development of the branch banlr, where you cannot get them to help at all as to St. Louis, THE CHAIEMM, MR. WARBURG: I only want to eliminate thingp .that do not apply. • REPRESENTATIVE SHERLEY: I think that is a concrete fact, MrX Chairman. THE GHAIRMAI, HR WARBURG: You will find mercantile i houses in St. Louis that borrow in lew York* IS. MART 1ST: Many of them. THE CHAIHMM, MR. WARBURG (Continuing)r And in Chicago "that borrow in lew York. I do not think that would be remed ied by a branch Bank, REPRESEITATIYE SHERLEY: I differ from you. You have no desire on the part of the people to help St. Louis, lew, we feel we are being absolutely discriminated against. We feel our State has been past arbitrarily cut in two, for there is no possible combination that oould have been as unfortunate for Louisville as the one she drew in the lottery of division : THE •CHAIRMM, MR. WARBURG:' I am not asking that to try to argue tlie matter at all, but to find out how that particu lar feature would be affected by the establishment of a branch bank. MR. WILLIAMS: Tour proposition, Mr. Sherley, is that these mercantile houses in Louisvilla, out of a desire to help Louisville, would be inclined to throw or keep some of their business there, providing you had a branch; that they are not concerned in sending their business to St. Louis now, REPRESENTATIVE SH1RL1T: I think that is unquestionably true.. MR. WILLIAMS: I can see that. THE CHAIRMAN, MR WARBURG: SR. BARR: I am doubtful about that, I belong to two large corporations which do business with two Louisville banks to the limit, and they could discount paper with other banks in Louisville, opening up ac counts, and the result would be the re-discount of this paper, which now goes east. MR. SWEARIHGII: I am on those boards and know they do it. We had an account opened with us last week by a concern that borrows one million or a million ana a half dollars, and it was moved from Buffalo and other accounts in lew York. That would increase accounts of that kind, I think, if we had a branch there, we could afford to take them on xn mere ease and comfort, knowing we could get the'money, if called on for a large amount of money, instead of dealing with, the Ban$ far away. ,REPRESEITATIYE SHERLEY: and you daal wdth a directorate that is not familiar with the character of paper handled in Louisville, and the feeling, whether it he justified or a real one or not, actually exists, that you m i l not get the quick accomodation through St. Louis that you could through a branch bank. low, that feeling is there, and it is going to stay there. IE. SAMLII: Mr. Martin, could you tell us, in a general way, under what conditions a branch bank would be desirable or necessary, or if -ever? I am not cp.ite sure whether that re~ solution means that 3*ast ^ ^he present moment it. is not de sirable. MR. MARTII: It is at the present. MR. HAMLIlf: When would it be desirable? -condition of things? I mean what So that we can all know when and agree when a branch bank would be desirable. St. Louis, but in general. Do not confine it to I am m&eh puzzled. there that if branch banks are desirable, why are" they not desirable from the moment of inception.. - If they are desirable at all? 1 can see the force of that, although we are facing the cosHsand < Congress, but I would really like to know the condition of 49 • ^ REPRESESTATIYE SHELSY: a That is the most pleasing state- It is a "command,n under the law. meat I have heard. MR. HiMEIlr . What is the condition that would raake the branch bank justifiable? St. Louis, you state, you can take care of Louisville at the present time. Is there any time when it could not or could do so better than now? SEIJLTQR BECKHAM: Let me supplement that;: Would it not be pr&cticable_ or desirable whenever that branch should be self-sustaining? SEHATQR JAMES;-. And is not that aet by the fact that Louisville guarantees it to be self-sustaining? MR. HAllLIlr I can conceive a branch of a railroad abso lutely necessary, and yet you could not figure out any. profit if you took the returns of the roads alone, I am asking merely for information, because we want to get at the bottom of this thing. X MR. MARTII: ' That*s what we all want to do. THE CHAIRMM, MR. WARBURG: Gould we not add to the ques tion of Governor Hamlin,- fh&t would be the condition -under which the Board should refuse to ^grant the opening of a branch? MR,. HAMLI1T: Yes; the whole subject. But what I rant to get at is what axe the obnditions. le' would all agree that the command of Congress should force the Board of Directors to give a branch. low, I do not understand that. 1 would like to have some information; that is, would the condition ever arise in this or any district where it was perfectly plain I 50. to us we mast establish a branch bank? fHE CHAIRMA1, MR. WARBURG: Governor Hamlin, I think you are asking Mr. Martin a question which he shoiild ask you. ICR,-.HAMLBJ: v'ery much of my information is obtained by questions to others, I am not an expert; I am a judge. HR, SH1H.IIGEH• The St. Louis Hank, with five St, Louis men on it, might consider that the proper time had ariived when they had exhausted their competition with us in the dis trict , and could not get anything more. They would say, “low, boys, you can have a branch.u" MR. MARTIH: I am surprised you put it on any such basis Hr. Schweringen, MR. S1EARIHGM: tion. It is a cold-blooded business proposi Oar business is being taken away from us St. Louis banks. That’s what sticks in our cr©F* MR. MIRTH: ::&way? What do you mean by your business being taken Let me have a list of the accounts you have lost. HR, SlEARllOlIf:: MR. MIRTH: |^e have lost balances. Well, balances. I will keep it thoroughly confidential, MR. JOHISTQS: I will give you two or three we have lost. The United States national — MR. MARTI!?: (Interrupting) r e I would like to have it in writing, Mr. Johnston, BABRr Hx. Martin is about to answer Governor Hamlin ?ls question, Mr. Johnston. MR. MARTII: Do not disturb liiml I do not believe you fcgentleieen are losing the business you think you are. I think you are mistaken. so ICR. DELAEFO: As reserves have been transfered, A- ' have not all bank balances been reduced? These gentlemen may be accus ing St. Louis banks for something that has been going on all over the country. THE' CHAIRMAI, MR. W4HBURG: That is a very important thing here. MRl^SHUHSSSI: The State banks constitute an important matter here. REPRESENTATIVE SHERLEY: It should not be anything but a practical question at the present tirse. fhat’s the good of talking Q about theorr? •» © MR. DELAM): We want the facts here. REPRESEITATIYS:' SHERLEY: If a man in reply to you says, WI am losing accounts, 8 that is a physical fact. ML, DELMO: Everv bank in the country is losing accounts. .The law intended it. REPRESESTATIVE SHERLEY: ! . We understand that, Mr. Delano. These men are not talking about those losses. ■ THE C H A I R M M, MR. WARBURG: The idea is right through the entire law, that the country bankers, the small banks, shall be enabled to be free of the necessity of keeping idle bal ances with other banks, that they shall keep one balance with the Federal Bank* low, what happens to Louisville is the same thing that happeni. to St. Louis, and will happen to other cities also. They will X©se a lot of balances when the final transfer of reserves is made, le hope it will be done in six ty days, if you pass our amendment that we have put in. MR. JOHNSTOf: Mr. Warburg, what we refer to is two Spe cific instances and concrete illustrations that cannot be af fected, whether this, law is passed or not. , and,the other at Hodgenville. One is the bank at Both opened ac counts at St. Louis because they said in time of stress St. Loiiis could give spicker service than they could obtain in Louisville. , REPRESENTATIVE SHERLEY: MR. BELAUD: Those are facts. I am glad-to have those facts. r REPRESENTATIVE SHERLEY: I am not caring whether St, Louis can give them better accommodation or not. The fact remains, if as a.result of this arrangement Louisville is being con stantly bled for the benefit of the St. Louis Bank, it does not make any difference to us; the result is the same; we are .losing blood. . MR. WILLIAMS: _ ,It makes a difference to us, Mr. Sherley. If the belief is well founded, we have-got to reckon.with it, REPRESESTAT111 SHERLEY: le are not making a direct charge against the Federal Reserve- Bank in St. Louis that it is refusing to give consideration-— proper consideration— to Louisville patrons, but we.do present in the nature of thingsthat they cannot give that consideration which a branch bank in Louisville, familiar/with the class of paper that would. CT originate there, could give. But I. am pressing the tiling tha- is constantly evaded here, tliat I would like to have met, and that is as to the fundamental purpose of the law, which was to have branches,' and to l®@p the money in the different cen ters and not to pile it into twelve regional centers, low, the men who "believe that there should be eight branches instead of twelve, or four instead of eight, or one instead of four, naturally are not going to favor the theory of branch banks; but against their opinion I put the law and. the opinion of Congress which, I think, ought to control in the matter. And this is- the reason I ask why— what reason can be given why a branch Bank should not be established, other than that some men believe that it is a bad thing in any way to decentralize, and if you want so to construe the law as to pile the money into as few hands as possible. MR. DELMO:. What is' the limit, then? ¥e have four cities within about sixty miles of each other which have claims fox branches, Cincinnati,, Indianapolis, Columbus, and Louisville, They are all in a nest by themselves. One has just about as good a claim as the .other. REPRESEFTSTIYE SHERLEY: Perhaps, but the time is coaing, Mr. Delano, if this law stays on the statute books, when all will have branches, MR. WILLIAMS: Ir. Sherley. very speedily. come. That, I think, is precisely the question, And some of us hope that that time will come 'Some of us regret that that time has not ' Personally, I think the time will have eoae, whenever there is evidence that makes it fairly clear that there is an amount of business that naturally and normally arises in a part of the district that can be better served by the estab lishment of the branch in its midst than by obliging it to go to the Reserve Bank at a distance, MR. S1EARIIGH: This business is not going to go there. MR. WILLIAMS:'' That fact is not easy to determine, but the fact is that up to the present moment the federal Reserve Banks, even where they have aerved, or been in a position to serve, a contiguous and rich territory near their doors, have had to scrape to pay expenses and to earn something towards dividends. The country is still, and I fancy that is true in Louisville and other sections of the country,- is still at the moment provided with banking resources beyond whai the busi ness community would digest. I think it will come., and ©ore speddily than any of us would have believed six months o£ a year ago. There will be a development of business, a stream -•■of re-discounts, flowing into the Reserve Banks and from ^agencies that will justify us in planting branches so as to make the facilities of the system more accessible. . REPRESENTATIVE SHERLEY; How, what harm will oomP, question has never been answered, guarantee any possible loss? ' That' lhat harm will come if we We do not break down anything, nor add a burden, because we .pay it out of our pocket, if ire do not create the business. low, whors hurt? (Mr. Williams starts to reply.) SHE CHAXSEM, MB. WAEBU1S: lay I answer that? ME. WILLIAMS: ' fh&t’s all right. I will see if it does not agree with my opinion; I will supplement what yea ia?e to say. 53ECE 0HA1BMA1; ME. WiBBUBS: May I say, Congressman, that when this law was still in the frying pan, I was one of,those who favored a smaller lumber of banks, hut I pat in a special pi da to organise a large number of branches, and lead up to that. MS, H1MLM: fifty or sixty? EBB 0HA1BMAH, MB. WABBUBS: will, haye them. Yes; and I still believe we In fraace and in Semany and in many of the smaller coontries, they have hundreds of branches. hay© them, of course, as this develops. And we will Bat all- these began with one branch, a&d as it grew branches were established. You would not develop or build a. railroad erxeept by a trunk line first, and then build a few branches later. BEPB1SMEJ.EE YE SHSSIiBY; lay I inter rapt there, Hr. Chair* man? Your illustration does not apply, for this reagaa: You "already have your railroad. You have banks and natural tenden cies in which the trade was going. How, you are arbitrarily undertaking to determine how trade shall move. ,£HB GEAIBMMt, MR, WARBURG: gets business. slowly, So; the railroad goes where it Of course, you see we are building up very, very ind, moreover, birr tracks have not been laid. She thing has not been considered sufficiently, and we have not even gotten our ftm&s in yet. We are going to get the final installment lov- ember nest, unless there is an amendment to have these funds paid in earlier, -- we hope in two | 5S« j months. Then, only, will it be complete. But, in addition to that, qwe will not then have the final force which we should i have. We axe bringing in another amendment in order to pro tect this enormous structure of credits and deposits which j has grown up in this country, which goes into untold billions., low, you say, and Senator James has asked, "if we make this guarantee, what’s the harm done? 1 Ihy can you not do it then?B • I 1 Uow, suppose we did for you what we would have to do for Cincinnati, Baltimore, Pittsburgh, and possibly ten or twenty other cities, also Milwaukee, that have exactly the same claim as you have? - * Milwaukee against Chicago is in the same position as you are against St. Louis, sequences be? lhat would the con You say you guarantee the business. If you look at that chart over there, you will find that the funds i we have had to protect this tremendous structure of twelve or thirteen billions is two hundred and thirty five million dol^-lars, and if you add to that,-I .do not want to bother you ""‘'with technicalities,-It may be, three hundred and fifty mil lion dollars of. go Id;-now, that is not any too much; that is too little* That *s why we axe coming to you and saying, Give us a way of getting stronger*"" low, how are you going to improve your chanees>4)y investing more money? Ihy, if this were nothing but a business proposition, a railroad, that wants to earn dividends, or a b&nk that wants to earn dividends, I would say, wgo ahead ana do it, if you promise | 57* to earn dividends for me. Go ahead and open your shop. 51 But you can do it only by investing your money, and your banks would, in tliat case, go ahead and force business, which’pos sibly would not "be the proper way to do for a Reserve Bank, In otlier words, at a time when we are just now facing the pro position of a large amount of m o n e y w h e r e we must hare meas ures to fight the pernicious influence of two or three hundred million dollars of gold that will come into tlie country,-from | the point of view of the country, it is our duty rather to get the gold and shut it up, REPR1SEITATIYE SHERLEY? You say, if I understand,$pou are afraid that the establishment of a branch bank here and else-, inhere would result in the discount of too much paper, and re- au suit in unstablizing the whole system by having too grat an expansion of credit* . THE CHAIBMM, MR. WARBURG: Let me right there state that -'"'4s no^ the conclusion I mean to convey. is just what I want. At the proper time that ■ REPRSSMT AT IYE SHERLEY: But not now? THE CHAIRMM, MR. WARBURG: I do not think the time is ripe now, REPRESENTATIVE SHERRY* I think your mistake is in the assumption you will create^iusixiess, in order to xa&ke the branch pay. lhat you are going to do is simply to take the business that would go-to otlier sections,and is being done. 58. and do it through the branch, and the volume of the business in the country remains the same* THE CMIRMAI, MR. WARBURGt The difference is this* If it goes to Chicago today the First lational Bank invests it. The First lational Bank does not care how the United States comes out. They are not charged with the responsi bility of keeping our country's finances in a position suffi ciently to protect it. But what you want in that case is that the reserve system should step in and take the other business from the other bank, REPRESEITAT ITT! SHERLEY* We do not do that. The Chicago bank does business again through the Reserve Bank. THE CHJLIR1AI, MR. WARBURG: lo, it does not, if my first contention is right that the Reserve Bank should not, and as a matter of fact our re-diseount has been very slight until this recent flurry, the Chicago First lational does not ^corne back to us, because only up to the present time the change has come* REPRESS!TATIYE SHERLEY: Let us put it another way, then. Those coaummities that are fortunate to have banks with suffices nt capital to take care of business without calling on the reserve system sfiall get the business from those coatmunities, and those of us>:#ho believe we have legitimate business that ought to be at home and go through the Reserve system are to be denied that until conditions get safe enough 59* to make it proper to. do It* THE OHAIBMM, HR. WARBURG: If you are right in your con tention, 'Mr. Congressman,-pardon me, I am not going to make an argument j 'because I am not discussing your branch at all, but 1 answering the broad and general question,-I want jrou to sym pathize with, our point of view and our difficulties. We are | i not unwilling at all, but we are waiting for the moment when we can go ahead and open the whole business up. R1PRESENTATIYE SiiklKLEYj Let me suggest, Mr. Chairman, the danger of inflation in this country does not come from interior towns, but from other influences that are piling up consider ■ able credit, without the necessary gold back of it. That is the thing that is making us fearful about this situation* THE GEAIRMM, MR. WARBURG:: Ws. Congressman, the infla tion going on now is due to the fact that in the biggest towns everybody buys too much at too high prices, and consequently, ‘ leads to excessive credit, And we see the other side of it, ‘but that is not here nor there. R2PRESSITATIY1 SHERLEY: . If I understand you, during tiaes, of marked prosperity,when the growth of the city would be the things to expect, we cannot hope for relief, but when every thing gets so tight that ’there is no business doing* that then we can get a branch. That -is'eeias ;just the reverse, frankly, of what it should be. THE CHAIEMM, MR. WARBURG: That would, I believe, not be putting it qp.ite- correctly, REPRESENTATIVE SHERJ^E: I am trying to strip it, and show just now it affects Louisville, THE CHAIRMM , MR WARBURG: Let eq say that I do not think any banker sihere would say they would not get any re lief, if they wanted it. The difficulty how is the natural transactions which would go to a Reserve Bank are hardly ex tant due to the fact there has been a tremendous influx of gold, and the reason the Louisville banks do not do business with St. Louis just now is really the time has not come for it yet. I think we are talking about two questions, which ought to be disconnected. The one is, and I sympathize with jrhat, that the Louisville banks are in a position of suffer ing through this temporary condition, because of the cam paign in their district which is hurtful to the banks* The other proposition is the broad proposition as to branches. ..Has the moment come fox' the Board, where it has got to take =a plunge and spend the Government1 s money? Because whatever we spend is the Governmentrs money. The Government, in the end, is entitled to the money which it finally will get. We are not earning at this time. earning its dividend. St, Louis is far away from What St, Louis and other banks are doing— they are living onjrjothing. The local business is practically per-cent of the business they are doing. They have invested some money in government bonds that is not local business. The rest they are getting through Hew York, New York is buying and feeding them to lew York, In order to keep St. Louis going there is not enough. local business to ■ earn a fraction of the dividend or the running expenses of St, Louis, And,still, you come to us and say in the district which, is perhaps the poorest outside of California, we should go ahead and open a branch, and if we do it there, we are increasing the charges. REPRESENTATIYE SHERLEY: Oh, no; we guarantee that* THE G H A I E M M M R . WARBURG?. But, I t*.l you, that is forced business, business which probably the Federal Bank at this time should not'do. And if you guarantee it for one year, if conditions go on,-and moreover I donTt believe in this guaranty business, I think it is bad, and I for one would not want it, because if you do it, you cut to pieces the power of the Federal Bank in St. Louis, and you destroy the power of the Federal Bank here to control that business, could not say to the Bank in Louisville, you must not do this time as a Reserve Bank what you want to do. The bankers will understand me. Suppose they wanted to invest because they wanted to earn dividends, we could not tail them not to do it. MR. SWEARIKGEN: I.-Wanted just to ask a question. Have you heard any complaint from any other districts of the banks in the Federal Reserve centers reaching out to take business that belonged to other cities? TEE CHAIBHlf, MR. WARBURG: Yes; we have. MR. HAMLUff: Yes, MR. S1EARIIGEN: Ihile you are waiting and marking time about locating these branch banks all over tiie United States, these twelve centers are reaching out to take away the hank deposits of those hanks not in the Reserve cities* The longer you wait, the worse it is. tod, Mr, Chairman, it has always seemed to me that the branches that should be located, ought to be located as soon as possible. The business'of these citi has been built up, and if, those branches are established, we have no objection- to Cincinnati for instance, having a branch. It would be helpful to us all along the line. MR. DSLA1IQ: Hr*. Swearingen, on that, we have felt that anybody who was building up bank deposits now was building on a sand foundation, because it was something that was likely to get away from them. MR. SlHARIHGEK: I have always thought, Mr* Chairman} .so far as I could figure it out, that every national bank in the United States would be simply like a country bank. That is naturally their position so far as the national bank de posits are concerned. But Mr. Martin left out of consider ation1 the State banks. >.Jhat they make deposits you of course know, and we make money out of it, just as well as national banks, and I suppose we will lose- ultimately national bank deposits* 63, MR. DEIAIB: ..It would be interesting, as a matter of fact in this record, if we could get a statement of tbs- gain or loss of the bank deposts of the St. Louis banks, and of the Louisville banks, as a whole. MR. --JOHISTOJF: 13?. Delano, there is no better indication than clearings of Richmond and Atlanta and increase of their deposits; how they have grown as soon as branches have been established, and how the others have not guown. The clearings of Richmond show something over ninety per-cent increase from last year, and Atlanta seventy-five. THE CHAIRMAN, MR. WARBURG: That is correct. MR. S1EARIHGEN: It would not be possible to make a sat isfactory comparison now. All deposits have increased. We may have lost very little aa a matter of relative action. But we have lost part of that custom sbo St. Louis. I think our bank deposits are more than they were a year ago, but they ought to be greater than they are now, SEEAT OR BECKHAM:. About the time the division was made, and St. Louis was selected, I happened, to be traveling in ay State in the eastern part, and I met a gentleman,- representing one of the St. Louis banks. gent fellow, He was a very affable, intelli I ran across him at two or three different p l a c e s a n d learned from him what he was doing there, going into the smaller towns, down there, and his argument to these banks was that St, Louis had been made the Reserve city and their accounts should be established with M s banl: in St. Loui 64, where they could be- better taken care of than in Louisville or elsewhere; and lie was visiting all that part of the State. I got that from him. same thing. And then I heard of others doing the So, there was a regular campaign. as Mr. Swearingen suggested a while ago. It is true, There is such a thing as a legitimate solicitation of business, in a way, but he was using the fact that St. Louis was the Reserve center as an argument to pursuade the small banks to take accounts away from the Louisville and to put them in the St.aLouis bank. And that1s what’s been hurting them. THE CEAIRMAI, MR. WARBURG:: ME. GETTYS: Of course. II believe we are not going to get anywhere discussing our troubles in Louisville. I believe we could talk all night on that phase of the question and not get any where. I believe we will have to satisfy ourselves by going home and carrying mth us in our minds some sort of definite or concret expssssion in answer to the question that has been asked by Congressman Sherley and li’. Hamlin,-If not now, when? L.8t?,s get to those two questions that seem to bear on the whole thing, and might be helpful to you gentlemen as well. Gan we take that home with us? MR. DEL110: Mr. Gettys, you and I have both been business men, and are not looking at this thing from any day dreaming point of view. If you were running a big establishment, and it became necessary, or you thought it was necessary, to start a branch in.another town, I think before you invested a lot of capital in that 'branch, or got a large, staff there or any thing, you would begin by putting in ansagent there and find ing out just exactly how much business you were going to win by that b’ganch. We established a branch in Hew Orleans for a year. That branch was a pretty heavy drag on the At lanta Bank. Even now, though it is contributing to the At lanta Bank, the Atlanta Federal Reserve Bank considers that it could do everything that it does with that branch, if it had a good agent on the spot'with telephone coannunication with the parent bank. So, with the night letter service and all that, they could perform every function at an expense of perhaps one-third of what they are now spending, low, I ask you, as a business man, would yon not begin in a new field that way, rather than begin by laying out an expenditure of. twenty-five thousand dollars a year? MR. GIYYTS: Well, ay impression as to the success of tie Orleans branch is not quite in accordance with yours. ...The information that I have is that it has been a success, an unqualified success. So, our impressions are different. You have information that I have not. SR. DELANO: I am not trying to conceal any facts. MR. GETTYS: Oh this question of., preparedness — we are all prepared for this branch over in Louisville, and we want to pull the lever, and you are not risking anything; cer tainly, if the thing is a financial failure, the Louisville if tlie business does not develp, year after year putting tip a loss. We will come up here and ask you to relieve us of it, if it is not a success. We are taking tlie risk for the first year, and we can demonstrate perhaps in a year just how much of a success it is. We are not asking you to put 1your capi tal there, wholly haphazard, nor are we operating under a wrong principle. have them? If not branch banks now, why should we ever We, in Louisville, are of the impression that if twelve banks are good, fifty-two are better. MR. DELAIO: Congress, I suppose, had in mind that there were going to be twenty-five thousand banks in this system, ME. GETTYSr tiling. But why wait? Let’s get right after this . HR. DELMO: How, as several speakers have said, this is a very new system. The last reserve payment was only made a month ago* The final reserves have not been finally transfer red, as/you know, and not until next l.ovember will the matter there had been more members, directors, or officers of the St. Louis bank coaling from Louisville, would have have a different ' feeling than you appear to express here? MY GETTYS: lot at all* me that you are knocking at the fundamental idea of the Federal Reserve System, and that is this: Because this whole elaborate machinery of constituting directorships of the various Federal Reserve Banks was a great hardship on the big banka which have hardly any 67. representation at all in these banks except in ycror district, the idea was that every part of the district should be repre sented, and that the banks should be the districts and not one city, And I, for one, do not see how you do not make it so * HEPRESElfTAT I'VE SHERLEY: Chairman, I think some of the trouble is we are looking at different sides of the shield, I labor under the disadvantage of being a Congressman, but I am a practical man, and I know what was in the minds of the men who made the law. You gentlemen are thinking all the time of strengthening these central Banks, and manifestly, no system is ]going to be of any value that does not make them strong to perform their functions. At 'the same time, it is not altogether impractical for men to think about the communities that these banks were intended to serve, and the purpose for which we created this machinery, le did not create twelve banks for thea to make money for themselves or for ff!Uhcle Sam,« but vte did have in mind certain communities to be served. How, we dd-not believe that proper, facilities are being given to our coiamunity. We think we are being required to do business in a new and awkward way, in a way that by the natural law of trade we would not do otherwise, and we believe if that is insisted on our banks will” just refuse to go into the system, and will do their busiiiess otherwise, as a good deal of it is done now. MR. DELAJTO: Tbat would be an argument for a change in the ss* district lines, j REPRSSE1TATIYE SHERLEY: Perhaps so. But that proposition 1 involves so much that is not practicable we would then be met with the same' argument as now,-HIf we re-distxict for you, we have to open up every other district. 11 We are trying to be prac I tical to an extent at least, of offering what we believe is a remedy, though not a comp3s te one; there never will be a com plete remedy for Louisville, when she has had the State multil&ted the way it has been. But with us, we will be -satisfied if we get this. How, if we have got to come to the proposition of redistrioting, why the thing becomes hopeless, because as soon - i as we get into this, we will be told that these other districts i will be affeoted, and you cannot begin anything like that* THE CHAIRMAH, MR. WARBURG: Of course, all the arguments here are predlcatS-d on the one that with the Louisville banks are not going to do business with the St. Louis bank. REPRESENTATIVE SHERLEY: I do not say they are not, but I -“ d° saY water will not run up hi&l, unless pumped. MR. GETTYS; Only in our extremity, Mr. farburg. THE OHAIRMM> MR, WARBURG;:. That is the unfortunate part, MR. GETTYSr We are human beings, THE CHAIRMM, MR. f&RBURG: That,is the point. I do not know whether I speak for my colleagues here, I have very little sympathy with the point, if every city says-fe are nos going to do business with Chicago, etc., and so it goes, and if we give, a branch to Indianapolis, the oitiea below Indianapolis - , will 'begin, "Sow, you have made Indianapolis a point, low, you must give us one,ff We Have the same trouble in the case between Seattle, .Spokane and Portland. You give it to one, and the _©■ther two will be in the same position. So, it means, there is no end to it, REPRESEITATIYS SHERLEY: Of course, if,because you give it to Louisville, you have to give it to everybody else, why then, your argument is sound. But if we do not present a justifiable case, then is is denied us. But you are asking frank questions..You.have no hold on the State banks, parti cularly. You have no hold on the merchants. They axe free men to do business as they please. If you do not make the Federal system attractive to them, they will not do business with you. That is not spite, that’s the law of self-interest that all of us follow* THE CHAIRIM, MR. WARBURG: " Nobody kna&rs sore than do we “4 hat the law of self-interest has made the dickens of a 30b for us to administer this system, We are trying to look at it from an unselfish point of view at least, and we have got to get into the system the spirit Tfhere the system is being con sidered as a whole, where we have no patience really for the fellow who says flI must"nave it my way, or I will not play. REPRESENTATIVE SHERLEY: has Louisville got. anything? map! Are we asking that? Good Lord, It is just by chance left on the I am glad to forget it, Mr. Chairman. I am glad to forget . 70 it. MR. SWEARINGEI: in. You ask, why don*!t the State banks come In our district I remember one section in the Act w M c h provides-did pr ovi de- 1 bat if we re-discounted paper, we would have to waive protest, and everything of that kind. THE CHAIRMM, MR. WARBURG: It was taken out* ■ Mi MR. S^ARINGEN: Hot entirely* THE CHMRMAI, MR. WARBURG: MR. SIEARIIGIF: Yes. le have to aaive for ourselves, as I understand it. THE CHAIRMAI, MR. WARBURG: Ho. MR. MARTIN: You do not have to put anything on your notes- M r . Swear ingen. MR. SHARIIGEI: MR, MARTIff: But I am Just giving my impression, You do not have to put the stamp on, MR. S1EARUTGES: But you have to waive it, and what is the effect? Why should I send to that bank? THE CHAIRMAH, MR. WARBURG: then you make that state™ ' ment, address yourself to the Senate and to Congress please (indicating Senators James and Beckham and Representative Sherley). (Laughter) MR. SWEARIIG1I:: position. But .I want to get before you one pro I want' to borrow'money. I can send to Chicago or Hew York. I have notes to re-discount« They take them. clerk fails to do his duty, they, are responsible. If their But here ! ] j I .J we have an arrangement supported by the banks, tMeli says we can do as we please. You suffer. That's what kept notes out of that Bank.I Would never borrow money under that condi tion. -That may be remedied now however. THE CHAIRIM* MR. WARBURG-; The Board mggested it should be remedied. MR. SWEARIIG-EH: Would you, as a banker yourself, if you wanted to borrow money, want to send your note to a place where if they failed to send notice, the endorser would be re lieved? THE GHAIRMM, MR. WARBURG? This is. very interesting, but I do not see what bearing it has on the branch bank question. MR. SlEARIUGEl; If not now, xfhen? where. Mr-. Hamlin and Mr. Sherley have asked, Sow, we do not seem to have arrived any I do not suppose we will arrive anywhere. And so far as %73 axe concerned, we are disposed to leave our case with you I do not t^hink we can add anything to it. It is very pleasant and agreeable to hear you able gentlemen discuss these questions, and we get great enlighten ment from it, and go home and feel we are wiser men. But I do not think, as far as we are concerned, we can do anything fur ther. We feel very deeply about this. I have not a prejudice against St. Louis or anyyqdy there in my mind, but every time the matter comes up, the thing goes the other way, That,:s the 7 propostion all tlie time. 3 , And with that, so far as we are concerned, we are willing to rest the case. / THE CHAIRMAN, -MR.. WARBURG; May I say for the Board that 1 we have' done a "great deal, and on behalf of the Board, I want you also to uaSerstand the difficulty we are laboring under. I am sorry Governor Harding is not here today, and I want him to have the benefit,of hearing what has been said, and he will get that -through the report.- I | 1 le want, and you know it we want the system to be a success. If anybody does, the Board wants it. MR. JOHJISTOF: We want it, but Mr. Warburg, we want to j help make it a success. SHE CHAIRIM , MR. WARBURG: I am glad to know it. But with you it is the bank first. MR. JOMSTOlf: Tha£ is the law of human nature, THE GHAIR1M , MR. WARBURG: We have nothing but the success ' '’-of the Federal Reserve System in mind, and are practically ‘ with it day and night, and have to take a view which may be more remote to those interests.which, of course, appear every thing to you, because there are so many other things that have to be considered, in order to be fair to everybody. This ques tion of branches is one-^that we have discussed quite recently very, very considerably, and we have considered the question whether just because it is so far-reaching* we could not develop;possibly some time simpler machinery, so as to take care I of tile hardships without going to the great expense, and pos sibly to the complication and disadvantage that it means, if you get too many Boards, forty or fifty Boards, wiioh are the danger "to the system. The difficulty is today that every mea tier of every Federal Reserve Board thinks that they are the Federal Reserve system, just as m e n as you Louisville men have thoughts against St. Louis. So, each Federal Reserve Bank has an interest of its own. That whole thing is passed up with all its difficulties and all its hardships to us and we finally have to see what we can make out of it* go home unhappy at all. I do not want you to I hope you will feel that whatever can be done, will be done by us, and while we cannot answer your question straight off the bat, when will you hav6 the branch I, for one, am willing to say you will have a branch, to come, if the system is a success. it ought There should be and must be a lot of branches. \ But one more thought in connection with lew Orleans. lew - 'Orleans is a success, or more of a success, since it has de veloped or founded the new banking system, that we have tried to develpp. Since the bankers* acceptances have become more popular down there, the bank is not doing re-discounting, but they have been buying bankers* acceptances, against cotton, etc and Memphis has taken a step and developed something that was a contribution to its new system of banking, low, there is nothing that will develop the necessity for branches more than that we have to get the regular business* X "believe as soon as the bankers' acceptances develop, as it has,-we have one hundred and sixty million dollars of investments, that is quite a stun for a young baby only -two years old. And when we started only two years ago, nobody thought we would have bank acceptances to a larger extent than twenty million possibly. And so it goes. If the thing is permitted to be develpped systematically, these branches have go to come. We cannot avoid the$, and we would be more happy than you when we have fifty branches coming. MR. S1EARIUGES: Mr. Chairman, that is interesting and hopeful, but the point in ay mind is thist Do you think that it’s just to communities to let them suffer by this com petition, and delay this introduction of this system, so that in the meantime they will have lost their business? THE CHAIRMM, SR. iMBDRGt: lay I give you an answer very frankly, and that is, I had the feeling while you were stating the case, you were not really meeting the St. Louis argument:.* 'JEhereiisfnotm::thing the St. Louis banks can get out of the ‘system you can not get, and if the State banks, think they have not proper opportunities under the Federal Reserve system in St. Louis, it is not so, and if we ever find the least bit of discrimination or hesitation in doing everything fox Louisville banks that they are entitled to, we will go into it pretty fast. MR. S1EARIIGEH: The Federal Reserve Bank, of course, . i ■ ! | i Is doing its best as fax as it is able* But the location of the Bank in tliat city damages us* THE CHAIRMM, MR. WARBURG; j I: j agree it is so,- but if I a St. Louis private bank goes to a State bank and says it can ! i do more for it in re-discounting than you can do, it is tell-' j f ing a lie. 1 ! MR* SlEARIIGEHr- It can do it more promptly, j '' I MR* JQHISTQI: We are losing business both in the Gl&re~ | ,s land and St. Louis districts. j We are making everv effort to' offset it, of course. j ! | I | j i : j ! ! i THE CHAIRMAI, MR.. WARBURG: 1 would like to have the figures. There may be something, teat it may look bigger to | ! • I you than it is, when in black and white. j i ‘ MR. JOHNSTON: We want to stop it while we are existing® . } 1 ., SHE CHAIRMAN, MR. WARBURG; M e a s e do not misunder} ! '■ . . . | j - stand. We may or may not open a branch there soon. We will ! i ' ! j cois-ider it from all points of view carefully and.sympathetic 1 i i ■ . j cally» [ j MR. DEM. 10 1 Mr. Swearingen, there is one kind of a ,• ' guaranty you can give us, worth more think, than a guar- i . anty, of expenses, which is probably something that you ' S ! i \ t cannot give, because the Comptroller will not recognize a } I | pledge of that kind as binding, but simply a sort of debt of honor on your part, but one guaranty that will really '| \ | j 76 mean a great deal to the success of tlie Federal Reserve System, and tliat is* a guaranty of some State member banks* MR. SWEARIHGEN: That is a large question,, and I wish I had the opportunity to sit in the shad© of a tree and talk with, you about it* | | ~ TEE GHAIRMAI, MR. WARBURG:: MR. SWEARINGEN: Are.you a State banker? We have a title and. trust company but | there is not one particle of service you can render us. We have nothing at all- we can redicount with you® A The only ob3fot;;of our carrying accounts is to have some money for exchange* Shat is about the only thing* We loan on collates alj we do not lend on comaercial paper. a piece of comercial paper, Very rarely, we take M r » Earr is the President of the largest trust company of the South. He will make the same statement to you*. The Louisville Trust Company, aa.other, is .-...likewise with us, and-the 'United States Trust ©ompany in . Louisville, If the Federal Reserve System ever is extended so that it can extend accomodations to institutions on gilt « edge collateral, even if they charge more interest for that, j i | and sake it not undesirable to get it, I think you.will get I hundreds of thousands in^the system, .For myself, if the ruling j rate was four or five, I would rather be in that system, and pay one per-cent more for the money than to carry our balances in Chicago, and Sew Yorkj but today you could not render any service. Biat*s tHe. real.reason we are not in* # It's the same way, — ■ I think I speak for Mr. Bsrr. THE GHAIRMAIf, 'MR. WARBURG: How many Stats bankers are here? MR. BARR: Since Mr. Swearingen has mentioned my name, Mr. Martin well knows, we operate a trust company which is a trust company pure and simple. trust estates. It has the management of I appear here in behalf of the National Bank of Kentucky, being one of its directors. The reason that our trust company does not ioin the Federal System is due to the fact that we have never discounted a dollar of commercial pa per, nor do we have any commercial accounts. And, therefore, none of the benefits which would be derived from obtaining money in times of distress would be available to us. THE CHAIRMAI, MR. WARBURG: MR. BARR: We get it in lew York. THE CHAIRMAN, HR. WARBURG; MR. BARR: Ihere would you get it? • Prom whom? We get it from some of the banks, the Bank of ■-America and the Bankers* Trust Company, and some of the other companies * and we endeavor never to borrow very much. We sell our ’ bonds and conduct the business that way* THE CHAIEUI, MR. WARBURG: Do you not think it would Id© a handsome thing if your bank would be in a. position to do that? What are you doi&g to carry out the decentralization of the system? MR. BARR: So one in Louisville has been more heartily in favor of the Federal System than myself. THE CHAIRIAI,. MR. WARBURG: MR. BARR: Theoretically? Theoretically; and if aSr Board of Directors were willing to go into commercial business, which, sooner or later, they may, I say,'Without hesitation, my recoismendation would be to join tlie Federal Reserve System. I cannot say. More titan that, It shows my approval of it, and it shows that if we c.uld receive the benefits of it, which, under the pres ent system, we do not, I would have no hesitancy in recommen dation of the adoption of it. MR. SlEARINGEl; The Kentucky Title Savings & Trust Com pany is a combined bant and trust company. Its principal business is, however, issuing mortgage bonds on real-estate. It has a savings deposit and an individual deposit. small bank. It is a Most savings propositions in Louisville are* We had,. I think, in 1914 or 1913, sixteen hundred thousand dol lars on deposit. I started down to the bank one Monday morn ing, and I met Mr. Gettys there, and he said, “Have you heard -’"*'frhat they are doing to your bank?” ;"have closed up.* know why. He says, 0They say you That was rather unpleasant news. I did not But that was on Monday, and, they were in an uproar* That day we lost about' ten thousand dollars of deposits. That did not mean very much, and would hot have been, noticed except for this talk. On the next day about eleven o* clock bedlam broke loose, and we were Galled upon during that day, — I think there were about ten thousand people who paid us a visit, — and we paid out sixteen hundred thousand dollars between eleven o*clock and nine o ’clock that night. We put up si gas we would stay open until every depositor was satisfiedable to do it, you may ask? How were you Our main account is carried with the Merchants Loan & Trust Company of Chicago. saw what was pending I telephoned to Mr. Is soon as I , and I said, ®We are having a run on us and need some money.H He said, aHow much will you need?11 1 said, "I want to start on one-half million.n He said, "Send your credit over tonight and go ahead and check.H Where would I have been with the Federal Reserve System, if we had had to send paper to be perused ana accepted by a committee? I would have been broke* We also raised money in identically the same way in the American Exchange Bank in Hew York, and a bank in Chicago. I asked Mr. McVeigh.--,once how he would have met that situation. He said it would have been met all right.• That was before the system was started, but I i have never really understood how it would have been met at a distance like that. THE CHAIRMAN, MR. WARBURG: I did not know Chicago was ^further away than St, Louis. MR. BABE: Gould we get that kind of service from the Fed eral Reserve Bank of St, Louis? this point out: In other words, I want to get Our relations with1'the Bank were such that they relied on us;-.; that when we said we needed the money and would send over the credits, they,-took our word and judgment. They received our credits next morning, and everything m s satisfac tory. THE CHAIRMAIT, MR, WARBURG: I do not know whether you fol- low our weekly statements. You may- have known there was a slight flurry in Hew York last week. On one day the Bank of Hew York paid out eleven or twelve million dollars. Fire mil lions were re-discounted by banks that had never been there before... They sent over their paper, and there it was, and the rest was taking acceptances from them in a jiffy. MR. BARR: Our paper is in Louisville and this Bank is in St, Louis, THE CHAIRMM, ME. WARBURG: It makes no difference. If you had gone to the trouble of having an understanding with Mr. Martin’s bank, there would be no difficulty at all, and if you would begin to buy bankers’ acceptances at three per-cent, in stead of having the® loaned at two per-cent on call, you would have satisfaction. The law permits us only to take certain things, and those we take without any hesitation. course, the ".'hole system is predicated on that. be no hesitation. And, of There shoxild So that you should know for certain if you -have good paper, there can be no hesitation at all. And it has b.een done. MR. BARR: I brought this out for this reason. This bank could get no service from the System, THE GHAIRMAIf, MR. WARBURG: ment. Let me cose to that in a mo After that, Mr. Barr said, you'got your accommodation in lew York, and Congressman Sherley, who says we do not de centralize enough, in Chicago. You are the ones that he ought to complain about, even if you had not got a oent that you could re-discount with us, which, of course, would not be so. because you can arrange your affairs so that you have enough* but if you bad only securities, if I were president of the Trust Company, I would become a member of the System, because I wanted to contribute my reserve to that general fund of pro tection,- in this case, for your ora. bank, and if you strengthen your own bank and your other State banks would coae into the System, you would double the strength of the -St. Louis Bank or of your Louisville branch, and you would not go to Sew York. And the only way to break up this centralisation is to create central points which are strong enough, and that is where I do not agree with Congressman Sherley at all. You do not decen tralize by having five hundred centers, and there you have none at all. If you have one strong point against which you wish to draw Chicago or lew York if these State banks con tinue to stay out and say, I get my accommodation from the Mer chants Loan & Trust Company in a pinch, in a panic, if they do not become members, though I hope they will very soon, I think .they have not done their part toward making the .system a suc cess. They do not think about doing what is best for the Na tion, but what is best for themselves. The national banks had to give up things when they came into the System* Ihy not the State banks? MR, SlEARIHGEKi bankersf acceptances. It is not so much in our line to buy We do not want to go into that line of business« THE CHAIHMAI, MR. WABBURG: lhat are you here for? 83 MR. SWEARINGEN: ¥e are loaning money on collateral. THE CHAIRMAN, MR, WARBURG: My dear sir, you have a right to speak to u s , if you are a good citizen, if you have any interest in what concerns the community, but you say you j ! do not-like, you do not care about that* MR. SWEARINGS!: MR. JOHNSTON: Oh, no, I He is only speaking about his Trust Com pany. THE CHAIRMAN, MR. WARBURG: I know that, i i I know the other half of him is all right. \ MR.. JOHNSTON: Mr. Warburg, we want to thank you very sincerely for the large amount of time you have given us, and * I want to say that I hope to see the day come when the State .banks do come into the System. _v .'< V- '• - 1
@FedFRASER