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A t ____ Austin, T ex a s..

February 9 ,


Law Reporting Com pany, Official Stenographers
T E L E P H O N E . 2 8 2 0 R E CTO R

------- ---—



A u s t in ,



9th, 1914.

Hot pursuant to adjournment at 9 : 0 0

A.M .

Exchange N atio nal
F. L .

( D a l l a s , Tftxai) fo r

the American



(D a l l a s ,



tho Armstrong

P a c in g Company.

( D a l l a s , T e x a s ).

(D a lla s ,


T e x a a ).

(D a lla s ,


fo r

tho D a l l a s Chamber

o f Commereo.


N a t io n a l Bank o f D a l l a s ,

(D a lla s , T e x a s ),


C a a h i e r , C ity

for tho Cl o aring H o u s e

A s s o c ia t io n o f D a l l a s .
W. M.


(D a lla s ,

L O U IS L I P S i T Z ,
e at D a l l a s .

T e x a s .)

(T a lla s ,


fo r

the C le a r in g


A. H« MAT SO' , ( D a l l a s , Texas)
7**t ie r B r o t h e r s ,

General Manager of

and Chairman of ths Railway Com*ni ttee of

ths B a l ia s Chamber o f Commerce.



(F ort W o rth , Texas)

fo r



W orth C le a r in g House A s s o c ia t io n .
jy y ?



(H o u sto n , Texas)

for the Houston

P a c k in g i n t e r e s t s .



(H ousto n,
(H ousto n,


fo r

the National Bank.
the Houston

Chamber o f Csmmerse.

C. HOGG, (H o u sto n , Texas) for the Chamber of
Commerce and the C le a r in g House A s s o c ia t io n .
J. L .
County N a t io n a l



(San A n to n io ,

^ank o f Karnes C it y ,

(A u s t in ,

fo r the Karnes

Texas) Vice- president of

the American N a tio n a l Bank of A ustin.


Page 3209 not in original document.



s e c r e t a r y o f the T r e a s u r y :


w i l l come to o r d e r .

«ent lenien, the hearing

I am poin'- to ask Secretary Houston, am

la on h i a native h e a th now, to maVe the announcement

fo r the Com m ittee.
T ’ e S ecretary o f A p r ic u l t u r e :

Gentlem en, t h is Committee

ia charged with t h e duty immediately of d iv id in g the coun­

into not

d is tric ts

le s s than eipjht nor more than twelve reserve

and o f lo c a t in g in each d i s t r i c t a c it y in Which

the F e d e r a l Reserve Fank ah all be l o c a t e d .
T h ia


a b ro a d ,

lo o k at it

n a t io n a l,

from that

economic problem . We must

s t a n d p o in t .

No community w i l l receive

the best b e n e f i t s from suoh a measure as t h is un less t h is
duty is performed in the broad n s tio n a l
by t h e l a v .
t ie n a

s p ir it contemplated

are compelled to d is r e g a r d mere conaiderar

o f lo c a l p r id e or p r e st ig e

ness in t e r e s t s o f the n s t i o n .

and co n sid e r

all the b u si­

The law s p e c i f i c a l l y re-

q u ir e s that

in s o lv ln r t h i s problem due regard be had for


and the

custommry course of t r a d e .


f u r n is h e s tho Vey to the s o lu t io n of t h is problem .
We s h a ll
fam ish in g
prob lem .

ask the w itn esses to

apply them selves to the

of such inform ation as w i l l bear d ir e c t ly on that
The time

is lim it e d ,

and we d e s ir e to hear each



s id e f u l l y

and to knov Juet

o f each cocjaunity a r e .

B oth of us

t h e in d u a t r ia l c o n d itio n s
w a ll around the


what the w ishes and internets
arc quite fa m ilia r with

in th ie S t a t e .

We w i l l concede a

and t h e a b il it y o f th estate to

produce e v e r y th in ^ that the people n e e d 9 and aany other
t h in g s o f that g e n e r a l c h a ra o te r .

wv at , in your judgm ent,

U n it e d S ta te s


fa r

What we d e sir e to know

is concerned, w i l l best

in t e r e s t s o f t h i s s e c t i o n .
c o n s id e r a t io n : ^*here,

th is

serve the b u sin e ss

That ou^ht to be the exclusive

in your Judgm ent,

B a n k ou~ht to he located that would best
w estern

section of the U uited S ta te s

should be

section o f the

a f e d e r a l Reserve
serve t h i s South­

and wh at d is t r ic t

attached to that b a n k .

I understand that there

are three c it ie s that d esire to

present p a r t ic u l a r sat t e re t e the Committee,

and we s h a ll be

glad to h e a r from D a l i a n .

mi 'ht

add ju s t

t h is word,

w i l l co n fin e th absolves to presen tin g

that we hope that g en tlea en
any f a c t s in addit ion

to whafr have been presented by those Vho precede t h e n . Ve
do not

care for r e p e t i t i o n s ,

and u n less gent lesion who are to

fo l l o w the f i r s t fe w speakers hare
In fo rm a tio n

to p r e s e n t , o f course

a d d itio n a l fa c ts or
it w il l be scarcely


J W Wright


ary fo r them to
M r . Moore:

to the

U *y




ask how much titie is to be


s ev era l c i t i e s ?

The s e c r e t a r y o f Agriculture:

We hare no d e f i n i t e


We hepe to h ea r the® a ll f u l l y b efo re the day ie over*

m en t.


secretary o f the Treasury:

We w ill hear Mr. Vrirht, of

D allas.


sec re ta ry o f Agriculture :

T ^e

OV J .


M r. W r ir h t ;


M r. W ri- h t,

fflve your f u l l

and o c c u p a t io n .
J . W . W r ig h t ; P r esid en t

o f t>ie Commonwealth

N a t io n a l B a n k , D a l l a s , T e x a s .
The S ecr e ta ry of

A g r ic il t u r e :

Do ysu represent



M r . w r ir v t :
T ^e



am chairman of the D a l l a s B u sin e ss m e n 's

rt se it inr t h i s m atter.

Secreta ry o f A g r ic u lt u r e :

W i l l you

roceed, M r.

W rirfit.
M r. W r i r h t :

I was only r'Oin* to say on b e h a lf of D a l l a s ,

thaft we would present

M r. ^ehcock f ir s t , that

T *e S e s re t a r y o f A g r ic u lt u r e :

la a l l .

You do not wish to sake


J . B . Babcock


2 21 3

statement y o u r s e l f ’
M r. W r i r h t :







The S e c r e t a r y of A g r ic u lt u r e :
n o n e , re sid e n c e
M r. B ab co ck :


T o u a&ay gire your f u l l

and o c c u p a t io n 9
J . R . Babcock, Secretary o f the Chscber of

at 7 )a lla s ,

r e p r e s e n t in g the D a l l a s Chamber of

Gentlem en,

I d e s ir e to present

t h i s t e r r it o r y

(in d ic a t in g

on map h ere produced) .

The t e r r it o r y c o n sis ts of all of


and a l l o f Oklahoma, that part of

ell ofK ev Mexico

L o u i s i a n a which i s west o f the M is s i s s i p p i H i r e r , 84 per

•* n t ,
e f the

and that part o f Arkansas which i s
Arkansas H i r e r ,



and west

per cent o f A rk a n sa s.

We h a r s drawn a memorandum on the side h e r e , which g ir e s
you the percent ages o f the d if f e r e n t r l t a l f a c t s in that
te rrito ry .


includ es 1 7 . 4

per cent o f the area of the

U n ite d S t a t e s ; 8 . 2 per cent e f the p o p u la t io n ; 1 2 . 6 per
sent o f the n a t io n a l b an k s; 1 0 . 2 per cent o f the st ate
W ik s ;

1 3 .9

le s t you

per cent o f the


t h in k that

annual farm p ro d uctio n;


all the productio n in the t e r r ito r y


J . R . Babcock


la farm p r o d u c t io n , I c a l l your a tten tio n to tho fact that
tho fa c t o r y production lo $ 4 8 5 , 0 0 0 , 0 0 0 .
T h is

s ectio n h as boon d esig nated by the f e d e r a l Govern­

as tho


west south c e n t r a l d iv i a i o n ,

an econoalc d i v i s i o n ,

c o r r e l^ lo n of its

for census pur oses.

and made so on account of the

in d u s t r ie s ,

tho hoiaogenlty of its people

and the lnterdepence o f i t s i n s t i t u t i o n s .
tory has

always b een set o f f

that t e r r it o r y



T h is t e r r i­
Without New Mexleo

is desig nated by the r a ilr o a d s

and approved

by the In t e r s t a t e Cobbs roe Comirlsslon as t v t Southwest S l a a s i *
flo a t ion t a r i f f t e r r i t o r y .
I c a ll your
and the r u l f

a ttentio n to the n a t u r a l b o u n d a r ie s , Mexico

and tho r iv e r —

The s e c re ta ry o f


J u s t omit

M r. flabcoc c:
t e rrito ry
4 1 .8


are faesiliar with that*

he b o u n d a r ie s .

Our greatest

points in regard to t h i s

aro in th ese f irures h ere on the le ft of the map;

per cent


A g r ic u lt u r e :

o f tho annual cotton production of the United

is r a is e d

in t h i s t e r r i t o r y ; 4 4 . 5

per cent o f the

al oottonseed produotlon o f the U nited S t a t e s , to the
amount o f $5 4 90 0 0 ,0 0 0 ,

greater than the en tire Wheat crop

of M in n e s o t a . 9 .7 per cent o f the annual live stoek



J . B . Babccclr


4a .8 per cent of the a n u a l cotton experts,

p r o d u c tio n ;

which b r ln r s to this country 12.6 psr cent of ?h« totCL

• z .fr t e of the United States, brln^infr the balance of rold
of this t e r r i t o r y .

in f a r o r

**rom e com p etitive standpoint plsass note this lin e here
(in d ic a t in g ).

The points on t h is lin e

bets* sn


the t s r r

ito ry nearer S t .


L o u is

and r>allas.

c o m e r o f O klahom a.

There is no portion of

Louis than D a l l a s , except that l i t ­
T h is

lin e h ers represents the 12

hour d is t a n c e by r a i l frssa 'n a ila s ,
s id e

can be reached f

ceded that
than to



all points th is

a lia s in 12 h o u r s .


w i l l bs con­

a ll the b a l ance of t h e country is nea rer D a lla s

any o th er p o in t .

p o p u la tio n is w ith in
th e rs

are equi-distmnt

Notice that

the congestio n of the

a r a d iu s o f 2 0 0 b i l e s o f D a l l a s ,


are more people w it h in 100 m iles of D a l l a s than there

are w it h in 1 00 m ile s o f T an s as C it y ,
la c k in g 1 >0,000,

as w ith in 100 m iles o f S t . L o u i s .

s o u r s s , you a ll know we are not
out h e r e .

and very nearly

W ith in the

a ll sage brush

as many »

and cactus

parcel post cons, w it h in approximately

2 0 0 m ile s rad iu s there was a po pulation o f 2 ,6 2 3 , 2 0 2




Poet Zone 2 ,

arm 3 , 6 9 1 , 0 6 3

p e o p le ,

and w ith in 2 00 m iles of D a l l a s ,
which i s 4 7 . 4

per cent o f the



J R B bcock


1st ion of the pr posed d i s t r i c t ,
per cent o f the t o t a l

2 0 .3

in the sane t e r r it o r y

while constitutins but
The mlue of t h e f a r * lauds


according to the last census f ig u r e s ,

was more than tve combined c a p it a l o f a l l 4 he banks


In the U n ited S t a t e s .

con psn les

I want to c a l l a tten tio n to the growth of the t e r r it o r y ,
p a r t ic


are b u i l d i n ^


and the f a c i l i t i e a
*he future


fo r reaching the t e r r it o r y .
and we are b u il d in r fo r the

Tho average growth of the United S ta te s was 21 per

in p o p u la t io n ,

e h lle the

average growth in the t e r r i ­

tory was 39 per c e n t . The growth In wealth
annually was 8ft.9 per c ^ n t ;
one b i l l i o n d o lla r s the
i s $ 8 8 ,9 0 0 ,0 0 0

in o t ^e r words, on t h e b a s is of

annual production o f that te rr ito ry

a year.

Tho number o f banks in crea sed

per c e n t ,

and population

in the last ten years 454

and the t o t a l d ep o sits o f those ban\s Increased

510 per c e n t .
T hese l i n e s

n t h e nap show the d is t a n c e s from the

towns that h are been considered
T h is


and are to be c o n sid ered .

all >fith r »fe r «n c p to w a l l a s .

Tou w il l please note

that o f course

D allas

is tho oentre o f a ll tho t e r r it o r y

s u rro u n d in r i t ,





a lonp way from Bow O r le a n s to

J R ^abcdok

X I Paso

Hud from S t .

h a l f way,


Louis to X I Paso.

and o c c u p ies

Dallas is about

a geographical lo ca tio n there that

serve that t e r r it o r y p r o p e r ly ,

and I t h in k we can

produce the f a c t s to prove that ■nallas is the proper
lo ca tio n .

I would b«» <*lad to supplement th is,

if there are

any other q u e s t io n s .

s e c r e t a r y o f A g r ic u lt u r e :

Upon what theory do you

In clu d e Oklahoma?
M r.

B ab co ck :

Ve Include


<“irst on the ground that the

country south o f the riv er was s ettled from Texas
secreta ry of A g r is w lt u r e :


regard to the c a jr se

of t r a d e .


Vs are compelled to h*rre
F a r e you any expressions

from the b u s in e s s sen and b a ik e r s of Oklahoma that they
d e s ir e to be attached to D a l l a s *


® abeock:


s i r , M r . L i p s i t s h as that

in f u l l

d eta il.

sec re ta ry o f A g r ic u ltu r e :
M r.


B ab co cV :


from Mew Mexico?


s e c r e t a r y o f A g r io u lt u r e :

To what extent

is the trade

in t h is d ir e c t i o n *
M r.



We show that

*e travel 657 men out o f

and in trade relations sell $4 4 ,0 0 0 ,0 0 0 * that


J . R . Be


te rrito ry .
The S e c r e t a r y
from tho se

o f A g r ic u lt u r e :

st.3tes that they d e s ir e to be attached to D a lla s ?

t h e i r trade

i s in that d ir e c t i o n ,



You mean


s e c re t a ry o f A g r ic u lt u r e :

han k ers o f those


What expressions h<sre you

M r. -*abcoc


and from L o u isia n a ?

the ha n ks’


From the b u sin e ss men and

I h a r e not any e x p ressio n s from the b usiness

■en in that t e r r i t o r y ,


that they do t h e ir tratiinr in

T>a l i a s .

s e c r e t a r y o f Agr i c u l t u r e :

Tou h *re

annexedit without

c o n su ltin g them9
M r.



Secret sry of A g r ic u lt u r e :

And without co n sid eratio n

as to Where t h e volume o f t h e ir trade goes and what t h e ir
b an k in g r e l a t i o n s
M r . *»abcoe>:


H o, w# hare

t ^ e i r b u s in e s s r o e s ,

considered where the roluae of

and hare

s t a t is t ic s on that p o in t .

s e c re t a ry o f A g r ic u lt u r e :

From th* ir

joint of riew

or yo urs9
M r. 'oabcocv:


From t h e ir

point o f riew and o u r s .

Secretary of Agriculture:

But you have no expressions

J R Babcock



fr o n them .
M r.


Rot *Toin *he b u sin e ss mtnt except in & few

is o la te d c a s e s , which w ill cover "he t e r r it o r y , ws thin
The secret ary of A g r ic u lt u r e :
s ev era l other p la c e s that


We had expressions in

Oklahoma d esired to «ro to the

M r. B ab co ck :

A ll o f Oklahoma?

Tbs s e c r e t a r y o f A g r ic u lt u r e :

Pra ctica lly ,

and that new

Ifexlco d e s ir e d to go to t h e north or w est.
H r . pabcock:
from the people

well, we cannot show by d e f in it e expression
in that t e r r it o r y that they want to be

a llie d with D a l l a s ,
o f the

but ws can show that the greater portion

state is d ir e c t l y connected with D a l l a s in a trade

and is more convenient to D a l l a s .
Any fa c t s you hare showing

T^e s e c r e t a r y of A g r ic u lt u r e :

that the current o f t h e ir trade sets southward, o f course,
ws would be priad to h a v e .


M r.

nabcosk :

We hues t h a t ,

I t h in k ,

in very



to f i l e .

<*T«rFMBNT 0 * M . 1?. WOLFE.


Secretary of the Treasury:

W i l l y su rive your nams,

3 220

M F Wolf*

residence and occupation*

W olfe:

V . F . *o lfe ; I sc in the cotton export

business in D allas,

and also rice president of the

Guranty State Bank ft Trust Company .

secretary o* the Treasury:

Tou know the problem we

hacro, of dividing the country into d istricts.

Wo should be

glad to hare your views.


I want to give information specially concerning

the question of cotton, beaus* that is ny business.

secretary of the Treasury:

With relation tothis p&rtim

cular district?


With relation to this particular diatrict,

yes, s i r .
The secretary o^ the Treasury:

W olfe:


Wo have in that district there as laid down

within 12 hours ride of D allas, practically 49 per cent
of tho total cotton area of the south.

Wo hare in the south

a total cotton area of 89 2,00 0 square miles and the nres in
this territory laid down there is 437,794 miles, making 49


Last year our total cotton production, according

to tho census of the United States and some other facts
I hare

here was 1 4 ,1 0 4 ,0 0 0 bales,

and wo produced in this

IT H Wolfe



territory 6 ,8 5 7 t000 bales, or 48 1/fe per cent of the total

secretary of the Treasury:

Give us aomefacts with

reference to the tot si production hsndled in Dallas.


Last year the Dallas cotton buyers bought

1 #4S9 ,00 0 bales.

secretary of Agriculture:

How does that compere with

woust on*
Mr. Wolfe:

I bare the figures from Houston, in fact all

o ' the cotton c i t i e s .
ambiguous, and

The Houston figures are rather

I w ill c a 11 your attention

The secret ary of the Treasury:


Are they any moreso than

D a lla s 9




The «,«scrttajgry of Agriculture:

Does that coce from the

1 fact of the difference in the figures*


No, I

am t akinc* these things fron Mr.

Shepperson* s book, iflio is tbs acknowledged statistician
of cotton statistics of the world, he is the acknowledged
The Secret arji of the Treasur :
wsli as the Dallas f i b r e s ?

Did he nakf the Houston as

I H Volf*



W olfe:



tade the Houston figures^ and ws haTt the

firures her* to 'back up the Pal lac fifu res.



figures are 1 ,3 8 1 ,0 0 0 bales handled last year, but opposite

Fhspperson puts a star, i*hich refers down to the

foot notes, which scgre—

Secretary of the Treasury:



Yes, s ir ,

Is it a Lone Star?

a tone Star, which say a that ths

Houston figures Include f . o . b . cotton; that near.s fres on
board the cars passing through Houston, bourht by Dallas
buyers, perhaps,

and roin^ through Houston to ftalteston.

is the reason I say


they are aabipuous, because they do

not represent ths purchases in Houston, but the cotton
passing through Houston.
Ksw r.rlsans is tl* t ext cotton centra of the south—

*ocretary of the Trsasury:

What does he aay ab^ t

Mr. Wolfe:

Mr. Shspperson did not h sre ths facts of

wallas, bscause our
year «*o,

Cotton Kxchsnjre was just organized a

and this is the first year ww hare p t up facts.

Ws ars posting our purchases last year for ths first time,
and that was not put in his report at thst t i* e , bee suss


M H Wolfe


it v a i not on record.

Fecretary of tho Treasury:

Toll us how that crop was

fin anced*'
Mr. W olfe:

About 1 8 0 ,0 0 0 ,0 0 0 of that 192,000,000 wan

fir* m.ced directly and indirectly by Dallas banVs.
The Secretary or *he Treasury:

Toll us the procedure, tie

method by which it vas done9


Tho procedure was that the buyers bourht

thio cotton in Oklahoma, Arkansas, Louisiana and Texas,
largely fare drafts on Dal 1 as in payment for i t .


We do

that practlca ly on all of our business, except in some
eases whore wa fire them Now YorV ?:xcbanre .
The secretary of the Treas ry :

They wore re-financed here.

Mr. Wolfe:

Wherefore those drafts

Y es.

sor.e in

Wo sell foreign exchange in Wew York
Chic afro and a little in Philadelphia,

The secretary of the Treasury:
Mr. Wolfo:


How, in Oklahoma wo handled from Dallas l&st

year of tv>* Oklahoma crop,

I want to tire you thosa

figures as they mirht be interesting to show that D a lla s,
really is in the centre of the cotton trade

and is handling

a large percentage of it , wo handled of the Oklahoma


M If Wolfe


233,000 baits lrjt year.
The Secretary of the Treasury: What was the total crop of
Mr. Wolfe:

1 ,0 5 7 ,0 0 0 total crop.

T*e secrttary #f

the Treasury:

And you handled about

23 per cent9
Mr. Wolfe:

Yss, that le free Dallas, you underat and— The

Arkansas crop south and west of the Arkansas River, we
h aid led last year 4 7 ,500 bales in D a llas.
The Secret cry of the Treasury:
Mr. Wolfe:

What percental

is that?

Arkansas raised 505,000 bales went and so ith

of the Ar Vans as River.

T>iey raised about 800,000 bales

tot si, but south of the river

about 5 0 5 ,0 0 0 , according

to the figures.

secretary of the Treasury:

Tou handled about

9 per cent of that?
Mr .

W o lfe:

Y es.

In Louisiana ws handled last year

1 6 f000 bales from Dallas.

Secretsry of the Treasury:

What was the total in

Louisiana *
Mr. Wolfe:

3 9 3,00 0 bales.

The boll wssril has eaten

then up and thsy have not raised such in three years. Of the


.. ■



--- —----- ---





Tsxes crop wo handled 1 ,1 6 2 ,5 0 0 bales froj B alia s.

Secret wry of the Tresairy:


Vo l f t :

Out of a total of 4 ,9 0 2 ,0 0 0 bales.

The secretary of the Treasury:


About 25 per cent.

T ss, a little orsr 25 per cent.

fro® this district
of the south.

Out of a tot el of ehat?

Vs export

about 66 per cent of the total export crop

Tou understand, ws only ralss ebout 49 per

cent, but east of the river they use it in their own s i l l s .

Secretary of the Treasury:

Vhat is the percentage of

export fros Dalles alone ?
Mr. V o lfs:

*bout 90 per cent.

The Secretary of the Treasury:
Mr. V o lfs:

Of this district?

Of this district 85 per cent is exported.

Sscretsry ot the Treasury:
V o lfs:

Vrosi rall&s?

Hot frsx Dalles, but fros; ths whole territory

T ve Secretary of the Treasury:

You spoke of the total

and I *suld like to know what percentage of thst export is
handled through Dallas*

V o lfs:

led through

Vs export about 90 per cent of the crop hand­
D a lle s,

end the total eyx>rt fros this district

is i*bout 66 per ce n t.
The secretary of the Treasury:

E xa ctly . How of that 86

* . H . Wolfe


per cent, how much of it Is handled through Dallas?

W olfs:

of 6 ,8 5 7 ,0 0 0 .

Wo handled,
.I t

as you see, 1,459,000 bales out

is a question of calculation as to the

per c e n t.
Tho Secretary of the Treasury:

Take those figures and

you can reduce it to percentages.


W olfe:



as to our uniform needs of mouey,

that is one point X supposed would be interesting, as to our
beeds for financing this crop.

As you know, t^e cotton crop

is the one ws hare the most trouble with in financing in this

South Texas begins their movement along in July,

and by the 1st of August they are in full operation in


We handle our South Texas crop practically

by ths 1st of October; it is nearly through down here, of
oourse there is something do in 7, but not much after the
1st of October.

Then we more our Sout>i Texas men up to

Oklahoma and Arkansas. Thsy begin up tfcere about the first of

and about the time they close up in South Texas, so

we can take the same money and the same financing and
handle the

South Texas crop and the Oklahoma, and Arkansas

crop, asking it a uniform demand so far as the demand is


II W Wolfs


Aside fro* the total value of the cotton produced last
year in this distric t, taken froic actual figures, I took
off fro * cgr books 11 5,000 bales to see whet it vould averse
a bale,

and it arc raged a little over $43 a bale.

At tbat

ratio the cotton orop in this proposed district comes to
$ 4 3 1 ,9 9 1 ,0 0 0 •

The ror seed is worth $€ 8,570,000 in the

same territory.
The Secretary of the Treasury:

Then you hare about


$ 5 0 0 ,0 0 0 ,0 0 0 in the value of the crop and the seed?


seed together.


a little over $ 5 0 0 ,0 0 0 ,0 0 0 in cotton and

It does not include nanufactured seed, you

understand, which is worth a little sore.

secretary of the Treasury:




secretary of the Treasury

That is the raw seed?

Thai ic the raw seed.
How what is the extent of

the period of the year over which the e tire crop has to b

W olfe:

It haa to be financed, the principal part of

In about four conths.


secretary of tha Treasury:



Beginning *hen?

Beginning, you al?ht sa®r, the first of
September and endiiig with the fira t of January. That la


II H Wolfe


the heaxy period When finances are needed the worst.
o&id, the South

As I

Texes orop is being financed when the other

pert o f the territory is not neediife? sny funds.
The secretory of the


What other crops in this

tsrritory hare to be cared for during that ssro period?
Mr. Wolfe:

Mot much.

The fr*it

and regetable crop is

sarketed in thespring before this comes on.
is a little ea rlier,

in the su-naer tis.e.

The grain crop

The cotton crop is

the sain crop which has to be financed during these four
aonths; practically no other needs financing.

The lire stock

Is unifora all the year around.

secretary of the Treasur :

What is th- s next biggest

crop, liwe stock or anything olss, In this territory out­
lined on the asp?
Mr. W olfe:

Wo hare the figures there that w ill be pre­

sented a lit tle later, that show those points.

Another man

has those figures and they are in a little book we hare there
but I hare not it before ao.

pecretery of the Treasur/:

That is all, Mr. Wolfe.







Secretary of the Treasury:

Pie set state your full

naae, residence and occupation.


Mr. Ardrey:


Howard Ardrey; Cashier of the City

Kalional Bank of Dallas,

and representing the Dallas Clearing

House Associatlen Committee.
The Secretary of the Treasury:

You rg$r proceed to tell

us the specific reasons, in addition to thos presented by
the map It s e lf, which contains the stcftlstics, why you think
this district should be created.
Mr. Ardrey:


Babcock has already mentioned to you

the facts showing the integrity of this district, that is to
ley, that it baa certain natural bou darles, and there has

Secretary of the Treasury:

Yes, you need not go orer

that cround araln.
Mr. Ardrey:

In the location of these regional banks, I

take it for granted that the idea is to locate them according
to the banking needs of the country,

and primarily the

service that each one of these banka is gding to render to
the territory within which it is located.

The law eontem-

J . H . Ardrey


plates end It haa elreedy been indicated by you gentlemen
that in the location of these ban Vs ysra spire primary con­
sideration to the district, first map out the district,


after you here sapped it out, to locate within it the
eity that can best

eerrs the district.

The secretary of the Treasury:

The law s*ys we must hare

recard to the convenience and customary course of business.


I understand that.

The secretary o f the Treasary:


In laying out the districts?


The secretary of the Trsaaury:

Now tell us why you select

thia particular district or lay it out, with reference to
that mandatory requirement of the Act.
M r . Ardrey:

Y es.

Now, with particular reference to

Texaa, you gentle men ere familiar with the fact that of
the capital and surplue and deposits of the national banks of

United States Texas is seventh in cap it el end surplus

and seventh la individual deposits.

Within the district

we have mapped out here, ae you w ill see on paste Humber 8 ,
there are 943 national banka with a capital and surplus
ef $ 1 0 7 ,0 0 0 ,0 0 0 .

It Is able to support a hnk having a

J F Ardrey

capital of $ 4 , 5 0 0 , 0 0 0 ,


and *ould hare deposit* of

$ 3 1 2 ,0 0 0 ,0 0 0 .


Sacretary of the Treasury:

Now wa hare those facts,

but what I want you to address yourself to is the convenience
and custoaary course of business in this district, as indi­
cat inf that tha district that is there outlined should be
created and that T>aAlaa should be chosen as theheadquartera
of tha bank.

Let .^e aak you a few queations.

In the first

plaoe, upon what assumption as to tit number of reserve die*
tricts to be created hare you laid out teis district?



secretary of the Treasury:

Hr. Ardrsy:

There are the others?

Tbs others would be located in Boston, in New

York, in Chicago, in Cleveland, in St. Louis, Minneapolis,

---- ---- —»* ««




and Atlanta.

The secretary o* the Treasury:




And Atlanta?

and the location of them bein^ largely

detaralned as indlcat ire of the co rsa of business, by the

capital and surplus of the ban'rs.
The secretary of theT reaau ry :

Mow, in laying out thia

district hare you aiaply arbitrarily aasumed a district
in order to get the required c apit alization, or hare ycu


J H Ardrey


considered it with reference to the mandatory provision of
the Act thst the convenience

and customary course of

husinsss in the district should be the primary considera­
t io n .


Unquestionably in all of Texas the course

of business would be within its own borders.


So far as

and Hew Mexico are concerned, we hanre

mapped it out on the basis that wherever this bank should
be located it would be

s question of service t o the member

If you concede s district that is earable of beln*?

self-supporting and capable of meeting the requirexet s , then
it is a geographical question of the location of the bank
for the service to the member bnks in point of time.

oecretary of the Treasury:


Let us begin with New

To whst extent has New Mexico trade relations with



As to bankin* relations, primarily ttheir

business would cro to Kansas City.
ever, have s number of accounts.

The ^allas beaks, how­
have accounts at

Carslbad, Clovis, Roswell end Albuquerque.
The secretary of the Treasury:

Vhat size are those


%; . --•

•• • • • • ' “

| \. j


J . Jf. Ardrey.

'Jr. Ardrey:


They ere quite considerable.

In doll ere and

c*nts they would not be so significant, and yet—
THo Secretary of Agriculture:

What extent have you

consulted the ffew Vexico business .*aen and bankers?
•ir. Ardrey:

Speaking fro* a banking standpoint, we have

not consulted the Wew Mexico aarehasts9 but I do know that
a nu-eber of Kew Mexico bankers .prefer a location in Balias
as fir s t choice and certainly they would as acond choice.
Of course,

the problem ef ^ew Mexico is to locate t h i n

so-ne territory nh*re they can be properly served, tHat
can furnish capital enough to support one of the Hmrisnal
T>»e secretary of the Treasury:

The question of the

customary course of busineas in Sew Mexico
one of the aoet vital importance.

i a , of course,

Business and

exchange ssem to have direct relation with et»cb other;
tanking transactions Indicate business relationships,


testimony presented up to this time before this committee is
that Kew Mexico9s trade relatione are not in this direction.
Mr. Ardrey:

I think in a measure that is true.


coursa* all of the Pecos Valley of Tfaw Mexico cornea this way.
The Secretary of


We have had representatives

J* H* Ardrsy.


from tha Pecos Valley asking to be attached to Kansas City*
Xhs Secretary of the Treasury:

And stating that their

trads is mostly in ^hat direction, front Roswell particularly.
Hr. Ardrey:

They mnted to go to Kansas City?

The Secretary of the Treasury:
lfr. Ardrey:

Y es.

So far as trade relations are concerned it

mifrht be possible that that is true.

So far as the banking

relations are concerned, we are assuming that out of a
Regional Bank located in Balias they can be served as well
i f not better than from Kansas City*
The Secretary of the i'reasury:
Mr* Ardrey: In point of time*

Well, why?
The banks in

ew Mexico,

of the 45 national banks in New Mexico, are closer to Dallas
in point of train service and otherwise

than they are to

Kansas City*
The Secretary of the Treasury:

Are you not mistaken about

The Secretary of Agriculture:

Suppose they say differently,

which view must we take, yours or theirs*

A u d re y :


think t h e i r s w ould be c o r r e c t *

The Secretary of the Treasury:

To what extent do the Naw

Mexico banks carry reserves in Dallas?

J. H. Ardrey.





»hink they have about 10 accounts in Balias

out of Vew Mexico*
The Secretary of the Treasury:

What inducements do you

hold out to banks for ths deposit of ressrves, the keeping
of reserve balances in Balias, what rate of interest do you
Mr* Ardrey:

We pay th»m 2 per cent on their average daily

The Secretary of the Treasury:
'fr. Ardrey:

Ho, sir.

B© you collect checks free?

There may be

soae small banks that

do, but I think it is conceded by all who have accounts in
Baglas that the Bellas bankers pay then on the basis of 2
psr cent and give them the bensflt of such par fa cilities
as we have.
The Secretary of the Treasury:

I notice that the Dallas

banks have reserves of other national banks amounting to
$3 ,3 9 2 ,0 0 0 ,

total reserves of other national banks.

Mr. Ardrey:

Reserves of other national banks?

The Secretary of the Treasury:

Y es, that is according to

the statement of the Comptroller of October 21st, 1913*
AOtal banking capital of Balias # 3 ,4 0 0 ,0 0 0 , and surplus
# 2 ,5 0 0 ,0 0 0 .

That makes # 5,9 0 0 ,0 0 0 capital and surplus.


J. H* Ad ray.

Vr. Adrey:



TVs Secretary of the Treasury:
I sse you *ave included in

How taking Oklahoma, which

this district, to what extent do

the Oklahoma banka keep their reserves in Dallas?


Hot largely.

I think perhaps they have

more bank aocounts with Forth Worth than they would with
T 'e Secretary of the Treasury: A i a matter of fact they
keep very lit t l e of their reserves in Fort ^orth or Dallas,
io they not?
Vr. Ardrey:

Hot so much as they do at Kansas City.

The Secretary of the Treasury:
Vr- Ardrey:

And St. Louis?

And fit. Louis.

The Secretary of the Treasury:


normal course of their

business and of their exshanges is with Kaasas City and St*
Louis, Is it not?

Wrm Ardrey:

Primarily, y e s, sir.

Of course, you will

bear in mind-The Secretary of the Treasury:

Have you consulted the

Oklahoma bankers at all about their desires?
It . Ardrsy:



The Secretary of the Treasury:

To what extent have you


J . H. Ardrey .


any indications of prsference on their parti


I found this, when I came to discuss the

matter with them, thst there was a confusion in their minds
as to just what they should say. The department at Washing­
ton, in preparing for these hearings,

asked the Oklahoma

bankers to appear at Kansas City, and they asked the Arkansas
hankers to appear

at St.

tj o u




They appeared there,

and so

far as sush testimony wcs given, It was perhaps favorable to
Kansas City and St. Louis. But it i s a fact that they were
influenced largely by the consideration that inducements
were held out to them, particularly by St. Louis, of a large
district in connection with the clearing of their country

Vow it has been represented, and I make this state­

ment merely in answer to your question,

that not only to the

banks in that district but also in Texas,

that unless they

to into a district with St. Louis and have a large district,
their items on points not Within the district shall be taken
for collection only, and i f they have an item on a member
bank in Clinton, Missouri, for Instance, unless they are in
a bank with Clinton, Missouri, they cannot get immediate
credit for it .

They have made that representation to the






banks not only there but in Texas.
The Secretary of the Treasury:

Have you any circulars or

letters which indicate that such a representation has been
tr. Ardrey:


sir, I hare a telegram which, on the ere

of this hearing, was sent to all the banks in Texas and
The Secretary o f tfte Treasury:
ilr. Ardrey:

Just read it .

It is addressed to the City National Bank of

"?or successful operation Federal Reserve Banks should
have first large territory with diversified crops Raking
seasonable demands at different periods of the year assuring
accommodations when needed.

8econd, branch banks managed

by local directors conveniently located in your state to re­
discount furnish currency and handle your items on entire
district for immediate reserve otherwise for collection.
We believe territory outlined by St. Louis meets all require­
ments and trust you will consider favorably placing our n«ae
fir st on your request for location of bank to Organization
Committee. *

J. H. Ardrey.

The Secretary of the Treasury:
Hr. Ardrey:

By whom is

that signed?

By the 3 t . Louis Clearing House Association*

The S e cre tary o f the Treasury:
Mr. Ardrey:


What date?

February 3rd, 1914, and it was sent, there is

one to Dallas (handing paper) and I have one in njy hand sent
to -he City rational B nk of Whichita Falls, who were kind
enough tc sent it to me,
from other banks.

ind I have seen dozens of them

I think every banker who will testify here

today, i f you will ask him, will

say that he got a telegram

also* The representation is that only within the district
in which we are located, may our items be received for
immediate credit and reserve*
The Secretary o f the Treasury:

I presume that all


bankers, however, hsve read the federal Reserve Act and they
are not going to be guided by the interpretation which some­
body else puts upon that Act, but by what the Act expresses.
They will he influenced more by that than by this telegram,
I »<*an, w ill

* .



they not?

I think it is fair to sty that these bankers

have accepted the interpretation that St. Louis has put upon
i t , at all event, and have been influenced largely in the
matter by that consideration*




Ths Secretary of the Treasury:


V e il, you have not

accepted it.
Vr. Ardrey:

I have not, no, but I know this to be the case.

The Secretary of the Treasury:

How can you assume that

others who have testified have accepted it? As a natter of

the testimony we have had from Oklahoma and these

other places ante-d&tes this telegram.


But you will rsw sbcr tha i prior

he St.

Louis and Kansas City hearings those gentlemen up there
canvassed the. sou lowest by committee, making these same
representations to the Clearking House Association.


cams to Dallas and made those representations, and I happen
to know they went to other reserve cities in Texas, Oklahoma
and Arkansas, making the saie representations.
T*e Secretary of the Treasury:

Those telegrams mi^ht be

put into the record.
Ths Secretary of Agriculture:

Aside from that, what has

h**n the bearing of the present course of trade in those
j communities?
The Hecretary of the Treasury:


Between Oklahoma points and

^ all as?



of Agriculture:

To what extent do Oklahoma

J . H.



bankers look to Dallas as the financial centre,

aid to

*hich their trade now trends.
Mr. Ardrsy:

Wot now mo -ouch, perhaps,

Mr. Secretary, but

ill bear in mind that for 50 years St. Louis has been

a central reserve city and only sines 1902 has any part of
this section had a reserve city located within it; Muscogee
City and Oklahoma City only within the laBt two or three
years, and Dallas and other Texas cities since 1902.


the 50 years naturally they have formed banking relations
whi di could not have been formed anywhere in this territory
on account of the reserve requirements. And I take it for
granted, in the consideration of this question, it is to be
supposed, instead of concentrating these reserves in the
three central reserve cities as heretofore,
for the purpose of

that this Act is


The Secretary of Agriculture:
districts under the law,

We are bo u n ^to have eight

so you need not discuss that.

The Secretary of the Treasury:

And there will be a de-

centralisation to that extent.
The Secretary of Agriculture:

Have you any communica­

tions on the part of the Oklahoma people indicating their


tfr. Ardrey:

r. Ardrey.


Ko, but I do know it to be a fact that so far

as bankers are concerned they oould be served out of Balias
as well as they could from any other city, so far as the
service in handling their items is concerned, and eo far
as th^ir beerowing requirements are concerned.

Secretary of Agriculture:

There again, suppose they

say the contrary?
Vr. Ardrey:

I f they should say to the contrary, of course

I could net refute their statement. But here is the fact
about that.

I f you have a federal Reserve Bank within a

given district that is self-supporting—
The Secretary of Agriculture:

Yes, but the district is

the main thing ju st now.
The Secretary of the Treasury:

The district is the

chief consideration.
Mr- Ardrey:
part of

Of course, you will concede that Texas is a

any district in which it is to be located. In mapping

out the district which we have, Texas furnishes |76,00C ,0C0
of the capital and surplus of # 107,000,000 of the district
we have mapped out.

I t would be impossible in locating

these districts to give every fellow what he m n ts, but
certainly the aajority of the 519 banks in Texas would have



consideration ftiven to their preferences as well as the 400
hanks with only # 31,0 0 0 ,0 0 0 of capital.
The secretary of the Treasury:

I may zaj now, you must

not draw any inference from the questions we ask* You must
not construe them as indicating any opinion or bent of mind
on our part.

W« have to ask those questions in order to

draw out the facta, so you may assume we have no preconceived
notions about this matter, we simply want to get all the
information possible.
Mr. Ardrey:

I understand.

The Secretary of the Treasury:

How, coming over to

Arkansas, you have a large part of Arkansas
ttrB Ardrey:

in this district.

We have taken in such part as a bank at Dallas

could serve within 12 hours.
The secretary of the Treasury:

What is the customary

course of business in that district; where does it tren4 ?
Mr. Ardrey:

Primarily to St. Louis*

The secretary of the Treasury:
Mr. Ardrey:

Primarily to St. Louis?

The present customary course of business.

The Secretary o f the Treasury:

Why do you include that

in the Dallas district?


Because we can serve them with a Ke^ional


J. H. Ardrey,


"Bank under the new law better than St. Louis could s-rve
The secretary of the Treasury:
just about th•» same as Texas?

I a their seasonal demand

It is largely cotton product­

ion in that territory?
Mr. Ardrey:

Thsre is quite a great deal of diversity up

They have apples and —

The Secretary of the Treasury:

But the principal crop is

Mr. Ardrey:

But the principal crop is cotton.

The Secretary of the Treasury:

You take all Of Louisiana

exeept Mew Orleans?
Mr. Ardrey:


sir; we take all west of the Mississippi

'J>e secretary of the Trsasury:
Mr. Ardrey:

Why we do not take New O r g a n s ?

The Secretary of the Treasury:
New Orleans.

How do you explain that.

No, why you uake all except

T)on* t you think well enough of Xew Orleans to

include that?
Mr. Ardrey:

Wall, we do not, no,


We take in

Louisiana, of course, on the assumption there will be no





bank located at 'Tsw Orleans.
not, of course,


If there should be, ve would

take in Louisiana) but we take everything

west of the M ississippi River on the assumption that there
will not be one at New Orleans, and Dallas can serve all of
this part of Louisiana better than any other
The Secretary o f the Treasury:
that business in that territory,

city could.

What is the course of
to Dallas or TTew Orleans or

nor thward*
lfr. Ardrey:

From the northern part of Louisiana Dallas

gets lots of business.
The Secretary o f the Treasury:

Cotton business princi­

Mr. Ardrey:

Yes. While Dallas cotton men buy a %reat

deal ih the northern part, naturally in the southern part
thera is not much in amount, but most of the business goes
to Hew Orleans.
The Secretary of the Treasury:

Does the general course

of business in this distriot trend toward Dallas ?
Mr. Ardrey:

So far as southern Louisiana is concerned

it does not.
The Secretary of the Treasury:
¥r. Ardrey:

And northern Louisiana?

Northern Louisiana more so, but perhaps


J* H. Ardrey


northern Louisiana would <$o nore to St. Lo|£Ls than to
D alla s, so far as the trade is concerned.
T^e Secretary of the Treasury:

To what extent do these

Arkansas and Louisiana banks now keep reserves in Dallas?
Hr, Ardrsy :

Wo have accounts in Dallas from Shreveport

and Alexandria, Louisiana.
Secretary of the Treasury:
Ur. Ardrey:


The Secretary of the Treasury:
Wr* Ardrey:


And in Arkansas?

We have an account with L ittle Hock, and

son* s f the banks in Texarkana and some few towns there.
The Secretary of the Treasury :

You have no expression of

opinion from the banks or business men in this territory as
to where they would lik e to so?


I think, i f I may give an opinion,


si ana banks, from state pride and so forth, wou Id
iress a pr^ferenc* for tfsw Qrlaaas.
'hs Secretary of she Treasury:
fr. Ardr?y:


And Arkansas*

vhirik they have already expressed a

f^rence for St. Louis.

The gentlemen who have been

b*fore you hare been principally bankers, and their con­
nections have been with the 3t. Louis banks for 50 years,





32 47

under tha old lav, by which it was a central reserve city.
There ia no reaerve city in Aifeansas, and they have been
compelled to keep their reaervea in St* Louis.
Tha Secretary of the Treaaury:

Tell me Where the ?)allas

banka keep their reaervea?
vr. Ardrey:
reaerve city.

Ve are required to keep them in a central
57 per cent in Few York» 23 per cent, in St.

Louis and 2p per cent in Chicago.
T^e Secretary of the Treaaury:

Ia the bulk of your bankihg

buaineae here with Wow York?
Vr« Ardrey:

Our aalea of counter exchange, so far as

that •ai^ht be an indication, 93 par cent of the exchange
ws sell to our cuatomera for payment of their bills ia on
Sow York, 5 per sent on Chicago, and 2 per eent on St. Louia.
ro far aa our outgoing iteme are concerned, within a given
period we aent out of <*188,000,000 of outgoing itexaa out
of the atate $ 8 8 ,0 0 0 ,0 0 0 to New York, which ia 47 per cent,
$ 4 1 ,0 0 0 ,0 0 0 to St. Louia, or 22 per cent, # 23,0 00,0 00 to
Chica<re, 12**l/2 per cent; $1 0 ,0 0 0 ,0 0 0 to New Orleans, which
was 5 per eent, and $ 6 ,7 5 0 ,0 0 0 to Philadelphia, which was
4 per eent.

Outside of &ew York, practically all of thoae

lteaa were aant to thoae places merely for collection


J. H.



because of coll action arrangemen to, and not for the accumu­
lation of reserves.
The Secretary of the Treasury:

Assuming that there is a

parring of exchange between these different Federal Reserve
banks, how is that going to affect the si tuAtion as outlined
by these figures?


We will have a necessity for keeping accounts

with other cities; Just which ones, would have to be deter•nined by experience, because there is no provision here for
clearing through the Regional Bank any items except on
member banks.

You cannot s^nd city checks, you cannot send

drafts on individuals or cotton exchange, or anything except
on member banks.

It will be necessary in collecting cotton

accounts and things of that sort to have accounts with the
principal reserve cities.

We will not have to have them in

all of them as heretofore, because we can send them to New
York and the other cities only where the volume of business
run s.
The secretary of the Treasury:

Do you think you have

correctly interpreted that provision of the Act in reference
ts exchanges?
Mr. Ardrey:


s ir ,

I know I have.

J. H.


The Secretary of the Treasury:


Have you taken into con­

sideration the fact that the Federal Reserve Board has the
right to promulgate rules and regulations which may mater­
ia lly alter that?
5£r. Ardrey:


that might be the case, but the present

language does not provide for anything except checks on
member banks or other Federal Reserve banka;

that is the

language of the statute.
The Secretary of the Treasury:


the language there

is very broad, and w ill, of course, have to be subject to
the interpretatlon of the Federal Reserve Board, subject to

so 1 do not think it is quite safe to assume

that your view of it is

ccurate yet.

That may be a

preliminary interpretation.
Let me ask you about the manner of financing this crop.
The bulk of your financing is done in four months of the
fa ll.
Mr. Ardrey:

Yes, sir.

The Secretary of the Treasury:
Mr. Ardrey:

To move the cotton?

Yes, sir.

The Secretary of the Treasury:

And the value of that crop

Is something lik e $5 00,0 0 0 ,0 0 0 within this district, as

J . IT. Ardrey.


testified to?
2fr. Ardrey:


The Secretary of Che Treasury:

I understand the testiniony

to be that about $9 2 ,0 0 0 ,0 0 0 is financial in Balias; is that
Sir. Ardrey:

The cotton buyers buy about $9 2,00 0,00 0 worth,

according to their statement.

As a matter of fact, the

exchange arising in this territory indicated there, the
foreign exchange manufactured there by reason of the sale
of cotton in this territory is 4 1 8 0 ,0 0 0 ,0 0 0 .
The Secretary of the Treasury:
Mr. Ardrey:

In the entire district.

One-half of it is here, and in that connection—1

T^e Secretary of the Treasury:

Did you say $1 80,0 00,0 00

in the entire district?
Mr. Ardrey:

Yes, foreign exchange.

T^e Secretary o f the Treasury:

And $ 9 0 ,0 0 0 ,0 0 0 originated

in Dallas?
Mr. Ardrey:


that is Dallas I am sp-aking of.

$ 1 8 0 ,0 0 0 ,0 0 0 of foreign exchange was handled in Dallas,
originating in this district.
The Secretary of the Treasury:
Ur. Ardrey:

How is that financed?

The foreign exchange itself is sold, about


H. Ardrey.


70 per cent in New York und 30 per cent in Chicago.
The secretary of
Ur. Ardrey:

the Treasury:

Practically none, it is negligible.

The Secretary of the Treasury:
Mr. Ardrey:

How much in Sew Orleans?

How much in St. Louis?

Practically none, it is negligible.

The Secretary of the Treasury:

So New York and Chicago

buy most of it .
Mr. Ardrey:

So far as the foreign exchange is concerned,

yes, sir.
The Secretary of the Treasury:

Ye what extent do the

Dallas banks re-discount in chat period, or hare to borrow
money tc finance their requirements?
Mr. Ardrey:
borrowed money.

This statement shows an

analysis of the

On page 8 there is a condensed report

taken from the sworn report to the Comptroller on October
21st, which for this year is conceded to have been the
maximum borrowing period.

You will see there on October

jj 21st the national banks in the territory we have laid out
had re-discounts and b ills psyable of $23»OCO,OGO.
The Secretary of the Treasury:

Where do you re-discount,

where do you get that money?


So fa r as the

reserve c itie s in iexas are





they would borrow their money in How York.

far as the Texas cities included in this $2 3 ,0 0 0 ,0 0 0 ,


would borrow their money principally from the other Texas
ci ties.
The Secretary of the Treasury:

To what extent did Texas

receive aid from the government this last f a l l , how much of
that « 2 5 ,0 0 0 ,0 0 0 was government money?
'ir. Ardrey:

Loaned to banks?

The Secretary of the Treasury:


Have you the

Mr. Ardrey:
*80 0,00 0.

I have not the figures, but Texas got

They put # 2 0 0 ,0 0 0 , I think, in Fort Worth, and

v600,000 in Dallas*
The Secretary of Agriculture:

Would this district you


have mapped out be a dependent or independent district?
Mr. Ardrey:

I t would be an independent district and

could finance itse lf.
Ths Secretary of the Treasury:

How could it be, with ths

necessity for re-discount to the extent your figures indi­


Look at page 9.

We have there an illus-

------- ------- —

J. H.



tration of the operation of the Federal Reserve Bank*


$ 1 0 7 ,0 0 0 ,0 0 0 capital and surplus in this district would
produce at six per cent, 46,421,000*
The Secretary of the Treasury:

You are figuring state and

national banks?
r* Ardrey:

Ko, that is national banks.

and national # 180 ,0 0 0 ,0 0 0 .

We have state

It would produce $6 ,4 2 1 ,0 0 0

The reserves of country banks on their individual

deposits as shown on page ti» and in this analysis I have
taken no national banks into account, are # 2 2 6 ,0 0 0 ,0CC.
the reserve city banks in the district $ 8 6 ,0 0 0 ,0 0 0 .



reserve under the new 1 as, after 36 raonths, on the country
bank deposits would be $ 1 6 ,0 0 0 ,0 0 0 .


this reserve bank

in this district would hold for country banks in Texas.
T>>e Hecretary of the Treasury:

That would not be com-

T^ive per cent only is compulsory.

Mr. Ardrey:

Yes, but I cannot

conceive in the operation

of it where they would keep serein their vaults than they
are now required to keep under the old law.

They are now

re quired to keep six per cent, and if under the new law
they are required to keep four—


J . H. Ardrey.

The S e c r e t a r y o f th e T r e a s u r y :


Is n o t y o u r s a f e a ss u m p tio n

th e m inim um r e s e r v e th e y w ould have to k e e p , I mean f o r the
p u rp o se o f t h is d is c u s s io n ?
Mr. Ardrey:

It nisht be, excepting for tha considerations

of the b ill its e lf.
b ill,

There is no reason why, under this

a ”ian should ksep in h is vaults any more than the

minimum amount of cash, i f the law in its operation is going
to perform the function its friends think and that the
bankers think —
The Secretary of the Treasury:

It is better always to

prepare these figures upon the mandatory requirements of
the Act, because that we know we can depend on, and anything
elso would be speculative, of course.
Vr. Ardrey:

Yes, sir.

The Secretary of the Treasury:

You msy proceed, however.

Vo understand that.
be £ 2 6 ,0 0 0 ,0 0 0 .

The totsl deposits in the Reserve Bank would
The law requires them to keep 35 per cent

of that in reserve.

That would give # 17,0 00,0 00 of those

dfposits to be loaned; added to the capital would be
# 2 3 ,8 0 2 ,0 0 0 .

The maximum borrowings on October 21st, 1915,

which everybody will concede was the maximum for this year,



H. Ardrey.


was # 2 3 ,0 0 0 ,0 0 0 only —

The secretary of tho Treasury:
say that is the maximum.

That i s

Just on that point, you
the maximum which

you actually did, but does that represent the maximum demand?
In othsr words, did you absolutely meet tho entire demand
of the district?

llost national banks, for instance, when

they ret down to their reserves, simply stop making loans
or else they begin to contract credits,

under the system

that now exists, except to the extent that they reluctantly
riiscount. Now the extent to ^#iich you re-discount here does
not indicate necessarily what the normal demand would be,
doss it ?
Mr* Ardrey:

I think so, yes, sir.

When you take into

consideration the fact that of this 1 2 3 ,0 0 0 ,0 0 0 of bUbls
payable and re-discounts shown here,

there is quite an

amount of it that is pyramided; I have no way of telling
how much, but i f an Interior bank borrows money from a
reserve city bank, and the reserve city bank borrows from
5ew York, the loan is counted twice, and the # 23,000,000 is
the total for all the banks without any computation as to
how much had been pyramided.
The secretary of the Treasury:

As a matter of fa c t, was

J . H. Ardrey.


not money very tight here, and was there not a considerable
contraction of loane.
?ir. Ardrey:

Yes, it was an abnormal period, and I think

i f this analysis would stand up under that abnormal con­
dition, it would stand up better under a normal condition.
The Secretary of the Treasury:

Suppose the normal demand,

not the speculative, but the normal co&nercial, agricultural
and industrial demand had been fully met, would it not have
required probably a ?reat deal more than $;^3,000,000 to take
care of it.
Mr. Ardrey:

I can speak, of course, with better knowledge

of the business of my own bank.

I know that the burddn

which was on us this year in meeting the banks of this
distric t, and I am sure it *as with all the other banks, was
becauee of the fact that many customers who borrow


from hone normally were, on account of the conditione*
borrowers of their local banks.

You take the jobbers and

Merchants who sell their commercial paper,
this system, are having created for

and who, under

them a broad market for

their commercial paper, they would not have had the weight
of their demands on the Texas Banka. And under this new
system we are Just that much better able to take care of it ,


o• H. Ardrey,


and, for that matter, under the system tha t we are now
entering, the reduction of the reserves in the banks give*
an excess of loanable power of # 15,0 00,0 00 in chis section
alone, which would certainly have taken care of i t .

I f you

will look on ihat analysis, on the basis of $312,0 00,0 00
individual deposits, three per cent of country bank deposits
of which we had # 2 2 6 ,0 0 0 ,0 0 0 , and ten per cent of reserve
city banks, ef which wc had $ 6 6 ,0 0 0 ,0 0 0 , would $ive
♦15 ,0 0 0 ,0 0 0 lending power to the banks in this section alone
iorc than formerly, and that would answer —
The Secretary of the Treasury:

You are including that

now in your figures?
.'ir. Andrey:

I are including that in my figures to show

here an excess of $1 5 ,0 0 C ,000.
The Secretary of the Treasury:

Yes, assuming that the

banks put that extra three per cent into the reserve bank?
Mr. Ardrey:

No, I am ficuring they will have it to loan

and therefore will not be required to re-discount so greatly
We had 3 2 5 ,0 0 0 ,0 0 0 loanable on the reserve bank, and they
borrowed $ 23 , 300, 000.
The Secretary of the Treasury:


That was upon the assumpt-

ioa that they put eight per c n t in the reserve bank in the


—1“ • w

J . H.



Federal Reserve.
Mr. Ardrey:

Yes, but you see the final analysis shows

$ 1 5 ,0 0 0 ,0 0 0 over last year*s requirements.
Ths Secretary of the Treasury:
bring out was this:

The point I was trying to

Of course, under the system as it now

prevails in ihis country, the national banks stop lending
when they get down to their reserves, unless they re-discount
or contract loans.
Hr. Ardrey:


The Secretary o f the Treasury:

They do not re-discount,

unless thsy are forced to, as a rule?
Mr. Ardrey:


A few do, however.

Ths Secretory of the Tressury:

But to the extent they do

re-discount, it is only to meet very great necessities of
their customers?



The Secretary of the Treasury:


the figures

would hardly se^m to Indicate the normal demand for capital
in this district in excess of what the banks are actually
able to provide, and that is the thing upon which we would
lik e to have as nuch light as possible.



J. H* Ardrey

The Secretary of the Treaaury:


To what extent was there

legitimate business and good commercial paper that the banks
could not handle, would you Bay?
Hr. Ardley:

Jtp deliberate opinion i8 that no legitimate

demand was made upon the banks, in Texas at least, and I am
more fam iliar with them than with the others, this past year,
that was not met*
T>e Secretary of Agriculture:

Did you not soy awhile ago

that you contracted loans?
Mr. Androy:

Ho, in answer to the question if it was not

the practice to do i t 9 to contract or re-discount?
The Secretary of Agriculture:

I thought you said you did

have to contract last fall?
Mr* Ardrey:

No, sir.

TVe s cretary of the Treasury:

Was there any substantial

contraction of loans last fall in this distriot?



sir. When the banks in Texas, in August

and September, when there seemed to be some tendency in
that direction and with the assurance that Texas banks had
from your department in the August 16th statement, that the
reserves of the Treasury Department, # 5 0 0 ,0 0 0 ,0 0 0 , were




H. Ardrey.


the banks in Sexas and in this district went their

lim it, in taking care not only of the legitimate needs of
their country banks, but their wholesalers and business
The Secretary of the Treasury:

Then you do feel

that this

reflects an excess oyer the normal demand of the district*
Mr* Ardrey:

Yes, I think every person will concede last

year was a rather hard year, so far as borrowing was con­
The Secretary of the Treasury:

And by reason of the fact

that you had recourse somewhere, you w*re able to ge the
lim it of your resources in taking care of business?
Mr* Ardrey:

Yes, and we say that under the operation of

this lav with the reserves in a Regional Bank in this
section, with the application of the reduced reserves of
3 and 10 per cent on individual deposits, we would be able

tc take care of it by ourselves*
The Secretary of the Treasury:

Have you made any figures

excluding the territory here whioh does not seem to be
natural, o& account of the customary courses of business and
general convenience of business,

that would not seem to

naturally atttch it s e lf te the Dallas district; excluding

—— ---



J . H. Ardrey

auoh territory, for instance, as Nsw Mexico and Oklahoma
and Louieiana and Arkansas, and taking Texas alone, have you
■ado any figures?
Mr. Ardroy:


s ir ; no ean stand that.

The Seorstary of the Treaeury:
Mr. Ardrey:

Where are they?

Right at the top of page 6 .

Texas alone

would have $ 7 6 ,0 0 0 ,OCX) capital and surplus, and it would
havs individual deposita of $ 203 , 000,000 and it had borrowed
coney of only $ 1 6 ,0 0 0 ,0 0 0 .
The Secretary of Agriculture:

Where do you get the

$7 6,00 0,00 0?
The Secretary of the Treaeury:

The total of theee two

Mr. Ardrey:

I figured the nserve cities separately,

beoauss they figure ssparately their ratioe of reserves.
$ 7 6 ,0 0 0 ,0 0 0 would furnish a bank of 1 4 ,6 0 0 ,0 0 0 .
The Seorstary of the Treasury:

What would its reeouroee

be in the way of reservee?
Mr. Ardrey:

About $ 1 7 ,0 0 0 ,0 0 0 .

The Secretary of the Treaeury:

Have you theee figures

tabulated anywhere?
Mr. Ardrey:

Ho, beoauee we did not figure Texas eeparately.

Ths Secretary of ths Treasury:

Suppose you f il s that as

an exhibit?
Mr. Ardrey: I would be glad to do so.
The Sscrstary of the Treasury:

I f this district were

created, there are other cities w ithin it that want to have
ths reserve bank?
Mr. Ardrey:


Ths Secretary of the Treasury:

Suppcss, for instance, as

bringing out tho point I aentioned a aoaent ago with referenoe to Oklahoma, ths courss of trads and so forth frost
Oklahoma, which is northward, testified to by their bankers
and business sen; i f Dallas were selected it would do
violence to the course of business and exchange and coapel
thes to cose to Dallas, would it net?
Mr. Ardrey:

Mr. Secretary, I cannot see why it would.

You take —
The 8eoretary of the Treasury:

Sup osc, on the other hand,

Galveston was aads ths reserve city ; that would alter the
drift of your exchangee, would it not?
Mr. Ardrey:

So far as the Dallas banks are concerned, it

would not sake a bit cf difference to us. 95 per cent of
the transactions, or a greater proportion than that with any

J* H. Ardrey

i w b e r bank, which it 1* going to have with the reserve
bank, are going to be by mail, and the probability ie —
there ie nc neoeeeity for their going there at a l l , and
what difference doee it Bake to a banker in Oklahoa* or
Texas, for th it Batter, when fee bundle® up theee itBBs for
the Regional Bank*, whether he takee a rubber stasp for
Kansas City or Dallas?
The Secretary of the Treasury:

That b*lng true, what is

your argUBsnt in favor of Dallas?
Mr. Ardrsy:

The point in favor of Dallas is in train

ssrvios 91m

Bsorstary of the Treasury:

Would not tbs saas thing

apply to Fort Worth or Houston?
Mr. Ardrsy:


I ooncede it .

Hot Houston, so far as

gsographical location is conosmsd, but 1 w ill explain that
sc far as Houston is concerned we contend that becauss a
tsrritory within which you arc gcing to looate a bank —
that the location of ths rsssrvs city therein should be
geographical, so far as you can find a city that has ths
fa c ilit is s for covering it*
The Secretary of Agriculture:
the centre?

$ould not Austin be nearer


J . H. Ardrey

Mr. Ardrey:

I do not think it would, so far as a.e*ber

banks are concerned.

It feight be geographically.

The Secretary of the Treaeury:

It is not wholly * question

of geography or accessibility, but it also has relation to
outher functions these reeerve banks have to perfora, assusing they exercise clearing house functions and —
Mr. Ardrey:


That would be a question of being csntrally

The Secretary of the Treasury:
Mr. Ardrey:

Tee, in a aeasure*


The Secretary of the Treasury:

But, on the other hand,

that you have a bearing on the queetion of exchanges and
the place where the greatest nuaber of these exchangee
would naturally occur would eeew to indicate to soae extent
the looation of the bank.

I aean not wholly, but that ie

one of the consideratione.
Mr. Ardrey:

In this section we have tapped out here I do

not think there is anybody but what would conoede that
Texas is located —
The Scoretary of the Treasury:
Mr. Atdroy:

Dallas, you itesn?

Ifts, Dallas is locatsd in the centre of the



H. Ardrey

district as far as the Bomber banks arc concerned*
The Secretary of the Treasury:

You do not claim that

Texas and Dallas are synonymous, do you?
Mr. Ardrey:


Yes, s ir ; very nsarly so.

The Secretary of the Treasury:

I asked the question be­

cause I noticed you were using them interchangeably.
Mr. Ardrsy:

So far me Dallas is concerned,

I w ill say

this, and so far as the Dallas banks are concerned, we
believe that this action here ought to have a Regional
Bank in it ,

and we believe it is necessary for the develop-

Bent of this section.

And so far as we are concerned, if

you do not think Dallas is the city in which tc put it, we
subait you ought to put it in Dallas or Austin or Houston or
any other city located in thli district that can best serve
the member banks.

Ws would much rathsr sse you put it in

Houston or Austin or Fort Worth or Waco than to tie us
on to any city outside of this district.
Ths Sscretary of the Treasury:


Lot me ask you this

Looking really tc the success of this systes,

which is the only thing after a ll, which must be considsrsd,
regardless of local considerations, because localities theB

are going to be benefitted to the maxlBum degree.

J* H. Ardrey

providing the fundamentals of this systen are soundly laid,
your figures have shown that this is a borrowing district at
the time of seasonal demands*
Mr. Atfdrey:


Ths Secretary of the Treasury:

Row would it net be better

in arranging these districts to incorporate into the dis­
trict a lending as well as a borrowing end, so as to make
them as self-containsd as possible?

For instanco,

is it or

not wiss to have ths district altered and re-arranged in
such chaps that you would gst a large surplus of lending
power in one part which could be utilised in the borrowing
part wheii the tiae for borrowing cores*
Mr. Ardrey:

In the first place you would locate a given

that would contemplate,

so far as this section

of the country is concerned, a withdrawing from this section
of the country for sight months of the year the ressrvs
deposits which are now being employed in Texas banks, or
should properly be employed through the Reserve Bank, and
employ it up here outside of our district, outside cf the
district from which it arises, and employ it up here for
sight months of the year, because that is when we have a surplus,
Federal Reserve Bank of St. Louis

for the privilege of borrowing it back for four


J . H. Ardrey

The Secretary of the Treasury:
wrong about that?

But are you not wholly

It does not eake any difference where

theee reserves are deposited, according tc your testimony
a accent ago.

The queetion ie tc have that reserve power

eo*e*here to which you eay reeort when you need it*

If you

do not need it for eight ncnthe it is better for every­
body in the district that it should be employed so&ewhere
where it is needed.

And one of the chief funtione of

this law is to provide a fund which eay always be available
for re-discounting at the time of real necessity or in
case of emergency*
Ur. Audrey:

But you do that re-dleccunting for the aeaber

The Score ary of the Treasury:
Mr. Ardrey:


Primarily nobody borrows but ths eeaber

The meeber banks ars not borrowers hers sxoept for

four month* of the year, but the industries in this section
are borrowers the year round, and could profitably employ
tfeose funds for the eight atontbs when the suggestion is
that we put them up here and lend thee to banks and other




H. Ardrey

The Secretary of the Treaeury:

Rot at a il.

Suppose the

reserve bank is located in soae ether city than Dallas—
Mr. Ardrey:

Say St. Louis, for instance.

The Seorotary of the Trsasury:

Let us assuee it was St,

Louis, for the sake of the discussion.

There is generally

a surplus of loanable funds in St, Louis at a il tiaes of the
year —
Mr. Ardrey:

Ho, s ir ; you are aistaken*

Khs Secretary of the Treaaury:

1 say generally there is.

according to the testimony submitted to ue, which has not
bssn controverted heretofore.

How asauning that that be

if there is a 4e&and here for industrial or coK&.ercial

or agricultural purposss which the local banks cannot
supply, this fund, not natter whether it is located in S*-.
Louis or Little Rock or any other place,

is one to «hlcfc

you can have rsaort at any tine with the eligible paper
provided under the act*
Mr. Ardrey:

You aear the other nember banks,

The Secretary of the Treasury:


if needed?

the purpose of ths

Act is to supply the® with that facility, and you eay you
do not need it for eight Months.


J* H. Ardrey

Mr. Ardrey:

The banks in this section would be borrowsrs

only for four aonths*
The Secretary of the Treasury:

At the tiae when that

four months ca.Ee, that fund, wherever it is located, is
likely tc be available for that seasonal dsaand. Ot&srwiss
you get this situation, otherwiee you have this to confront
you, that this reserve bank then would have to do one of
twe things, i f it was not a self-contained dietrict, I
mean, it WGUld have to aek another ressrve bank to re­
discount its paper in ordsr that ths msaber banks of that
district sight gst rslisf,

or slss havs to apply to the

Federal Reserve Board to compel some other reservs bank to
ooss to the assistance of this bank.

lew ws ought net to

orsate deliberately a weak unit in ths systsa if ws can
avoid it.

It is bettsr tc maks these units self-sustaining

so far as practicable, is it not?
Mr. Ardrey:

Tee, sir*

The Secretary of the Treasury:

Vow with that in vies,


aa asking you as a business can and banksr if we ought not
to consider very closely in laying out theee districts and
naks thsm Just as self-contained as possible under noraal

J . H. Ardrey

Mr, Ardrey:

I think so.

Ths Secretary of tkc Treasury:

And would you not get

really more reliefe in this section with a district sc
orsated than if you creatsd one which, fros the very outset
aust rely upor, sone other re serve bank tc take care of it
in tine of need.
: \

Mr. Ardrey:

Well, this district w ill not have to rely

upon s o b s other r s s s r v s bank to take care of it in time of

It ie self-contained.

This district cansustain

it s s lf without borrowing a dollar, so far as the &es.ber
banks ars concerned, outsids of the r e s e r v e s th e y contribute.
The Secretary of the Trsasury:

Well, that is upon the

basic of the figures you have presented here, and they are
the reeult of a system which does not reflect a ncraal
condition, because thsrs is a lot of a rtificiality in the
systcs as it now operates, therefore they cannot be relied
upon ae conclusive.
Mr. Ardrey:

BCt if you reduce the figures to the new

syste* and sli&inate a ll pyrsaidsd leans which ars figured
in here c a d adjusted to the reserves, the banks are going
to have enough.



H, Addrey

The Secretary of the Treasury:
ligurco arc reliable,

I Bay, a ss u m in g th e s e

they reflect a rtific ia lity ; u n q u e s t io n ­

ably U.ey ao reflect considerable a rtificia lity , therefore
they ~re r.wt reliabj.e, I aean to rely upon thaa wholly.
Mr. Ardrey:

The chmge would be acre favorable* to the

figures than otherwise.
?h(» Sscretary of tae Treaeury:

That relates b^ck tc the

question I asked in the early pert of the discussion, as to
how far the demands of this district have really been met
Mr. Ardrey:

I think it is fair to state that i»ith the

bcrrc«ed f.on&y th^t this section )iae always borrowed, we
hive fiir ly act their deaand*.
The Secretary of the Treasury:

Aacuainii that in the

arrangesnt cf these districts, and tLey all have to be
related to each othtr,

they caunot oe taken and considered

absolutely independently, assuaing that Ir the organisation
of this district different liras are xaia down froa. these
you have indicated ani outside of the Texas cities, what
wculd be your second choiee outside oX Texas cities for a
reserve bank?
fcr. Audrey:

So far as the E^lla^ oanke are concerned.




H. Ardrey

*« would p r .f e r to * ° tc 8t> Louls '•athsr than Hew Orleans,
Kansas City or Denver.
The Secretary of the Treasury:

Vculd the bulk of your

trade and exchange be with St. Louis normally?
Mr. Ardrsy:

lors so than with ths other citiss?

The Ssoretary of the Treasury:
Mr. Ardrey:
with Hew York.


Yes, but not at a ll of conssqusnce as compared
Vs would say St. Louis merely because of our

contiguity, not from preference.
Ths Secretary of ths Trsasury:

Considering New York, to

what extent are your exchaggs rslations with He* York?


is the determining think in your Bind at the moment?
Mr. Ardrey:


The Secretary of the Treasury:

To what extent are the

necessitiss of sxchange with Hew York ths rssult of an
a r t ific ia l condition under the preeent system rather than
as reflecting normality?
Mr. Ardrey:

It is becauss Hew York exchange now passes

more at par evsrywhsrs than anything elss.
Khs Sscrstary of ths Treasury:

Exactly, and your balances

in Hew York are very largely for exchange purposss, are they



J . H. Ardrey

Mr. Ardroy:

Taj, primarily so.

The Secretary of theTrsasury:

With this Act in effect# will to a vary considerable measure disappear, because
ths exchange of this Rcserve Bank w ill pass at par just the
same as Nsw York exchange,
Mr. Ardrey:


Ths Sscrstary of the Treasury:

With this system going,

would your exchange balance in Hew York be large, do you
Mr. Ardrey:

Of couree, i f we have a Beserve Bank located

somswhsre outside of Texas and ws are a member bank with
St. Lcuis, we would creats ouif balances wherever our reserve
bank is, we would creats our principal balances with ths
items that we clear through thit medium.

The only way we

orsats balancee with any of our reserve cities is through
ths items ws esnd thsu rather than the currsncy we ssnd '" S

How i f Dallas is tisd on tc St. Louis, naturally

ws would accumulate mors reserves there than anywhere else;
that is where we would keep out reserves; St. Louis, Hew
York and Chicago act now ae reserves, and our balances with
any of their count.

Ws ksep balances with St. Louis because



J. H. Ardrey

they collect our eut-of-state ite&s.
There ie one function in that connection that is rendered
to a Re*#rvs Bank member by its parent bank that ie aest
important, it ie a twelve tenths preposition, and it ie aors
Important really than the natter cf borrowing aoney, and
that is the Batter that we discussed in the beginning, about
the clearing of these checks.

If you locate one of these

Regional Reserve Banke within a given district, it ou&ht
to be where that facility can be available of with the
greatest affifiency .

lfow, overnight froa Dallas we can

rsaoh every part of our section with these remittances*
with thsse collection iteas that are sent in.

A bank

located down here at Coreioana can send its iteas to Dallas
over night, and to the extent of 85 per cent of these iteas
thsy can be presented the next day for payment.
The Secretary of the Treasury:


I know tuat point#

Sup.ose, on the other hand, you have a branch in Dallas of
ths Reserve Bank, wherever it may be located,
exactly the sace fa c ilit y .

you get

The question of clearances

would be through the branch bank for a particular district.
Mr. Ardrey:


That of courss,

is to be determined here­



J. H. Ardrey

The Secretary of the Treaeury:

Yes, but I eay, assuming

you had a branch, you would get all the clearance facilities
and re-discounting fa c ilit ie s , for that matter, which you
would get through the Reaerve Bank itself*
Mr. Ardrey:

You Bean if the branch at Dallas haa assigned

to it a given territory?
The Secretary of the Treaaury:

I aav that branches are

sandatory under the law, and suat be eatabll8hed.


adaittlng that the Reserve Bank were established scaewhere
else with a branch at Dallas, you would get all these
fa c ilit ie s .
Mr. Ardrey:

You would get all these fa c ilitie s , providing

the itema were sent to the banka alone rather than tc the
parent ban*, but if we were tied up with St. Louis and had
to send our itsss through the St.

Louie bank,

I would like

A l l attention thit it is iBpcssible for St. Louia to

aerve this territory down here in thie diatrict aa well as
Dallas can.

Here is a copy of the Clearing House rules —

The Secretary of the Treasury:

That cuts no^ figure.

I aa

juet going tc ask you aoae questions as to the Clearing House
provisions of the Act.


All that will be altered.


the branch banks s i l l be related tc any district


J. H. Ardrey


whtti they are established, and if you had a branch in Dallas,
certain territory nould be allotted to that branch, beoause
you cannot arrange the clearance system any other way*
Mr. Ardrey:

I understand that.

The Secretary of the Treasury:
question here.

Sow let me ask you a

I would li"<e to address this to t h e Dallas

Clearing House, and the reporter can give you this question.
Section 13 of the Act, on page 14, provides, end I w ill
read the question, because I will ask It of the other
Clearing Houses end then X w ill not have to repeat It to
each of t h e n :
"Upon the indorsement of any of its member banks, with
a waiver of demand, notice and protest by euoh bank, any
reserve bank may discount notes, drafts, and bills
of cxohanpe arising out of actual comnercial transactions;
that Is , notes, drafts, and bills of exchange Issued or
drawn for agricultural. Industrial, or commercial purposes,
or the proceeds of which have been used, or are to be used
for such purposes, the Federal Keserve Board to have the
right to determine or define the character of the paper
thus eligible for dlsoount, within the meaning of this A c t."

There are some further provisions, but that is the thing

1.11 III** « * w i UMii

1 1.1W I



J. H. Ardrey


to which I want to particularly direct your attention.


should like to have the Dallas Clearing House consider very
carefully that question with a vie* to submitting a brief or
memorandum at the very earliest possible moment, giving your
v ie *8 as to what would be the proper definition of commercial
paper under this Act; and in considering the question, we
should li're to have you call our attention to any particular
paper which is indigenous to this district, and also to
suggest certain standard forms of notes, drafts, and b ills
of exchange which might be adopted for uniformity by the
entire Heserve Bank System.

I f you can send that to us by

the fir st of i*aroh, we should t>e glad to have it*
Mr* Ardrey:


The Secretary of the Treasury:

Another point.

Section 16

of the Aot, on pare 19 provides:
••The federal Reserve Board shall make and promulgate
from time to tins regulations governing the transfer of
funds and chargee therefor among federal reserve banks and
their branches, and mey at its discretion exercise the
functions of a clearing house for such federal reserve banks,
or may designate a i'ederal reserve bank to exercise such

functions, end may also require each such bank to exercise

- V : f \






J. H« Ardrey




the functions of & clearing house for its member bonks."
flow we should like to hare your suggestions and ideas
as to the rules and regulations that the Board may adopt
relating to the transfer of and charges between the banks,
the federal Reserve BankB end their branohes and also give
us your views as to the clearing house functions which you
think these banks ought to exerolse and as to the machinery
which might om best employed for that purpose.
<*r. Ardrey:

I would be very glad to do so.

The Seoretary of the Treasury:

You might inoidentally

take into consideration the preceding paragraph of the Act
on page 19, which provides that:
'.Sveiy i’ederal reserve bank shall receive on deposit at
per from meraber banka or from federal reserve banks ohecks
and drafts drawn upon any of its depositors, and when
remitted by a federal reserve bank, checks and drafts drawn
by any depositor in any other federal reserve bank or member
bank upon funds to the credit of said depositor in said
reserve bank or member bank.”
That is something you referred to a moment ago —
Ml. Ardrey:

Yes, unless th is federal Beserve Bank is

permitted to perform all the functions —


J. H. Ardrey

The Secretary of Agriculture:
iir. Ardrey:


You rrean the branoh?

So, I am speaking now of the Federal Reserve

Bank and Its branches, unless they are permitted to perform
a ll the funotlons which federal hanks are now permitted to —
The Seoretary of Agriculture:
iir. Ardrey:

That is the intention,

I am sure that is the intention, and any

construction that has been put upon It to insure larger
districts with the idfcea of influencing such consideration Is
The Secretary of Agriculture:

You may be sure that any

extraneous consideration or suggestions of that character
will heve no weight with this Committee.


The Secretary of Agriculture:

Please state your name,

residence and occupation.
kr. Llpsitz:

Louis i-ipsits.

I em in the wholesale dry

goods business in Dallas, Texas, and representing the commer­
cial end of the Olearlng House at Dallas.
The Secretary of Agriculture:
are considering?
Mr. L i p s i t z :


You know the prohlen we


- - w w - ----- r«


h r w n









L ip a it z

The Secretary of Agriculture:

-J -W “*MA-MHJIil


Wo w ill be glad to have

your views.
* r . Lips Its:

I have here some maps indicating the extent

that the Dallas jobbers trade, and w ill confine my remarks
entirejy to jobDlng interests, showing the territory which
we are covering.
The secretary of Agriculture:

Does that show the territory

in which Dallas is dominant?
Mr. Lips its:
as a whole.

ies, so far as 2 exas is concerned, but not

These naps simply show the name of the conoem.

Vs have Just selected a few of the prominent companies doing
business in our city, and these maps Indicate the territoxy
that they cover, and also indloate, i f you please, the per­
centage o f business that they have in the states described
in the territory which has been previously described.
The 3eoretary of Agriculture •
Mr. L ip sits :

You may proceed.

Do you want me to leave these with you, or

road from them?
The Secretary of Agriculture:

I f you desire to make any

conoent or present anything for special consideration, you

L ip sits:

I want to say that Dallas has 318 jobbers



Louie Lip sita


doing a bu8ine88 there of $ 2 1 2 ,0 0 0 ,0 0 0 , based on the 1913

X want to say further that Bellas has located


her city 2200 traveling men who are traveling this entire
territory, who Bake Dallas base or headquarters.

Dallas has

in addition 637 traveling men that cover the territory other
than Texas alone, to w it. Mew ^exico, Oklahoma, and that part
of Arkansas and Louisiana which we have referred to here.
»Ve sent our inquiries to 36 jobbers asking the volume of
their businessv or rather the number of customers that thqr
had in the states that we have in our territory other than
Texas, and we found the answer to be 4 4 ,650 .
Dallas has at thie time 26 Implement houses doing a
business of $ 2 6 ,0 0 0 ,0 0 0 annually in this territory.


has 32 wholesale automobile houses doing a business In this
territory o f $ 1 8 *0 0 0 ,0 0 0 , and in building material, exclusive
of cement, an annual business of ^2 5 ,0 0 0 ,0 0 0 .

In electrical

machinery and supplies she does an annual business of
# 1 5 ,0 0 0 ,0 0 0 .

Dry goods, cloths, clothing, and so forth,

$ 2 5 ,0 0 0 ,0 0 0 .

The weekly payroll of the 2200 traveling

sen who reside in Dallas le £129,000.

Dallas has 42

business houses rated at over # 1 ,0 0 0 ,0 0 0 , and has 118
concerns of national consequence or importance who are






Louis llpsltz


rated at over $ l v00 0 9000, where Dallas is the headquarters
for the entire southwest for these concerns to which I refer.
Ajb an evidence that they have builded wisely and have

selected with much care the Jobbing houses of Dallas, I w ill
say there has not been a failure

in Dallas of any concern

with a capital of over *>50,000 for a period of ten years.


mention that simply to show the wisdom of their selection.
We have a trade log there, indicating the merchants who come
there and register and have a refund of fare.

While we have

a great many more merchants who cone during all periods of
the year, there are two periods when they have a refund.
And to mention the growth, I want to say that in 1901 Dallas
registered 500 from this territory; in 1906, 1 5 0 0 , and in
1915, 2900.

I mention that as

an evidence of the immense

growth of Dallas as a market.
Dallas has a house trade, meaning that the customers
come into the houses to make personal selection of their
needs, of 45 per cent, we believe the greatest per cent
shown anywhere in the entire linited States in proportion to
the entire business done by any Jobbing house in the Uhited

So far as distance goes, we know Dallas goes lust as



Llp sltz


far & b the ratee w ill permit, because she is gaining rapidly
in the physical position, so ffer as rates are concerned.
I want to say I an speaking now from a dry goods point of

The rate from Dallas is equal to the rate from St.

Louis at the northern boundary of the Oklahoma lin e.


other words, we oan go to the extreme northerly line we have
indicated here before any other olty of any consequence has
any advantage over us.

So far as Sew Mexico Is concerned,

we have a rate from #1.18 up to #1.52 to tbs middle of the
state, enabling us to reach the eastern portion of the state
or that portion which is fertile on a rate of $1 .18 or $ 1 .5 2 ,
as against St. Louis #1.82*

And so far as reaching the

western ptrt, our rate Is $1 .82 or the same as the St. Louis
rate, whloh is our nearest competitor of consequence.


Oklahoma we go to the northern boundary line and in Arkansas
and Louisiana we about split the t e r r i t o ^ , we about reach
them midway.

From a rate point of view we go to HI Paso

at $ 1 .0 0 as against # 1.70 fros S t . Louis, and $1 .4 7 from
Denver, ana as against #1*72 fro® ifew York.

I mention that to show the physical condition whloh makes
it possible for Dallas to go out into this territory.
The Secretary of Agriculture:

would you say Dallas


Louis Lips its


dominates Oklahoma and Ben Mexico?
Mr- ~ipsits:

*io, X would not.

X would say that Dellas

fould secure, conservatively, 16 per cent of the business of
Oklahoma and Mew Mexico.

Dallas will he able —

ecretary of Agricxilture:

Which cities are your prin-

oipal competitors?
Mr. -ipaits:

Jt* Louis, Chicago and Hew /ork, are the only

tfcrec t l i t arc competitors o f consequence*
The aecretaxy of Agriculture:
-ir* ^Ip slts:

Kansas City?

J o , not in our line,

.Censas City has only

two houses in our line and only one active.
The Secretary o f Agriculture:

You are speaking now of the

jobbing business?
iir. ^ip e its:

Xes, s ir , of the jobbing business.

The Secretary of the Treasury:

What branch of the jobbing

i*r. i^ipsits:

Dry goods.

Dallas today is serving a

greater portion of the dry goods to Texas than any other city
in the United States, perhaps twice as much as any one city,
and is growing very rapidly.
Xf I may be permitted to refer to our own particular
business, we hpve been In Dallas seven years and have grown


Louie Llp sitz


342 per cent, and that la not peculiar to our o^tn business,
but is the condition of practically all the concerns which
are there*
The Secretary of Agriculture:

What percentage of your

bus in ess do you do in these adjoining states?
Mr. llp s it z :

I would say we do 75 per cent in Texas, and

25 per cent scatters! in the other states.
The Secretary of the Treasury:

flext to Texas, in which

state do you do the most business?
Ur* L lp sit z:


Dallas sells more goods in this

territory than does either of her other competitors, Kansas
City or St. Louis, and particularly surpasses them in
automobiles —


The Secretary of Agriculture:

In which territory do you

mean, Texas?
Mr. Llpsitz:


I speak of Texas.

Automobiles, cemeAt,

dry goods, electrical supplies, groceries, harness, hats,
caps, machinery, millinery, paper, petroleum products,
paints and o ils , saddlery and vehicles.

In some of these

lines no other point In the territory is equipped to handle
the business, not having any one of these lines represented.
We w ill say, for instance, in the mAllinery business, there


Louis Llpsltz


is no other point in this entire territory that has millinery
fa c ilit ie s in a wholesale way*

In wholesale hats we have

perhaps 300 per cant more than any other city in the terri­

Some o f the larger concerns have recently moved to

Dallas because of the accessibility to the territoiy

The American Sash & Door Company have recently

selected Dallas as their headquarters*

J2very coal coooem,

•very mining company in Texas, Arkansas, Louisiana, Hew
Lexioo and Alabama have a selling office In Dallas, and
Dallas 18 the only selling office they have in Texas, with
one exception*
The trend of business is becoming more localized all
the time*

1 would like to say that perhaps 30 years ago 95

per cent of the groceries sold, we will say in Texas, came
from St* Louis and Hew Orleans*

Today I dare say the

jobbers are serving the retailers to the extent of 25 per
cent, and not over 5 per cent is being brought in from the
other states*

In a dry goods way I w ill say that 30 years

ago practically all the retailors thought it their duty and
that they had to po to How T o * , and did not even stop at
St* Louis*

Twenty years ago they began to feel that St*

Louis would serve their needs*

JPor the last ten years they


Louis Llp sitz


hare found out it is simply a question of trading with th©
point that has the best freight rate and the best facilities,
anc the business is becoming more localized, and today Dellas
is supreme in that her trade far exceeds any other point
in this territory.
The Secretary of Agrioulture:

To what extent are your

houses branch houses?
Hr. Llpsitz:

Practically none*

Of the 114 concerns of

national consequence I have referred to, two only are branch os
of S t . Louis and one of Jtew Orleans.
The Secretazy of Agriculture:

You are speaking of dry

Hr. L lp sitz:

27ot I am speaking of all oonoerned.

The Secretary of the Treasury:

What are those branches,

what do they represent?
Hr. L lp sitz:

One is a flour concern and the Hess

Envelope Company, and the other is the Standard K illing
Company, and the one from liew Orleans is the Southern <ood
Stock Company.
I mention that to show the growth of Dallas.

I think

the number of merchants visiting there and the fact that
Dallas has more houses there shows more than anything

- -1”


Louis L ip s itz

the great convenience o f being able to trade there.



was recently favored by the government with a port of entry,
which has been vith us only eight or nine months and is now
doing a business larger than any other point similarly
situated, and made representations to the Treasury Depart­
ment, showing in 1912, and this was covercd by affidavits to
the treasury Department, $ 1 ,0 3 0 ,0 0 0 .

It is the largest

cdistributing house for Seers-Roebuek 8* Company outside of
their parent compsny.

We have a house which is producing

its own business, as against the Kansas City house which 3s
only a branch and delivers on the orders from the parcAt

This indicates the volume o f their business in that

particular territory (producing map ).
This is a map outlining the territory covered by the
Butler Brothers firm*

Thqy hove outlined practically the

same territory we have here.

This is not a branch of the

parent house, hut is a separate house, and this is the way
they have the territory outlined for the United States.
Seers-Boebuck & Company had their expert in the field and


went over the situation very carefully from a distributing j
point of view; and while perhaps Houston will show that
merchandise can be brought in there at a little lesser rate.


Louis Lipsitz


yet the faot that the final coet o f final distribution to
the retailer la so much greater and Dallas can serve them
in so exloh less time, we believe induoed them to select Dallas
as the proper placj for the branch house.

In our own case,

we lived in Tyler, Texas, and viewed all points in Texas with
a view of finding where we could distribute to the best
advantage, and after figuring on It for several years, we
determined Dallas was the best place, and our growth indi­
cates the wisdom of our selection.
The Seoretary of Agriculture:

Pile that with the reporter,

and also the map.
Mr. Llpslts:

I w ill be very glad to.

I want to say, if

you w ill permit me one minute more, that as compared with
ths S t . Louis market, the Dallas jobbers have a decided advan
tags In the matter of freights, and can reach the customers—
The Secretary of the Treasury:
Ur. L lp s lt z :

In wha;t territory?

All of this territory which we have

Our average rate, I f you please, from Dallas

I s , we will say, 50 cents per 100 pounds, and the average
rate frcm the mill at Fall Elver, say, where we get our
cotton floods largely.

Into Dallas w u l d be $L»04, or a total

cost from the time It leaves the cotton mill in l.aseaohusei s


Louis Llp sitz


to the average customer in Texasv of | l .5 4 .

The rate f*om

Vail River into St. Louis would be 86 cents, and from St.
^ouis to the customer in ^exas it would be 02 .55.
The Secretary o f Agriculture:

You are speaking again of

Texas only?
Mr. L ip sits:

.ith regard to this 50 cent rate, or a

difference of 81 cents per 100 pounds in favor of the Dallas

The average oase of dry goods w ill weigh about

pounds, and you can see we w ill reach the customer at an

actual saving of $5 .0 0 for every case o f merchandise he
receives by buying through the Dallas jobber as against
the St. Louis or

ansas Ci1y jobber.

The Secretary of the Treasury:

I thank you.

You may file those maps

and papers.
(The maps and papers were filed accordingly. )
The Secretaiy of the Treasury:
11 representatives of Dallas*

i r . Ardrey, I see you have

How there are other cities to

be heard, and unless these gentlemen can contribute someth
new or additional to what has already been presented, I think
it w i l d be just as well to rather limit the number who may

Is there anyone else here whom yon particularly

desire to have heard, who can give us any new light?

K. L* Flippen


Mr* Ardrey:

3 2 91

I f yon w ill permit us, we would like to have

Ur* Flippen sneak.

ile is a large packer*

SHATr&EHT OF £. L . F L IP P Y .


ecretary of the Treasury:

State your full name,

residence and occupation*
Mr. Flippen:

E. L* Flippen, President of the Armstrong

acking Corrnany, and Armstrong Refining Company, Dallas.
Mr. Secretary, I am representing the manufacturers of
Dallas, end I hare a resolution here from them which, if you
will permit me, I will read.
The Secretary of the Treasury:
Mr. Armstrong:


Read it.

vihereas, the Organization

Committee is confronted with the problem of dividing the
United States, under the Federal Reserve Act, into not less
than eight nor more than twelve districts, and to locate
in each district a Federal Reserve Bank; and
Whereas, the United States Census Department have
always classified Texas, Oklahoma, Arkansas and Louisiana
as the West South central geographic division; and
3Thereas, Dallas is the logical and geographical centre
of this territory; and


L. Flippan


vhereas, this is practically the same territory that
Dallas Is asking for to be tributary to a Regional Bank
at Dallas; and
tfhereas, the diversified interests of this territory
are each as to make It a balanced district and the demand
for money uniform during twelve months In the year; and
Shereas, i f annexed to any other territoiy It would
redound to the benefit of said other territory and to the
detriment o f the Dallas territory; therefore be it
Resolved, by the u n d ersized manufacturers of the
City of D allas9 that to conserve, foster and expand the
Agricultural, Financial, Commercial and Lam facturing
Interests of this rapidly growing section of the United
States, one of the federal Reserve Banks provided for under
the Federal Preserve Act should be located at Dallas.
Respectfully submitted.
( ignatures of 50 concerns added.)
Tho Secretary of the Treasury:

File it as an exhibit.

Of course, those are expressions of opinion \*faioh would have
to be backed up by some facts, which we are trying to get

I r . Fllppen:

I ?ould like to call attention to the fact


L. L . Iflippen


that Texas, from the standpoint of a packin- centro, has
a rate ^feioh has been in effect now about nine months on
packing house products from Texas cocron points to Kansas
City of 21 conte per 100 pounds*

The rate froci Ejxisas City

to Texas common points is 60 cente per 100 pounds, abotrt
three times as great-

The rate from Dallas to H # Louis

is 36 cents per 100 pounds, and the rate from St. Louis to
^allas is 60 cents per 100 pounds.
The Seoretary of the treasury:

hat is the reason for

l&r. Flippen:

The reason for that is on account of the

great movement of tonnage to the Gulf ports for export, and
the necessity of the transportation company to make whatever
rates are necessary to encourage the manufaotu ring indus­
tries of this territory so as to get tonnage northbound for
their empty cars.
How on a ll grades of refined cotton o il , the rate
from Dallas to Kansas City is 35 cents, and to St- Louis
35 cents, and fro® St. Louis and Kansas City to Dallas it is
60 oents per 100 pounds-

90 per cent of the Texas and

Oklahoma meal and oake which reaches foreign markets, is
exported through Texas ports by Texas refiners.

The esti­


£• I . Fllppen


mated prediction of erode cotton oil ie 700,000 barrels, of
ski ok. Texas refiners w ill handle 88 per cent*

The manu­

facturers o f Dallas —
The Secretary o f the Treasury:

How do thoee figures make

Dallas the point In Texas far this Regional Reserve Bank, i f
a district ie created here?

Relate those figures to Dallas

Hr* Flippen:

These figures show that so far as Texas as

a whole is oonoerned, they are entitled to a bank*


Dellas Committee is working for Texas primarily and for
Dallas second*

hen It cranes to the location of a bank, we

will be glad to set forth the claims of Dallas, but we want
yon first to consider the claims of Texas.
Ifow I have here as an exhibit a letter from the
Secretary of the Interstate Cottonseed Crashers Association,
with headquarters at Dallas, giving the lis t o f mills and
people who are members of the association, and I would like
to f i l e that as an exhibit*
The Secretary of the Treasury:
Mr* Flippen:

Just let that be file d .

But as showing the importance of Texas and

Dallas as a centre, we have the headquarters of the
association in Texas*


B* L . Flippen


I also have here with your perm ission, to file as
exhibits, original broker's contracts covering the sales
cf poods by Dallas manufacturers to Copenhagen, Denmark,
Liverpool end Manchester, in£Land, all parts of Mexico,
and a s far north as Vancouver, Seattle, iilwaukee, and as
far west as San Francisco.
(The papers above referred to were filed accordingly.)
L r . Flippen:

1 have a report here from the stockyards

Company showing that Texas has over 10 per cent of all the
cattle in the United States.
I have maps here from the different manufacturers and
jobbers o f Texas, most of which show the territory they
cover and the percentage of business they do in the respect%

ive states, and showing that the claim of the Dallas Regional
Bank Committee is justified for the territory that they
have chosen.
Here is a cracker manufactnrer that is now covering
in all the state o f Texas, a certain portion of Louisiana, 75
per cent of Oklahoma and about 15 per cent of the territory
in lew l exloo*
The Secretary of the Treasury:

Are these ^aps you have

pot a ll of the same character, indicating different lines


E. L . Fllppen


O f bU8lH088?
Mr. Fllppen:

Yes, s ir .

Tho Seoretary of the Treasury:

Suppose yon f il e the whole

book as an exhibit and we will examine it , of coarse, at the
proper time.

A mere reading of them now does not convey any

Mr* Fllppen:

I w ill be glad to.

(The maps above referred to were accordingly f i l e d .)
M r.


There is another question we vjould like to

bring out from the standpoint of the manufacturers.


accumulate vory heavy stocks of merchandise through the
spring and suxaner months for distribution to the ootton
sections at the time the crop is being gathered, and at the
time the financial institutions need the money to finance the
crops the manufacturers are liquidating 4hd returning the
money back to the banks to loan to the farmers and to the
cotton buyers, and befrlnnlnp the first of January, the
manufacturers are borrowing that money back again, and most
of them have connections in the east where we sell our paper
through note brokers, azri we pay four to six per cent interest
on that paper; and the money we borrow is the money that is
oarrled by Texas banks up there as reserves, on which they
Federal Reserve Bank of St. Louis

two per cent; and the people who are oarrying the money

E. 1 . ¥1 ippon



get the balance; and we want that money carried In 'Texas so
the entire six per cent w ill stay in Texas.
The Feeretaxy of the Treasury:

You have to do a great deal

of your borrowing outside o f the Dalles banks, then?
ijr. Plippen:

Well, not necessarily, but the manufacturers

have bank lines usually for their accommodation, and then
they borrow the money on the open narket and use their bank
lines as an anchor to windward in case the paper falls due
and they have not the money.
The Secretary of the Treasury:
your paper outside?

To what extent do yon sell

Take your own concern, as an illns-

trat ion.
Hr. Flippen:

Taking our own concern, we owed the Dellas

banks practically nothing during the cotton movement last
Tho Secretary of the Treasury:

Vna that because you could

borrow cheaper elsewhere?
Mr. Flippen-

/e could borrow cheaper or Just as cheap.

The Secretary of the Treasury*

here you can borrow just

as cheap, ?rtiere do you borrow?
Mr. Flippen:
have id le funds.

'wo borrow fro© the local banks when they


K* L . 7 1 ippen

The Secretary of the Treasury:


Do yon frequently find

they have not idle funds and you have to borrow outside?
l£r. Flippen:

i»'o, aside from the fact our requirements

are frequently in excess of the aiaount allowed by the

ank Actf we could get all our money in Texas.

The Secretary of the Treasury!

At the same advantageous

Lr. .f’lippen:

iractieally the same.

The Secretary of the Treasury:

Are you any more fortunately

placed than most borrowers. In that respect?
H r. Flippsn:

I do not think so.

The Secretary of Agriculture:

To what extent do yon look

upon this as a creditor or borrowing or lending territory?
Mr. Flippen:

Our experience in our business in this terri­

tory has been that it is the best balanced section of the
United States.
The Secretary of Agriculture:

Is it dependent or indepen­

dent financially?
Hr. FI ippen:

I think it is Independent.

The Secretary of Agriculture:

Has that been your exper­

ience and the experience of this section, that it is inde­
pendent or dependent on outside districts.

JS* L . Flippen
i * . . Matson


Mr. Fllppen:


lly experience has been that it is indepen­

dent •

ecretary of Agriculture:

Ths Seoretary of the Treasury:

That is a l l , thank yon.
Have you anybody else,

fcr. Ardrey?
U t • Ardrey:

e would like Mr* Hats on to speak very

e bad asked Lr* Collier to speak* bnt he will

speak about the general banking situation and can follow
at any time*

S TATmiHT 03? A. 11. MATS OS.

The Seoretary of the Treasury:

Will you state your fu ll

name, residence and occupation.
Mr* Matson:

A. V . Matson; general nujaager of Butler

Brothers, and acting as Chairman of the Railway Committee of
the Dallas Chamber of Commerce*
The Secretary of the Treasury:

I f you have any new light

that you can shed on this problem, we would be glad to have
you give it to us.
Mr. Matson:

We thought that psrhaps the evidence I ccrald

give as to Butler Brothers, locatsd In Dallas, might be of
interest to you.

Five years ago we had five distributing


A# la. lBt80n


houses located in va ions sections of the country, and at
that tine we decided to locate a house in the southwestern
district of this country, a distributing house.


carofully considering this matter frsm oil sides, and inves­
tigating various jobbing centres in this district, we decided
that for many reasons, Dallas was the proper place for us to
looate our fifth distributing house.

Texas was our largest

Btate served by St. Louis prior to our coining here, and since
coming here,

in 18 months time,

our business grew about 100

per cent, assuring us that re had located in the proper city
to properly serve the territoiy, from a mercantile standpoint.
The Secretary of Agr5culturr :

/hat territory do you serve

from Dellas?
Mr. Batson:

All of Texas principally, excepting the Gulf

point8, that are served from cur Eew York house.
The Secretary of Agriculture:

To what extent do you serve

Oklahoma, Hew Mexico and Louisiana?
M r. katson :

In Oklahoma we serve practically all tbat

business coning to


south of the Canadian River, and in

Hew Mexico very l it t l e excepting down the Pecos Valley on the
Santa Fe Railroad.
The Secretary of the Treasury:

Do you serve that frctn


A* M. Matson


S t. Louis or Dallas*

Ur * Matson:

Dallas mostly *,

Ths Sscrstary of ths Trsasury:
Mr. Mstson:

Ths Pscas Hirer district?

Ths Pscos River district, y e s,s ir*


Arkansas, not rsry much,- but perhaps mors than five par cent
of our total buslnsss from Dallas goes into Arkansas*
Ths Sscrstary of ths Trsasury:
Mr* Matson:

fhat about Louisiana?

Ih s same applies there, a rsry small amount*

As my map w ill showm we serve but a rsry small district
right througi hsrs (indicating)*
Ths Sscrstary of ths Treasury:
Mr* Matson:

Practically Tsxas?

Y s s ,s ir , and Oklahoma and a little district

off in ths northwest corner of Louisiana#
Ths Sscrstary of the Treasury:

That is all*

Mr* Matson: Would you like to hear our report of ths
railroad fa c ilit is s for rsaehing this tsrritory?
Ths Sscrstary of the Treasury: Ws are familiar with it*
I f you desirs to fils any data on that sub J set as an
sxhibit, you may do so*
Mr* Ardrsy:

WC would hars bsen glad to hare Mr* Nevills

Brooks, who is ths Chairman of the Fifth District cf ths
Texas Banksrs Association, to prssent a rssolution whichwas



passed at their annual meeting on February 5th %
The Secretary of the Treasury: Lat it be filed*
(The resolution was fila d , and is as follows):

the provisions of the Federal Reserve Act

require that tha couatry be divided into not less than eight,
nor more than twelve districts, within each of which a
Federal Reserve Bank shall be located! and
WH5RSA3, the agricultural, commereial and financial
importance, both present and prospective, of Texas and the

statas in tha Southwest Bake it necessary, undar

tha system to ba established, that one of tha Federal
Reserve Banks ba located within this

section to serva properly

tha vast interests therein aid promote the development of
tha won ler fu l re sources thereof;


WHEREAS, at this annual meeting on February 5, 1914,
the members of the Fifth District of the Texas Bankers

dssire to reeorl their views with respact to

the location of the Federal Reserve Bank to serve the dis­
trict, within which there are located 405 State and National
Banks, having a capital m i surplus of |36*392 ,0QQt the
same being thirty per cent in number,

m I thirty-one per

seat of the capital and surplus of all the banks in Texas;


thereforebe it
RESOLVED, fir s t , that we hereby ratify and endorse as
the logical and geographical designation of the district to
be treated within which to locate the Federal Reserve Bank,
the following:
All of Texas,
All of Ohlahoxna,
All of New Mexico
All that part of Arkansas sou£h of the Arkansas
All that part of Louisiana west of the Mississippi

Second, that the city within

this district


qualified as the location of the Federal Reserve Bank, to
serve the saae by reason of its geographical location,
commercial importance and unexcelled fae ill ties, is the
city of Dallas*
Third, That the Chairman of this District bef and he
is hereby directed to appear before the Reserve Bank
Organization Committee at its hearing at Austin on February
9th an d 10th, and present thereto a copy of this resolution?




and give such furtte- testimony in support thereof as any
■ay be necessary*
Tha Sacretary of Ap-riculture:

What part of Texas does

that district cover?

fir dray:

Tha northeastern portion, horderingon Oklahoma

and Arkansas, 613 banks with $ 3 5 ,0 0 0 ,0 0 0 banking capital,
an d 31 per cent of tha banks.
The 3ecretary of the Treasury:
Mr* Ardrey:

They favor Dallas?


The iecr^tary of the Treasury:

Have you any copies of

telegrsaa or letters which you sent thera, bearing on that
subjee t?
Mr* Ardrey:

They were in their annual meeting.

The Secretary of the Treasury:

.I f so, we aight have those

Mr* Ardrey: I would say this, we had quite a nuabar of
postal card endorsements

and other things in response to

letters and telegrams, but just as we were accumulating
those, the Department at Washington

sent out a similar

inquiry to every bank in this section, and we are quite
content to let Dallas1 olaia rest on the poll taken in that

and consequently we have not filed the letters aad



talerracs in answar to tha 1 attars

sent out#

Tha Secretary of Agricultural Thay ware aant out before
tha government poll was taken?
Ur * Ardrey:



a mat tar of fact thay were sent out

Tha Secretary of the Treasury:

The gorernaent pall la

certainly likely to produce untrammeled and unrestrained
opinions, without influence from any one.
V r # Ardrey: Y e a ,a ir ,

and so far as Dallas is concerned,

we are content to let the matter rest on the opinion of the
banks in answer to that question*
The Secretary of th* Treasury:

We will eall from Fort

Worth now, unless there is somebody else Droa Dallas who
want a to be heard*

Ur* Ardrey, before we close the Dallas

hearing, if you desire to call any one else, you may*
Mr# Ardrey: We hare some other witnesses whom we are
quite anxious tor you to hear, and I think they can give some
new in fora at ion, i f you will indulge them.
The Secretary of the Treasury:

I f they can give any new

: information, all right*
Mr* Ardrey: We would like Mr* Robinson to speak* He is
the preeident of one of the implement dealers in Dallas*




The Secretary of Agriculture:

Mr, Robinson, will you

state your full name, residence and occupation?
Mr* Robinson:

William M« Robinson, Vice Presi d»nt, Parlin

k Oron dorff Implam ant Company*
Tha Sacratary of Arripulture:

What is the point you

desire to present*
Mr* Robinson:

Well, sir,

Dallas is the largest distributor

of agricultural implements in the southwest* It is second
only to Kansas City in the United States* We hare about
30 wholesale houses there*
Ths Secretary cf Agriculture: What is the total volume
of distribution?
Mr* Robinson:

About $3 5,00 0,00 0*

The Secretary of Agriculture:

What part of that is done

in Texas?
Mr* Robinson:

4bout 85 per cent of it , and the balance

is d stributsd in southern Oklahoma, southern Arkansas and
jj lew Mexico*
The Secretary of Agriculture:

About what percentage in


W* M. Robinson

Mr* Robinson:


About 10 per cent.

The Secretary of Agriculture:
lir* Robinson:

And in Louisiana?

About 7 per cent in Louisiana*

The Secretary of A£r iculture:

Where does Oklahoma as a

whole get most of her inplements?
Mr. Robinson: Oklahoma city*

All of Texas and northern

Louisiana, the Pecos Valley of liew Mexico, and a lap-over
into Oklahoma from the northern boundary towns in Texas,
are all served from Dallas.
The Secretary of Agriculture:

What part of the business

woull you say is done by other Texas cities, Fort Worth,
Houston, Waeo and San Antonio?
Mr* Robinson: There is not any Implement business or
vehicle business or nachinory business in the agricultural
Implanon: line done in any Texas City except throu^i Dali
The Secretary of Agriculture: Have you any naps or data
which you ds sire to file?
Mr. Robinson:

Mr* L lpsitz, I think, fil e d our map with

his statenent* But the inpressive point is that all the
agricultural implements in the southwestan part are dis­
tributed through Dallas*
The Secretary of Agriculture: Thank you* I think that


Math an A lame


givs us th# information.
V r. Ardrey:

I f you will hear U r. X a than Alama,


Caahiar of tha American Exchange Bank, and President of the
Texet Bankers Association?
The Secretary of Agriculture:


The Secretary of Agriculture: Mr .Adams, will you state
your name, residence an d occupation?
Mr. Adams: fta than Adams, Caahiar of the American Exchange
National Bank of Dallas; P r e s iA n t of the Texas Bankers
Mr. Secretary, I had tha pleasure of hearing your
speech in St Louia, in which you atated that theae banka
were to he located more for the future development of the
country than for the present naeds —
The Secretary of Agriculture: I

(to not recall makingjust

that etatement.
Mr* Adams:

V e il, something on that lin e .

The Secretary of A/rrieulture:

It is very important to

know Just what the line was.
Mr. Adams: I f I remember you correctly, yew stated that


Nathan Adams


the needs of the country would not be the convincing thing
at this time, but the development of the country would be
taken into consideration*
The Secretary of A riculture:

Well, that is a different

statem ent.

Vr. Adams: That is the idea I meant to convey. Dallas,
in 1904, h a d total b an k in g resources of $ 1 6 ,0 0 0 ,0 0 0 , with
five National Banks. In 1914 they had total resources of
$ 4 3 ,0 0 0 ,0 0 0 with five National Banks and fiva State Banksf
In T ax a s,

taking the Comptroller*s report of October 21st,

as the basis,
w ith assets,

the total number of banks in Texas was 1362
in round figures, of $ 1 2 6 ,0 0 0 ,0 0 0

and individual

deposits of $ 2 9 6 ,0 0 0 ,0 0 0 . In 1903 they hal 377 National
Banks with a total capital of # 37,0 00,0 00 and total deposits
of $ 8 8 ,0 0 0 ,0 0 0 , showing an increase in ten years of
# 2 0 8 ,0 0 0 ,0 0 0 .
The Secretary of the Treasury: Pile that as your exhibit.
Mr* Adams: Yes*
(The statement was accordingly f i l e d .)
Ths Secretary of Agriculture: You are speaking there of
National Banks?
Mr. Adams: National and State. There ware no State banks


Nathan A lama


in Texas in 1903* Tha State lav cane into off act after that
time, an i we think that these matters should be considered*
Speaking of this territory claimed for Dallas, while I am
not qpeakingfor the whole association in Texas, and do not
want to be undbrstood as speakingin that capacity, I
believe we are better able to serve the territory we have
selected than St* Louis or fcew Orleans or either one of them,
with the stata divided*
past 15 years will

I think the feistory of the

develop tha fact that we have the right

to expect that the increase in Texas in the next 15 ysars
will be better than th* increase in — will be better than it
has ever been, and we will be amply able to take ears of our­
selves* We had the experience in 1907 with St .Louis
of not being able to get the banks north of us to take a
check loon that city*

Ve do not believe they are the

lenders of money that you have been le d to believe* We be­
lieve we are amply able to take care of the district that,
ws have chosen,

and that the facts will

The Secretary of the Treasury:

tfevelop it*

We will hear the super in-

ten dent of Banks, if he is here*
Ur* Ardrey: He has not corae in, but he will testify for
the state in general,

snd can f i l l in at any time*


B . B . Paddock

The Secretary of the Treasury:


We will hear from Port

Wortti now.
VlT . Lo uis J . Worthu^:

I f tiie Comsittee pla&se, I ais

Chairman of the Fort Worth delegation.

Is have segregated

Fort Worth* s plea into several co-re^aa~dilopics, according
to this inquiry, and we have the following list of gentleaen
who will specialise on each one of tne ja topics, and we
would be pleased if the Committee #ould call their names
in that order.
The Secretary of the Xreasury:


7?e will hear you

Captain Paddock.

The Secretary of the Treasury: State your name, residence
and occupation?
Mr. Paddock:

B . B . Paddock, my address is 7ort Worth,

and ny friend at Fort Wortn designate my occupation

as *town loafer” .
The Secretary of the Treasury: I suppose we ought net to
ask you if you deserve the title (laughter).
Mr. Paddock: You c m ask me anything you have a nind to

B* B* Paddock



and I will answer to the best of my ability*

The only

o ffic ia l position I occupy is that of honorary president for
life of the Port Worth Chamber of Commerce, and it is without
emoluments, duties or obligations*

the Port Worth Committee hare seen proper to

assign me to the presentation of the railway and mail
fa c ilitie s for Texas, haring divided up the different sub­
jects and assigned them to those that they thought would be
competent to present them intelligibly*

But I do not want

to trench upon any of my associates, but for fear they might
not think of it, I want to challenge the statement made by up
good friend of Dallas, Mr* Babcock, that Dallas gets- all the
trade from southwest Oklahoma*

We get a little of it in

Fort Worth, Just a trifle*
If I have comprehended the intent and purpose of this
Aet rightly —
The Secretary of the Treasury: Will you qpeak a little

so the gallery can hear you*

Mr* Paddock

I do not care about the gallery, but I want

to get it into you*
The Secretary of the Treasury : I f you get it to the
gallery, we will hear it*


B* B* Paddock

• Paddock:


I f I comprehend tha purpose of the Act

correctly, it ia to provi fe a financial system which will
beat serve the people and tje business and productive
interests of the country, and not so much

we have

the banking

la id out a district comprising Texas,

Oklahoma and New Mexico, it being—
The Secretary of the Treasury:

Your argisnant relates to

the same district as presented by Dallas?
Mr* Paddock:

Ito, sir,

we do not include Arkansas or

The Secretary of Agriculture: Can you give us your map?
Mr* Paddock:

We have a little map here

that I got at

Dallas* I do not want this Committee to think there is
nothing west of Dallas there, any railroads* Have you the
map there that tfiows the truth of this thing?
The Secretary of Agriculture: Do you want to f il e that?
Mr* Paddock: Yes, I want to file that — no, I think I
will have that framed and put in my library* We present to
you this map (producing another map) as showing the other
states on the paper* That map is a reproduction of the
postal route map as platted by the Post Office Department,
which shows every railroad in

Texas, Oklahoma and Hew Mexieo*


B . B . Paddock

I believe*


You will observe, gentleman of the Committee,

that thers are 13 miles there i n r e i which represent 13Trunk
line of railway that converge at Fort Worth.

I want to

capitalize the word Trunk Lines for a reason which I will
give you later on.

This is the shortest line that we have,

it is only 233 miles, but every other line there extends
entirely across the state and adjoining states

to the

corn'll ere ial marts of the country.
You will observe that C u r j are three lines to Denver,
to witt the Fort Vorth & Denver, the Santa Fe and the Heck

There are four lines to Kansas City, the Santa Fe,

Hock Island, Missouri, Kan see & Texas and Frisco System.
There are five lines to St. Louis, the V. X . & T .,
Cotton B e lt,


the Texas & Pacific with its connection with

the Iron Mountain, and two lin^s of the Frisco, one line
lin e,

a little north-of Fort Worth in a direct

and the other runningon the eastern line of Oklahoma,

the distance between the two lines at this point being 109
milas, covering, you will observe, quite a considerable

There are five lines to Houston and Galveston,

the K .K . & T .,

3:uita Fe, the Houston Sc Texas Central, the

International & Great Northern, an3 the Trinity & Brazoe


B . B* Paddock


V allay . There are two lines to tho Mexican border on the
•outhweet, and New Mexico is served by three lin e* from
Port Worth, there being a tri-daily service from Fort Worth
over the Santa Fe lines to New Mexico, and there are two
lines over the Texas & Pacific and the Orient, taking up
the Pecos Valley, which is the most productive section of
Mew Mexico, from an agricultural standpoint*
The Secretary of the Treasury: Have you any connection
with Dallas?
Mr* Paddock: Y e s ,s ir ; we do not use them much (laughter).
There are four,

the Texas & Pacific, Cotton Belt, and the

Rock IAand, and then for their convenience we built them
an Interurban railway which has a h a lf hour service between
the two c itie s .

They are on this map as well as their

interurban lines north to Denison and the southern line*
The Secretary of the Treasury: Yes, I see it now that
you oall my attention to it*
Mr* Paddock: Yes. You will observe there are no branch
lins • from Fort Worth in any direction or leading out to
connect with sny other road,

nd that condition

dbes not

prevail anywhere else in the Jnited States, that every line


B . B . Paddock


entering or converging at a given point is a trunk lin e.
We are

dbing more railway business than any city of

anywhere near our size on thi3 continent* I heard the boast
made that one of our competitors handled 643 freight cars
daily through their several yards in their city . The number

handled daily through the yards of Fort Worth is 3052 p lus,
making 955,505 freight cars handled in Port Worth during
the year 1913.
The Secretary of the Treasury What is the name of the
competitor to which you refer?
Mr. Paddock: Here it is on that little map I gave you.
Tha Secretary of the Treasury: Where they handle 600 a
Mr. Paddock:

Dallas, 643. Give thsm credit for all they

do. There is a reason for this which is found in the fact
that not only are we the centre cf two of the greatest
articles ofccommeree in this country, but that our lines are
trunk lin es, and under the ruling of the Railway Commission
of Texas, which is also applied by the Interstate commerce
Commission to the Texas-Oklahoma points, a one-line rate
is lower than it is over two or more lin as, and as the lines
converging at Fort Worth are trunk linos they take the one


B . !<• Paddock


lin e rata, to that Fort Worth has an advantage to about 85
per cant of tha points in Texas and Oklahoma, of the onelin e rate as against the two or three line rate,


accounts in a great measure for the large number of freight
ears that are passing through Port Worth.

Of these cars,

41 5,21 6 cars do no business in Port Worth except tha inter­

from one road to another and the others are loaded

and unloaded in Port Worth.
The Secretaryof Agriculture:

Which city receives the

most commodities over its railroads, Fort Worth or Dallas?
Mr. Paddock: Well, it would depend a little bit of whom
you were making the inquiry, I think.
The Secretary of Agriculture: I am asking you right now.
Mr. Paddock: Port worth.
The Secretary of Agriculture: Which distributes the most
commodities over these railroads?
Mr. Paddock:

R>rt worth.

The Secretary of Agriculture:

It has the largest business

each way?
V r. Paddock: We handle through our yard* 3052 cars plus
each day, their

largest claim being, I believe, 643.

The Secretary of the Treasury: The question is , how many


B . B* Paddock


of the* originate there and indicate the business originating
at Port Worth and corningin to Fort Worth and stopping there*
Mr* Paddock:

Well, you would subtract 415,216 from tha

and you have 540*289*

The Secretary of the Treasury:

Loaded and unloaded?

Mr* Paddock: Loaded and unloaded*
The Secretary of the Treasury:

Representing local Fort

Worth business?
Mr* Paddock:

The business coming into Fort Worth and

go ing ou t *
The Secretary of the Treasury:

That is what I mean,

exac tly *
Mr* Paddock:

Fort Worth being the —

The Secretary of the Treasury:

What does/bulk of

that business eonsist of?
Mr. Paddock: Cattle, grain and cotton, and of course
Merchandise in an d out, but toe larger business is in eat tie,
grain and cotton* Most of the cotton goes through, all but
125,000 bales* Of something like 1 ,0 0 0 ,0 0 0 brought in Fort

there are only about 125,000 actually handled there

on the platform. There are 110 mail trains in and out of


B* B* Paddock


/orth every <tey, n o


trains that carry tha mails, Fort

Worth being tha headquarters of tha 11th Postal Division,
established in lovember, 1888*

It is a coincident that it

eobraces practically tha same territory that we are asking


for, for a Reserve Bank, Taxas, Oklahoma, fcew Mexico and
they taka in a part of Arkansas and Louisiana, which we do
not* Our reason for not doing that was that we wanted to

gat a Reserve Bank and the trend of business we thought to
ba an important factor, and as the anount of business
transacted between Texas points and Arkansas and Louisiana
points is so small, we did not add it to the territory for
presentation at this time*
low with the mail facilities of 110 trains in and out
during the day, we reach a point 220 to 225 miles from Fort
Vorth to which mail can be forwarded and an answer received
within 24hours.

We also give it within 36 hours and 48

The Secretary of the Treasury:

Is that a part of your

Mr* Paddock: No, it is not printed in the pamphlet, but
I w ill file it with you •


B . B . Paddock

The Secretary of tha Treasury:


I f you will fila it ,

please do so, because »a cannot carry those figures in our
Wr# Paddock:

I will file it* We reach points varying from

220 to 225 miles,

in which a latter can be dispatched and a

reply received within 24, 36 an d 48 hours*
As an evidence of the business that us being lone by
the Railway Mail service,

there are living in Fort Worth 257

employes of the mail service* Thare are two chief clerks and
there are 156 parcel cars sent out from Fort Worth* that is
a new department in recent years in the transmission of
fre i^t,

sending small parcels to local points*

156 of

those each day leaves Fort forth loaded with small con sig*.
ments to different points in the trade territory of Fort
Wa have added law Mexicorcto this territory for the
reason that tha principal industries in Kew Mexico are
cattle, fruits and vegetables, and lining* Outside of the
Pecos Valley and its tributaries,
agriculture in Hem Mexico,

there is very little

as I understand and am adviaed*

That business lar/rely comes to Fort Vorth* Most of the
cattle, and I think practically all the fruits and vegetables

B . B . Paddock

com* thare.


It is no unusual sight to see several solid

trains of these refrigerator cars coming into Fort Worth
within an hour or two of aach other.

The California Fruit

Company has ta headquarters for tha southwest at Fort Worth,
whora tha so cars are inspects!, re-iced and distributed from
there to the points in the north -uid northeast and horthwest*
Denver gets most of its fruits and vegetables through Fort
Worth9 from the southern part of Texas and from southern
Arizona and New Mexico.

Just the day before I l e f t , one

firm in Fort Worth paid a freight b i l l of $20,000 on one
shipment that eame in*
Fort Worth., by reaaon of its railway facilities —
perhaps the personnel of Fort Worth people mi^it have had
some influence in the matter, but probably largely because
of its railway fa c ilitie s and convenience for the trans­
action of business, is the headquarters of the Texas Cattle
Raisers Association*

That narae is possibly a misnomer,

though it originated in Texas some 40 years ago, 38 years
ago, I believe, most of its membership is in Texas, but it
comprises members tram Oklahoma, Hew Mexico, Kansas, Nebraska*
and Old Mexico.
The Secretary of the Treasury: I

see you have Mr.Stafford


B • B • Paddock


down hare to apeak on that.
Vr* Paddock:

Yes, ha will speak on that particular point,

but I am spealdngof its being mads the hsadquartars, because
its railroad facilities* Also it is the headquarters of the
Crain Dsalers Association, the headquarters of the Farmers*
Union of the Southwest, the headquarters of four of the

that converge in the city*

The population of Fort Vorthm as you will see


looking at the census reports, shows a percentage of increase
greater than that of any other city in the United States
for the last decade, being 174*7 percent, and it is growing
as rapidly now as it did then*
The Secretary of tha Treasury:

lhat was the population

by the eensus of 1910?
Mr* Paddock: 7 2 ,3 1 2 , an increase during the decade of
174*7 per cent* We assists that this is building for the
future, and wears e j e c t i n g great things for our £ktj and
our section upon the completion of the Panama Canal, when
all the products destined for the Orient will pass through
Fort Worth seeking an outlet through the Panama Canal*
say they will go through Fort Worth for the reason that
these lines of railway extend north into the Mississippi



B . B . Paddock


Valley, and they are trunk linea of road and do not have
to change and gat off thair own ralla to ra?eh tha Gulf
porta in Texas.
I believe, Wr♦ Secretary, that what little else you
say fin d in thia pamphlet upon that tub j act cosparises about
what I wish to aay about it*
Tha Sacratary of tha Traaaury: Wa can raly upon that
printad matter, I presume*
V r•

Paddock: I wrota it , H r. Sacratary, and I feel quite

aura that that will ba enough for you (laughter).
Tha Sacratary of tha Traaaury: Knowing tha authority
I shall know what weight to give to i t .
H r. Paddock:

Y a a ,a ir , precisely that.

Tha Sacratary of tha Traaaury: Can you give ua thrae
copies of that?
Mr. Paddock: Y e s ,a ir , I will aaa that you get thas.
Tha Sacratary of the Traaaury:

Kindly fila thraa addi­

tional copies.
Mr. Paddock: Y e s ,s ir . If there are any additional
facta or any <ju©stions you desire to ask se, I will «ry to
an swar thas.
Tha Sacratary of the Traaaury: I do not think of any­


R* D* Gage*

thing* That it a ll,


thank you* We will hear ISr* Gag#*


Tbs Secretary of tha Treasury: Will you state your full
nane, residence and occupation?
*r• Gage: R* D* Gage; Port Worth, Texas; Vice President
of the First National Bank*
The Secretary of the Treasury: Hare you a map outlining
the district that you are advocating?
Mr. Gage: The /in e s , Mr* Secretary, that ase entirely
pleaaing to us are coincident with the lines presented by
Dallas a few monents ago*
The Secretary of the Treasury: You are in agreement upon
that point?
Mr* Gaga: Y es,sir*

All of Arkansas, south of the

Arkansas River, Louisiana —
The Secretary of the Treasury:

As to the district it s e lf,

of course, we have had information*
Mr* Gage: Yes*

The Secretary of the Treasury: I f you will kindly advise
us why,

if that district should be created, Port Worth

should have the bank as against any other city in the district,



R* D. Oage


we should bo pleased to get that information .
Mr, Gage: To be entirely frank, Mr* Secretary, the honors
are quito evenly divided, unless our large railway and sail
fa c ilit ie s and our large grain business and our cotton
business incline the scales in our favor* The two towns who
are contesting here from North Texas, are within 30 miles of
•ach other, and all that can be said about the

one in a

general way, can be equally truthfully said about the other*
I havo listened with interest, and of course it has been very
instructive, to the line of your questions*

Sow, Mr*

Secretary, Texascannot pretend to enter the lists with St*
Louis or Chicago, or with Rew York*

I f we down here

unlerstand that question, and you will excuse me if I go
beyond what I ought to, it is with entire deference
to you gentlemen, your line of questions which I have
listened to —

we had the idea that the purpose of the law

its e lf was to distribute and to prevent the vast sggreg ation of money —
The Secretary of the Treasury:

Does not that inevitably

follow, no matter where you put the reserve banks, so long
as you divide the country into districts which the Act
require at


K* 3* Gage


Kr* Gage: Not entirely so, wa think# Wa think that thia
country down h e r e , that ia a developing country and a growing
country, if wa can ahow you by tha figures and by the facta
that wa are eafely beyond the margin of the minimum required
un cbr the law, if our dbposita jU8tify i t f If our wants and
our needs ae^m to warrant it , we think i f there be any doubt
in the min a of you gentlemen, it certainly ought to be
resolved in favor of the southwest*
The Secretary of Agriculture:

how you are apeaking


thia whola district?
Mr. Gage: I aa qpsaking for the entire state*
The Secretary of Agriculture: Only for the entire atate?
Mr* Gage: Oh, no, you understand generally for the atate *
We want it in the atate firat* We think theae minor differ­
ence a ought to be sunk right here# Of course, there ia a
pleasant rivalry* We believe we have the ed^e over our
other friends*

We believe that Port Worth teas inclined the

scales a little bit more heavily*

But speaking for Texas

It s e lf, you speak about the trend said current of trade* How

3d not believe in any abrupt dislocation and disruption

of these relationships, but to a certain extent that must
be done*

R* D# Gage


The Secretary of Agr culture: His provisions of the Act
in that reapect are mandatory* It

says wo shall have due

regard to tha convenience and customary course of business
in these districts*
Wr* Ga^e: I un "erstand, but I do not understand that the
conditions which have prevailed possibly tor 50 years of the
financial current through 3t* Louis and Chicago and &ew York,

ide artificially so by the fact that they are the great

reaerve centrea —
The Secretary of the Treasury: We are not peaking wholly
of exchange, but our inquiries are directed to all these
business phases as well, as the lin e of questions which you
heard indicate, and we are trying to ascertain what will beat
aerve the customary course of business and convenience,
which includes banking, but that is not the only interest,
by any means*
Mr* Oage:

* o # I understand the agricultural and industrial

interests are also considered*
The Secret >ry of the Treasury: And let me say again, and
addressing myself to your opening remarks,

about the

purpose of this Act being to decentralise reserves, and that
the purport of our questions would seem to indicate the


3» Cago


purpose to oantralize th® funds, tha very Act itself craatas
decen trali^ation which you

o f,

an 1 the organization of

tha country into not less than eight nor more than taelve
liatricta ia bound to bring about that result* Tha only
question is what tha lines of tha 3istricts ah all bef and
aa to vhara tha Reaerva Bank itsalf shall ba placed in each
ona of thaaa districts*
Zha lav alao contemplates, and in fast it aakea it
mandatory, that thara shall ba branchas of thaaa banks
throughout thaaa districts, in ordar that tha convenience
and custoaary course of businass Bay ba best served in
every direction.
V r. Gaga:

I understand*

Tha Secretary of the Treasury:

How that is

what tha

Coaaittee ia trying to ascertain, an d aa I said before, and
I would like to try to repeat it hare not, tha line of our quo*
tiona do * a not in any manner indicate any £*ift of our opin­
Mr* Gage:

3d I understand*

The Secretary of tha Treasury: But what wa Bust da, as
you gentlecnen are advftoating a particular thing, is to aak
questions which
Federal Reserve Bank of St. Louis

mty eeaa opposed to your views, for the

of bringing out all the facts and developing the

R . D# Gage


i'r. Gaga: I understand* I di i not intend to convey the
idea that you gentlemen were endeavoring to impose a con­
dition upon us which was contrary to the drift of the
financial current and trade current.
The Secretary of the Treasury: &fot at all* I only wanted
to emphasise the point and make it clear again, so that
there may be no mi sun cterat an ding.
tfr. 0 age: Temporarily there might seem to be by the
formation of this district which we aug/rest, a breaking of
ties and a disruption of relationship, bfct it does seem to
us that, homogeneous as we are down here, with like interests*
it could be done with the very least inconvenience, and
certainly to the very great convenience of these people who
are in the boun iariej of the territory we suggest.
The Secretary o f the Treasury: The normal relationships
between depositors and the various banks in these statesare
not £Oing to be disturbed, nor are the normal relationships
between the banks themselves going to be disturbed.


Act creates the reserve banks for the purpose of providing
a new and additional facility to those now existing.
Mr. Gage:

3o I understand.


D. Gage


The Secretary of the Treasury: Now ths purpose, of course,
in locating these bank* and laying out the districts is to
fin d out what will beat accomplish that purpose for which
this Act was passed,
we lad this

flow attuning this district,


same question as between St. Paul and Minneapolis;

they both concurred in the district, but each wanted the
bank in their respective cities.

The question we had to

ask them in the question we must ask you here, what prevail­
ing or paramount reason is there for having this bank either
in Dallas or Port Worth, i f this district be assumed? Now,
as representing Port Worthr if you can give us any prevailing
reason why Port Worth should have it as against any other
city in the district, we would like to have it .
Kr. Gage:

As I said before, the honors are even between

these two c itie s ,

they are so close together that what helps

one helps the other, except that we have the railroad and
mail fa c ilit ie s ,

and we have been the headquarters for the

Postal division for 25 years.
The Secretary of the Treasury: You base your claimm on the
large railroad and mail facilities?
Mr. Gage: Yes, and the handling of cotton.
The Seoretary of the Treasury: Do you handle any more



D. Gage


cotton than Dallas?
Mr. Gage: Not more, n o ,s i r .
$ 1 ,0 0 0 ,0 0 0 plus *

We financed last year

That w ill be furnished you by others. Of

in cattle we are the easy leader of everything in

the southwest south of Kansas C ity .
The Secretary of the Treasury:

Supposing a district were

created different from the one you have outlined, what would
be your choice outside of Texas as the city for the Reserve
Bank for this region?
M r. Gage: Outside of Texas?
Ths Secretary of the Treasury:

Outside of Texas, assuming

that a district other than this were organized,

and there

were no Texas city named.
Mr* Gage: Ity personal preference would carry me to St.
The Secretary of the Treasury:

That would sorvo more

the normal course of business and —
W r. Ga^e:

I think so.

The Secretary of Agriculture: Is Fort Worth's business
more with S t. Louis than with Kansas City?
Mr* Gage:

I think very largely so.

The Secretary of Apriculture:


4>es the cattle



D. Gage


business go?
M r. Gags:

Kansas city is tha second largest cattle market

in the United States, Fort Worth third,

and Chicago firs t*

But you w ill observe that Kansas City is not a central
rsserve city,

an i therefore the reserve cities in Texas

naturally take up the lines of least resistance and lan d in
3t • L o u is .
The Secretary of Agriculture: I was speaking more of the
flow of commodities and trade, rather than the banking

The Secretaryof the Treasury:


that is the point


ws are more concerned in, because when this Act goes into
w il l

after a short time,


and so w ill

these central reserve cities


reserve cities disappear, and

none of them w ill keep reserves of banks* how in contemplation
of that, where would you think the Reserve Bank should b e , as
between St Louis and Kansas C ity ,
is concerned, which would best

so far as this territory

servo the customary course of

bus iness?
Hr* Gags:

Hien you got down into the cloth and shoe lines

and lin e s of clothing of a l l kinds,
p ariso n between Kansas City

then there is no com­

a n d S t .L o u is as to where we go,



in these lin e s of trade, but when it
g ra in ,

comes to liv e

stock and

than o f course the cars trundle down from Kansas City

in thia direction loafed with grain down to Port Worth, and
a great many cattle go from fcew Mexico and the west and are
shipped directly to Kansas City*


is useless, I presume,

to t3ll you about the banking capital of Port Worth?
The Secretary of the Treasury:

We are familiar with that.

We hare it in the comptroller's statements, of course.
Mr. Gags:


The Secretary of the Treasury: I would like to ask you
where do you keep your reserves now, how are they dis­
tributed between the central reserve c i t i e s ,

and in what

Mr* Gage: The larger amount, of course, is in Hew York*

W# are bound to use New York exchange; and a very respectable
amount in Chicago a n d a less amount in St.

louis. We dis­

tribute our normal exchanges in that way.
The Secretary of the Treasury:
balances in New York largely

You k*ep your larger

for exchange purposes, I

M r. Gags: Y e s ,

there is a greater

exchange, it is current everywhere.

damand for New York



3. Cage


The Secretary of the Treasury: You heard the questions I
addressed to Mr.
with the


Do you concur in h is views,


parring o f exchange between these reserve banks,

the necessity for carrying such large balances in New York
w ill be obviated?
Ift*. Gage: Thay w ill be largely diminished.
The Secretary of the Treasury: That w ill be the inevitable
r e s u l t , w ill it not?
V X . Gago: Y e s , largely so.
The Secretary of the Treasury:

You heard the question I

addressed to M r. Ardrey about the d e finitio n of commercial
paper and the clearing house functions to be discharged by
these banks.

W ill you consider those addressed to the Port

Worth Clearing House Association?
Mr. Gage: Yes» We should like very much to broaden the
definition of commercial paper.
The Secretary of the Treasury: Mr. Reporter, see that
Judge Gago is furnished with a copy of this question.
M r. Gage: According to our standpoint in the southwest,
without roference to sectional lines, our best collateral,
and a very large amount of which w ill be offered to the
Reserve Bank, w il l consist of the most liq u id and the most






solvent assets we think in the United States,

aid we get

fro* the narrow and hidebound commercial view of what

constitutes commercial paper,

and I tfiould be very glad to

give you our views*

Secretary of Agriculture: To what extant do you think

this d istrict you have l a id out would be independent or
dependent fin a n cia lly ?
Wr* Gage: We would not for tha entire year, Mr .Secretary —
you take it in the latter part of tha summer and the early
f a l l *onths,

the demand upon us to carry the cotton

tremendously heavy.

Sometimes we escape.


To illustrate

last year the bank in which I worked did not discount at a l l .
The Secretary of the Treasury:

Why was that?

V r . Gage: The need was not so pressing* This year we
borrowed # 3 0 0 ,0 0 0 from our northern and eastern corre­
spondents, and £ 100,000 fro*
understand it

the government.

But you

does net perpetuate its e lf year after y e a r.

The Secretary of Agriculture: But normally do you have to
rediscount in the f a l l ,
lfr. Gage:

to move the crops?

Sometimes for 60

days, and rarely over 90 days.

The turn of the cotton crop brings it i n . The cattle crop
b rin g s it in twice a year


sometimes three times and the


R* D* Cage


money turns oyer and over.
The Secretary of Agriculture:

One of tha things that

seemed to be in the mind of Congress in passing this Act and
providing for these districts was that in normal times, that
i s , except in times of unusual stress,

that these districts

should be independent*
Mr. Oa£e:

That is the proper view for this Committee,

and we think that wi*h our p ractically

*6 ,4 2 0 ,0 0 0 ,

to be exactly correct,

*5 0 0 ,0 0 0 , or

as a capital for the bank,

with the necessary and legal reserves you would h o ld,


would help out wonderfully and I think we would be able to
take care of ourselves*
The Secretary of Af;ricult are:

You have nothing to show

the attitude of the people of New Mexico and Oklahoma
towards Port Worth?
V r . Gage:

That w ill be brought forward by oth ers.

great many cattle yea have interestedthem selves


to the

•x te n t of writing in their concurrence in the view that
Port iorth is the most lo g ical place, by reason of the heavy
cattle traffic transacted there.
The Secretary of the Treasury: I
the liv e

#ould l ik e to ask about

stock paper you take there.

Is the live



R. D. Gage


paper of Toxaa in tho form of a n *to , practically the same
aa that employed in other section*, where such paper is used,
like Denver and Kansas City?

Mr. Oa^e: You moan tlie fora and character of the paper?
The Secretary

the Treasury: Yea#

Mr, Gage: I think s o .

The paper, of course, is mostly

in the form of a chattel mortgage.

Different paople resort

to different methods of c e rify in g it,

an d they have the

cattle counted and the brandaxamin* d.
The Secretary of the Treasury:

But the same general method

la follow ed:
Mr. Gage: I think so .

I mi (jit say in closing,

if you

w i n permit nn —

Tha Secretary of the Treasury: Any exhibits you care to
file with your testimony, you may so f i l e .
M r. Gage: The bank clearings for Port Worth, adverting to

that for a moment, and then I shall conclude, have grown in
the la st ten years from $ 8 4 ,0 0 0 ,0 0 0 per year to $ 4 1 8 ,0 0 0 ,0 0 0
as shown by the statements.

The Secretary of the Treasury: What do you pay on your
bank balances?
}/r. Ga^e: Two per cent oa daily balances.

R* D. 0 tiff9


Tht Secretary of the Treasury:


The same as Dallas?

I r . Gags: Y ss.
Ths Secretary of the Treasury:

%id how a&out check collect­

Doss the same practice prevail in Fort Worth as in

Vr. Gags:

As to the charges mads?

Ths Secretary of the Treasury:


Mr. Gags: Practically the same.
The Secrstary of the Treasury:

Hhat were the clearings of

I have forgotten.

Mr. Gage:

Ve hare not

>een able to ascertain.

Mr. Ardrsy: Ws did nor submit the figures,

fbr tho reason

there is not a uniformity in Texas in the method of computing
elearings. Dallas has newer published her clearings because
their methods of computation is different from the othor
Texas c itie s.
Mr. Ga,~e:

$ 3 1 8 ,0 0 0 r000 for 1912, andT £361,000,000 for

Ths Sscretary of the Treasury: That is in and out, I
Mr. Gar#: That is ths daily clearings, but it represents
actual clearings, with daily settlements.



• G a^ a


Tha Secretary of tha Treasury: Do you clear on the same
b asis?
Mr* Oar©:

On the New York basis.

Tl» Secretary of tha Treasury:

What is the difference in

tha b asaa?
Mr. Gaga: I do not know vhat his basis is, but va charge
only in tha ona way.
Tha Secretary of tha Treasury:

Wall, those figures may

be file d .
Mr. Ardrey:

The difference, I think between the methods

of computation as between Dallas and Port Worth I think,
are that we settle every day,

aid cancel tha balances and

I think they clear back the next day some of theirs.
Mr. Gage: I do not really know what the differencea
consist o f. I only know what the recorda show.
Tlia Secretary of the Treasury: We will taka a recess now
until 2:00 o 'clo ck.

Whereupon, at 12 :00 M ., a recess was taken until
2 :0 0 o'clock P.M .

C. Ousley



2 P.M.


The Sec re lary of Agricultural

You may state your name,

residence and occupation.
V r. Oualey: Clarence Ouslay, Editor of the Fort Worth
The Secretary of Agriculture: You are familiar with the
problem we are confronted with?
Mr. Oualey: ?airly so.
The Secretary of Agriculture:

And we would be very glad

to hare you give uayour assistance.
Mr. Oualey: I want to address myself to one or two points,
gentlemen. T wa* very much interssted/while ago ia the
inquiries that Secretary McAdoo addressed concerning the
definition and form of commercial paper.
pan ling a propoaal for a

There is now

aystem of Federal agricultural

aid that ia, to aat the most al>out it , only a hopeful

experiment, far in the future, and I take it that for some
yaara to come the only hope of improvement in the accomoda­
tion of produce ia through thia Act, and that it waa wi8©ly
provided that fsrm paper, or paper repreaenting staple


C# O usley

a r ic u lt u r a l prod ucts,


should be accepted as commercial

paper and that the needs of producers in this southwestern
country ought to be considered as well as the channels of
how from that standpoint I am sire you w ill realize the
importance of this
a rea,

as you w ill hear presen tly from M r. Sanson and Mr

J t a ffo r 1, who w ill

southwestern country, this /rreat producing

t e s t ify concerning the l iv e

stock pro­

that rural paper w ill constitute a tremendous volume

of transactions o f these banks* That bein'? the case I foil

the B oard ought to consider the needs of producers in

the more immediate and l i q u i d

accomodation o f their

th-n has been h ereto fo re r e g a r d s d b y
words, h e r e a ft e r ,
a ^ r ic u l t u r a l paper

u n ie r

ths banks*


In other

the p ro v isio n s of this b i l l ,

w i l l be a larg er element than ever before

in banking and in currency issu e*
Now remember that Texas is the l iv e stock of the
u n io n ,

qad remember it produces one th ird o f the

\jBGric<m cotton crop,

and that in those two a ssets alone

p resen ts a problem o f natio nal


in the dispatch

o f those products from ths fa r a to the consumer with
lea st

waste of


d istrib utio n through mi ddlomen.


C . Ousley



Ko* Port Worth, as you will find presently, finances
a greater pi*rt of the live stock industry of this entire
southwestern region.

You will find it finances almost the

entire grain product of this southwestern region. You will
fin d tIso that it finances as much of the cotton crop, in
round number a 14 ,0 0 0 ,0 0 0 bales, as any other city of this
-tat*. Th^r .fore, /ort north linances the larger volume, twotiiirds or wii.ree—fourth j a

the live stock and grain, and

ati much of tho cotton crop as any other city in the state.
Secretary houston is ^erfttctly aware cl what is new

in prospect in the economic rerolution of

handling farm products through co-operative enterprise, and
if he will pardon me for saying tnis, he has made the wisest
suggestion which has yet be n mada on that subject concern­

the h a n d l in g offarm products by the smallest unit,


it is only a question of the assembling of the legislature
jn this state and in ouher states contiguous to this suction,
when these offerts will b j put into effect and this system,
JV.Houaton, will not be fairly establishe I b jfore there
v ill bo bulk marks ting under state acts.
coi^es to pass,

And whatt that

-lie Jbman Is upon bsnks for Uae accomodation

of f rm products in the non Is or producers is going to bs



C# Oualey

▼asfcly larger than it ever haa bean.

And I trust that tha

Board in considering the location of theae banks, will have
due regard to thia new fie ld of banking as well as to
preserving the charnels of trade and commerce, as Secretary
Me A doo has referred to this morning.
Secretary of Agr culture:

We include that as part of

Sir. Oualey: You do not include that as part of commerce?
The Secretary of the Treasury: Oh, yea.
sOr. Oualey:

That being the caae, then Texas is manifestly

e section to be very seriously considered.
The Secretary of Agriculture:
Mr. Oualey:


The truth is, you cannot put Texas into any

region, either of eight banks or of twelve banks, without
Texas being the largest part of that region. Kow then, with
these aggregated interests, certainly it is entitled to very
serious consideration as the location of this Reserve Bank,
and the relation of such parts of Arkansas, Oklahoma, Sew
Mexico an d Louisiana to this Federal Reserve Bank located in
Texas, will not interefere

with the charnels of commerce. I

hope you will bear that in mind, because those local merchants
and dealers will still do their local business throu^i their

p j*

local banks.

C. Ousley


It is the local member bank which will have

relation to the Reserve "Rank, ond that will not interfere
with any channels of commerce; I take i t that the Act means
you must not interfere with %ny channels of commerce.


I wont to in sist that compelling a part of Arkansas and
Louisiana to do their reserve banking through a Texss
Reserve Bank would not interfere with the transportation
or shipment cf commodltiesor the purchase of goods by the
Arkansas or Louisiana merchant.

He would simply have to

have his reserve relations with Texas through correspondence
and otherwise9 instead of with S t . Louis or £ew Orleans.
The Secretary of the Treasury:
admit that the 1 aw makes mors
the Interests

U r. Ousley, of course we

ample provision directly in

of the agricultural

law, which is a very wise provision,

classes than the former
and we are aware of

the great volume of commerce of the countiy which arises
through these agricultural communities.

Just what injury,

i f anyr would be done to that trade i f you had a larger
distric t, perhaps incorporating in the district communities
that ssrs not

so largely agricultural j for instance, if you

had a district reaching from the edge of S t. Louis or Tansas
Cityr might there not be advantages in having the greater

divereity and perhaps a greater volume of lending power to
meet the abnormal movements that come seasonally?
Mr. Ousley:

Well, that would be a matter to be —

The Secretary of Agriculture:

I am just asking for your

V r . Ousley:

Yes, that would be a matter to be calculated

by the actual volume of assets that would be aggrerated,
when you come to add i t up.

My own impression from my casual

study of the eubject is quite in line with the testimony
already delivered here,

that this region is self-sufficient,

and thsrs would be no difficu lt whatever in financing the
entire crops of this region

with their extra seasonal demand;

thsrs would be no difficulty in financing these crops in

region without *oin?r beyond.

The Secretary o f Agriculture:
another question, Mr. Ousley?
within the number,

I would like to ask you
The Committee has discretion,

to establish from eij$it to twelve

Mr. Ouslsy:


The Secretary of Agriculture:

How we of course know that

the country ie developing very rapidly; we know that some
ssctlons are developing rather

more rapidly than other

p jb



O u eley


Would i t be your advice that the Committee estab­

the mini:.Tum numberor a larger number thm

the minimum

number, with a view to allowing for the location of other
districts later, to meet the demands of
Vr. Oueley:

developing locations?

Ify opinion is in regard to that that within

five years you will increase the number of reserve banks.
Ths Secretary of Agriculture:

You mean by Congressional

Mr. Ousley:

Y sf, by Congressional action.

So my

judgme&t is that the committee ought now to establish the
maximum number, becauss I think the greatest


will be rendered to the count jy by having the maximum number
of units.

I believe in five yearsyou will increase the

number of reserve banks,

because I believe when they are

established there will be development a£d inter-relation
andcontact that will solidify thm among themselves and i t
will tend mors and mo re tt create a demand for those local

I would not say that I favor such a plan, i f it

wsrs not for the fact that all the banks are to be under
ths dirsotion o f a general Board which will have regard to
the whole national welfare.

I think the larger number of

units, and ths smaller ths unit} ths greater ths satisfaction

p jb

C. Ousley


and the more liq u id the resources and the more satisfactory
to the accommodation of the whole of commerce.
The Secretary of Agriculture:

Your argument is primarily

for the creation of such a hank in the southwestern region.
F*r. Ouslsy:

Yes, sir*

The Secretary of Agriculture:

And secondarily for Fort

Vorthss the location.
Ifr. Ousley:

Yes, s ir .

The Secretary of the Treasury:

Hare you cdven any thought­

ful study to the problem of the la ger as against the
smaller number of banks, at the outsst.
Vr. Ousley:

I was just answering that question to Dr.

I think the larger number will give greater

satisfaction to the country.
The Secretary of the Treasury:

But I say, have you studied

the phases of that problonr or is it an offhand opinion?
V r. Ouslsy:

It i s not an offhand opinion; i t is based

upon a fundamental conviction of my own am to the wisest
manner in the conduct of public a ffa irs , and that i s to have
the largest

number o f automatic units and the smallest units

consistent with the handling of the buslnsss.
The Secretary o f Agriculture:

Vy question grew out of

p jb

C. Ousley


ths experience */• had in other sections.

For instance,


gentlemen in one cf the large and rapidly developing sec­
tions eaid very frankly that they did not think that a "bank
with a district ia that particular section ought to be
created at this time, but that they did think in five or
s i x years such a district ought to be created, and they
therefore urged the establishment of the minimum number of
districts wi th a view to the segregation of that territory
Vr. Ousley:


The Secretary of the Treasury:

The Federal.Reserve Board

is the power to readjust these districts and create a
larger numberup to twelve, if we started with the minimum,
Vr. Ousley:

I quite unde stand that.

The Seeretary of the Treasury:

Bo that the opportunity

for readjustment exists, i f we begin with the smaller
number, whereas if we begin with the maximum number the

difficulty of readjustment would be greater.
Vr. Ousley:

0hr yes, you would have to take from one and

add to the other, and I c m understand t>» twould be a
d iffic u lt y .
The Secretary of the Treasury:

So the ($iedsion, of courser


C. Ousley

arises in the mindsof tha Committee as to which policy would
be preferable to begin with*
lfr. OuBley:


at fraa k to soy I am basing ay opinion upon

a fundamental conviction that the beat interests of the
count zy wllir be eerred

by having the largestnumber of unite.

I bell ere i t will woxfc better that way and give more satis­
The Secret air o f Agri. culture:

is that based on a very

thoughtful conaideration of the functions of the brancfr
Mr. Ousley:

Well, I quite agree that the branch bank

may aerve to meet the requiremente that are in my mind for
local aceoBBaodatlon.
The Secretary of Agriculture:
Mr. Ousleyr that the directo is at

You underatand,, of course,
the Regional Bank ore

drawn from the entire territory.
V r. Oualey:

Yea, and they can establish branch banks.

The Secretary of the Treasury^
the branch banka are more likely

And that the di recto rsof
to be local people, a

larger numbe r of them.
Mr. Oualey:


that i s true.

The Secretary o f tha Treasury:

And they w ill therefore


C. Ousley
R . 0 . KcCormack


* l&rger knowledge of local conditions t h a ths

dlrectorsof the rsserrs b«ik itself?
Vr, Ouslsy:

Yes, the* is true,

THe Secretary of the Treasury:

That is all,

thank you.


’ The Secretary of the Treasury:

You may state your name,

residence and occcqpation,
Vr. VcCozmack:

R. 0 . VcCormacki Secretary o f the Chsaber

of Commerce at Fort Worth.
In the handling o f food products, the question cf
financing and transportation is , of c o u n e , a v e r y important

First of

ths grain situation.

Fort Worth is the only

primary grrf. n market south or wsst o f ths VissCixi River

I t ha sheen steadily growing for the laat ten

years, and last year handled 29,106 cars of grain, about
ons third o f which wsre purchased by ths Fort Worth grain
dealers for local consumption end ths balance o f which was
storsd and treated In ths elevators and warehouses or milled

In the flour mills s d

afterwards shipped to the consumers

for final consumption.
Fort Worth at the present time has 17 grain elevatoxs
and grain warehouses and 2 flour m ills.

The economical

R. 0 . FcCoimack


method of handling grain teaches ths t the interest of the
producer and the consumer can best be protected by haring
this grain treated in transit*

This is a problem, however,

that I take it you are familiar with, because you hsre
probably heard this same argument at the terminal markets is
the north, such as ths Missouri River points, and likewise
It has been estimated, as near as possible,

that it

requires the sum o f $3 0,00 0,00 0 annually to finance and
handle t*e grain crop that moves throu^i ths terminal market
of Fort Worth.

About 60 per cent o f the grain crop of

Oklahoma is purohased by the Texas grain dealer.

A large

portion of that necessarily is purchased by the Tort Worth
grain dealsrs, bee mss Fort Worth has probably more grSn
elevators and warehouses then all the balance of the State
of Texas put together.

Thirty per cent of the Oklahoma

grain crop approximately is purchased by the Oklahoma dealers,
part o f which is fo r local consuaption, and a part of which
afterwards moves to Texas.

Ten per cent which comes in

early moves to the northern markets, such as St. Louis and
ana as City.

Within the last three months the admimist ratios

at Washington has semi f it to make some radical changss in

R. 0 . McCormack


the t ariff on grain, and a new line of lousiness hsi been

Since the tariff was removed on com r and it was

fir s t removed on com * there have been something like eight
oargoeaof co m from the Argentine Republic unloaded at the
3ort o f Galveston ./hich have moft d to interior Texas points
for consu&ption.

This year* owing to the peculiar crop

conditions in the West* we have faced a shortage in co m ,
I f it hid not been for the in$>o rt ation of this Argentine
c o m , the price o f co m in Texas now would h&ve been in the
neighborhood of

-ol.OO &nd perhaps more, whereas on the other

hand, the market during the time this com was moving, and
there were three bo ate at onetime at the Port o f Galveston
discharging c»rgo,

the market dropped something like 14

A majority o f the t import co m hae been handled by

ths Port Worth grsin dealers, for the reason that th y are
established in ths business

they hcnre their Belling agencies,

their organisation* and they know how to handle this c o m
and know where to find the market.

At the present time

there ant something like 300,000 bushels of the Argentine
c o m in storage at 7ort Worth,


dealers at Fort Worth

who have handled this c o m advised me that up to the present
time they have been obliged to buy this through selling


R. 0 . VcCormaek


agencies and to a certain extent finance this through New York,
*11 of 'which has a tendency to hinder or encumber the
business, which the consumer must pay for in the end.


has been suggested that in order to permit of the freest
movement of this c o m and the greatest benefits to ths
feeders and consumers, that i f the final step were taken, to
permit of ths entire financing of this crop in the region
where it will be handled, that it would be a long step ia
getting the benefits that were first intended by reason of
the removal of the tariffs on this grain.
Ths Sesretary o f Agriculture:

What percentage of this

grain business is financed in Fort Worth?
V r. VcCoxmsck:

Well, I have not got the ex&ct figures,

I know that some is financed in Fort Worth, but the same
argument in a general way that appliesto the cotton will
apply to the grain business at Fort Worth.
money there i f they can, and i f not,
can get i t .

But you understand,

They get their

they must go where they

In treating thlsgrain,

a good portion of the grain must of necessity go through an
slevator to be treated, to be dried,

to be properly held.

Our climate i s suoh that corn will not ke«g> in a crib as It
will In ths no th; it will mildew, and therefore it requires

R. 0 . )rcCo rm&ck


to do that business.


it has to be wo iked oyer every

so often and to be run throu^i an elevator and dried, to get
the mositure out of i t .
The Secretary of Agriculture:

Where ia that financed?

Mr. McConaack:: I f you will pardon zae, we have a grain man
from Fort Worth who ie more familiar perhaps with where he
gets his operating capital than

I am,

I made the general

statement that it is financed in 9 0 rt Worth so far as
possible, and then they have to go outside when they cannot
get it in Port Worth,

That is a detail, however.

Ths Secretary o f Agriculture:

Th?-t is a rather important

Mr, McCormSck:

I f you will pardon me, I will call Vr,

Voore to answer i t right atfjsy.
H r. Woo re, will you answer that please?
Mr, 2 # G, Moore:

The money that is used to finance ths

grain that i s handled in Port Worth, Mr* Secretary, is
furnished by the Port Worth banks, that is ,
percentage o f it*

ths greater

Ths Port Worth grain dealers and the Port

millers both have borrowing accounts in the north,

Chicago end Mew York,
Ths Secretary o f Agriculture:

W s l l , normally do you have

R , 0 , McCormack


to borrow to a considerable extent from outside,

to aove that

Mr, Moore;

Normally ws do not.

The Secretary of Agriculture:

Do you hare to do i t every

Mr, Moors:

Every year we have to borrow some outside,

yes, s ir ,
Ths Sseretary of Agriculture:

What percentage, would you

Mr. Moors:

V e i l , we have to gp outside of ?o rt Worth only

when the crop movement is heaviest, during the months o f

August end September, and then I presume that Port

Worth furnishes 70 per cent of the cag>lt&

that is invested

in ths business.
The Secretary of Agriculture:
Mr, Moors:

30 per cent outside.

The Secretaxy of Agriculture:
The Secretary of the Treasury:
$ 3 0 ,0 0 0 ,0 0 0 or $3 2,000,000?
Mr, McCoimack:

finance outsids?

That answers the question.
On a crop movement cf


Approximately $ 3 0 ,0 0 0 ,0 0 0 ,

Ths Secretary o f the Treasury:

And 30 per cent outsids?

that is annually,

And 50 per cent . ou

R. 0 . '^cHo im&ck

Kr. ' cCormfcck:


Afchough wc have the exact number of cars,

on account o f the fluctuation in the market I t would he hard
to tell what that Is worth.
as we can.

You can estimate that ae well

Vow there ic a movement o f grain through Port

Worth th^t our dealers do not handle themaelves, but it is
handled under the system of what is called shipper's orders
or b ill of lading attached to a draft.

It is shipped to

Fort Worth because Port Worth is the point of interchange
from the fields o f production to the fields of consumption
on everything that oomes into Texas from the grain producing

therefore a dealer or a grower, in shipping this,

sometimes ships into Port Worth to h is own order, trusting
to find a customer while the car is

in transit,

i f they do,

and i t is necessary to reconslgn this, it means that that
finandbl transaction must be taken care cf at Port Worth.
Bade of i t , however, w}»n the grain

go«* out of our

elevators to the final consumers, that money oomes rigit
back to the banks in Port Worth.
Vow in addition to the train movement, a large traffic
and movoaent is developing in the way of produce, apples
and vegetables and so forth.

At the present time Port

Worth has a cold storage capacity cf


The fruit

B. o« 1'cCormack


and produce business is getting to be handled very much the
same aa the grain business.

Instead of being stored in an

eleT&tor, in order to hold it until such time &s the demands
of the oonsisner require, i t has to be put in a cold storage

Then afterwards it is reconsigned to the point <f

consumption, and the through rate from the point of origin
to the final destination is applied.

The reason fo r the

location ef the cold storage plants at Port Worth i s the
same reaaoa that applies for the location o f the grain
elevators at jort Worth.

They are in the direct line of

transit, and the point o f Interchange, and can reach any
point in the etate or ia the eeuihweet after haring been
stored at Port Vorth, without going out of the direct line
o f traneit, which means the application of the through rate
under these transit privileges, aa we call thtaar without

any penalty or back haul,

Thle i s a new lin e of business

tha* is developing as the country develops.

Tne years ago

Port Worth waa not known aa a grain marketr and ten years age
I doubt i f they had cold storage ^capacity in Port Vorth for
half a dosen cars, I mean public storage capacity.

At the

present time we hare 17 elevators and atorehouses for grain
and our cold s to rags plante have a capacity of 482 carar

E . O . McCormack

and there ie a demand oyer and above that ri$it now*



had an inqui ry — *
The Secretary o f the Treasury:

What is the value of that

business in a year, do you suppose?
lfr. VcConaack:

On the produce?

The Secretary o f the Treasuzy:

Yes, what doeslt amount

to In s year.
Mr. McCormack:

I hare not had ths time really to find out

what ths annual outlay is .

I know that one o f our storage

plants was forced to pay about three weeks ago the sum of
$ 2 7 r000 on freight chargee alone on apples that came into
this cold storage plant to be stored and later shipped out
to ths consumers.

It is customary for the plant to advance

ths chargss.
The Secretary o f the Treasury:

Have you m y other matters

to qpsak o fr Wr. WcCo mack?
Wr. IfcCoimack:

Koy s i r , I think not.


The secretaryof Agriculture:

You may state your name,

residence and occupation.
Hr. Sanson:

V . Sanson; I am prssident of the Cassidy

p jb

If. Sanson


Southwestern Commisd on Company, Fort Worth, Texas.
Tho secretary o f Agriculture:
are confronted with.

You know the problaa m

W M will be the beat district for

the soutliwest, and where ought the bank to be located?
V r. Sanson:

W ellr we think Fort Worth,

and Texas.


territory embodied as stated by the gentlemen who preceded me
here, would be Oklahoma, Yew Ifexico and Texas.

Of course,

thers i s a part of Arkansas and Louisiana that might be
attached, but since their relations with Texas axe so small,
and the asK>unt of o*pl tal that could be secured for banking
capl tal and deposits would not help a great deal, we think
probably Oklahoma and Hew Mexico should be included with


Oklahoma in many respects is pretty closely tied on

to Texas.

Her grain mores this way and a great deal of her

lire stock mores to Fort Worth

for market, especially her

hogs, and a large per cent of the cattle.
The Secretary of Agriculture:

Bo you know what percentage,

Vr. Sanson?
wr, Sanson;

I would not underatke to Bay, but I

think the

figures show that there is annually about $ 3 ,0 0 0 ,0 0 0 in hogs
alone just to Oklahoma City,

i beliere that is right,

$ 3 ,0 0 0 ,0 0 0 I think is the exact figure — I mem

sent from

II. Sanson


Fort Worth to the state of Okl shoma, for hogs alone. Further,
Oklahoma has been largely a grazing and feeding ground for

for the movement of cattle from Texas to the south

and wsst.

These deals have b en financed in Tort Wprth
0 * course, I may sey in a way that Kansas City and

S t . Louis hare something to do with the financing, for ths
reason that the commission people who finance these* deals
hare ofll oes in Kansas City a*d S t. Louis, and some of than
in Chicago.

But the people who handle this business


main ofll ce and the principal amount of business ie done in
Port Worth, because people lir e here who handle thesedeala,
and it runs into a very large amount of money.
As has boon

said probably here, we are now the third

cattle market in the United States,

and the only market in

the United States that showed an increase in business for
the year 1913, all the others showing a decrease.
The Secretary of Agriculture:

ware you the relative

Wr. Sanson:

Tss, s ir ,

absolute figures.

they will be file d here, the

I want Wr. Stafford to give them to you.

He follows me practically on the same proposition, and he
is ths manager of the Stockyards Company, and has the actual


V. Sanson




and I vill leave Lhis here, and he will read them

and f i l s them with you.
Vow I may say ths same for the horses and mules; we
srs ths third market in
mules, handling

the United States for horses and

56)000 head of mules and horses, estimated

to be worth about $150 a head, requiring about $9*000,000
to handle.
How ths point thst we want to present to you is t h ^
in financing those propositions, Fort Wo th finances mors
agricultural products today than any other city in Texas by
s considerable amount of money.

That is not by reason of

the banks hawing the largest capital there, but the
commission companies located in Port Worth, by a custom that
was sstablished years ago, I may say for all time, and up to
the prsssnt time,

thers has not been really adequate money

to handle the lir e stock business with; there has besn
hardly any time when there was a plentiful
to be had to finance their cattle b i l l s .

supply o f money
How I have got some

figures **ere that are absolute for what is handled from ths
Fort Worth offices alone, that does not enter into ths
banking proposition* that they have nothing to do with.
At a given time* the close o f buslnsss, fo r ins trace,

p jb

If, Sanson

December 31st,


the commission houses in Port Worth had at that

time about $1 0 ,0 0 0 ,0 0 0 of loans on cattle, right around
$ 1 0 ,0 0 0 ,0 0 0 .

No <f this paper is made for 60 days, 90 days,

120 days and up to six months.

There is hardly a single

Instance where it runs OY&r six months time.

So we figure

that this $1 0,0 0 0 ,0 0 0 in the course of the annual business in
one year is turned orer two and a balf to three times,
making about $3 0 ,0 0 6 ,0 0 0 that we annually finance outside o f
banks and tiust companies doing business in Port Worth.


order to handle this, and you understand the banks ha Ye
about what they can take care of in grain and cotton and


other things,

ths commission man takes a mortgage

on this cattle; they are being prepared for market with

we take a mortgage ranging in value from 50 per cent

of their value up to their full v & u e in many instances,
with a rood solvent man behind, who has his own feed; he
prepares these cattle for market sod this is a class of
collateral that we are able to sell in almost any o f the
markets of the country that have money.

I would say that

Texas alone handles about 20 per cent of that amount, I mean

Texas banks located at various pla ce s; a great many

maall banks in small towns, and then the larger towns at

V . Sanson

times buy ve ry lib erally of this paper.


About lo per cent

of it is sold probably in ransas City, about 10 per cent in
S t. Louie, and the balance o f it ia eold in Chicago, Few
York and other eastern c ities.
Vow I want to make an assertion that I

/ill not back

with reference to the real demands and deeds, and what

is being taken care of in the lire stock businsss o f this
country, I mean to say in the preparation o f the cattle from
the time the producer produces them until the middleman or
feeder takes charge of these cattle and prepares them for
the market.

I think I wn perfectly safe in saying t o d ^

that there i s $1 00,0 00,0 00 of cattle paper held by the
banks of the United States in the territory that we hare
mentioned, Hew Mexico, Texas and Oklahoma; and of course
i t does not

apply so much to Arkansas and Louisiana,

although w» have

d very Insistent demamds to finance them

since the boll weevil has hurt their cotton; they are going
into live stock there now, and i t ran be worked up very
readily, and lo ts of money will be needed.

These loans are

taken care of ia many ways by which they never show in bank
statements until they are probably sold in Hew York or
Chicago or some place of that kind by loan companies.


p jb

¥ . Sanson


banks that does not want to shov any re-discounts and cannot
afford to, will organize a loan coxapany which the stockholders of ths bank own sbsolutely outright, and they take
these loans and turn them into the lo an company without
recourse9 and the loan company sells this paper in the eaatr
Of Course, the loan company is pretty

close to the bank's

correspondent, whoerer it may be in the east, and they
understand pretty well that
of paper*

they are giving them a good class

How we take ths position further that -- really

I know some banks that did not take any at the money to
finance the cotton

crop here this year, because they did not

have commercial paper to put up as collateral, what is
termed conasrci al paper,

and this i s the largest and best

lin s of coasaercial paper that is produced in this country,
i s my judgment, and there is more of it ;

and again, it is

pspsr that the country bank would buy as well as the larger
banks in the citieat

even in this stds, when they are

running easy in Texas, becauss they want their money in the
fa ll when the cotton crop begins to more and they hare got
some au>ney at this time of the year, and they hare hardly
anything they can put that Money in except cattle psper
that they cm absolutely say w ill be paid in August and

V . Sanson


September, at tho time the cotton movement begins, and for
that reason it is reasonable, when things run easy, and you
would be surprised how small banks in this country hare
bou^it that paper.

We hare one bank with a capital of

$50r000 that bought $175,000 of that line of paper last

Of course, they had a large surplus and were a pretty

strong bank and had no other use fo r their money and had
done naturally no re or lsss of it , and they figured they
could rely on this money so they could hare it to use whsr
ths cotton commenced to more.

Of course,

those conditions

hare not existed this year, and Texas banks hare p r a c t ic & l y
taken very lit t le o f this paper and we have had a great
deal of trouble to finance it outside^

fo r the reason they

had all thsy could do to take care of the cotton.
The Secretary of Agriculture:

From ~h&t point of view,

would it be better to hare a email district such as you here
outlined, or a larger district?
The Seeretary of ths Treasury:
H r, Sanson:

With more lending power.

V e il, necessarily from the statement I hare

made here to start wi thr the demand for this line of paper
is almost unlimited, and I do sot believe,

as sons believe,

a baudc located here with this amount of money would

p jb

V , Sanson

render us any



ry great amount of a s s t s t «c e in handling it .

But whet we would like to do is tbia:

The product is

pro diced in this section of the country, we produce it here
end we sell it h e r o /

Har if it could be arranged so that wo

could finance it here, i t would be certainly better.
The Secretary of the Treasury:

Th& t is exactly the point,

whether or not the bank with more power could do i t .
Vr, Sanson:

I am not going to say that i t would he a vu ry

great improvement for handling this immense line of pa^>er —
The Secretary o f Agriculture:

JUst let me suggest there,

o f course the theory of this law, of what the law will
aoecaplich i f possible, is the creation of districts strong
and diversified enough to be independent in all except very
extreme time, «nd bo take care of these re-discounts.


your statement brings out the argument there or should bring
out the argument very d e a r l y , how, with this district which
you hars described there, can that $1 0 0 ,0 0 0 ,0 0 0 of paper
which you say has to be sent all over the country and that
other do per cent of your annual operations, be taken care cf
in this d istric t.
Vr, Sanson:

W ell, that brings on a great question to

!Tow for instance, we will aay that you include


W. Hanson

this territory that we are asking for here for a hank, we

say you turn that doff and attach us to Kansas Ci ty or

S t . Louis as tho case may be.

Kansas City, being nearer by

only one ni?ht1e distance in

mails and it does sot make you

loss any time, would naturally nake it in my opinion a very
desirable piece for a bank If we could not get one, you

Sow Just how much capital you could concentrate-**

we are quite familiar with the condition of handling this
cattle paper in K m s a s City, because ws hare an office there,
ami what paper we sell in Kansas City we 8*11 to our own
banks there.

We find no market in Kansas City for our paper

sutslde o f the besilts ws actually keep baltoees in*


buy frost ua because we keep a balance with them.
As an illustration, you take the banks connected with
thia industry there, there are two of them located at the
yards which do a very largs business.

The demand on than

is so great that they organized in turn a I o n

company, and

I think it is probably safe to state, I do not want to be
quoted as exact, but I think around $ 6 ,0 0 0 ,0 0 0 of
that loan company sells,

this paper

originally when they ozgemised it

they anly had $ 2 5 ,0 0 0 , but they hare a good deal cf surplus

, and somebody must have a good deal o f confidence la

p jb

V . Sanson

tha paper they sell.


This paperis sold we know, because

they take some of our paper and we know i t goes on east,
finding an outlet.

So i f you were to embrace all that

territory in there, we would still hare to go on somewhere
slss and find more money, becauseif we were tied on to thas
it still would not make any more money to take care of i t .
The Secretary o f the Treasury:

Would the same argument

apply to St. Louis?
Hr. Sanson;

Yes, I think it would, practically the same

The Secretary of Agriculture:
there would be probably the

0f course, under this law

retention of a larger sum of

money and any riven territory than as heretofore obtained.
Vr. Sanson:

You mean to say, instead o f these banks keep­

ing their money all in Hew York, they would keep more o f i t
Tim Secretary o f Agriculture:
V r . Sanson;


Tl* t would be a great benefit and would help

a greet deal, but those are things that would hare to be
figured out.
The Secretary of Agriculture:

And another thing9 as you

know, as it has bsen suggested here, i t would make re

p jb

V . Sana on


discounting respect-bid,
**r. Sanson;


e think i t is now.

Tfc* Secretary of Agriculture:
people hare not thou^it so.

Well, I know, but some

There has been, as you know,

s t c ry considerable irrational prejudice on the part of
banks —
y r . Sanson;

if a bank aho^s re-discounts, or borrowed

money, some fellow is ready to Criticise*
The Secretary o f Agriculture:


Hr* S&nson:

That i s the reason they start these loan
c o ^ a n ie % p e r h a p s .
I ta k e i t i s a p r o p e r f u n c t io n o f
a bank, and you p r e T id e

t h i s bank to do i t

w it h , and I

t h in k

i s proper.
The Secret try of ths Treasury:

This law encouragesit

and makes i t desirabls.
Mr. Sanson:


How, of course, it looks a lit t le

b i t against us here thatnwe produce — you will understand
that ths Tery territory we are f iguring on here is the

country o f the world outside of the Bepublic of

Mexico t 1 mean o f this industry,

the United States and the

Cattle are not bred today to any extent.


take this Tery territory in Louisian* that is one thing


V . Sanson

they require.


They do produce some cattle in Arkansas and

Louisiana and v lll prodyce Bora.

But i f you take that terri-

toxy «id New 'exico and Texas 9 you hanre the breeding country
of ths United States.

The Republic of Mexico

fereat deal of cattle.

furnishes us a

of course, these people come on and

carry these cattle to the northw&st and they go to market
from the northvest

and from the time they buy them thay

finance them in another direction.

They buy our cattle and

only 50 per cent o f theae cattle that go to those markets
arc consumed by the packera direct.

Almost all the others

are bought by feeders locally and otherwise and go on to
The Secretary o f Agriculture:

Have you some data you want

to f il e , Mr, Sanson?



Mr, Sanson:


In the first place, hers is a telegrsi

that will be explanatory to you.
espeoially concerns us.

It is not one that

That is from Mr, J , D. Jackson,


from ElPaso.

He wires "The National Banks at Marfa, Alpine,

and For t Stockton want to be placed in eastern d istric t,
either Houston, Fort Worthor Dallas and no t in the western
d is t r ic t .*

I suppose that is sent in answer to something.

IT* Sanson

The se c r e ts ^ of Agriculture:
V r. Sanson*



I Just received it this noon, and he asked

for it to be brought to your attention.
of the Cattle Raisers' Association.

He is the P r e * dent

You see that is right

acfacent, and they are good toans, and it shows that the £1
Paso sentiment of not being tied on —
The Secretary of Agriculture:

£1 Paso did not object so

■sch to beinr* tied on to some place in the east or northeast,
but i t wsnts to be attached to Hew Mexico and Arizona.
V r. Sanson:

jrow i f you will bear wi th me, I intended to

start out by reading some telegrams from gentlemen who
endorse Port Worth fo r this bank, and when I had finished
that, then to undertake to tell you the reasons.

So I hare

told you the reasons I had, and now Z want to read them.
These are from the Executive Committee of the Cattle Kaisers'
Association, and the largest o rganisation in the world, and
for fear you ask me, I w ill say we asked for these endorse­
ments when we sent the telegrams, and these are the replies
that we received.
The Secretaxy o f Agriculture:

You asked for the endorse­

V r. Sanson:

Ve asked them to wire the Secretary; la other

M, Sanson



there was no opportunity for the Cottle Raisers to

hold a meeting of this kind between that date and the time
you were to be here, end this is whet we take it to be, a
practical endorsement.
The Secret sty of the Treasury:

You may fil e a copy o f

your telegrss to them, to which these are the responses,
V r, Sanson:

Yes, I will do it .

But there are a few o f

these I want you to pay attention to, because I think you
know some

of the genetlsmen.

The Secretary of the Treasury:

Suppose you read the

inquiry first, because we can always better understand the
responses then,
Vr. Sanson:

Gentlemen, we will f il e that with you,

hare it down there at the ho tel a



thought it was embraced

This is from San Antonio, to Vr. E. £. Sp iller:


heartily endorse and recommend Ft. Worth for Federal Reserve

Endorse fully members of Cattle Raisers^ Association

to that effect, J , V , Dobie,"
This is from Slaton, Texas:
"Believing that the establishment of one of the
Regional Banks in Texas would be of incalculable


V , Sanson


to tho lir e at ok and agricultural Industrie* and knowing
that development of all that section of country contiguous
to your c ity has been greatly retarded because o f inadequate
banking fa c ilit ie s I heartily endorse Ft, Worth as tha most
logical place in this state fo r the establialiment of one of
the Regional Banks and the great number of banks that will
take stokk in same will unquestionably make i t a veiy strong

A, B, Robeiteon,"

lfr, Robertson is the ejfe-Vice-President at the Cattle


This comesfroa San Angelo, Texas)
*1 endorse action of Association recommending Pt,
Worth for Regional Reserve Bank.

R. K, H a r r is ."

He is a banker and cattle man also.
Here is one from Mr. H. H. Corder:
"I fully eadorse P t , Worth fo rPederal Reserve Bank,
You can so sign resolution,"
H r, Corder is at Uarfa, Texas.
The Seoretary of Agriculture:


they are all the same

tenor, are they not?
}fr, Sanson:

Well, no,

I want to read one or two that X

believe make a pretty good talk, and if you will excuse ms

p jb

V . Saneon


I will %sk you to listen to one no re here anyway:
one from R. J. Kloberg, wingSTille,

I have


■Acdept my endorsement fo r ? t f Worth ae location for
pederal T>eserre Bank.
Here is one frost Ike T. Pryor, San Antonio:
•F t . Worth being leading cattie market o f southwest
and ons of the principal markets of ths United States an
strongly in far or o f Ft. Worth for one o f the Federal Reserve

I believe lire stock furnishes liquid collateral

for more paper than any other product of the farms or ranch.
Iks T. pryor."
Wow I have a numberof others:
•Uvalde, Texas*

As Executive Committeeman cf Cattle

Raisers* Assn. o f Texas 1 heartily endorse F t. Worth for
Federal Reserve Bank,
■Marfa, Texas.

val V . Mangum."
Sign my name endorsing resolution.

W. W. B o g e l.*
■Stamford, Texas.
fron Reynolds

Mr. ttas tings received telegram

Burnett and Sanson requesting him to wire

you endorssncnt to resolution for Federal Reserve Bank.
V r. Has tings is absent on Tongus River Ranch inspection

Frank Reeves, Secy. F . S Hastings.*

p jb

M , Sanson.

•Clarendon, Texas.


Your night letter 5th

Pyle Sgd.

Reynold* out city till 3at, night. Hag, delivered to Mrs.
P y le **
•Dalhart, texae,

1 endorse resolution recommending

Pt, Worth for Heserre ^ank.
•B eerills, Texas,
serve Bank,

A. M, James,*

We endorse Pt. Worth Federal Re­

J . W, Cook and Son,*

•Menard, Texas,

Frame in your owrn language my

unqualified endorsement of Assns. action in Heserre Bank

Janes Call an, •

•Alpine, T«*xas,

You may aay that I recossnend Ft.

Worth for Pederal Reserve Bask,
most Houston tod^r.
•D elrio , Texas,

I am

starting H

Paso to

J . B, Jackson,*
I faror * t . Worth the most eui table

place ia Texas for location o f a Gorernment Heserre Bank,
T, B, Jones,*
Wr, Sanson,

wow x want to file a couple o f letters here

fir in g the reasons, signed by Mr. ,j, Ogden Armour and Mr.
Louis Swift, why they located a packing plant in Fort Worth.
Maybe I am talking a lit t le too long, but I want to file
them with you.

(The letters are as follows:)

K oanson

’In establishing


a live stock merket in the Southwest,

the interests who mede the investment; i , e . , for yarde^e,
f a c ilit ie s , prckin£ plants, railway yards and ct^er general
equipment nacosuary to a live stock market selected Fort
7crth, Texes, primarily on account of the fact that it
offers the easiest access to a ll sections of the state and tc
the Southwest by reason cf its superior railway fa cilities.
The financial requirements of the live stock business in
Texas Fro second only to cotton: Fort Worth is the clearing
house of the live stock business of the Southwest and a
concentration o f financial power to assist in caring for this
business would undaubtedly be of the greatest value to the
Stateof Texas and adjacent territory i f located in Fort
The central location and accessibility of Fort ^orth
affords it the opportunity to be of genuine service in the
commercial *nd industriald evelopment of contiguous
territory nnd gives it a decided advantage over other cities
asa point of concentration for the energies of trade find
fin m ce of the great Southwest,
(Signed) J. Ogden Armour,
January 24,

1 9 1 4 ,'


I! Uanscn
Je w

Swift and Co*pany,
Chicago, ^so ruary E , 1314.
,rr . Roy C. Vance,
Chairmrn 3ecionrl >Brrv?

pnk Committee,

Fort "orth Clear'ng r^ous© Association,
Tc.rt Worth, Texes.
Dear 3ir:-



In establishing a livfi stock market in the .iouthwest
the interests who made the investment, i . e. for yardage
fa c ilit ie s , pecking plrnts, rpilv*ay yards and other general
equipment necessary to a live stock market, selected Port
Tforth, Texas, primarily on account of the fact thrt it
offers access to all sections of the tftate and to the
southwest by reason of its railway fa c ilit ie s .
Vert TTcrth has shown great progress and has grown to
be a live stock center of splendid proportions; Fnd the
prospects ere very encouraging; and, as the wonderful Jtate
of Texas continues to develop her remarkable p o s s ib ilit ie s ,
the future prospects are inspiring.
?he figures below show receipts of live stock at ?ort
orth for the year 191E, with approximate valuations, m d
indicate the importance of the live stock m&rket to which






. j j . m



j H



p p p p v M | H 4 U . ' . ! P , |P e


V Sanson


>'ort ^crth has tcrown:

liupiber of


Appro xl ete Ye luatlon



$4 2,44 8,62 5



2 ,8 5 6 ,1 7 7



6 ,8 6 3 ,9 3 7





_ 8 ,508,600

lor sea * rules

$ 6£ ,9 8 6 ,4 4 7 .
Yours respectfully,
(Signed) Louis
*'r« Snnson;

. ow ift."

How, gentlecen, herf* fjre the people, 1500

atr<n£, with their poat office rddresses end their signatures,
and thG8e will be filed with you, who Rre acturl live stock
shippers anti reisers, rnd a grent niucber of the® f re serbere
of the Cattle ’Raisers1 .‘.saociation, who were sent a card
asking theE their views about where this bank should be
locate , m d we asked them to si^n the card and return.
.'here are £t>01 there, who are bonr fide cattle reisers
in Texas, Hew ?re ico end Arisons, and probably it w ill reach
outside o f th? t territory a l it t l e , beeruse they are the
people whOK we £ot o ff the l i s t , who ar* the actual shippers
to that carket.

e went tc file th« t with you*


K Jenson

The secretary cf the Treaaury;

I f you hrve the inquiry

you addressee! to them, it had better be put in new to
accompany the exhibit.

I f you have not it here, you siay

file It lrter.
T r. Srnson:

' e w ill file it If ter.

This resolution ri^ht

here is what we s^nt cut.
In *n effort to get the opinion of the live stock raisers
and ieeders of the southwest, they wer

asked for an opinion

which bro ight forth the following resolution: "As one
*ng*ged in the live stock and cattle industry, I strongly
urge upon your honorable Conar.ission tha importance and
necesHlty of placing one of these Regional Reserve Banks
in the Jtate of Texas and earnestly recomrcen

the City of

Fort T^orth as the point at which this bank will best serve
the cattle anc live stock industry cf the southwest.
Sow that ia exactly the resolution thrt each one of these
2501 people signed.
The Secretary of the Treasury:

Yes, but whrt was the

v r. j * nson: 7h” t was the inquiry, ^nd they signed that,
The Secretary of the Treasury:
them and they signed it?

ou Just sent that tc

V Jpnson

’ r . *>' naon:

sr 80

Yes, s ir , and it was returned, rnd there was

no other cotr.r unication sent tc there whatever.
IIow before this other p^per is file

, I w ant to le? ve

it for Vr, Jtaffcrd.
The secretary of Agriculture:

Wh^t percentage of the

cattle of Texas are handled directly through Fort Worth and
i hat peroentege coes to some other market.
Kr. S a n s o n ^ e l l , we do not h^ve the exact figures on
that, but I would say thft about 60 per cent now probably
are handled through Fort ^orth.
The Secretary o f Agriculture:

In thft increasing?

V r , ianson: Oh, yea. T’r , atpfford will give you the
firiires which w ill show you thrt that has increased greatly,

hen I say 60 p*r cent, of course there i s a Kovecent of

cattle th? t are not &oing to markets, which Kay be going
into Oklahoma out of this country, but for absolute market
Btuf r, I expect I

a little low on those figures.

How m other t h in ; I did not refer to, the fact is we
ore hpndlint probably on an average, I will say, 75 carloads
a day, 2 0 0 0 or 2 6 0 0 0 cattle from the Republic of T'exico,
thrt rre being sold in Fort
Of that st u ff,

orth d a ily , and we hm dle all

The fact is we are the gateway for the


S Jm aon
A. .itpfford.


•public of ’ extco for thia atuff tror. ^rownsville Rad from.
'ar.pico thres h <rlveatr.n by bo* 1 1 which comes to ua, and all
the way up to

1 -aao w' are the grteway, ^nd tv ry head

praetlc lly of th* t stuff coxes tlMKgfc


: rth rnd is

bought there.
The *iecretarv of Sericulture:

t of


e th^nk you.

; .

?he secretary o f Agriculture: You Key atste your m*~et
residence end occupation?

-:r. S taffo rd ; J.
the Fort

*. S ta ffo rd , 'aaiatan t General Manager o f

orth stocky?* rd a CcK^ny.

?he secretary o f 'gricultnre: I f you w i l l , pleaae tfke up
any new point a anU e*phaaixa any essential point which you
l!r. Stafford: I believ * the

ora?.itteo ia thoroughly

x'itr.lllar with th<* eaaentlal point a of the live stock industry,
enc I ahall not go into i t at a l l .

The only two points I

wiah to touch on ire the m turf 1 courae of the live atock
bualnese rnA the trend of conditions# aa briefly aa poar,lble.
raking the rap which was file£ with you thia corning, or
any R*p o f thia p a r t lm la r territory, you w ill find that

^ * Stafford



the breeding ^rounda, as outlined previously by ‘T. -t^ffo?d
11> In th© southern p*rt of rexas *nd western part, extending
north m d west s lit t le ? bove the Texas & lacific Hallway*

an handle


s no longer a breeding ground, it is a feeding

This being the erae, the rap w ill show you that

every line o f railroad running frote south or west Texas
which is in that territory move a or rims through Forth ^orth.
In other words, evary err o f cattle excepting sos,e ssall
w.ount on the Orient

'allway has ts ir.ove through ?ort ^orth,

I or It is the » * t u m l route
northern &Rrket.

through ?ort

Jn other words, lort

orth goinc, to any
orth is ;;© siturtcd

for the aove??:*nt of lire stock th?*t the business rust &ove
through t her?, ev n i f It is felling sotr.ewhore else.
result is tlrt Ip at yeer^ In 1913, we h*n£ls& In Fort


e totnl of l vlt!&#QCO head of cattle and calves, as GQKp&rnd
with about £i C ,OOC hand tern years ago.

"his amounts in

round *1 ures to ;&£,50G.G0C paid for live stock on the Fort
Worth Karket.

?hat covers only edible live stock, c a t t le ,

calves, hogs and sheep.
On the movement o f live stook, while of course the
"le^ional ^«nk proposition does not yet include taxlco , we
®uat t^ke into account the F.ovcm;ent o f Kexlc n cattle.


J \ Stafford.
rerr.cvrl of tho duty on ’ exlcan cattle is going to hrve a
very marked e ffe ct, in fact
ment of that comrodity;

t is felt already in the move­

ast year we handled at Vert


market —
Tile Secretary of the Treasury:

Has not that a ll been

covered already?
!.!r, 3tafford:I do not think so.
The Secretary o f the Treasury: In the statement wade by
;.'r, Sanson,
r'r • Jtaf ord: I do not think so.

90,000 head of ! exiccm

cattle, valued at $ £ ,8 1 1 ,0 0 0 ,
rTp to the 81st of January,
1 9 1 *, we/hrndled 18,000 head of Vexicsn cattle, showing,
in other words, about three ti es as many ‘ exlcan cattle
thia year already aa for the a?me

eriod last year.


showb in our opinion the fact that we must depend yo a large
extent upon Mexican cattle, and all of that movement is
hr r.dled in som

way through a Texas bank.

At the present

time a great deal of it is deposited and left in Texas banks,
at least it is all paid by checks on Texas banka.


He lean business in thrt connection coming from Tampico,
Brownsville, Laredo and Tsgle Pass, must move through Fort
ttorth, and it Is just as natural a route through ^1 Paso to



j a S ta ffo rd ,

?ort 7orth as any other way,
! exir.o marketed

90 per cent of the cattle from

at any market were marketed at Fort ^orth.

Our reason for thinking th*t Oklahoma would be an
ir portent feature from the Fort

orth standpoint — we do

not control all of southern Oklahoma business, but in 1913
we paid from Fort Tcrth to southern and western Oklahoma
o f &ogs.

S ,9 00,0 00 for hogs, something over 200,000 head
-he movement of sheep from Hew I-exlco ia nor,- in

the direction o f the Fort Forth market.

>e cannot fcive you

the figures 0n that, because they ere brought into .exas and
finished in Texas end sent to market.

There was a recent

movement of 6000 head into dna Angelo from 'e xica n points,
The railroads fac ilitie s to Oklrhom'- probably favor Fort
tforth more thrn any other market with the possible exception
of Kansas City.
We have another industry connected with live stock,
horses and mules.

*e are the third largest horse and mule

market in the United states.
?he Secretary of Agriculture:

That has been presented,

tfr. Stafford: I did not hear that.
Th* Secretary of Agriculture: To what extent do you h^ve
to do with the financing of this business?


J . A. 3trffo rd .

l!r. Stafford: nothin*: whPtever.
The Secretary of the Treasury: Thrt is a l l , thank you,
v r . Jtefford: I w ill file this statement now.
7hfi Secretary o f the Treasury:


(The statement is as fo llo w s:)
In picking the district n?»med with Fort ~crth as the
central point, the idea has been kept in mind thrt each
district must, in i t s e l f , be self-sust?inin , th^t i s , the
corcrerce of each district aust be well b* lpneed f nd an
e*ual amount of returns aade to the moneys pfid out, each
district independent of the others.
'.71th the immense live stock, cattle and £rflin business
of the southwest, this is nearer accomplished in the city
o f Fort

orth, than any point in the proposed d istric t.

For deteils of the live stock >nd cattle business, see
~xhibit 1 .
Coincident with the live stock, m*y be mentioned the
question of feed.

This consisting of cotton seed products,

such as cake, meal rnd hulls In the first case, r>na grain
in the second.

?he moneys for the purchase of this feed

oome from the cattle leans and a 1*rge part of the trans­
action of the purchase

of such food Htruffs is at the city


J A Stafford

of Fort


orth by reason o f selling rc:ancies on the ccttgn

ae^d products, *nd elevators rnd warehouses on the g rain

'orth is the irlmary

grain market o f the -South­

w e s t , created by reason of itB superior trabsportation

fa c ilit ie s .

In the yesr 191E, 29,108 cers o f grein were

received at t h i s m arket, tho value o f which was approxi e t e ly

J2 0 ,000 ,000*

T'ost o f t h i s g r a in goes into the elevator®

for storage or treatment and is In t e r shipped to t | » con­
sum ers.

Thus a workin,

c a p ita l o f m illio n s o f d o lla r s

is required to handle this one commodity, ?nd l r t e r , the
retu rn s on t h is g r a in pre made d ir e c t to t h is c i t y ,

maintaining the w orking brlanee.


S ost important at t h is

ti e to the Southwest is the new l i n e o f in d u str y crested
by the recent c a n c e lla t io n o f the import t r a f f i c on g r s l n .
A lready several cargoes o f grfln have moved, to the consumers
o f the Southwest through the Texas G u l f p o rt s.

T his has

been of immense b e n e f it to the consumers and a potent
fa c to r in reducin g the price o f feed the present w in ter*
Under present c o n d i t i o n s , e l l t h is import g r a in t r a f f i c


hendled and fin a n ced through Hew Y o r k , thus permitting of a
m id d le m a n '8 p r o f it and much unnecessary inconvenience and
d e l a y , * 1 1 c f w hich ten£s to in crea se the cost o f d e l iv e r in g



J A S taffo rd .

thiij commodity to the consumer.


ith th© free movement of

the grain crops thus created, should be provided the further
fa c ilit ie s of , iving to the people the full benefits this
and other acts of the administration intend.
In the conservation rnd distribution of food stuffs,
experience dictates thrt certain coorodities, such es fruit
and vegetables, must be ke^t in cold storage at a central
point to thus prevent deterioration, and, at the same ti e
be available to the markets.
The reason of tho great number of railroads entering
Fort-~orth, anci the furtherfact thpt Fort Torth is the
point of interchange )or Junction point)on a majority of
the traffic to and from the southwest, here is located the
storage and transfer point for practically all of this
The capacity of the cold storage p lm t e at Fort ^orth
18 now 482 carlonds of produce.

This business ie one thrt

i 3 continuous fcv n in the winter seas n.

The climate is

s ch thrt cold storage is necessary rnd therefore requires
capital the year around, with the returns always coming
back to this point.
Coincident with the claims of Fort Worth for the

J A S taffo rd .

proposed federal reserve district, we would coll attention
to the fact thf t Port "orth is headquarters for the Eleventh
Division of the 3filway ’"nil Service of the United 3trtes,
f nd thi)

leventh Division comprises the states of Texas,

Arkansas, Oklahoma and I*ew Mexico, which is almost identical
to the suggested reserve district. This, in itseli‘, is a
strong argument of the accessibility of Fort Forth to tfce
terri ory named*
Of the ltncense traffic
throu h the

to and from the itate of Texas

iouthwest, Port ’’orth is the print of inter­

change of not less th n 70 per cent of the total, as attested
by the fact that 955,906 loaded cars moved through the
railroad terminals in the year 1913.
The pack g e , or less t h m carload shipments of freight
for the proposed district is concentrrted at F ;rt

orth for

distribution in much the same manner as the United jtates
m ail, f*nd this concentrated freight requires 165 package
ours dally from Fort ~orth to the various cities in the
In further support of the importance of this city as
a rail oad center and point of interchange, it might be
pointed out that the California Fruit C o ., in the year 1913,


J . A , Stafford,

inspected 16,000 carloads of fruit at the city of Fort
7crth, onehalf of which was re-iced at this point on its
way to destination.
■th a steady deir.rnd for working capital, Fort i?crth
has 266 Jobbing and manufaetaring concerns, besides the
packing house, lire stock end grain industries,
lo ll tax receipts show total number for last four
years —

191G - - - - 1 4 ,9 1 5 .
1 9 1 1 $ --- 1 5 ,1 7 0 ,




2 1 ,2 2 9 .

Fro*, this it is Rhcwn that the I'oil Tax payments of

cocppred with 1910, show an increase of 45 per cent,

1. LIV^ 3?0CJT IKI^??3?HY,

*t the present time the

otate of Texas and the Bepublic

of ’ e ico yre the principal breeding grounds of cattle of
Largo quantities of young cattle are sold rnd shipped
each year from Trx&B to stock pastures rnd feeding grounds
of the Hcrth and northwest.

This movement of cattle, alone,

creates an enormous demand for money in this territory.
The T ariff b ill

of the present / dminietrotlon moving


J A 3tafford.

the duty on l iv e stock g iv e s th is sec tio n the b enefit to a
p e c u l i a r l y l rrge ext nt o f the ir mense breed ing grounds nnd

ranches in llexlco , thousands upon thousands head of cattle
have a lr e a d y moved from T'ejdco into the pastures and
Kar ^ts o f T exa s, as w e l l as large numbers of sheep; these
c a t t l e and sheep are used by the ranchmen o f Texas to breed

up to thoroughbred b u l l s and re-stock t h e ir ran ches. This
i n i t s e l f r e q u ir e s an enormous eiAunt o f money i n t h is
terri tery.
Owing to i t s w on derful advantageous lo c a t io n from a
t ra n s p o r ta tio n and geo g ra p h ica l standpoint a s a f f e c t in g
the liv e

stock in d u s t r y , Fort Worth i s n e c r s s a r ily the

centre o f the liv e stock in d u stry o f the entire southwest.
From a small to ta l o f 265,000 head o f c a t t le and calves

handled i n t h i s market i n 1903, i t has Jumped to th ir d plac
in the h a n d lin g o f c a t t le i n the United i t r t e s , with a
to ta l o f 1 ,1 8 5 ,1 6 4 head o f c a tt le and c a lv e s for the y ear

1913; Vort Worth shewing the greatest in c r e a se in c a t t l e
and c a lv e s for the year 1913 o f any United states market.
The total amount o f money required to handle the c a t t l e ,
calv es,

hogs and sheep on the Fort

the year 1913 amounted i n roun

"orth market alone fo r

fig u r e s to *1 5 5 ,5 0 0 ,0 0 0 .

J A 3t/ fford


every d o llr r o f w hich i s p/'id out on the cipy on which the
liv e

stock ia s o l d , n e c e s s it a t in g a very large amount o f

monsy in thia t e r r it o r y to properly handle the b u s in e s s .
: h i « movement of c a ttle included a total o f 9 0 , 0 0 0 head o f
imported ?rex ican cat l a , valued at - £ , 8 1 1 , 0 0 0 .
The year 1914 already promises to put Fort »crth in
8econd place aa a c a t i l e market* ?or the month o f Jr-nuary
there i s an inc ease in c a tt le and calvea over previoiis
J a n u a r y , o f over 2 L ,0 G 0 head, or 34 per c e n t , aa a g a in s t
a heavy decrease at "i s s o u r i riv e r markets for the same
p e r io d , and a s a fu r th e r in d ic a t io n o f the p o s s i b i l i t i e s o f
the movement o f l iv e

stock from Vexico to t h i s c e n t r e , would

c a l l a ttentio n to the fact th "t d uring t>is last January we
have received a to ta l o f 1 8 ,0 0 0

head o f v e i c * n c a t t l e , or

o n e- fifth as many a a received for the e n t ir e year o f 1 9 1 3 ,
and w h i l e , cf c o u r s e , ? exico is not a party to our reserve
~ank la w , ev^ry d o l l a r o f the money prid for these M exican
cat le i s

handled through some Texas bank.

I t i s a p e c u lia r

tran po rtetio n c o n d it io n that p rovid es thrt all cattle coming
from le x ic o

throug h the ports o f vralvestcn, Texas C i t y ,

Lare o , B row nsville ?nd "a g l e lass going to any no rthern
m arket, the route would n a t u r a lly be through Fort

o r t h , and

J k Stafford



1 Paso the route

through Fort TTorth i s


just as n a tu ra l

from a tr n s p o r ta tio n standpoint as v ia any other fu n c t io n ,
the r e s u lt being that 9C per cent o f the c a ttle moving from
K o x ic o d ir e c t to market comes to or through Fort


r h i s , we co n sid er o f extreme s ig n ific a n c e in the lo ca tio n of
a rese r v e bank i n the southwestm s s the centering o f the live
stock in d u stry from I'exico on Fort 7*orth and the very fact
that every re le a n in t e r e s t e d in any way in liv e stock w i l l
hrve h is mind fix e d on Fort tforth as the point from which
he draws his p r o f it and revenue on hi a b usin e ss end the fact
that the m ajority o f these shippers sooner or I s t e r v i s i t
t h is s a v k e t , it
w il l in ti

is on ly reasonable to s ppose th^t Fort


e become the trade centre w it h M e x ic o , e s p e c ia lly

the e n t ir e northern t i e r of I'exican s t a t e s .
L I T ' iiTOBX IJ D !\ r ? Y .
A nother l i v e

stock in d u stry centering on Fort I orth

rnd w hich should be co n sid ered in pny q uestio n o f finance

i n the southw est, i s that o f horses and m u le s , ?his to rket
has jumped to th ird p la ce in the e n t ir e United states, w it h
a to ta l o f 6 6 ,7 2 4

head o f horse? and mules h m d l e d at t h is

market d u ring the year 1 9 1 3 , w ith a value o f

I t im r e a lit y requires at least

9 ,0 0 0 ,0 0 0 .

'£ 0 ,0 0 0 ,0 0 0 to handle th is


J A Staf ord


business, as these horses and males oome to this market from
went i-6X&8,

Uev; Hexioo, Oklahoma, K a n s a s , are

a i d for

through the hanks here and are la te r so ld to p lanters in
east T e x a s , L o u is i a n a , M i s s i s s i p p i , Alabaroa, Georgia; in
f a c t , the e n t ir e Southeast.
Another great argument in favor of the lo ca tio n of t h is
r eserve bank: at Fort T o r th , is the enormous amount of
b usin e ss oenter 1 %

on t h is point from the State of Oklahoma.

A at the map will show that p r a c t ic a l l y every r a ilr o a d
in Oklahoma on which l i v e stock is produoed is a natu ral
rout© to th is m arket.

?he proof of th is is the fact that

in a d d it io n to the la rg e nnmber of o a t t le a n ! oalves r e c e iv e d
at th is raarketfrom Oklahoma, we han le d a t o ta l o f over
2Cf ,0 0 0 head o f hogs from that State during 1 9 1 3 , fo r whioh
1 6 , 9 0 0 , 0 0 0 was p a i d , dra fts being made from Fort \ orth to
i p r a c t ic a l l y every bank i n Oklahoma.
It ia p r a c t ic a l l y s ig n if ic a n t that the proposed t e r r i ­
tory for the Southwest reserve bank i s a lm o s t, i f not
e n tirely ,

id e n t io a l w ith the territory sup p lyin g the Fort

market with l i v e s t o c k ; that i s ,

Sexas, Oklahoma,

w estern and southern L o u is i a n a , vestern A rk a n sa s, Old M exico,
and Hew ie x io o .


J A Stafford


in the pr paration of ca ttle for ?narket, and when
bought by man who prepare them with feed and pasture to ship,

it usually requires from threo to six months to get them in
proper oon ition far m arketing.
It has b>en and is the o us tom o f those v/ho are engaged
in t h is l i n e
pro uoers

o f b usin e ss to buy these ca ttle from the

in v ario us parts

f tho co u ntry, a n i a ft e r buying

them they u s u a lly seoure 1 ans from 50 per oent o f th e ir

up t o , i n some oases, t h e ir en tire v a lu e , the feed er

or han 1 r of those o a t t le fu r n is h in g h is o m money for
grass an I fe e d .
It reouires a la rg e amount o:? money to take oare o f
t h is 1 ind of b u s in e s s .

The greater part o f t h is money is

u s u a lly fu r n is h e d by commission merchants Tho take loans
secured by mortgages on suoh o a t t l e ; i n t u r n they eadorse
t h is pa er and s e l l it i n suoh parts of the country as they

can secure the b est m arket, it having been demonstrated
that t h is

is a very d e s ir a b le olase of paper and

is really about ths only la rg e l in e

of commercial paper

is b a n 'l e d in th is cou ntry.
I n the h a n d lin g of t h is lin o o f b usiness the oomais io n

merchants of Fort

-orth, T e x a s , fin a n c e a n n u a lly about


J A Stafford

tventy- five m il l io n d o lla rs
of Fort I orth hand le d ir e c t .


in a d d it io n to ^hat the banka
I t K i l l show that Fort fo rth

r e a l l y fin a n c e s more loans than any other o it y in *exas.
Of the paper sol

, u su ally about 20 per oent is han led by

Texas banks* about 10 p er oent by Kansas O ity and 1 0 per oent
by Sit. L o u ie ,

tho bal m oe in Ohioago, Hew York and other

eastern c i t i e s .
T his c la s s of paper is regarded as very desirable for
banks for tha r e a s o n , f i r s t ,
s e o o n ',

it is short time pa-er, a n d ,

those o a ttle when prepared for market always bring

the money, it being a olass of paper that

oan be depended

upon to be p aid at m a turity .
The l i v e stook in t e r e s t s of T exa s, a largo part of
Ok ahoma and a part of Hew -lexioo, in c lu d in g some of
Arkansas and L o u is ia n a , n a r ly a l l look to the Fort Worth
commission people to fin a n c e th ir d e a l in g s , and it is done
through them.

This is one of the strong reasons ?hy a

reserve bank should be looated at Fort W orth, whioh is
p r a c t ic a l l y no- tho l i v e stook market of t h

Southwest, and

vhere a l l these deals are fin a n o e a , and v ould bo o f great
a s s is t a n c e to those fin a n c in g the d eals to have a bank
looated h e r e ,

thus fu r n is h in g it a larg e l i n e of ooctneroial

J A Stafford


paper t at


ia d e s ir a b le and ^ a i d promptly at m aturity*

In the past

it has been im possible


deafters 1 oated a t Fort north to supply the leg itim a te
demands mode upon them.

For th is reason a large amount of

this paper has been taken by -Kansas City and St.

louis banks

en lorsed over by them without recourse to Loan Companies

c o n tr o lle d by the

same banks an i sold by said 1 a n companies

to in v e s t in g bankers i n the e a s t .

By so doing they do not

show l i a b i l i t y of rc- iscounts or loans i n t h e ir statem ents,
The amount h a n 3led in t h is ?.ay runs into many m illio n s of
d o l l a r s , which should be hanlied in the country where
pro uoed and s o l d .
In c o n sid e r in g the l i v e stock in ustry i n the Southwest

or a l l aa r e l a t i n g to fo r t worth is tne estaDiishm ent of
permanent headouarters at thlB point of the Assocla ion
most v i t a l l y in t e re s t e d i n the pro n o t io n a n l marketing o f
l iv e s t o c k ; nam ely, the C attle R a isers A s s o c ia t io n , the
la rg e st o r g a n is a tio n of it s k in d in th« s o r l d ,

in c lu d in g i n

i t s membership almost every F a lser of l i v e stook i n 2exas,

. exico, Oklahoma, Hew Lexioo, and a larg e number of members
i Louisiana an

A rkansas.

The Farmers U n io n , w hioh is

J A 3tafford


encouraging in every way p o ss ib le the increased production
of l i v e s t o c k ,

The headquarters of the Southwestern Boys

•nvl G ir l s Hog Clubs # embraoing a l l the proposed te r r ito r y

: or t h is j egional B ank.

Headquarters for the Baby Beef Clubs

o f the Southwest.
The most s ig n if ic a n t faot of a l l as it a ffe c t s the
establishm ent o f th is bank i n Texas, an

es p e c ia lly in Fort

. o r t h , is that where the l i v e stock ind ustry of other
seotlons of the United States is v.aning, as shown by the
reports of p r a c t ic a l l y a l l other m arkets, the Fort "^orth

marl et is showing a continued inorease in receipts of a l l
kinds of l i v e s t o c k , and a c a re fu l study o f l i v e stock con
ditio n s

in tho U n ited States w i l l oorvinoo any t h in k in g man

th at the great pro uctio n of l iv e stock must come from the
regio n abov

o u tlin e d for ensuing years and that the g ra zin g

and feed in g o> o a t t le i n the Horthweet
w ith the r esu lt


is r a p id ly d e o l in in g ,

each year there w i l l g ra d u a lly be a

narrowing of l i v e sto ck tra ing in largo q u a n t it ie s to t h i s
s e c t io n , w it h a consequent inorease in the importance of
the present acknowledged centre of the l i v e stock in d u str y a'
the Southwest, Fort


In an e ffo r t to get the o p in io n of the l i v e stock

J A Stafford

raisers and feeders of th


Southwest, thoy vere asked for an

opinion *:hioh bro ght fo rth tho foil wing resolution:
*Aa one engaged in the live stook and oattle industry
I strongly urge upon your Honorable Conniseion the importance
and n e c e s s i t y of placing one of these Iiegional Iteserve Banks
in tho 3tate of I ojzxs and earnestly reoomaend the Oity of

orth as the point at

hioh this bank will best serve

the oattle an*, live stook industry of the Southwest.11
Signed by 2501 feeders ana Breeders of Cattle in the
States of Arkansas, California, Idaho, Kansas, Louisiana*
^IsslB slppl, Hew £exloo/and Texas.
The original signatures are on file and can be sub­
mitted if desired.
Also the same resolution . as adopted by tho !?xeoutive
Committee of the Cattle lalsers Association of Texas*


votes to this effeot are on file and can be submitted if
In ooaoluslon, attention is called to the fact that
of the entire receipts at the >ort V7orth market, 5 3 per oent
of the oattle

are sol - to others than the Fort Vorth packers

most of them going back to tho oountry as feeders on short
loans, and again to the market when fat.

Fort iorth is

J A 3tafford


* H Fuqua

recognized aa the greate8t feeder markot in th? Treat, and
w ill eventually be the only large one.

The Secretary of Agriculture:

You may atate your name,

residence and occupation?




17. H. Fuqua; I am in the banking business and

stook business, and I farm some.

Ur. Wortham:

&r. Stafford failed to bring out one point

which we particularly desired to have him bring out, namely,
the item of where these horaes and mules were bought and

That involvea a financial proposition.

May he re­

turn to the stanA for a monefet?
The Setvetary of Agriculture:


PURTHat 3SAI"51 HT 01 J . A . SIAF10BD.
Idr. Stafford: The horses and mule 8 coming to the Fort
.Torth market are bought largely in Kanaas, Oklahoma and Hew
Liaxioo, and a few from Nebraska•

They are pal L for on

arrival at Fort Worth ancl are a old exoluaively east of Fort
£orth; in other vorda, they do not move back to the same
t e r r i t o r y , as la aometimea the oaae vith cattle*


J A Stafford


largest sale Is In Louieiana, Arkansas* Llisaissippi,
Alabama and Georgia and also Iforth and South Carolina to


It practically means it takes about J 10 ,000 ,000 to

cover the amount of horses and mules handled in Fort Worth
annually, and it practically means twice that amount of
money, because they are brought in and paid for and held

sold, and the money comes fran a different direction«
There is another feature I would like to bring out in

that oonneotion in regard to the amount of business, whioh I
do not thing has been oovered.

Fort Worth is probably the

largest buyer of cottonseed o il, in the southwest.


handle annually about $ 1 ,1 ^ 6 ,0 0 0 worth of cottonseed oil*

The Secretary of the Treasury;

. H. FU UA.

Hov , Hr. Fuqua, you rnay

-j :. Fu ua:

I am presi ent of the bank —

The Secretary of the Treasury:

Thich bank is it ?

Ur. Fuoua; I am away out in the northrest portion of the
state, at Amarillo; the First national Bark.
The Secretary of the Treasury; Mow w ill you please give us
any/light which you can upon this problem.


* H Fa cua


Mr. Fu a&: I do not know that I can give you any particular­
ly new l ig h t , but I would like to say that, coming from the
northwest nortion of Texas, it is the great desire of the
bankers and the financial men of that

lstrlct that we have

a bank In xoxas, fir s t.
The Secretary of the Treasury:

-here do you keep your

reserves now .
I;r. Ju ua: Hew York, Chicago, Kansas City and

t . L uis.

The Secretary of the Treasury; Do you keep any of it in
Dallas or Fort WorthV
I2r. F®|ua;

t*e have never had designated a reserve bank in

the state.
The Seoretary of the Treasury:

You have no reserve bank

in this state that you use?
Xr« Fuqua:

No sir

The Secretary of the Treasury: But your desire is to be
connected with the Reserve Bank in Texas, if one if 1 cated
here ?
i*r. Fuqua: By a ll moans.
The Secretary of the Treasury:
in this same district ?

Mr. Fuqua; Yes sir

You want Amarillo to be

H H Fuqua


Tho 3eoretary of the Treasury: What weald be ^oar
booond ohoiooUr. Faqua:

Peroonally ilansas Oity \7ould serve us better

than any other point* aside firom Texas, but we are uncom­
promisingly for Texas,

i f it is possible to get one in this

state. I am interested in about forty odd banks, and I am
speaking for a ll of those, and also for a nmaker of other
ban: s in the northwest part of the state.
The Seoretary of the Treasury: Will you file

a list of

the banks you are speaking for?
Mr. Faqua: Yes, I oan do it later.
The Seoretary of tho Tr ae^ry: If you pleaso, so it may
be an exhibit to your testimony. They all favor a reserve
bank in Texas ?
Mr. Faqua; Yes sir.
The Secretary of the Treasury:
Ux. Fucua:

But ?;hioh oity?

Of oours* Fort 'STorth is a lit t le nearer to us,

bat we w ill be glad to get it in the state. It is for Texas
f ir s t , and for the oities afterwards, according to your good
The Seoretary of Agriculture:

To That extent do you

think Texas roald be able to take oare of this district*

3T H F u q u a

I£r. Fu ua* I notice that point was nade this morning
and I believe if it were possible for Texas and the adjoining
territory that would naturally go with it to be able to
maintain its reserves ani its funds at home, that they would
praotioal y be able to take oare of the needs of this entire

You understani at present, while wo get a great

deal of our assistance froia the east and north,y*t in ^any
times 7 o are only asking for the balances that we oarry there
and sometimes we may exceed that, but if it were possible for
us to carry our reserves more at home, we would not be
require-! to go east for the accommodation that we do now.
The Seoretary of the Treasury:

is it not a fact that you

do not ask for aa much as your balances, even;
h&r Fuqua: Tea, s i r , that migl t be.
The Secretary of the Treasury:

You usually have a surplus,

I mean the banks of the country as a rule have a surplus
always in Sew York*
ilr. Fu ua:

Yes, s i r , the banks of the country do, but

that is not the oase in ay particular section,

e are a

great borrowing section up there; it is a new country and
we han le a great deal of cattle there. And in fact, I may
state, i f I may be permitted to ~o, that for six years

7. E Fuqua


Amarillo, the lit t le t v;n I come frora* enjoyed tha
tinction of 7 oaring
other point in th
been passed


more oattle from the range than any

That*, as for ai>years. Shat has

now for 14 years, ainoe the establishment of the

many railroads.

That was a quarter of a century ago. when

I went there.
The secretary of Agriculture; You spoke of your particular
section as being a bor rov ing region.


hat extent vould

you regard this entire section as a borrowing region?
r . Fuqua:

Certain small towns at all seasons of the

year are borrowing towns; at certain times they have large
sums of money, but at portions of the year the smaller
interior towns in the district are borrowing towns,
Tfce Secretary of tho Treasur;:: At the height of the
lir. Fuqua: Yes, at the height of the season.
The Secretary of the Treasury:

Do you think as a banker

that it would be wiser to create a district which is wholly
a borrowing one or create a larger district that vould have
more lending power •
Ur. Fuqua:

There arc certain portions of the year that

J E Fuqua

th is

d i s t r i c t r e fe rr e d

other points

it ^ o u l


to has a surplus of money and at
be a very heavy borrowing soot ion .

the s p r i n g , say from December to A ugust,


is the heaviest

borrowing tim e i n the no rthw est, and in the f a l l season we
a re s h ip p in g our money. v>e have a lrea d y marketed our g ra in
o rop .

We r a i s e c o n sid erab le g ra in in that country, and our

l i v e sto ck th en are oomli^; to m arket, and a t the time vrhen
in an * around Fort l.orth, P a lla s an

Houston, and a l l t h is

country here they are needing th eir money,


w i l l say from

August to J a n u a r y , we would have more money than any other
t im e , onder ordinary or com on c o n d it io n s .
The Secretary o f the T r e a s u r y :

Fuqua: Y e s , s i r .

dermal c o n d it io n s ?

But that con i t l o n has not

p r e v a ile d for the past twelve months.
The Secretary of A g r ic u l t u r e : You xxx probably heard the
statem ents made t h is m o rnin g, that a con sid erab le part of
t h is t e r r it o r y w hich you have in d ic a t e d i n t h is d is t r ic t


asking to be in c lu d e d w ith c it ie s to the n o rth .
3Sr. Fuqua: Yes s i r *
The Secretary o f A g r ic u lt u r e :

To what extent w o u ll you

s u f f e r detrim ent or disadvantage i f a la r g e r d is t r i c t were
created v it h a reaerTe tank in Kansas C it y , wo r i l l

s a y , fo r

W H Fuqua

the sa


of c i s c u s s i o n ,


or 3t. L o u is , w ith a branch at Fort

T o rth ,
IJr. F uqu a:

I do not know just what la going to be th©

l a t it u d e or the duty of these branoh banks*
The Seoretary of A g r ic u l t u r e :
the function s

Under the law it may have

of the reserve b an k s . There are no lim ­

it a t io n s •
The Secretary of the T rea su ry :
s u p e r v is io n a n
Lir. F a u a :

Subject to the general

c o n t r o l , of c o u r s e , of the r eserve bank,


be improper for me to asi: here

have heard th at branoh bank question



about how

many branches co u ld or would there b o , p r o b a b ly t
The Secretary of tho T rea su ry :

It depends e n t ir e ly upon

the d is t r i c t s and what w i l l be approved by the Federal
B o ard ,

The r eserve banks a re compelled under the law to

e s t a b l is h bra ches under the ru le s a n l re g u la tio n s to be
p r e sc r ib e d by tho B o a rd , and the tendency w i l l be to
e s t a b l is h those b ra n c h e s ,

of c o u rs e , from tim e to time as

the b u s in ss of the d is t r i c t s r e q u ir e them.
ilr. Fuqua: Yes. W e l l ,

I b e l i e v e , s i r , that w it h the

completion o f the Panama Canal r ig h t s o o n , it is g oing to
put Tosas on th e highway of commerce, and i f that be the


H Fuqua


The Secretary of A g r ic u l t u r e :

have run across the

Canal a l l tho way from i.ittsburgh to S e a tt le .

Hr. Pa ua: I understand
The Secretary of A g r ic u lt u r e ;

It is going toput every

o it y in the ooantry on the na p .
The Seorotary o f the T rea su ry :
Fu ua:


I t h in k that


It began r e a lly at Boston.

u it:

correct. But you are

g e t t in g much oloaer t o the o u tlet as you approach the S u lf
and near Texas.
The Secretary o f the T reasury : In every o it y we have been
the la n a a a Canal is an A la d d in 's La up.


I Relieve I w ill go a l i t t l e fu rth er and say

that Texas , as perhaps the gentlemen here know


they are not particularly a c la n n is h s e t , but they are a very
lo y a l s e t , a nd I believe a bank established somewhere i n
Texas w ill be not only a very s a t is fa c t o r y b a n k , but
b e lie v e


it is the next thing to a n e c e s s it y .f o r the develop­

ment of this

southwest country.

I do not know ,

I aa not

tenp ted to say there t h e se banks should be e s t a b l is h e d , but
I do b e lie v e that Texas w ith its great u n lim it e d , and I may

say entirely undeveloped resources , it many r e n p t o t u , ou;:ht



W H Fuqua



to h a v e , from what it oan and T i l l be able to do for the
government a n i for thio Ie p u b lio of o u rs , some co n sid eratio n
as f a r as a reserve bank is concerned.

As to where it is to

be l o c a t e d , th at is for you two gentlemen to decide a ft e r
you have heatd a l l th is

to i t .

e t id e n e e .


I b eliev e Texas is

I believe its great volume and great p o s s i­

b i l i t i e s r e a l l y e n t it le it to a reserve bank.
She Seoretary of the T re a s u ry : We are here for the purpose
of g iv in g
h e a r in g .

it c o n s id e r a t io n .

That is the object of th is

That is a l l , than}: you.

Host Houston is r e a ly to be hear

Vert ham:

, I b e lie v e .

This pamphlet contains a com pilation o f a l l

the fa c ts w hich have been subm itted.
The Secretary of the T rea su ry :

That may be f i l e d as an

e x h ib it•
(The pamphlet was a c co rd in g ly f i l e d . )
U r.

Oscar W e lls : The State Commissioner o f Banks is h e r e ,

and inasmuch as h is testim ony might perhaps have some weight
w ith a l l the c i t i e s , we should l ik e to have him come ahead
of Houston. He w i l l only take a few m inutes.
The Seoretary of the T rea su ry : Tfe w i l l h ar from M m .

j® •

^ W C o llier



CF 3 . ff. C O L L IN .

The Secretary of the treasury:

Sr. Collier, you. may state

your name and residence and occupation.
2ar Collier;

>v Collier, Commissioner of Insurance

and Banking in Texas.
ihe Seoretary of the treasury:

You are the State Commis­

sioner of Banking, I believe?
Mr. Collier:

Yes. s ir .

I assume that the reasons for

the local oommittoe having asked mo to appear before this
CooiBlttee was to testify as to the faots of the number of
state hanks in Texas, their capital and resources> and the
number eligible to beoome members of the liesorve Bank*
The Secretary of the Treasury;

We should like some infor­

mation ae to that, and also whether state banks, under your
lav* are entitled to become members in this system.
Mr. Collier;

Yea, s i r , there is nothing in our law to

prevent them beoomin# members*
The Secretary of the Treasury: la there anything that
authorizes them:

Are they permitted to o n

Mr. Collier; Yes.


Under the statutory provision they

can o n not in excess of 10 per ccnt of the capital stock

w Collier

of the corp oration Id

hloh they aro invest lug.

The Secretary of the Treasury: Ton mean 10 per cent of
their o?ra capital.
Hr. C o llier: Bo. 10 per cent of the corporation in which
they are Investing.
The Sec etary of the Treasury: That would seem to give
them aiqple power.
::r. Collier: Ample pover, yes, sir.
The Socretary of the Treasury;

you may submit any

fact8 you have.
lir. Collier:

Shall IsreddL the date, or shall 1 just file

i t , Mr. Secretary
The Secretary of the Treasury:

If it is purely statis­

t ic a l, it Bight be of more service to fil e it . You might


a summary of it .

l£r. Collier

There are 349/banks in Texas with a

total oapital, surplus and profits of

4 4 ,6 4 5 ,0 0 0 .. I w ill

omit the odd figures. They havo total deposits of
J 6 ,00' ,0C0 and total resources of $149•000*000*
The Secretary of Agriculture:

7»Tiat has been the growth

in the last five years?

C o llie r : The growth of the banks during the fisoal

W 1 C o llie r.

year 1912-1913, there wite 111 now charters granted with
aggr igate capital of 4 3 , 3 5 o , 5 0 0 .

The growth of the deposits

from the time tho f-tate 3ank la?; went into affect in 1906 was

4>8.00r ,000; 1907, t l 9 ,0 'C ,0 C 0 ; 1908, £ 2 2 , 000 , 000 ; 1909,
$ 3 9 ,0 0 0 ,0 0 0 ; 1910, ^ 48 ,0 0 0 ,0 0 0 ; 1 9 1 1 , £58,000,000* 1912,
$ 7 1 ,0 0 0 ,0 0 0 ; 19 13, v9 6 .0 0 0 ,0 0 0 .
The Seoretary of Agriculture

That is the growth in the

last sevon years.
L*r. Collier: That is the growth since the system was
The Seoretary of the Treasury:

How many are eligible

under the Federal r eserve i«et?
lir. Collier: 377,

ith an aggregate oapital and surplus

of 1,31.057,600.
The Seoretary of Agriculture
LIr. Collier:

And deposits?

I did not give tho deposits, because I sas

called on until this morning for this data, and did not

have time to prepare that, but it is fair to assume that
the deposits of those

«ould be about ^6 0 ,00 0 ,00 0 .

The Seoretary of the Treasury:

Have you any indication

from those banks as to their purpose with regard to the
Federal 'ieserve Act V
Bank of St. Louis

Ti 7 Colli or

^r- C o llie r:


I *111 say th is, I&r. Secretary. I have had,

I suppose, in airiea from almost every one, and the attitude
of the Department of Banking in Texas is to enoourago them
to beooae members.
The Secretary of the Treasury: Are they sho. ing a disposition to oome into the Federal Reserve system?
Mr. Collier; I believe it is fa ir to assume that more of
them would beoome members if a Federal Reserve Bank is
located in Texas, than they would if it was located other­
There is one point I want to touch one, if you w ill
pardon mo.

That i s , It has been suggested that having a

Eeserve Bank located in Texas where it was entirely a
borrowii^ country would not be advantageous or wise. I
want to say that if the banks used their reserves, they
would alwa.B be able to take oare of th ms elves. At the
date of the last oall our state banks In Texas only had
four and one-half million dollar a borrowed, and had in
eastern exchange over 5 1 4,00 0,00 0.
The Secretary of tho Treasury; wTiat is your law here with
reference to reserves ?
Ut . Collier; They are required to carry 26 por cent.

W W Collier



The Secretary of the T re a s u ry : 26 per cen t?

Up* Collier: Yes, a ir .

Hence I take i t that would be no

bar to their becoming members.

The Secretary of the Treasury: Hot at a l l . They are only
required to carry 12 per oent.
*lr. Collier: Yes.
The Secretary of the Treasury: That is a pretty large
reserve for the average country bank, is it not?
ir. Collier: Yes. However—
The Secretary of th e Treasury: Are they required to
maintain that reserve strictly ?
lir. Collier: Ten per oont in their vaults and the balance
with reserve agents.
The Secretary of the Treasury:

ihat reserve oities have

you for atate banks?
Hr* Collier: We permit any national bank in Texas which
has 46 0,000 capital to act as a reserve agent for state
banks an<3 also any state bank may act as a reserve agent for
any other state bank provi ing it has a capital of *50,000*
The Secretary of Agriculture: You do not kno^ how many
s~oh state banks there are at pres nt ?
Mr. Collier: So, but I can state there aro in Texas 164


W Collier.

s ta te

banka that oarry no out of stato reserves.

?hey keep

t h e ir reserves a l l i n Texas. They are small b anks, however.
T ho Secretary of the Treasury: And v;bat is the minimum


hioh the law alio s a state bank to have?

r . Collier: £10,000.
The Secretary of the Treasury; There is no limit upon the
uAxImam amount, is there*
13t . Collier: £o, s i r .
The Secretary of the Treaopjry: That is a l l , thank you.


car o s c a -. j e l l s .

The Secretary of the Treaaury; Xou may state your name
residence and oooup&tlon.

e lls : Oscar ' e lls; Vice-President of the First

national Bank of

Houston, Texas.

The l core tar y of the Treasury: iVhat do younrepresent ?

el 1b :

1 aa chairman of the Joint Committee, acting

for the Chamber of Commerce of Houston and the Clearing House
Association of Houston.
The Secretary of the Treasury: Are you president of the
Clearing House?

e l l s : So, I am not.




The Secretary of the Treasury: But you are authorized to
speak for the Clearing Hiousa*

(qI I b : I am, yes, s ir , an

he Clearing House who

v.e have other members of

ill perhaps appear before you, who

are also authorized to appear.
Hov. I want to say first that the plan that Houston has
adoptei in presenting its claim is perhaps a little different
from any applicants ;ho have appeared before you, because

have sought to condense suoh information as we thought


would bevaluable to you in a very snail compass.
The Secretary of the Treasury: la this !<&p Ho. 1 , the

proposed district ?
Sir. Fells: Lap I p .
The Secretary o


is the proposed district.

the Treasury: You include in it Hew

Orleans ?
1 r . Wells :

3e include ins- it west of the Mississippi . iver

. . . in your wis om Hew Orleans
and it has been suggested thatif
properly belongs in this t outhwestern d istric t, it could
very well be put in this

listritt without any violonce to her

natural 1oca ion, because the balance of power in this

7*ould be in Eexas, even including Louisiana and

Sew Crlea s

0 Sells


Tho Seoretary of the Treasury: In other words, you do not
object to Now Orleans ?
^r. Welle: » • do not object to Hew Orleans.
The Seoretary of tho Treasury: You may proceed.
Mr. 17ell8 : In the announcement emanating from Washington
there v.ere three determining factors suggested.

*e have

taken those factors as the outline of our argumentt the first
being tho geographical oonvenie oe, involving transportation
fa c ilitie s and ease and rapid communication with all parts
of the proposed district. I oking towards the development
of that factor we have prepared the map TIo. 1.

The difference

between our map and the map presented by Dallas this morning
is that we un ertake to defend only the southern half of
Oklahoma, being that half lyin^* south of the Cano lian River,
that part of Arkansas south of the Arkansas river, that part
of Louisiana west of the Mississippi river, following th«
natural water boun ary around inolu ing Sew Mexico.
The Secretary of t e Treasury; The \;hole of Hew -iexiooV
Hr. f e l l s ; We inolude the

hole of Hew llexioo on this

assumption, that notwithstanding the disposition to do the
least violence to the trend of business in other directions,

0 Wells

that perhaps


in dividing ap there will be necessary some

arbitrary lines l a id , and £ew Llexico being a stock raising
territory largely, and doing a great deal of business now
with Fort Sorth, the live stock centre, and with rail ay
fa c ilitie s running from
in this district
accessibility to

’1 jaso to Denver, oould be handled

ith a branch at

3. iaso, because of our

*1 Taso, the branch.

This map w ill show, Lr.
points in thia territory.

Secretaries, the prinoix>al
It will show the distance from

Houston in hours and miles. It sho s the location of the
ports along the ooast now in operation an 1 being develpped
by tho expen itare of government money. He have also—
The Secretary of Agriculture: \Jhat are these figures on
here ?

Veils: The top figures are the miles, and the bottom

figures are the hours distant from Houston. That includes
Hew Orleans, Baton Bouge and a ll points in this district
and a lit tle bit outside the district.
T'e have three telegraph and cable systems, those being
the Western Union,

ac ay an;

Postal, and two long distance

telephone systems. I am speaking to So. 1 sub-topic of
your outline.

These reach every banking point in the pro-





posedL diatriot.
Tha Secretary of the Treasury: What ia the extreme limit
of your long diatanoe serv oe from Houston.
-©118; The long diatanoe service can be carried on to
any part of this diatrict without any


The Secretary of the Treasury: Outside of Texas?
Bellas u© talk to EanBas Oity and St. Louis ?ith great
frequuncy, and sometimes with splendid service. That dependa
on climatic conditions, whon you reach that diatanoe.
How the ©tatistioal data which I do not Intend to read
in detail oover the lis t of railways serving Houston and

Houston, there being 17 in number, with a total

mileag© —
The 3©cretary of the Treasury: We are familiar with it*
Ir .

^ e l l s ;I Was going to point out the percentage of the

total mileage in Texas which oentres in Houston,

e have

79 mail trainsdally in and out of Houston, and 106 passenger
trains dally in and out of Houston.

That does not include

any ©lectrlo interurban service.
F© have water transportation fa c ilit ie s , utilizing
Buffalo Bayou from the Gulf of Mexico to Houston turning
basim, which is under process of completion, under contract




z\ ooifying an average depth of £5 fee; , and an average width
of 100 feet at tho fease.
Unit d

This v>ork is being don ’ by the

tates government an- the Houston Navigation District,

and the contract is near completion*
The Seoretary of the Treasury:

3fcen do you expect that to

be opened?
wr. W ells: It rill be opened some time during the coming
year, this year.

Then we already are raaking provision for

the establishment of dockage and slips and fa cilities for
Houston, as a shipping point, is 500 miles nearer tha
graneries of the

set than the Atlantic and Pacific ports

and 300 miles nearer than iJew Orleans. Then the Intercoaetal Canal is completed from Galveston Bay to Corpus
C h rist!.
In this proposed district, tributary to Houston, are
he f o i l ot,ing ports; Aransas Pass, Corpus Christi, Freeport,
Calves on, Texas Oity, ioint Bolivar, Port Arthur, Beaumont,
Orange and Morgan City.
How the second point of our outline has to do with
industrial and commercial development ani needs, involving
the general movement of commodities an. business trans-

0 i.ells .


Ions xiitliin a proposed district and tho transfer of funds

and exchanges of credit that result.
In the second nap we shov> a product map, or at least
sho* the predominating proloots of each section In this

You will notice the rice and

3 ugar belt Is along

the coast, and tho yellov pine, oak and hickory timber—
The Secretary of the Treasury:

When is the rice crop

marketed, when is the period of extreme dernand for the move­

of rlee?

Hr. Wells; I was golngto suggest, we have here as a
witness every one of these iniustrios re£jresnted, and "h ile
we do not

come here prepared '-1th a lot of statistical data

to repeat the things laid
are here to answor any

iown in this condense! form, they

uestions pertaining to their indus­

t rie s; anl we want to say too, that any argument that we do
touch upon here and which we haveeought to condense and
hioh you want elaborated, we stand ready to elaborate and
verify this data at the same time*
You w ill nfttloe the yellow pine, oak and hickory
timber and cypress lying along

the eastern part of Texas and

the western p rtion of Louisiana and a portion of Arkansas
include! in there. One of the greatest claims that Houston

0 Trails


makes for tho 1 oation of a I.egional Bank Is the diversity

of In t e r e s t s w hich she represents now.
The live stock ra isin g , hile we are not a factor in
ti e pro action of meats,

,e are a very strong factor in the

breeding fie ld referred to by the gentlemen from Port Worth
awhile ago; in fact there are more cattle pro ucsd in a
territory tributary to Houston and 100 miles distant that
any other point in this entire territory.
Ihe cotton, corn, small grain and fe e d s t u f f s in tho
xastern portion of i t , and the truck a n i cirtus fruit in the
southwestern portion , in fact a l l along the southern p a r t .
and the loaatlon of the oil fie ld s , which is a very material
part of our commercial activity— these are all sho n as

These little black dots on that map represent

the points of Oregon from whioh cotton was shipped last
year to trco of the cotton factors located in Houston, showing
the trend of that commodity towards the Houston market to be

sold on a commission basis.
The business of cotton faotorage is peculiar to

Houston and Galveston, a n i from all sectio ns of this country
where cotton is p r o d u c e !, that cotton is shipped to the
Houston market to be shipped a g a irc t advances and be sold

0 tells


on a consnission basis.
Following Map Ho. 2 there are statistical daia and we
give to you. the square miles of the territory, the population,
railr ad mileage, an 1 assessed valuation of wealth. And we
take up and discuss briefly in condensed form the production
of cotton.

There were 7 ,1 2 5 ,0 0 0 bales in the district


a value of y 4 1 0 ,0 0 0 ,0 ^ 0 .

The gross bales hanlled through

Houston were 3 ,3 2 4 * 000.

Those are the figures referred to

by the gentleman from Dallas, this morning, in talking about
cotton which passed through Houston. The net bales were
1 ,3 0 1 ,0 0 0 , including the net bales recorded at the Houston
Cotton Tixchange, the f .o .b .

cotton which is actually paid

for and han-Vled and financed by the exporter or buyer.
The Houston Cotton Exchange has 47 members, devoted
to the marketing of the cotton.
223,679 bales in 1912-1913.

Houston factors handled

That cotton, by the way, a ll the

Houston facto rs1 cotton, or practically a l l , is handled by
Houston banks. . er haps one large factor $oes outside for a
portion of the money, or he did this year on account of
abnormal conditions, or Jierhaps three of them did, but
ordinarily the large percentage is handled by the Houston

0 -Tells

xh re are no available statistics showing the nambor
of bales exported, bat it is conservatively estimated that
b5 par oent

of the net volame handled by Houston ootto firaa

is exported, valued at § 6 6 ,3J3,220, against ^.hioh foreign
exchange ia drawn and sold from Houston through local and
eastern brokers.
Hexfc to the production of ootton is the production of
cottonseed products.

There vrere 1 ,9 3 2 ,6 2 3 tons, from the

best sta tistic s, crushed
valuation of 4,46,000,000.

for manufacturing purposes, with a
There are 1 ,6 2 7 ,2 7 7 tons used

for feeding, fertilizin g and plafcfcing, of a

value of

h43,00<~ ,0 0 0 , v.hich do not go to the crushers
The Secretary of tho Treasury: How much is crushed at
Houston? Have you large mills hero?
i£r. ft'ella; Yes, we have large oil mills there, an


7 par oent of the entire seed of this district is used for
manufacturing purposes,

and they turn out a greater volume of

anafactured pro acts than any point in the south, the value
of which is $ 1 6 ,6 0 0 ,0 0 0 .

we have a number of producers of

cottonseed lard products, from the ootton seed.
The value of the manufactured products is $ 6 2 ,0 0 0 ,0 0 0 .


0 W ells.

and they export about # 1 7 / 0 0 ,0 0 0 of i t .

How tha territory consuming these by-products or the
products cf the cottonseed, reaches to Arizona on the west,
Kansas on the north, Porto I.ioa on the south, and
the Atlantic

Seaboard on the east.

The Houston mills

purchase and crush 7 per cent of the s e e d , and so far as I
know the financing is done exclusively by Houston banks.

Then we have corn, wheat, oats, hay and other feed
stuffs produced in 1912, valued at $ 1 8 3 ,0 0 0 ,0 0 0 .
The Secretary of the Treasury:

You mean produced in this



The next item perhaps, LSr. Secretary,

is lumber, tfe are the home of the lumber in U3try, so
far as this district is concerned. The estimated stumpage

of feet in this district outlined on that map is about
1 5 0 ,0 r0 ,0 0 0 ,0 0 0 f e e t .

The output from that stumpage in

feet 6 ,3 1 3 .0 0 0 ,0 0 0 in 1913, with a value of 4 - 88,000,000.
and odd.

A great part of this was done by 48 lumber com­

panies in Houston, employing a total capitalization of
•J3 1 ,8 3 5 ,0 0 0 .

When I say lumber companies, I mean manu­

facturing anl se llin g companies. There are no consequential
lumber orjaninations outside of Houston in this



0 T?ells


handling lumber, either manufacturing or selling*
'e xt cornea the volume of production of petroleum.
"here are 12 oil fielda looated in Tessas 'Khich produced in
191*5, 1 5 ,5 0 0 ,0 0 0 barrels and 8 oil fields in Louisiana which
pro uoed in 1913, 1 4 ,0 0 0 ,0 *0 barrels, that pro ueed in fexas
being valued at § 1 5 ,6 0 0 ,0 0 0 , and that in Louisiana
£ 1 4 ,0 0 0 ,0 0 0 , or a total pro* action of 29 ,500 ,000 barrels,

1 ,0 0 0 barrels daily, valued at $ 2 9 ,8 0 0 ,0 0 0 .

A p a r t of

that financing is done in Houston, and a large portion of
the capital of these companies is contributed by Houston
citizens, and they horror money and the transactions are
han lec through, the Houston offices and Houston banks, al­
though* they do not confine their borrowings to this terri­
During 1913 it is estimated that the Gulf Ports
received from Mexico

8 , 500 ,000

valued at £ 6 . 5 0 0 , 0 0 0 , which

barrels of cru e petroleum,

as handled and financed by

the companies dding business in Houston.
This proposed district contains 14 oil refineries,
representing an investment of $1.3,000§000, exclusive of
pipa lines and stocks of o il , and manufacturing refined
prodacts of a gross value of $ 8 4 ,0 0 0 ,0 0 0 , at least 40 per
cent of which is exported via Port Arthur, which is located

J® *


W elle

within tho listrict, and one of the points we claim as
tributary to Houston.

In Houston there are 28 oil com­

panies incorporated a n 1 capitalized at # 8 8 ,5 2 6 ,0 0 0 , proAicing
and marketing tho greater part of this output.

i e are growing as a rice


In 1913 there

were 7 7 ., 00 acres of rico land in this district vahich
produced 6 ,1 4 9 ,0 0 0 b&gr , valued at £88,000,000* This is 90
per cent of the ontiro crop of rice of the United States,
of vhioh 3 .8 per oa.vt goes to foreign r.arkets, 21 per cent
to Porto ; ica. and 75. 1 per cent is consume* at home.
Ve are also a sugar grcfiug territory.

In 1912 there

were 359,350 acres dev ted to 3*.zger raising in this district,
pro ucinf? sa^a^s valued at v!5 ,0' 0 ,0 0 0 .

That estimate was

flrotten froro + he offices of several a ^ a r producers.
The Secretary of Agriculture:

Thai; S.a a repetition of vhat

i.*» in hore * 5s 5t not ?

»olir: ; t

imply ecwi&r Ini Kg here*

51m Sccr >tcii of l£ri<Hilture:
?fcr- T-11f : HaTC you rise roa

I have read it already.
about the exports and

ii;vQ?ti and tho values re?, ate A -o saGhv
The Secretary of ^ r i e u l t a r e : Yos.

**ell«: I **ooIA like to call your attexr,ioa to two

0 'Veils

or three things as we go along, because it might develop
into the asking of some questions.
The Secretary of the Treasury:

Touch upon the spec if io

points you wish to emphasise.

/ells ; Yes, I will be glad to do that. In fact all

these points —
The Sec etary of the Treasury: You could not emphasise
them better t an you have thorn in this volume.
Jr . f l l a : I understand that.

The Seoretary of the Treasuryt

So i f you *ant to say any­

thing in an explanatory way, you may do so.
liIr. ‘ifells :

One of the points we would like to touch upon

and emphasize is the favorable location of Houston for a
Regional Bank particularly as it may pertain to tha develop­
ment of the foreign exchange dealings by the regional Bank.
That is one of the t h n g s for which, it makes provisions, in­
volving exports an


I say that because Houston is

adjacent to these ports already located and those being
located, and tho volume han~lovl at .Galveston

as ^ 889 ,000 ,000

and at Port Arthur ( 2 7 ,0 0 0 ,0 0 0 , and a ll these other porta
are be ng developed by the expenditure of money, but lown
the Ship Canal we handled in 1913, ^35,950,000#


0 Sella

The m iscellaneous data concerning- Houston I do not
think i s e s p e c i a l l y p e r t in e n t.
Th > S e c r e ta r y of the Treasu ry:

fe w i l l examine th at any

Heading Afc i s o f no va lu e .



There i s only one other th in g , and that i s

th t the Houston inbound f r e ig h t r a t e s are favorab le J,o the
continuous b u ild in g o f Houston as a d is t r i b u t i n g p o in t, and
that t i l l be touched upon by other w itn e sse s.
Tho ?ecr«*tary of the Treasu ry:
d istrict

I no l i c e th at the proposed

outlined v.oul? <rive th<*

e^ional Bank a c a p i t a l o f

v 5 , 32 4,0 0 0 and d ep osits of < 1 7 ,5 6 2 , 0 0 0 .

In th at based upon

the minimum re uirement of the A ct?
Hr. ' . e l l s : Y e s , 3 per oent o f time d e p o s its , and


separated the deposits a? t.c rescive cities end member banks
and the amount of 1 p o s it s as aho'^n by the ctatemen-.

cold l i k e to c a l l your attentio n t c nap No. 3 ,

showing the 1 c a tio n of the banks doin£ busiE&os in Houston,
c a r r y in g s p o rtio n o f t h e ir re se rv e s tliere, the number
c f banka at th ese p o i n t s , s.nd <he number o.. accounts c a r r i e d
by those banks in Houston, as simply she i i ^ the d i s t r i b u t i o n
of them over th a t a re a .
i?he S e c r e ta r y or the T re a su ry :

-hat i s

the point you


0 m is


to bring oat V
Hr. Wells: I simply want to show that these little rings
8hor th© location of the

banks nov; carrying accounts in

The Seoretary of Agriculture;

^vhat rate of interest does

Houston pay?
Mr IVells ; Two per cent.
The Seoretary of Agriculture; And the same check
oolleotion arrangements as the other cities?

Tells: Yes, s ir .

I do not think there is any

difference in th« Texas cities in doing that business.
he Seoretary of tho Treasury: To what extent is Houston
able to finance these operations, to what extent does it
have to go outside?
Mr. Sell®: During normal times the Hoaston banks borrow
comparatively little money outside, and that only in the
ve -y extreme portion of tho movemsnt of the ootton crop.
Of oouwao, there are a great many commercial paper oianufacturere who go outside for money just as thoy . i l l go
outside after the Regional Bank has been established.


do not think that that point would stand in the way of the
operation of

a Regional Bank in this territory as compared


0 r'9lls


with the opera!ion of a i.egional bank in any otheT territory,
beoause there Trill he a oertain amount of supply of standard
oommeroial paper, and i f we nsaimfacture it it will be found
in the open market, and a oountry that is continuously
developing cannot hope to find all its

lending power located,

at one point, ev*n if a Regional Ban^r is looated there.
The Secretary of the ^ e a s U r y :

Do you think a Federal

reserve P-ank looated in this district as you have outlined ^
it , located Houston, would preserve the


course of

b r i n e s ■aad conserve the greatest conveni nee of business
in southern Oklahoma, and all of Louisiana west of the
ttisaiasippi liiver.
J r . Veils: I fco think so, for this roason —
The Seoretary of the Treasury:

tShat are your trade re­

lations with that part of L u is ia n a and southern Arkansas?
-ir* S e lls :

«e have very little trade r slat ions with

southern Arkansas ourselves* However, there are some trade
rolationo in the northern part of the state with southern
Arkansas, and we have some trade relations in oklahoma*
because of the fact that our crop moves earlier and we can
f*e uently, in normal years, after we have begun to get
re lief from the cotton crop in the southwestern territory*


0 Sells

loan money very rea ily to tho Horth Texas and Soath
Ok ahoma banks, and do fre aently io so, before they
reaoh the peak of the 1 ;ad.
The Seoretary of the Treasary: To what extent woald Hoaston
be a better point, considering the normal coarse of baSiness
throaghoat this '.Listriot, to what extent are HoastonTs
advantages saper or to those of Dallas and Fort Jorth for
this partioalar parposeY
LSr. S e lls : For the whole district.
The Secretary of the Treasary: Yes.
-Ir. ife l l s ; Ve maintain that oar advantage lie in oar
increased railway fa c ilitie s over the Horth Texas points *
we think even greater than Fort Worth, and we believe greater
than Dallas, so far as railway facilities are concerned.
IS believe that the sarety of Hoaston*s fatare because of tha
development of th i waterway system w ill make it the largest
to1 n , therefore the lo ioal one no# to se eet. And it has
a railway system connecting with the lower corner of
Louisiana, the Southern Pacific running across to 131 Paso,
and can reaoh the soathvestem corner by ra il ay. And it

3 if;nifleant that thatecoantry \i l l be developed, reaching

towards Tampico.

9 rQlle


The Secretary of the Treasury; Is the ooanodity movement
between Fort lorth and Dallas tov;a1rd8 Houston?
Mr* flells: All export commodities naturally flow t at
way, for Instance, ootton, and that is tha biggest commodity
produoed in thia country,
The Sooretary of the Treasury: 3at outside of that?

fo ils: Outside of that the oattle would go to Fort

Tha Seorotary of the Treasury: Bat i f you had a Regional
Bank at Houston, for instance, the matter of exchanges and
various other transactions ?,ould necessitate the reversal
of the normal trend, would it not? It vould be brought
southward instead of trending northeastward, as it does now.

Veils: I do not think so, as evidenced by the number

of bank accounts and reserves carried there by banks a ll
over this territory.
The Secretary of the Treasury:

To what extent do you

have exchanges now with Fort *orth and Bellas?
Hr* W ells: It would bo difficult

to give you the exact

figures —
The Secretary of tho Treasury: Vould it be as great your


C Sells


-r. *?ell8 : We sent t era as great a volume, taking it for
12 months in the year, as they sent to as*

We bay as much

exchange In covering the balances from northern points as
they bay from as.
The Seoretary of the Treasury;

Is it not easy enough to

get the exact data on that ?
Ur. v/ells :Perhaps that ooald be done.
The Seoretary of the Treasury; *e should like to have
that submitted as an exhibit,
Mr* H e l l s ;

7/hen you s a y N o rth T e x a s , we h a v e a good

rziany p o i n t s —
The Seer tary of the Treasury; Uo, I am speaking of
Dallas and FortBorth.

Wfeat are your exchanges *ith Dallas

for a period of a year,and Kith Fort
a year?

Vorth for a period of

I wouli like to have Port *orth and Balias give it

too, from their end of it* You w ill please file that
The S e c r e t a r y o f i g r i o u l t u r e ; Have y e a ta en into con­
s i d e r a t i o n L o u i s i a n a ’ s p r e f e r e n o e i n the matter?
Ux* Veils; Ho.

That would be for Eew Orleans.

-/© did

that upon the assumption that there mightnot be a bank
established at Sew Orleans, and we do that upon the further



0 Wells

assumption that we now handle a great portion of L uislana's
pro uotion, in that we handle their lumber and o il , and it

not do Tiol itice to tho trend of business* Of course*

you appreciate a ll tho trend of business is eastward under
the present system.

Southern .Arkansas vrould be an arbitrary

line* so far as Houston is concerned.
The Secretary of igriculture: We are not speaking so much
of banking as the general trend of business.

e lls : 7.e do some business up there.

The Secretary of Agriculture: And Southern Oklahoma V

ells:.T h ey are a cotton raising territory, and it

. ould do no violent* for their business to. come that way
because it does to a certain extent come there now. It oomes
south, act necessarily to Houston, and the cattle business
comes to Tort fforth, which is what we are undertaking to
dofond, so farvas the

territory is concerned.

The Secretary of the Treasury:
able borrowing

This is a very consider­

district at certain times of tho year, is it




At certain times of the year they borrow a

great deal of money, but we believe
The Secretary of the Treasury: fhat co you suppose th®



0 ! ells •

naximum demand from this district is for a year?

oils * I have not undertaken to malce any figures.

5he Secretary of the Treasury; I m an in tho peafc demand.
Ur. Sells: I have not undertaken to make any figures.
I assumed Ur« Ardray's figures, wliioh he gave this morning,
were a pro er report of the amount of borrowing, as they
wore from the Comptroller's report of October 31st.
Tho Secretary of the Treasury;

2hat would not be a

proper indication, because they would not show the entire
demand —

e lls: Absolutely, and there was some pyramiding,

as he suggested also , so it

ould be difficult to ascertain

srhat would be the amount necessary to be borrowed.


believe th is, that with the release of the percentage of
reserves which is to be released under the new law, and that
would come to us from the sale of standardized commercial
paper on the open market, because we believe this b ill w ill
create a central discount market*
!Phe Secretary of the ‘ihreaaary:

You mean it w ill ofeate a

central discount mar et in each district i
Mr. Wells: I mean a general district market; it may not
bring it into each d istric t, but it w ill be 2m certain parts

0 Wells


of the United States and there will be money to be had over
and above the reserves carried by the reserve banks, which
a re now used in other channels, and we b eliev e we v:ill get
s mo re lie f from the sale of that pa er, and that in addition
to the rote is s u in g poorer of the bank at the time we need

it moot to move tho crop, would take care of our require
monts under normal conditions*
Die Secretary o f the Treasury:

You mean by resorting to

the Federal Reserve Board?

iir. V»ells : Yea s ir .
The Secretary of the Treasury: Instead of to some other
: r.

e lls: Yes, instead of going to New York, Chicago, or

St* Louis as now, because we carry our reserves there, and
it . ottld be sufficient to take care of us because of this
issuing power.
the Secretary of the Treasury: In other words, your
theory is that by resort to the issuing power, you would
. “-





* ..'



: -s

under all occasions be safe.
Mr. ^ e lls : 2e believe in anything, in ©very emergency we

. ould b© safe; w© believe the power of the i.egional Bank



would be sufficient to take care of us, and our borrovring


0 Wells

fac ilitie s aro extonded to us now based on th© reserves
carried at those points.
The Secretary of tho ‘Preaaury:

Of course, the i uestion

would arise from a business standpoint which was tho most
advantageous thing for you to do, whether to borrow from some
other reserve bank or recort to the Federal Reserve Board.

ellB : That ji ould be for tho Board to decide.

The Seorotary of the Treasury: Ho,

it would be for the

bank to determine. Of course, the Board would have to give

ermi8Sion to deal with another reserve bank.


ells : Yes. We assume t at the reserve bank will

resort to this issuing power, because that is part of its
earning pover.
The Secretary of the Treasury: It would not, providing it
could get the monny from another Federal Eeeerve Bank on
better terms.
I3r. r,e l l s : Lo, but in any event it would do no viol noe to
the ayBtem to use the issuing power, on which we can rely.
The Secretary of the Treasury: Is it your judgnent it
would be b tter to create a district that is wholly a borrow­
ing distriot at some periods of the years or create a district
which is x. more balanced, for insta ce, with one 4nA of it







a la to extenci at 3uch times as your extreme demand ca; e ~—
lir. Wells: I want to oall attention to ths condition which
I spoke of a moment ago, which ia frequently done in the
) eavy movement of crops, and that is that we not can get
money very rea illy from the movement of this lower country,
fast enough to take care of the demands up here in the
The Secretary of Agriculture:

"ells: -e do.

But do you?

And if you will let me refer to a

personal transaction of our own hank, in 1912 the hank
deposits in the bank which I represent, struck the low ebb
on August 18th, going down to C-2,200,0C0« By the 23rd day
of September, ?hich was about 33 days later, our bank
deposits fromcountry banks were

,3 0 0 ,0 0 0 , or $ 3 ,1 0 0 ,0 0 0

increase, or at the rata of $100,000 daily, shov/ing the
I I uidating power

when the cotton begins to move.

The Secretary of Agriculture: Is it not a fact that out­
side of the ban>: operations, there are large interests In
this state that have to go to outside territory to get

veils: I tiiink they w il l , if you put the bank in a
territory, even.

I think they

il l have to do that,


0 . Welle


I f jou oou^d oreate a district and get far enough away from
our OT.-n district in the other direction, where the diversity
would be unquestioned, then I would say if we could have
those two elements brought together at one point, we could
work to better advantage by using the surplus money in that
section rchile ours is busy, but the extent to which you could
do it by creating a geographical division here is negligible.
The Seoretary of the Treasury:

But theonly question is

whether you can approximate it .

; el l a :

It is desirable to the extent to which you

can reach i t , but we do not believe you can reaoh it by
oarving out any larger territory than we can take care of
ourselves, because we can take care of it ourselves, being a
smaller seotion, by being a smaller district and not so unwieldly.
The Seoretary of Agriculture:

That would not necessarily



. Wells:

Ho it does not necessarily follow.

The Seoretary of Agriculture:
The Seoretary of tho Treasury:

That is simply an assumption.
Y*hat would be your

preference if you did not have a reserve ban1 in Texas, I
a headquarters, what would be your choice outside of


0. ttella


Texas, as the oity to whioh you should be attached.
H r,

ells :

I b e lie v e the first choice of the Houston

bankers, outside of Texas, of course, relying upon the
logical location we would go to , realizing that we cannot
skip a territory to go beyond, would be S t. Louis.
The Secretary of tho Treasury:

In other words, the normal

and natural trend of business is more to St. Louis from this

e lls :

Of course, the bulk is towards Hew York.


exchange is sold in the east.
The Seoretary of the Treasury:

But you are going to have

a different situation under this system.
lir. flells:

That is the reason wo say a Regional Bank in

Houston would bo a good thing, because it will have an
importation and exportation trade out of the business from
these ports.
The Seoretary of Agriculture:

What would be your a t t it u d e

towards New Orleans ?

se lls:

7ie can hardly r e c o n c ile ourselves to g o in g to

Bew Orleans, for the reason it represents a weaker territory
than we do, and we would have the balanoe of banking power
of any district you might carve out.


0 . rellB

The Secretary of the Treasury:


Your argumant as to

foreign exchange would mate Hew York more logical?

W ells:

That is true for the present, bat I am talking

of the development of the ports, which are being developed.
The Secretary of the Treasury:

Of coarse, the question of

Hew York exchange will beoome less important after this
system is established, but at the same time it does not
alter the fuialamantal fact that the greatest strength you
oan give through natural and eoonomio causes to each one of
these districts is desirable.
Mr. W ells:

That is true.

The Secretary of tho Treaaury:

To what extent do you

carry reservos now in New York?
U r. \ells :

About 50 per cent, I should say.

The Secretary of the Treasury:

Where do you carry the

U r. W ells:

25 per cent in Chicago, 25 per cent in St.

L o uis, these b^ing the three central reserve c it ie s , and
our city being a reserve city.
The Secretary of the Treasury:

To what extent were Houston

banks compelled to re—discount last fa ll?
Mr. W ells:

Telit our statement made in January showed

0 . T?ell8



about a million and half 3till carried in January#
know how indicative that is .

I do not

I should say twice as muoh as

that anyway# taking our ossn bank as an indication.
The Seoretary of the Treasury;

Does that represent the

extreme of the discounting that ?»as done or —
H r.

e lls :

Unquestionably we borrowed more money last

fa ll than ever before.
The Seoretary of the Treasury:

I mean to say do you

frequently re-disoount through indirect means?

a lia :

I cannot say as to that, because I am not

familiar with the other banka.
The Seoretary of the Treasury;

e publish our a.
That I mean is th is,

frequently the banka resort to indireot methods of re­
discounting —

e lls :

I say

e do not.

r e borrow money and advertise

It as b ills payable.
Tho Seoretary of the Treasury:

You put it in your statement

H r. Fells i: I assume some of that is done.

I think that

is true in all seotions of the state
The Secretary of the &Traasury:

’ hen you get down to

your reserves, do you then simply stop lending money or

---- ^ m,.< „


Je w

0 . Felle



do you re-disoount?


a lls :

©11, iir. Seorotary, t.o Aid not stop laat

summer, because we thought the normal movement of the ootton

crop Y»*ou d soon give ua r e lie f, and we borrowed vory liber­
ally and freely to take care of that movement, and all mer­
cantile interests too, but we were not able to take care of
all the demands*

I thin] v.e took care of every reasonable

demand, based upon the value of the aooount carried with us,
and vre did not stop making suoh loans except those that we


felt had no right to apply to us under those conditions, and

perhaps some of them v;e vrould not have made under normal
The Secretary of the Treasury:

But so far as legitimate

business demands are concerned, have you any idea how far
each year they are seriously hampered bj lack of funds
required at the extreme period.
Ur. W ells:
any time.

1 do not think it is seriously hampered at
You understand that the network of the commercial

activity of this country is built around the movement of
that one dominant crop of ootton.

The country merchant

borro* 8 a little more money until the irrop is harvested,
of the
Federal Reserve Bank of St. Louis

country bankers, and the merchant borrows more in


****«.,... i L




0 . ’"ells


the reserve oity, waiting for payment, and it all goes up a
l it t l e bit higher until we get relief from the movement of
that or op.

That is the condition with which we have to

oontend, and I believe in normal conditions that the leg iti­
mate demands made upon a bank by its customers, and especially
for the orop movement • are take^oare of by a free use of the
re-discount privileges of the reserve city bank, because they
realize that it comes back readily and ordinarily the loans
created in Houston are paid before the first day of October.
The Secretary of the Treasury:

What is your opinion as to

the number of banl*3 which ought to be established at the


As a banker my views would be for the minimum

number, bat when it comes to distributing the number over
the country, it seems to me li):e the best service tould be
to increase that minimum perhaps to nine or ten.
The Secretary of the Treasury:

Have you prepared this
*** i

district with relation tp the division of the country?
Mr. W ells:

re l»ve not, only in a general way.

The Secretary of the Treasury:

Do you think it is

very important in the laying out of any district that is


0 . Tells


should have an absolute relation to the rest of the country?

e lls :

Y es, I do not think there is any question,

from your point of view, but I mean to say I have not taken
any specific point in the southeastern country, but the only
district —
The Seoretary of the Treasury:

That other districts i

did you have in mind when this district was laid out?


would the rest of the oountry be apportioned?


In the southeast country I *ould say Atlanta

or Birmingham, to serve that portion of the country east of
us, and to the coast, and north of that would be Hiohmond.
The Seoretary of the Treasury:

Would you not put Hew

Orlear^s with Atlanta?
Mr. W ells:

Ho. I «ould put Eew Orleans with us.

The Seoretary of the Treasury:


You have not got it with

you her a.
Mr. T?ells

I suggested that to you modestly.

Th j Seoretary of the Treasury:

Yeay you said it would not

be objectionable.
Mr. " e l l s :

It would not be objectionable.

The Seoretary of the Treasury,,: But i f it was not put
 here, where

would you put i t , with Atlanta?
_________________________________ i




0 . ITel IB

~:r. ” 6118:

I f it did not go to aa, and in your judgement

it should go the other way, making the Mississippi Biver the
dividing point.
The Secretary of the Treasury:


That is a l l .

There are two or three things in the book,

showing the total remittances and the currency operations
Which I t h in , are indicative of the banking operations in
Houston, and I should like to call your attention to them,
although I do not want to take up your time.
The Seorotary of the Treasury:

Yes, it may be file d .

(The book vaafiled accordingly.)
LIr. W ells:

How we have a number of witnesses, for

instance, Mr. Cleveland is here as a ootton factor to
substantiate the things which have been said.

The Secretary of the Treasury:

You may state your name

and residence and occupation.
II Mr. Cleveland:

A.r.Cleveland, of Cleveland & Sons,

The Secretary of the Treasury:
Mr. Cleveland:

^hat is your business?

Wholesale grower and ootton factor.

Je w

A. 3. Cleveland.



G. Cleveland & Sons.

The Secretary of the Treasury:

You have some data you

want to submit ?
Mr. Cleveland:

Only in confirmation of the facts about

Houston, I~r. Seoretary.

Xy firm is engaged in one depart­

ment as oottcn factors.

e receive cotton on consignment

from every cotton raising county in Texas.

That cotton is

shlppe i to Houston to be sold there; sometimes to be held
and sold later* an- sometimes to be sold on arrival.


advance against those shipments, perhaps on 75 per cent of
our shipments ;o maize a vanoes against i t .

The man owning

the cotton wants his money ahead of the sale.

25 per oent

is shipped us on open bills of lading, either for sale or for
The Seoretary of the Treasury:

uhat is the percentage

of the crop, would you say , which ie held in warehouses?

^4r. Cleveland:

It is right hard for me to answer that

question, but this w ill give you an idea.

Ve have received

practically 100,000 bales of cotton this season, and we are

The Seoretary of the Treasury:

About 20 per cont?


holding 20,000 bales.

I 3 Cleveland

T’r. Cleveland:


The Secretary of the Treasury:
Kr. Cleveland:


How is that financed?

As respects ourselves?

The Secretary of the Treasury:

Yes, how do you finsnce

r . Cleveland:

Tie buy no cotton ourselves..

iTe advance

on the cotton end sell it to exporters, to cotton buyers.
'e bcrrow coney from our Houston banks until they cannot lend
us any more, and then we borrow elsewhere.
The Secretary of the Treaaury:

’That percentage of your

requirements are usunlly Ket by the Houston banks?
T!r* Cleveland:

In nonrel seasons we can and do meet all our

requires ants at home.
The Secretary o f the Treasury:
Hr. Cleveland:

You get thee: at hone?

Under normal conditions.

TheSecretary of the Treasury:

But last f a l l , for instfnee,

to what extent did you h^ve to go outaide?
Tr. Clevrlpnd:

For about h P lf.

The Secretary of Agriculture:

Do you have to go outside

every year at poms period*:
'*r. Cleveland:

Uo, v r. Secretary, we oo not.

But I

should say we would go out of town 50 per cent of the year

A. 3. Cleveland*

for money.


e do It oftentimes because v;e can and because

we think that the banker induces us to do it occasionally,
and if w# can get money on the outside generally we %J»ulu.
do i t .
The Secretary of Agriculture:

You are speaking as a

business nan?
Mr. Clevelands


The Secretary of Agriculture:

Is it your judgment that

the uiatrict woul I be better served with this district as
propoaad or with a larger diatriot?
Mr. Cleveland:


-o not l:nov that I am competent to

uestion, Mr. Secretary:

I would be disposed to

aay that thia district is proper*
The Seeret&ry of the Treaeury:

That would be largely

on aocount of the 1 cal feeling abojrt the problem, or would
you be detormlnad in that by the economic conditions which
should be covered.
Mr. Cleveland:

I think I am persuaded on that poosibly

by the first influence.
The Secretary of the Treasury:

It is rather d ifficu lt

to get away from that in the oon8lderation of problems of


this character.




There <lc you sell most of your foreign

b i l l s , to the local banks or to Hew York?
T'r. Cleveland:
with that,

We sell none at a l l . We are not concerned

"’he man who buys from us* has th*t to do.

The 3eeretary of the Treasury:

I thought you made some

direct sales.
J r . Cleveland: Bo, none at e l l .
The Secretary of Agriculture:

Have you r>ny data you would

like to flic?
Mr. Cleveland: Bo.
r. Valin:

*11 o f our data Is in those books.

T r.

T?vnns Is a cotton exported, and he w ill not take up very
much time.

JT A T 'T P U T OF J .

W. 75VAIS.

The secretary of the Treasury:

State your name, residence

'and occupation?
Mr. Evans:

J . 7* Evans, Vvens & Company, cotton e porters,

Tho Secretary of the Treasury: What facts do you desire
to submit in addition to those contained in this book?
K r . Frans: well, I had very little to say except to con-


J* W* Svans


firm that which ha* been already said, and to call your
attention particularly to the fact that Houston actually
and physically handlee more cotton than any torn in the
United States#
Now these gentlemen here today hare spoken glowingly
of the amount of cotton which Is financed from different

Houston actually handled 900,000 bales, that is,

there Is that muoh brought in there, classed, wei^ied and
shipped in even running lots to foreign countries*
The Secretary of the Treasury: Have you figures on Dallas
and Fort Worth?
Mr* Brans:

So, I ran only sajr what the actual receipts of

cotton in those two towns averaged something around 100,000
bales each, in other words about one to nine as compared
with Houston*
Now the second largest town in the United States from
a ootton standpoint is Memphis* They handle on an arerage
each year about h a lf a million bales*

Of course, this

does not include the cotton which is financed In Houston
and shipped through froa the country, possibly amount ing to
half a million bales more, or in round figures, in a normal
year, probably # 9 0,0 00,0 00 of foreign exchange*



J* E* Kvans


The Secretary o f the Treasury:

Ho* is that financed?

Mr* St ana: Largely through Houston banks*

I shoul i aay f

to giro you some idea of how that is handled under normal
conditions, we frequently hare a stock there after Christ­
mas of 1 5 0 t000 bales, which you may ssgr is worth from
$ 9 ,0 0 0 ,0 0 0 to $ 1 0 ,0 0 0 ,0 0 0 and I venture to say under normal
conditions there will not be more than $300,000 or $400,000
borrowed aovay from Houston on that cotton*
The Secretary of the Treasury: The HoustoJ banks can take
care of it?
Mr* Brans:

Yes, they do*

That foreign exchange is

usually sold Either to Mew York, Philadelphia or Chicago,
and sometimes hew Orleans*
The Secretary of the Treasury:

Do you sell much of it to

Hew Orleans?
Mr. Svans:

io , I should say from 5 to 10 per cent of the

whole* Mew York and Philadelphia get most of it*
The Secretary of Agriculture:

Is there any other point you

wish to bring out?
Mr* Evans:

Mo, I do not believe there is anything more*


J* 2* Me Aah an


J . E. Me ASH Ah *

Th# Secretary of tho Treasury:
u n i|


Will you state your full

residence and occupation?

J* 8* WcAahan, Vice Pro si dint and Caahi ar

of ths Southwestern Commercial Bank of Houston#
The Secretary of the Treasury:

Are there any facta in

addition to the facts contained in this volume that you
wish to present?
Mr* MsAshan:


to not know aa there is anything new which

I could say* I think the statistics are all well compiled*
But I

do wish to say perhaps a little further than that,

that as this is a new system of finance, we are very anxious
for Tsxas to be represented in i t y and Texas will no loubt
furnish the greatest bankingpower of any other unit of any
district that it may be placed in,

th<*r afore we

Reserve Bank to be plaoed in this state*

wiah the

As you knowy we

have formed s group of states, parts of some states and all
of some states* You will see the map in that book*


natural tendsnoy of the commerce in those states is towards
the gulf ports, and our wiah is for the banking business and
exchange to follow the natural tendency of the shipments.

J* 3* Me A ah an



an d for that reason ws are asking th# consideration of
Now th# Houston banka are very large lenders of money,
▼#ry large, and I think they hold more reaerye money for
interior banka

than the banka of any other tvo cities in

the state, which shows the natural tendency of reserves in
that direction*
Ths Secretary of ths Treasury: Your inducements in that
respect are not superior to any other Texas city, are they?
Mr* McAahan: Not that I know o f.

Is pay the same rate of

interest that the others purport to pay} we pay 2 per cent*
And so far as giving par fa cilities areconcerned,


bdnk with which 1 am connected does nothing that any
other bank in any of the reserve cities in the state would
Ths Secretary of the Treasury: I f you did not have a
bank in Texas, I mean if the headquarters bank was not in
Texas, where would you prefer to have it for thia region?
Mr* lfcAshan:

fbr this region I think our prsferencs would

be St* Louis or possibly Kansas city , but I think largely
St* Louis* The tendency of trade in this section is north
and south, and for that reason the southern tendency of



2* Me A shan


trad# would bring a groat portion of this diatriet to Houa
Tho Soorotajry of tho Troaaury: In view of tha fact that
thia la largely a borrowing territory, as has boon testified
to by numerous witnesses, vould you or not, now dismissing
all looal consideration,

and looking to tha strength of the

ayatem itse lf and the greateat facility for thia section of
the country, say that it would be better to hare a larger
and stronger district#
Mr* Me Ash an: I think it would be better — now you are
asking my opinion an d nothiagmore?
The Secretary of the Treasury: Yes, we want your opinion*
Mr* MoAahan: My opinion ia thia, I would rath sr sea a
bank eatablidied with Toxaa wholly as a district than to put
it in any other ayatem; that ia my peraonal preference* I
do not know that mX all of us coincide with those views, but
here is the point;

The time that we

are cloaeat run for

money is in the early aummer. It ia a little later than
that in Korth Toxaa, but in South Toxaa

we aro closest

pressed for money between the first of July and the first of
August* Last summer money was very close with us,although
we used the borrowing privilege

very slightly in our own

and hardly ever uae it at a ll; but on the fir st

J . E • McAahan


of August we were very mxious to get soma of the government
money that was going to ba placed in tha southern banks*
While it didnot come quits as soon as we anticipated it
would, when the time arrived for placing it , I do not
M l i e v e any of it went to Houston* I do not think* Vs did
not taka any of i t .

We were relieved by the first of

The Secretary of the Treasury:

It was saved for you,

but you did not take it?
Mr* McAahan:

Yes, we did not need i t , in other words* On

the first of September the natural condition of business had
eased us up*

Secretary of the Treasury:

But in the meantime to

what extant was legitimate business compelled to suffer
from lack of accomodation?
Mr* MeAiam:

Not much*

Ths Secretary of the Treasury:
Mr* MeAdam:

Mo, sir, not much

lot much?
not any more, I Should

say, that it did in any other city of equal consequence in
the country*
The Secretary of the Treasury: Y es, but is it not desir­
able to eliminate all legitimate buaineas suffering of that


J . E* MeAshan


Mr* wcAshan:

Of course, as a human 1tarlum principle, it

ie very dssirable to eliminate all suffering.
TheSeeretary of the Treasury: tfo, but as a good business
principle in business, is/not vise not to compel unneces­
sary commercial suffering or losses, i f it ean be done?
Mr • MeAshan:


The Secretary of the Treasury:

la that aspect of the case,

and looking at it from an economic standpoint, would it not
be desirable to organize a district which would be selfcontained and able to meet the diman is at all seasonf of
the year?
lir* MeAshan:

Yes* But as I understand it , there would

be a power placedsomewhere

which would control the

eirculation and the issuing of notes of Federal Reserve

and will also control the shifting of balances, the

seasonal chifting of balances*
The Secretary of the Treasury:

But that does not mean

that we ought to diliberately create unnecessarily


dies it?

Mr* MeAshan:

But, Mr* Secretary, any one who has been

engaged in the banking business knows very well that it is



5* Me Ashen


often good policy to re-discount in order that when the
ease comae and the easy time comes, you may hare a full &ine
of loans outstanding; that i,a that you should not hare a

surplus of money on hand*

The Secretary of the Treasury:

Exactly, but ifyou hewe

not the ability here to re-discount, then you cannot take
care of the demand*

Now the purpose of this Act is to

create as strong units

as possible, so that that re-discount­

ing privilege may always be available*
Mr* MoAahan:

Yes, I say that would be an ideal condition*

Mow as to commercial paper, I do not know that we have touched
on that*

Ve have commercial paper offered to us from all

sections of Texas, and of course a great deal of the best
paper that is offered to us, and the most satisfactory paper
in every wayji paper that liquidates itself by the sale of
the things that secure i t , is cattle paper*

Ye handle a

large line of eat tie paper In our city, the banks in our
The Secretary of the Treasury: You have heard the ques­
tions that weaddressed to the Clearing Rouses oft Dallas and
fort worth?
Mr* Ms Ash an: Y e s ,s i r , I heard it , but I would lik e to






hear it over again*
The Secretary of the Treasury: I will ask the reporter
to give copies which will be presented to Mr Wells as
Chairman, and we should like to haye your clearing House
present your views as soon as possible, say by ths first of
Mr* McAshan:

On what point is that?

The Secretary of the Treasury:

On the definition of

commercial paper, and also on the matter of exchanges
between the Pederai Reserve Banks and their branches, and
the matter of exercising clearing house privileges, and
Mr* McAshan:

I presume all those matters will be answered

to their own satisfaction by the Federal Reserve Board when
they come to them*
Ths Secretary of the Treasury: But wears getting


views of commercial bodies and clearing house associations
for ths purpose of enabling the Federal Reserve Board to
consider then*
Mr* McAshan: Vow in rsference to the shipment of commodi­
ties, it is mentioned in this little book of ours that the
distances from ths great grain fields

of the west to


J* 3* VoAahan


Calve* ton and Houston are much shorter than they are to any
other Gulf ports, and that inevitably has a tendency to
bring them along tha lin js of least resistance*
The Secretary of the Treasury:

Do you do much grain

business in Houston?
Mr. MeAshan:

Y es, a great deal of it , both of importing

and exporting. We handle *eme very large grain interests*
But I do not think we handle anythinglika the


which weregiven for Port Worth this afternoon. Still it
is a very important item.

This is an undeveloped state,

and practically all the wealth of the country is now cosing
out of the south and westa that is , that comes out of the
ground, except coal perhaps, and we would like to be in on
this new deal. ■
The Secretary of the Treasury: Well, there is no way to
keep you out, you are bound to get in .
Mr* MeAshan:

You might keep us out so far as a Reserve

Bank is concerned*
The Secretary of the Treasury: You are bound to get ths
benefits of this system*
Mr* MeAshan: Y es,

that is so*


J* E . VcAshan

The Secretary of the Treaeury:


And we are very eager that

you should have it to the very fullest possible extent*
Mr. McAahan:

Thank you very much.


The Secretary of the Treasury:

Will you give us your

nans, residence and occupation?
V r . Talley: I<ynn Talley, Cashier First National Bank,
The Secretary of ths Treasury: Give us any new light you
are able to on this question.
Mr. Talley: I have been more personally interested in
the stuty of the Federal Reserve Act from the standpoint of
open market operations. It is not our desire nor would it
be ay desire, to place a tax on the commerce of this section
by advocating such a small district that would not adequately
take care of the commerce within the lines of that district,
but I realize if such a tax were placed on that commerce
by an increasing interest r ate, that the increased interest
rate in itself is bound to cause a flow of money into this
district to eeek investment from districts
h ig h rate

is not obtainable*

where such a


Lynn Talloy


Tho foreign axchange operationo alono would furnish
a Federal Reserve bank located in Texas with an excellent
opportunity for business.

I might say hero that if a

Regional bank is placed in Texas, from tho standpoint of tho
bankerst wo aro interested in seeing it have an all the
year round business, because we want to see it earn money,
as we have our money invested in it ,

and as our discount

rate would inorease, as our credit would expand, we would
be bound to increase those foreign exchange operations,
because gold will follow the lines of the best earningpower*
It must be remembered that the district that we have
outlined in the data we have la id before you is about 1000
miles square, that is 1000 miles from the extreme southern
portion to the extreme northern portion, and also east and
west it is safe to say it is about 1000 miles • We are bound
to have within that district a sufficient sequence of
climatic conditions to create a reasonable diversification*
I know that, taking last year as an example, by reaaon of
the excessive rainfall which set in during our harvesting

that the City of Houston, by reason of its southern

location and by reason of the number of banks scattered



Lynn Talley

ovor a wile area doingbusiness with it , increased its cash
holdings very considerably between the 26th of July and the
15th day of September, by no other reason or from no other
cause than the fact that our cotton crop begins to move and
begins to be converted into money at least 30 days before
even that section which we tarm northern Texas, without
going outside of the state, and Oklahoma is a lit t le bit

Our highest point with reference to our loans to

country banks is reached during the month of July and the
first part of August, and as those loans begin to decline
our loans on cotton increase,

as you w ill notice from the

tables as laid down in that chart there*
The Secretary of the Treasury: Now, }&r.Talley, on the
question of the strength of ths district itself, looking at
the economic foundation and organization of these banks and
dismissing local considerations, as we must view this from
the economic standpoint, because you gentlemen yourselves
are going to get the maximum benefit if we get a sound
district laid out —
Mr* Talley: We appreciate that.
The Secretary of the Treasury:

Aid we are more eager

perhaps than you are yourselves, because we have no loca 1



Iornn Talley


oonsiderations to control or influence ua, — now with that
in view, is it your Judgment as a banker that it is
better to lay out a district which is a borrowing district
than to lay out a district which would be self-sustained and
able to take care of itself, if it can be done*
Mr* Talley: I rather take issue with some of the testimony
that has been given here, that we are altogether a borrowing
district, and I think I can have the statement confirmed,
that there are times in the year, I should say from the
middle of October until the latter part of March, that ws
are large buyers of commercial paper in this state*
The Secretary of the Treasury: Yes, but at other points
of the year you are large borrowers, are you not?
Mr* Talley: Y e s ,s ir ,

that is very true*

The Secretary of the Treasury: i*ow, assuming that a dis­
trict could be la id out which would, except in cases of

or extreme need b# self-contained# would it or

not be better to have that sort of adistrict than one which
is at times a lending district and at other times a very
large borrowing district*
Mr. Talley:
y s s ,s ir *

Ws would prefer a district of that character*


Lynn Tallay

Tha Secretary of the Treaaury:


Aa a matter of economic

soundness, the 8eIf-contained district would be bettery
would it not?
Mr .Talley: I have never la id any special importance on
the expediency of the Federal Heserre Bank requiring or
permitting one Federal Reaerve Bank to discount for another,
becauee I do not think that that is of any expediency*
The Secretary of the Treasury:

It is an emergency pro­

in any avent?

Mr. Talley: Yes* I take it as such* But there has been
testimony given already that that was the intent of the lew,
for one regional bank to furnish another with money, and I
do not take it that way.
The Secretary of Agriculture: Is it your judgment that
we should start out with eight or more banks?
Mr* Talley: My Judgment as a banker would be that you
should start out with the minimum number, simply from the
standpoint of any business man who is starting a new
business, he would naturally prefer to load that business
with as little machinery and expense as possible when he
starts out*
The Secretary of the Treasury: You would rather start out



lynn Talley


with wight of tha strongest possible units for ths success
of the system?
Mr. Talley: Yea, eight or nine or ten.

I <jfo not see

how the country can be adequately served with as few as
sight banka. There is this large section up hare —
The Secretary of the Treasury:
the Reserve Act,

You say you hays studied

and in view of ths provisions for branches,

which is made mandatory upon the reasrre banks

of each

do you not think this district will be well

served of a headquarters bank were put up even in St .Louis,
with branches in these large centres?
Vr. Talley:

No, sir, I do not, Just simply by what the

name branch Implies. I think it would be far better to
place the branches in remote districts like away out in
the western part of Texas and Sew Mexico

and around up in

this territory in Colorado and such territory as that.


think every central reserve city and every reserve city
should be directly a ffilia te d with the parent bank.
The Secretary of the Treasury:

Well, they wouldbe

a ffilia t e d with the parent bank through a branch. You know
the provision of the Act, do you not?
Vr . Talley: Y e s ,s i r , I under stand what you mean.


Iynn Talley

Th* Sacratary of tha Treasury:


Bach branch bank is

officered vith seven directors possessing the same qualifi­
cations as the directors for the Federal Reserve Bank itself?
Mr* Talley: Yss*
Ths Sssrstary of tha Treasury: And the purpose of giving
a looal Board of each branch bank is to bring the management
of that bank as close to the community as possible.
Vt» Talley: But then if the district which we have mapped
out is not/self-contained district, it could not rely
very much on a branch, because it would not have tha
authority —
The Secretary of Agriculture:

But the secretary is not

asking that —
yr. Talley: I unierstand what he means. But we would not
havs as $uch immediate relief as if we had direct trans­
actions with the parent banks.
The Secretary of the Treasury:

Suppose this district

you havs suggested is l a id out, with the headquarters bank
at Dallas, for instance,

do you mean un 3»r the circumstances

Houston would prefer not to have a branch governed by her
local people?
V r. Talley: I would not hardly see the neeessity of one


Lynn Tallay


at Houston with tha Regional Bank at D allas.

Tha Secretary of the Treasury:

3ippose on the other hand

that Hew Orleans were incorporated into this district as
•uggested, would you say that New Orleans had better not hare
a branch because it did not have the headquarters bank, if
it were located at Dallas or Houston?
Mr. Talley: Perhaps I do not altogether gather the import
of branch banks, but I do not think that any reserve city
would be depending primarily on the branch banks*
The Secretary of the Treasury: But hero you have three
reserve cities in Texas,
Mr* Talley:

fbur in fact*


The Secretary of the Treasury: Within a comparatively
short distance of each other*
Mr* Talley:

Well, we have six.

The Secretary of tha Treasury: Y es, Galveston and San
Antonio, I was overlooking than*
Mr* Talley: Yee*
The Secretary of the Treasury: Kow each one of them could
not have a regional Reserve Bank*
ICr* Talley: I am not contending for that. You brought
up the subject of branch banks, an 1 my idea is that they

Lynn Talley



should serve tha remote district® and not undertake to
primarily serve a city Ilka Dallas or Houston* What I maan
by that Is , it would ba preferrable* you understand,

to have

tho transactions of all reserve cities go directly to tha
parent bank wherever it rasy ba located.
The Secretary of the Treasury: But suppose you had the
headquarters bank at Houstoh, would you say then that San
Antonio would be better served without a branch than with it?
Mr. Talley: Well, I should think so, y e s ,s ir . I under­
stand the local organization of tie branch bank too, you
under stand..
The Secretary of the Treasury:

Wiat would be your choice

for a city outside of Texas related to this district, for the
reserve bank, what wouldbe your first choice outside of
Hr* Talley: Well, it is rather Hobson’ s choice; th*are
is only 3t*Louis that eould,possibly serve* But not by
reason of our trend of business being towards St*Louis at
the present time; we only use them as a convenience to clear
items through*
The Secretary of Agriculture: Why of necessity would it
be ot .Louis?

Would not Kansas City serve?


Lynn Talley

Mr* Tallay:


It would be st* Louis,

because if the

Regional Bank would be plaoed in St# Louia* it would be a
very large district and would require all th© capital obtain­
able* One objection I have to the large district is that I
think i t would promote the expansion of credit beyond the
reasonable bounds* There is that danger*
The Secretary of the Treasury:

Why so?

The Secretary of Agriculture:

Why would it?

Mr* Talley: Simply because more people would be pulling on
it and more demands made upon it*
The Secretary of Agriculture: Your individual banks are
going to deal directly with the business as before*
Mr* Talley: 0 h t yes, but then if you have a larger bank,
then they think it has mo re ability to re- discount*
The Secretary of the Treasury: Is that all the fear, that
because the larger bank would be a larger bank and would have
more business, that there would be more

demand upon it*

Mr* Talley: Jfo, I mean it would be more frequently beset
to grant credit*

Secretary of the Treasury: Ofcourse, its credit

would be extended only to member banks*
M r, T a lle y : Y e s , I understand that*

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

B. A. Peden.



B. A . PEDSfc.

Th# Secretary of the Treasury:

You may state your name,

residence and occupation.
Mr. Peden:

E. A. Peden, President of the Peden Iron

& Steel Company, Houston.

IfM liVfflllB T rTTT ^


E . A.Pe lan

The Sacratary of the Treasury:


Hays yon any facts in

addition to those s tat ad hare which you wish to submit to
tha committee?
Mr* Peden: Mr* Secretary, I wanted to attempt if possible
to stress this feature of the case,

that Houston is the

great gateway through which a most gigantic tonnagecomes
from the seaboard of this country as wall as from abroad*
The Secretary of the Treasury: Kaye we not got that fairly
well oovered hare already in these figures?
Mr* Peden: You may haye*
Mr* V e ils: Ve thought as a jobber he could elaborate the
advantages of an inboun d frei^it rata, on account of Houston
beinglocated on a waterway*
The Secretary of the Treasury:

All ri^at, proceed, Mr*

Pe den *
Mr* Peden: There was a feature

of the case which I

thought might be worthy of your attention, an d I jotted
down a few leading commodities that wa handle* My testimony
is perhaps from a different angle from most of these gentlemen, because tha products I han lie are largely manufactured
outside of tha state and brought in for developing our
resources here, and a large bulk of thor. originate in the


E* A* Peden

Pittsburg territory.


Steot stool, for instance® enjoys

a rato to Houston of 37-l/2 cants as compared with 63 eants
to other jobbing points in tha state, giving us an initial
advantage of 25-i / 2 cents.

On wirenails we have a rate

of 37-l/2 cents against Texas common points of 56 cents,
giving us an in it ia l advantage of lS-l/2 cents.
The Secretary of the Treasury:

Is that the rail rate or

water ratef
Mr. Pedan:

The water rate into Houston and tha rail rate

to common points.

The combination of the two, where the

railroads meet tha water rate, which they frequently do.
Wrought iron pipe, 57 cents to common points and 37-l/2
cents to Houston, or 19-l/2 cents in our rsrv&r*


shells from Hew York City, 35 cents to Toxas common points
and 56 cents to Houston, giving us an in itial advant^e of
29 cents.
The Secretary of tha Treasury: ftow this question always
arises with reference to thase statistics: To what extent
are they a factor in making Houston, for instance, a superior
point over Dallas or Port Worth for the location of the
reserve bank of this territory you have outlinedhero. Sow


E* A . Peden


that is th© kind of information we like to have* Why 3d they
aake it better to have the bank in Houston because of that
fact than to have itat Dallas or Port Worth?
Mr* Peden: My theory was because of the immense amount
of money that necessarily flows there in settlement for
those commodities*
The Secretary of the Treasury: But those relations and
transactions a r e with the banks just

as now,

after th e

Reserve Bank is established*
The Secretary of Agriculture: Does Houston distribute to
as many people in the state as Dallas,

fbr instance?

Mr* Peden: In these lines9 a great deal more*
The Secretary of Agriculture:
Mr* Peden:

And to a larger population?

Yes, bccause of the fact that our freight

ratesare so arranged that we reach a maximum at about 245
miles fir st class, and a little nearer on the cheaper
classes, and whan we go beyond that we have a blanket rate,
say on fourth class, of 58 cents per 100 pounds to all
The Secretary of the Treasury: You un cferstand, of course,
after this system is established there w ill not be any


E . A* Pa don


alteration of your relations with your bank. This Ressrvs
Bank hide tha rsserves of all tha other banks in ths dis­
tric t

and it is thers for ths purpose of re-discount ing

whan nacessary for msmber banks# so that these facts do not
hare any direct bearing upon the location of tha Kessrve
Mr. Psden: Of course, i f they sea Irrelevant I will not
attempt to proceed further. But I presumed that the volume
of business brought to a certain point Vy these advantages
would havs its weight, either directly or inilrectly, and I
was notbanker enough to know just how you would look at it*
The Secretary of the Treasury: I f you have suznarissd

we w uld be glad to hare them in the record.

Mr. Peden: I will promise to be a short horse soon curried*
I have not much more to say. But in recognition of Houston's
f a c i l it ie s , as I havs attempted to suggest, I want to read
you a few names of

some of our very large corporations

through the country who have raeognized it as such, and the
establishment of whose business there is going to mean more
and more volume for that territory,

and naturally more and

more money to pass through our banks.

E* A * Peden



For example, the American Steel & Wire Association;
the Texas Carnegie Steel Corporation;

the Pittsburg Steel

the warehouse of Crane company;

the Western

Electric; the Southwestern General Electric; the Wcstingiouse
Electric; all these have recently established large branches
there* The O il Well Supply company, the Continental Supply
Company, the Republic Supply Company, the Rational Supply Com­

I refer to these because they all handle products

which go to the development of our natural resources, and thqy
are brought to the ultimate consumer cheaper through our
gateway than any other*
These four comraoditiesl mentioned awhile ago might be
multiplied into the hundreds, with the corresponding advan­
tage in favor of the tonnage being handled that way*


I have said so far is with reference to the inbound and a
similar array of figures could be brought in herewith
reference to the outbound gtrafflc*
In ftirther recognition of this location, one of our
railroads alone spent there year before last $ 6 ,8 1 2 ,0 0 0 ,
*4 ,0 0 0 ,0 0 0 of which went out in pay envelopes*
The Secretary of the Treasury: Thank you, Mr* Peden*


L# Davidson



Th# Secretary of Agriculture:

Will you state your name,

residence and occupation*
Vr. Davidson:

L . Davidson, Continental Lumber Company,

Houston, Texas.
Ths Sacratary of Agriculture:

lhat can you say that will

throw any lig i t upon this, that has not already h a m pre­
& r . Davidson: I can tell you vary little, Mr* Houston.
Ths Secretary of Agriculture:

We know alout tha lumber

business and forests there*
Mr. David© n: I just want to make onr or two remarks hare,
and I cannot add vary much to tiiat is in the book there.
Houston receives from all over the United States and part
of Canada and Mexico and Europe annually about *1 6 ,0 0 0 ,0 0 0
from the shipment of lumber, which goes into her banks in
the form of exchange iWr checks from all these sundry points,,
and I think from that standpoint a Regional Bank in
Houston would be of great assistance in clearing those items
and that exchange, which is abig item with us in

the lumber

business at the present time. All the othur facts you have


L . Davidson


in refscenee to lumber in this pamphlet#

We havs seven

lumber producing railroads leading into Houston, of which
Houston forms ths hub*
Ths Sscretary ofAgriculture:

Are your lumber operations

the year round?
Mr* Davidson:

Y e s,a ir,

we operate the year roun <3* The

season is mild, and we can operate practically the year
round* That is about all I can add to what has been said*

The Secretary of A p ic u ltu re :

Will you state your name

and occupation.*
Mr* Oage:

A* S* Cage; I am in the rice business*

The Secretary of Agriculture:

Have you anything to add

to what is in this book?
k'r. Oage: Gentlemen,

the only thing I have to add is that

the rice business is in its infancy entirely,
comparison with the p o ssibilities, asid I

that is by

db not think that

the time is far distant when we will be exporting rice very

from this country;

and Houston is the geographical

centre of the rice belt, besides being the port through
which the heaviest shipments

would have to be financed*


A* S* Cage



Beyond that, I do not know that I have anything that I can
Tha Secretary of Agriculture:

That looks rathr to tha

future, you think?
Mr. Cage: Y e a ,s ir , that is in addition to the preaent*
Mr* lella : Unless you care to have ua develop


queation offarorable fre i^it rates, showing the diacussione
of tha merchandise from h are, we will not call on the freight
rate men*
Tha Secretary of the Treaaury:

Submit it in the for® of

a statement.
Mr* Walls:

It ia in the book, unleaa you want it elabor*

a tod*
Tha Secretary of the Treaaury: It iannot necessary.
The Seeretary of Agriculture:

We would like to hear flroa

aome of theae other gentloisen*
Mr* Delia:

I wouldlike to call on Mr* Hogg*

Tha Secretary of the Treaaury: Will you atata your name,
reaidenca and occupation, Mr* Hogg*
Mr Hogg: W ill C* Hogg, Houaton, Texaa*

W* C • Hogg

Tho Secretary of Agriculture:


Will you give us some light

on this problem?
Mr. Hogg: Simply as a student, Mr* Secretary, whan I first
b a g m to look into Texas* claims possible for a bank eentre
to bo located somewhere in Texas, without going into the
matter, I thought that it would ba impracticable for Taxaa
to gat a bank at all unlass it was attached to St* Louis;
that i s , going on the assumption that there woul&ot ba
o?«* eight of those banks established

in the beginning,

leaving the further re-die trie ting to future development*
At least that was tha intimation I got from a good many
questions that I saw asked} particularly by Secretary McAdoo
in soma of the hearings* I inferred that that was about
thabasis on which h i s mind and maybe yours had operated*
But th m lookinginto it from the standpoint of studying
impartially between thealaims of any contestants in the
strifa for that bank here in the state, it occurred to me
that whan you get back to Washington you could not ignore
the basis of production and trend of commercial coramo ditties
in this souths*oat country.

In other words, i f you are

going to undertake to stress the one particular factor you
announced whan you started# then you are going to have to

W. C* Hogg



give consideration to any territory like Texas,

and the

incidental attractions, which produced $ 1 ,3 0 0 ,0 0 0 ,0 0 0 of
raw material every year, and that is based on tha last two
or three years production, necessarily the exchanges of
money n d credits incidental to that production would make
. '*

it such as if a district cannot be outlined with Texas as
the centre, which would be self-supporting,

it would at

least be self-supporting so much of the year and stich a
large lender for sight or nine months when it is full of
money, that ny the in ter-dependency of these tan or twelve
districts over tha country,

& e would get tha service on a

much better basis than die would

ever get it if she were

attached to 3t« Louis*
I think all of ushave perhaps

made a mistake in

undertaking to attach Mew Mexico to any district that Texas
shoul d be in, following the idea that the trend o f commerce
and commodities should be observed

i f possible*

1 think

lower Oklahoma south of the Canadian River and Louisiana west
of the M ississippi,

in fact all of Louisiana, with a dis­

trict around Mew Orleans and a central bank in Texas, if
you put a district back to Mew Orleans, you would have to
put you central bank at Dallas and your branch at HI Paso

W* 0* Hogg



and a 'branch in Houston, but if you take western Louisiana
and leave Row Orleans and attach it to soma eastern dis­
trict, perhaps Houston would e&amand the position,
tho drift of its commodities to the seaboard*

dfcie to

Of course,

the main money item in the southwest is cotton, which you
heard dwelt upon interminably this afternoon, but you cannot
got away fr*om the fact that the area of the eight or ten
or twelTO districts you are going to establish in this
country, outsidb perhaps of some of the mining sections,
will not produce any more raw material each year than Texas
itself originates;

in fact, Texas is sufficient for a dis­

trict entirely to it s e l f . It will show on the basis of the
reserre bank at least four and one-half million dollars
capital and sbout three

and a ifoction times


for its reserve, and the economic resources of the state
are so tremendous an d it is so tremendously developed, that
the opening of the commercial facilities

by waterwaiys,

coastwise, and the outlook we have to south America and
Mexico, if the resolution over plays out, so I

do not see

how you can get away from it*
Ur* Wells:

Is it your intention to call on any

of the

bankers from the different parts of the state who are

W . C « Hogg


ga there dhere?
Th® Seoretary of Agriculture:

We wanted to hear flrom Mr

Ball of San Antonio*
Mr* Wall a: Wa would like to ha ve you haar from Colonel
B a ll, who is hare*
Tha Secretary of the Treasury: We would like to hear from
Colonel B a ll.


The Secretary of the Treasury: Will you state your name,
residence and occupation.
Mr. B a ll: Thornes H . B all, Vice President Bankers Trust
Company, and director in the Union National Bank, and a
lawyer .
The Secretary of the Treasury:

is would be glad to hare

you give us any li&ht tou can on this problem?
Mr. B a ll: I will be as brief as I can.

I was glad to

hear the gentlemen state that ther were here with an open
mind. I knew they would be, although it was rumored that
before they left they had deeided upon it ,

snd were coming

around to satisfy us as to where would be the best place to


T . H . B all


hare a branch in Texas#
How, in order to meet the possible mental attitude of
the committee, charged with this responsible duty, and I will
try not to worry you, it occurs to me

that some of the

suggestions made were those that had to be made
advocates of the central reserve bank*

by the

I have believed in

this b ill from a study of this as an economic proposition,
and from the standpoint of the country at large. I believe
in it yet.

I believe that carrying out tho purposes of this

b i l l , serving the people in the best manner possible, with
due regard to thisfttate, that one of these regional banks
ought to be located in Texas.
Mow I want to call your attention to this fact, that
necessarily much of the present commercial relations hare
been built up under artificial conditions and tinder a finan­

^rstam that has beoome intolerable. I want to say that

the only real injustice that has ever come to Texas has bean
by the impotency of the bankers here to get their money out of
the banks in money centres where they were locked up.
got through the panic of 1893 with our money


locked up,

and we got through the panic of 1907 fairly comfortable with
our money locked up.

And I want to say in my judgment,


T • K* B all


with ®me knowledge of all the principal citias of


union, haying v isited them and h m ingbecome familiar in a
degree while on the Rivers and Harbors committee with all
their caimerce and claims, that this Committee would be
amply Justifiedin making a regional Reserve Bank i f it only
had in it the limits of Texas alone, and

that I would be

willing, so far as my opinion goes, and that is shared by a
great many gentkemen whose judgment I value,

that a regional

bank thus established will take better car* of itself so
sstsblished than any other bank, big or l it t le , that you may
establish un ter this system.
Now, as far as the question of lean banks is concerned,
that is a relative term*

It depends* A bank may hare a lot

of capital, a region may have a lot of money and be bloatedLy
fat without having a proper consistency of flesh.
tack Texas on —

And. to

somethinghas been said and properly said

about the wishes of the people of a part of Hew Mexico and
the wishes of a part of the people of Oklahoma and the
wishes of a part of the people of southwestern .Arkansas,
I respect their wishes, and I would that every man could be
acknowledge! in the organization of this system;
wishes and their Interest and their commerce

but their

and their

T . H . B a ll



resources are mo thing comparable with the resources, the
business ability and capacity of Texas,

aid certainly ought

not to weigh more in the mindsof this Committee than to take
this great state of ours and cause it to wag as the tail of
either New Orleans or St. Louis*
Now, gentlemen, we hare been the victim of a false
financial cystem and a false tax system and a false money

We do not want to Ve denied the opportunity to show

ourselves in the formation of this.
to be not loss

I believe there ought

than eleven of the so Regional Reserve Banks

started to begin with.

I icnow that in that I differ from a

great many of my banking friends. But it must be remeibered
that the bankoro as a rule who are now coming to see the
great merits of this system were opposed to the passage of
the b i l l at a ll, and the sentiment largely, and I think not
well founded, was in favor of a central bank. There can be
but one fault in this system, and that would be the failure
to have a central bank. It is much easier to unscramble
the eggs by creating eleven districts to begin with, and
then if we fin d eleven are too many, and I answer that in
deference to the suggestion made by a member of the committee,
if it is found it is too many, it will be easier to redhice

T . M« B all


them to eiggit than to advance them to eleven. I f eight bo
found too many, than four can be selactad,
groat many believe, a
of tha question,

said than i f ,

as a

central bank istho necessary solution

it would inveitably tend to that*

The commit tea will bear in mind that there was a time
whan thare was no great harbor upon the Texas coast*
railroads built up a rtificia l conditions


by which the

gr anatriac of the wast wara compelled to saak the Atlantic
Saaboard at tramendous loss and sacrifice to themselves*
Than thogulf roads wara established,

and deep waterat the

daman d of the trans-Mississippi country was had at Galveston*
Mow under tha old conditions tha grain and all went towards tho
Atlantic Seaboard,

therafora when these new conditions were

created, that commerce had to be disturbed, and you must
disturb to come extent the existing conditions which are
a r t ific ia l,

in the creation of this new system, which is to

decentralize instead of centralize,

which has proved a

How tha consequence was that under those changed

conditions the government today has spent on tha Texas coast
over $ 2 5 ,0 0 0 ,0 0 0 , but moro than that much is savod ovary year
by reason of that development, to the granaries of the west
in their

freight rates* The consequence is that thare has

T . H . B all



bdin buildad up on tha coast of Texas a great port, our
sister city of Galveston, whose foreign commerce exceeds the
entire foreign commerce of the entire Pacific Coast. It has
outstripped New Orleans and is today the sacond port in the
United Statesand rapidly gaining upon that admittedly great
port, the fir s t in the union, Hew York.
Now, in addition, on the Texas coast there are four or
five other deep water ports. The commerce of Oklahoma said
the granaries of the west is tending gulfward, it is finding
its outlet there, and it has increased by leaps and bounds
enormously, out of a ll proportion to that of any other port
in this country.

And while that is being done,


the banks of Texas have increased their eapitaland resources
in almost equal proportion, and in advance of

any other

section of this nation.
I am not going to give you any new figures, but in
1891 the entire deposits of national banks in Texas
$ 2 6 ,0 7 2 ,0 0 0 .

In 1901,

to | 7 4 ,8 0 5 ,0 0 0 .

the next decade, they had increased

In 1905,

and I take that year because

that is the year our state banks were created,
increased to ,'101,285,000.

they had

Now from 1905 to 1911,

national banks had increased to £ 1 56,0 00,0 00,



and you have

T* H . B a ll



the figure* here, both by Dallas and Houston as to the pres- |

As to that, if you will add the state bank deposits of

$1 0 0 ,0 0 0 , you will fin d that within that conparatively
short period of tine we hare practically trebled our banking j
lot only that, the question has been asked about our
ability to take care of ourselves*

The report of the

Comptroller shows, and I may make a little blunder, but you
w ill fin d me out if I do, and it will not be intentional
if I do —

the report of the Comptroller shows that the total

borrowing of the Texas banks

was somethinglike £12,000,000

at the tine of that statement, re-discounts.
Mr*Ardrey: It was $ 1 6 ,0 0 0 ,0 0 0 for Texas banks, all told.
Mr* B a ll:

Veil, I suppose that was in this district we

have proposed*
Mr. Ardrey: # 12,0 0 0 ,0 0 0 for country banks,

ai d ^ 4 ,0 0 0 ,0 0 0

for reserve o ities.
Mr* B a l l : I only counted the national banks*


the difference between the reserve# that are required to


kept in those would make up that difference, to say nothing
of the rapid accretion of resources and the ability of the
banks to take care of themselves*



T . H . B all


Now it vas asked by th® Secretary of the Treasury
awhile ago if we did not suffer by having to borrow money
and being crowded*

It is a good thing to be crowded some

times and not have money too free* But I want to say from
my knowl edge of the state and especially of our own territory,

t not know of a single business that went to the wall

during that time that assigns das a reason for it that the/
were unable to obtain the proper baulking accomodations,
with any degree of truth*
The Secretary of the Treasury: My question

was how far

legitimate business had suffered for a lack of sufficient

that was the whole point I was trying to

get at*
Mr* B a ll:
that I

And that is my answer to the question, first,

db not believe legitimate business suffered

in this

I believe it is helpful to legitimate business

sometimes not to always be able to borrow money cheaply;
in other woris, to have a little pinch* I think it ishelpful
to the individual too*
TheSecretary of the Treasury:

It is a good thing to

pinch illegitimate business, but is it a good thing tfli pinch
and handicap

the legitimate business interests?

T . H . B all


Mr. Ball:


My answer to that is I do not believe that they

ever had bean handicapped.
The Secretary of the Treasury: I
hadbeen, but I a* asking

did not assert that they

for information*

Mr. Ball: And I am answering the committee for their

an d I do not believe they have.

The Secretary of the Treasury: But what I wanted to do
was to correct your interpretation of ay question-


seeaed to infer that I thought thera had be<sn some re­
H r. B all: Ho, I as suae

you are asking for information.

The Secretary of the Treasury: Yes.
Mr. B all: And I am sure you did not think we were any
harder up here

than they

are anywhere else, because


were not.
Ths Secretary of the Treasury: I found when I started out
that most of the country was hard up and all wantedmoney .
Mr. B a ll: Yss.

How then, St. Louis could no aore

conveniently take care of us,
taking care of u s,

because if the burden of

assuming that we are a burden of that

sort, is imposed upon her, her ability to take care of the
other part of the district woul ? be correspondingly decreased

T . H* B all



of course*
The Secretary of tha Treasury: May I interrupt you thare*
I would Just Ilka to say this,

an d repeat it again.


questions of this committee do not represent in tho slight­
est degree any preconceived notions or opinions*

1 b have

not any* We are simply trying to get ths facts, and it is
necessary to asl these questions to bringout the argument*
But when you say that if St*Tx>uis has the bur dsn she could not
take care of you here, the mere location of a Reserve Bank,
if it wars locatadin St*Louis, would not put tha power in
the hands of 3t* Louis to deal with the situation at all,
because the 1iractors of that bank undar the law are chosen
by tha bank* in tha district, and naturally Texas would have
a representatkn on tha Boari of that bank, Just as other
parts of the district would have, and the government itself
•elects three members in addition to those ohosan by the
banks in the district*
IfrSall: Yes, I understand*
The Secretary of the Treasury: So that tha same argument
mi^ht be made with reference to Dallas, if that was chosen,
that you would have to depend on Dallas, but you would not*
That is merely tha location of the bank*

I wanted to make


T . H . B a ll


that clear*
&r* Ball:

Wall, I understand tha system, but what am try­

ing to maintain is that putting Texas and this territory
in a system with St* Louis would not accomodate Tsxas as
well as it would to take either the district outlined by
Dallas or the district outlined by the Houston Committee*
The Secretary of the Treasury: Of course, that is a very
proper question to consider*
Mr* B a ll:

Y es, because the banks in St, Louis hare not

been better able to take care of themselves than the banks of
Texas have been*
There is anotter thingl want to call your attention
to b r ie fly ,

and that is this, that Texas ought to be created

as a u n it. We got hold of the thing in time here through
the Railroad Commission, before our state became artificially
developed and but for that Commission »e wouldprcbably have
250,000 or 300,000 people in Houston today, because of the
system than of giving favoa

and rebates and all that to

water ports, and concentration that built up so many cities
along that lin e .

The consequence ia #e have a lot of

splendid c itie s , resourceful and v ir ile and active in every
way, homogeneous and contiguous,

ail we represent really a

T . H 4 B all



Thors is no trouble about Fort Worth, Dali as, Houst n,

Galveston, Beaumont and San Antonio all combining their
resources and standing together on tha economic questions
which w ill confront them under this new system# It seems to
me under these conditions existing, of course I am not going
to occupy your time, because I know that both you and
Sacratary Houston are thoroughly familiar with tha tilings
wa pride ourselves upon in Texas, but if a state that has


over 1400 banking institutions, that is showing tha greatest
amount of progress, that has this immense amount of territory,
which makes it inconvenient for them to be in vassalage to
another financial centra —
The Secretary of Agriculture:

Does not that convey a

rather incorrect assumption, to apeak of it as being in
vassalage to another fin a ic ia l centre? It would be Just as
right to say that any other
to Texas*

sac tion would be in was sal age

It is a section which controls it s e lf,

and I do

|inot see why it is necessary to sugjfst the question of
Mr* B a ll:

That is the way we feel about it*

Ths Secretary of Agriculture:

Ihen you have a seetion

which is supposed to control itself and not be con trolled by


______ ____


T . H* B all


any other taction*
Mr* B a ll: But Texas does not feel she ought to be tacked
on to S t.L o u is ,

and I

said y as sal age, meaning we were to be

made an appendage or pendant to it, when I do not think our
resources and ability, in Justice to Texas, authorise
warrant our being attached to it*

I believe Kew Orleans

ought to be included in this district*
can make a district


I do not think you

with Mew Orleans as the centre that

would be as strong a district as you could make in Texas
without Mew Orleans*
The Secretary of the Treasury:
exactly the same argument

Suppose Mew Orleans made

you are making, that she did

not want to be att ched as a vassal to Texas, what is this
Committee to do* Thera are various sections of the country
that are arguing that they ought not to be attached to any­
thing, they must be kept off by themselves, they io not want
a reunited country on the financial question; and so i f that
argument is good here, it is good in other sections of the
country we have visited, so we are bound to considerthis
question from the economic standpoint, having relation to
these parts of the whole, and that is the only way *a
can consider it*

T . H . B all

Mr* B all: Y sa ,


aid I do not expect you to do it any other

way* An! if Maw Orleans put* up that kind of an argument*
aha ia at parfact liberty to dto ao and I will not resent it,
and I do not resent these people comingin from St •Louis
and trying to make representations and do the beat they
could to gat us in with them*
After a l l ,

the respondibility will come back to you

gentlemen who are chargelwtth i t ,

and you will give such

attention to our representations and viewa and figures aa
you think they are worthy cf •

And thou^i you alay us, we

w ill still aerve thia adminiatration (applause).

Ife gave

up the tariff on our raw material against the Judgment of a
great many without a murmur, and we are trying to do what ia
right and we want to help you in your great task;

but we

certainly think with a atate of thia magnitude and thia
showing which must appei. to you as reflecting some degree
of credit upon our people and their reaource8,
vary deeply in earneat about thisroatter,

we do feel

and we think that

with the Pacific Coast, conceding it to San Francisco —


do not wnnt to be in the attitude of hostility towarda 3t.

and I had her on the H a t of the eleven citlea that

I thought ought to be given regional Reserve Banka, but I

T . H . Ball



do think that Texas with her position, her great geographical
area, h^r tremendous resources, the manner in stiich she
is forging to the front in every line, and the confidence of
her own people that

tie ean take ca»e of the situation, that

these points which have been suggested by our committee and
by the Dallas committee

will not be any more bitterly

opposed certainly to being attached to Texas, than Texas will
be to being attached to these other points, and I was Just
suggesting that because while we are amiable, we want to do
all ws can,

we want you to consider as far as you can con­

sistently, with your enormous responsibility,

the desires

an I wishes of this great state of ours*
The Secretary of the Treasury:

That is what we came here

for, te get your views, an 3 we are gAn^ to give faur con­
sideration to every argument that has b*en presented* But
I should like to say Just this in answer to your remarks
that thought we slay you, you will still be loyal to the
administration, Colonel —
Iflr* B a ll:

Well, I mean the government.

Ths Secretary of the Treasury: I want to say that in th at
connection of course I assume you are speaking facetiously,
but somebody may not understand you, and therefore


T . H . Ball


I do wish to say that it is impossible, of course, in
the laying out of these districts

as required by law, to

slay any section of this country or injure any section,
whatever these districts may be*

This new system is bound

to be more beneficial than what you have got today, so that
while the desire or every local community will be impossible
to meet, and if we allowed every community to lay out


own district we would never get the country divided into
these districts, the purpose of the committee in having
these hearings throughout the country has been solely to
give the people of this country the largast end amplest
opportunity to present the views as they see them for our

aid we are going to give those views fair and

impartial consideration and our decision will be rendered
llfrom that standpoint and no other#
Mr* B a ll: Ye know that, Mr.Secretary. (Applause)
The Secretary of the Treasury:

Have you something else to

Mr* B a ll: So* You were talking about the points* I
gave you the number, eleven, but did not suggest the points*
The Secretary of the Treasury: Y e s , you didnot give us
the points*

T . H* B a ll

Mr* B a ll:


Houston, Atlanta, Baltimore or possibly
I do not think it is very material batm an

Baltimore and Washington —
Tha Secretary of the Treasury:

You mean Baltimore or

Mr* B a ll: Baltimore or Washington;

fcew York, Boston,

Chicago, Cincinnati or Louisville, Minneapolis, San Francisco
St* Louis and Denvar* I f the three were left off, I vould
omit I>enver, Minneapolis and Cincinnati or Louisville*
Th# Secretary of the Treasury: We thank you very much,
Colonel B all*
Mr* Wells: That is a l l , &r* Secretary*

We have some

letters which wedesire to file*
The Secretary of the Treasury: Submit whatever corre­
spondence you have as exhibits*
U r9 Wells: I will be glad to 3o so, with a copy of the
letter we wrot#*
Th# Secretary of the Treasury: Is there anybody her© from
San Antonio who desires to be heard?
closes, &

Before the hearing

desire to give an opportunity to anybody who

can shed any light on this problem to come forward and speak
now or forever hereafter hold your peac#*


Mr* Wells: There are a number of interior bankers
The 3ecretarynof the Treasury:
from anybody who

le should be glad to hear

dbsires to volunteer. I f not, the hearing

will now be adjourned*

Whereupon, at 5*30 o'clock P*M*,
above entitledmatter was adjourned*

the hearing in the