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Eoiton* Uast*
January 9 & 10. 1914•

Law Reporting Company, Official Stenographer*





J . j * . Coolldgo, J r ,
Hugh Bancroft
O l i v e r 2f. W. Sprogu*
* • 3D, Higglna
Clarence ¥# Bturron
Thane* P # Beal
Alfrod L . R i p l e y
H, C, B*Yi8
Charlei P . SI i n n , Jr.
John P . 8ft*yer
H. If. Butoholdor


ifethaa D. Prince
John ?. Titegarald
C. Hoyt


Henry B« 6pr*gu«
H. X. Higginton
Bo"btrt W. f » f t


John Jfteob Kogsrs
John J . y * r t l n
R. V. Strrtna,
SU*» B. Mvms
yrancia H. Dniray
yraderiek V«
Jooeph H.
y , Hlchl>orn
B« Stradtor
y , ¥ # Bat^brook,
A. &, Alken
John J . K i t c h e n
yradario H* Valux
Jar«m« Jonaa
Viitur H. B r w k e t t
John X« B*te«
Winfisld Tuok
William A. Ga«ton




L. Walab
r H. V, 81 evens
' Joaibh quincy
Goorga V« R. UveriMsn
Gordon Abbott
¥« D. Higglns
tr« n« D a t i n g
E# Voody Boynton
George Orfchna
Ctoorg* Y« Towl*
Ch»rle» E. Allen





' OS



January 9tn»

The Organisation Committee met pursuant to adjournment at
10:00 A. H.

The Secretary of the Treasury.
The Secretary of Agriculture.

Boston Chamber of Commerce;
A. B. CoolidgOt J r . , President
Boston Chamber of Commerce*
K, a* Preston, Treasurer,
S. B. Pierce & Co., Grocers.
TT4gh Bancroft r Chairman*
Directors of the Fort of Boston.
0 . V# W, Sprague, Profeeeor,
Banking and Flnano« r Harrard Unirersity.
Mr. Ooorgo Abbot Sxown Bros**, and
Vr. Paxnsworth of Klddor Peabody A Co.,
on Toreign Exchange.
Boston Clearing House Association:
X. P. Boal r Preeident^
Second VsvtlonaX Bank of Boston.
V, K »aston r President,
National Bnm^nmt Bank of Boston.
0 . 7* BLiaSf, Jr« r Vioe-Pr«sidcnt t
Vationel Union Vanie




Massachusetts Bankers' Association:


0* ?• Blinn, Jr., Vice-President,
Vetlonel Union Bank*. Boston.



Alfred L» Alien, President,
Worcester national Bank* Worceeter*


J, P. Sawyer, Cashier,
Union national Bank, Lowell,





H. y . Batcholdar, President,
Mechanics National Bankt Salezt,


H, 0. fownend, Prtaident,
yitch"burg national B«nk9 Pitetfburg*



H. B. Shoe h Leather Association:




J. P. VcKLwainr of V. H, VoELvain k Co.,
C. ۥ Hoyt^ of Paxnsworth Hoyt Co.
I , A. Ooolldge r Tr«asurer r United Shoe Vachinery 00* ;


Henry £« Hlgginaon,
Lee Higginson 4 Co,





John 7* Martin, President,
Exchange Trust Co.
B. A. Klnibillr President,
Voohanios Hational Bank,
Concord^ Vm H,
A* H. Heaord,. President,
Anoakeeg Hational Bank,
Veaehesterr V, H.
Vr« TeXt» President,
¥echaaios National Bank,
ProTidenoa, R, I,
¥r, Luoien Sharptr
Brown A Sharp a,
Proridance, B, I,
V» S« Braokatt, Cashier,
Peoples National Beak,
BratUal>oror Vt#



P. V. Adsas, Cashier,
Ifarehents national Bank*
Bangorr Haine*

George A* Curren, President,.
International trust and Banking Co.,
Vathan 1). Prinoe,
Windhom County Hatlonol Bankt
]>fiaelsonr Conn.


George W. Ooat^ Cwihier,
Tlrat national Bwik,
Icwioton, Haine.


John K. Bates,. President r
Pixat national Bank,
Portsmouth, H. H.


Trod ?• Partridge,
HOBS Kational Bank,
Holyoke». Vass*


H, V# Stereaa, President,
Hartford National B*nk,
Hartford, Conn*


Hon. D&vid X* Velsh, OOTemor of Kassaenusetts*
Hon. John 7* Pltsgerald^ Hayor of Boston*

Jottiab Quincy, Xx»lfayor of Bostonl

Congressman WLtoHell,
Oongressaan Thachor.
Congressman Phelan.
Congressman Curley.
Hon. Thomas J. Kenn«y, Candidate f o r Ifayor.
tfr. y , W. Hwisfield, State Treasurer.
Mr. 1* V« Sterens, Vozner State Treasurer.



General Charles H« Taylor,, Publisher Bon ton Globe*
Representative of Boston Post.
Representative of Boston American,
Hr. Clarence ¥ # Barron, Publisher, Boston ¥ews Burssttf
Mr. Charles B. Strockor, Publioher, Pinaacifcl Xsws*

Boston Re s i Xsts-ts ICxobMftf^t
P. H.


Sec*y-*re*ji. f Boston Real Estate Exchange.



Holyoke Board of



Mr. JsasB P a r f i t t r Preaident r Holyoke Board of Trade.
Kr. y . X. Pfcxtridgo.
Mr, 8 . A« Uthoney.
lfr» H, E. Allen,
Springflaid Board of Trade:
Vail River Chamber of Connaerce:
Robert 0* Davis * Pxeaidont r P a l l River Chamber of
tymi Ohsniber of Coamero*:
Henry R, Sprague,
(Newport (H.K.) Board of Trade:
Vr«, Sanud D. Xewie.
Mr. Parley A.



i The Secretary of the Treasury: Vr. coolldge.

Xir. Coulidgc: Gontlemen of the Speoial Committee, xm
welcome you gladly here to Boston, and thankyou for the
careful plaining of your journey that lead* you to visit
the several regions of the country that have claims upon e>
regional hank. We are confident that your eosnalttee will
bring in no minority report) and you will excueo me if I
seem to assume in advance the decision that we unanimously
hope you will reach.
We have taken it for granted that in establishing not
less than eight regional re*wr* hanks* one of then would be
situated in Boston*

X do notf however, propose to make any

argument. I wish to thank you for honoring us with your
presence and to assure you that the speakers who come "before
you will present the case fully, convincingly, Z trust,
and concisely,
X welcome you again end thank you for coming. (Applause)
She Secretary of the Treasury; lfr# Coolidge, and
gentlemen. On behalf of the Committee X desire to thank
you cordially for your very hearty greeting and to say that




\ It giTM us * groat deal of pleasure to toe here* I desire
[ also to thank you Tory heartily for the courtesy of the
I Chamber in placing these room* at our dieposel *hlle we are
| here*

X may aeyr in thie connection*, that the purpose ef the

; oomaittee in visiting the different sections of the country
f is to elicit such additions! information- ss »• esn g«t which
will shed light upon the problem confronting the Coaanittee,
Under the Feder*! Beserre Aet we are required to divide the

> country into not less thsn eight nor* more thsn twelve

| districts*, end to select the looation for the headquarters
of each Vederal Bank within those districts*
Z think thers Is an inpr«eeion that only one hank will
be located in each district*

Sow thtt i s true so far as the

headquarters banks are concerned,, but It i s not true i n
another aspect of the case.

These banks are permitted to

hare branches, and through that machinery i t i s expected
that these f a c i l i t i e s will be placed at the disposal of all
parts of the district* so that the banks in vr^ry P*rt of
the respective districts will be within easy reach either
of the headquarter* bank cr some one of I t s branches*
Sow we quite understand the local pride which psnopta



| the various cities to enter into friendly contest for the


"headquarters of those banks*


At tho semo time, gentlemen*

'this is » "broad and sost important economic problem. It la I


not a political problem, i t i s an economic problem* This




(Committee i s not on ft. poll teal expedition, w* ax* not on a


Junket) we are * ere for business, and we intend to deal
with this propoeltion in * strictly business fMhlon.



X may be permitted to soy so, Z think »e hare arrlrod at a


point in this eountry whon tho people are anxious to hare


these problems dealt with in s. thoroughly business-like and
straightforward fashion,

The purpose of the committee in


asking t h i s trip Is to bring the f a c i l i t i e s of the committee
into convenient aoceea to the people of the eountry*, so
that ws can expedltiouely end as eonreniently ss possible for
a l l the people, acquire knowledge of their views end
desires caid their economic conditions*
How* gentlemen, there sxs a. great many here to be heard
and who wish to be heard,

the tine at the disposal of the

committee i s necessarily short* Vs expect to close these
hearings tomorrow at twelve o*clock.

Z want to ask you i f

rou will not kindly address yourselves and the information.
we shall akk f o r te the questions which the committee may




X do not know that any oratory i s intended) X «a doing
most of i t ayself*. i t stiexs, &nd X think X ought to out i t
short) but we went information more particularly MI to the
course* of exchange »nd of business transactions in this
seotion of the country* Ye know Boston's conaercitJL importance

Ve do not need to l>s informed about that*

We do

want to be informed about the general conditions existing
i n Vow Sngland) what p u t of the territory of Sew England
will be best served, for instance, by the location of a
headquarters bsak in Boston, whether sons part ef i t should
go to TTcw York, or whether any pert of i t should go to Hew
York, i f a Vo&itXL Beserre Bank should be established there,
that I s the chief point upon whioh we desire information*
¥111 you permit me to rise to •> question of personal
p r i r i l e g s , as they say in Congress* My attention was
called yesterday to an editorial in * Boston paper*, and
which seamed to be a repetition of a statement «ftieh M
appeared the previous auwraer, and to which my attention had
not been befor* directed* in which the statement was atadft
that X had said that X favors* the Tariff BUI because I t
would *g«t* Hew Sngland.

How X should like to say with ft*

waphasis as X can ccsoaand, that nothing could have been


i ••


I more foreign to my thought than such a statement*

And X

i would have aaore contempt for myself than any cltlsen could
hare for »e» If X felt that X was capable of making such a


In the first place, any man who assumes public duties
owes a duty to the entire countryr and certainly, as far as



X a* concerned,, ay only desire In public life Is to benefit,
so far as any labor X amy expend, the entire country without


I reference to any section*


As a matter of f actt three years ago X had the opportunity to appear before the Beaton Chamber of Commerce,
which honored no with an invitation to speak* and X took
of that occasion in concluding my remarks to
the Terr great and unstinted admiration which X have
always entertained for the peojts of Hew Sngland* not only
for their achievements, hut for their history and the great
part they have played in the development of our great and
"beloved country.







President of the Boston Chamber of commerce,
?Jr, Coolidge:

Kr. Secretary, X am only going to take a

moment of your time*

Xn order to demonetrate that fact

X am going to stand while X apeak: and while not
5 to instruct the committee in regard to the commercial import* i
ji anee of Hew England*, perhaps in the four or five minutes
| which X ehall occupy.* X may fee permitted simply to present the points of view which we have,
X should like f i r s t Just to remind you that in this
l i t t l e section of Hew Bngltand* composing two per cent of the
area of the United Spates , there i s mmn per cent of the
I population and 14 per cent of the productive ability of the

That i t i s not a declining ability* X should

{like to illustrate by calling your attention to the figures
jjof the four great industrial districts ef the country*
lew Tozk* Ohioego, Philadelphia and Beaton* during the l a s t
rive years, tha percentages of which are in order* Hew York
\Z per cent increase, Chicago 20 pttr cent increase* Phil atelphla 10 per cent Increase* and Vew England 29 per cent
Vhile the manufacturing industry i s not the full measure of



J* Randolph Coolidger Jr.



, the banking neoesslties or requirements of the district,, i t
: does point out somewhat i t s eonmercial greatness*


Ifey I just say a word with regard to our three great i s *
duetries, ootton* voolen and boots and shoes* the production ,
! of which in the entire country i s about $&OOr0O0».OO0 each
annuallyy and of which Hew England produces aore than 50


: per cent each*


When you consider that ours i s an old settled portion of

j the country, end that our industries were developed many
years ago, Is not this a rather surprising etatencnt?
; Take for example the cotton industry itself* Tou are






< aware, gentlcnen, that there has been a great development in |
i cotton nanufacturlng/the South, but I think it will sur|
jjprise you when I say that whereas the increase in cotton
j manufacturing for the country at large has been 39 per cent, j
the increase in Few England has been 4a per cent*

The v»xy



general feeling has prevailed that the increase in the South :
( has been at the expense of Hew England. Bush is dist. inetly |



'not the c*se.
|; With regard to wool our inersase has been 40 per cent*
while that of the country has been 34 per cent.




J. Randolph Goolldge, Jr*

Our other great Industry, boots and shoes, Is rrcre striking
even than these two* Hera la an Industry which ha© been
springing up all cnrer the Vest and 2£orthv*eat, In order to
get nearer the raw material and the distributing markets,
and yet, while the increase of the country has been 43 or


43 per cent, we have maintained a unifcr© Increase of 34


per cent*


I mention these things trorely to point out the iaportaaoe-4
the growth of Hew England and alao the comeerclal Importance
of Hew England,-*- aa perhaps ons of the bases upon which we
aak that a regional bank shall be located here at Boston*
We believe that a regional bank for Jbiew England, located
at Boston, will serve the interests of Mew England, far more
-satisfactorily than a branch of the Hew York regional bank

ould do*
The fundamental theory In the finds of the people who

produced this legislation. It seems to ua, was that the
sections of the country have divergent requirements, which
can best be served by the location of a regional bank conveniently located In the center of the district, managed by
local people who are familiar with the Industries and the



J. Randolph Coolidgo, Jr.

various intor-re^ated branches of the business*
Wo sub»it that that condition, whicn we believe was in the
nin'a of the people who made thia bill,^exiots to a peoullar
degree in Sew England*

Here wt are, off by ourselves, a

geographical entity, with


Interests, and poeaibly a

ccaaon language, the Yankee dialect*
Our interests are intcr-rolated, our coney is invested
mainly in certain prominent and highly technical lines,
lines wftich we know are thoroughly understood In the oo»neroial and banking businesses of Boston and of fie* England,
which arc alvost unknown outside*
Take cotton for example. The scores of pills in Hew Bedford, Fall Hirer, Lowell, lawrenoe* lianohester and
Kaahua, are known root and branch in Boston, and in great
part art utterly unknown in Hew York or elsewhere. That is
true of the hoot and shoe industry, and it is true of the
w o d e n industry.
To illustrate that, and to show the importance of this
technical knowledge, you a ay r«rr either Mr. 8eoretary and
gentloKOn of the Ooirtrittee, that about 15 years ago Hew York
tried to supply its lack of information regarding wool
paper by the ••tablishnent of a wool bank, officered by sten



J* Randolph Ccolldge, Jr.

competent to pass upon wool paper, with eepeolal reference
to obtaining the Boston business, as it was then declared*
The effort was a dismal failure*

Boston continues to be

the great wool starket of the country*
There Is another thing I should like just to refer to,
and that Is that Boston has never been financially dependent
upon Hew York and is not now*

Its industries were created

mnd developed and have been built up by Boston brains and
Boston capital*

We wish emphatically to express the

opinion that the Boston resenre district should Include
the whple of Hew England, in order to furnish the proper
baala of banking resources for a regional bank at Boston,
which would then be one of the large banks of the country,
perhaps third of fourth.
That Is ail Z have 16 offer, <llr« Chairman, in presenting
the case (applause)*
Chairman of the Port Directors of Boston*
The Secretary of the Treasury!

Mr* Bancroft, will you

permit ice to say that I think the Gon&lttee would prefer to



H* Bancroft.

pursue ita own method of eliciting this information, be*
cause our time it so short in which to hear the 75 people
who desire to be heard here. We will just have to elicit
the particular things that %e want to know about it*
Ur. Bancroft:

In order to indicate the line of questions

that I deal re to ask, I «&y nay that, appearing for the
Chamber of Commerce| I a» Chairman of thv Directors of the
Port of Boston*

That Right Indicate the line on which Z

could furnish you with Information which you may desire*
The Secretary of $he Treasury: Have you something prepared
that you want to submit?
Mr. Bancroft: There were two matters bearing upon the
port that I should like to refer to very briefly •
The Secretary of the Treasury: Suppose you proceed, and
then If you hare any special data, we will be glad to hare it
filed and »ade an exhibit to your remafck*. Tou nay remain seated if you prefer to do so*
•r« Bancroft: At the President of the Chamber of Commerce
has suggestedt I will be brief if X stand*
The Secretary of the Treasury: Please do not understand
that there is any unwillingness on the part of the Committee



H* Bancroft*

to hear you*
Mr# Bancroft: We understand, I think everybody here under*
stand the limitation of time; but in view of the powers
and contemplated functions of the regional banks in facilitate
ing rorconveniencing foreign conferee* we wish to bring
briefly to your attention the present situation.
As the president of the Chair be r of Commerce has presumptions
encugh to suggest it, I will express also the sane suggestion,
that in viow of the provisions of the Act that there shall be
at least eight regional banks, I think that neither Mr.
Coolidge nor X are very bold la suggesting that the
City which Is the third in the country a* to bank clearings
and fourth as to bank deposits, Is the natural selection
for one of the eight or twelve* unless there are some
very overwhelming reason* to the contrary; and that In
view of the provision that the location of rthe district
shall refer to the natural subdivisions of the business of the
country —

I do not attempt to use the exact language of the

Act, but that ii the idea — unless sowe very good reason
is shown to the contrary, Sew England should be the district
of such a bank*
low bearing upon that, from the particular point that in



H. Bancroft*


tereats se ae speaking for the Port, a very serious effort
la being Bade, and up to the present tine with gratifying
results, to furnish at Boston a second international port
comparable with Hew York, and to oleae up the trenendous Inequality that baa hitherto existed.

At any rate two years ago the State of liasaaobusetts started
a polioy of livers! appropriations for developing the port
here. In two years the result has been the increase of
the total foreign ooftmeroe of the port fro* $330,000,000 —
X Include In the figures a large amount of Canadian la
transit irbuainess that id sons —

to $335,000,000 the first

year and 1380,000,000 the second year*
X an speaking of these thing* in order to esphasiae the
importance of the convenience of the banks and the conac©racial intereste of the territory being properly subserved,
and the lnportanoe of having a bank as strong and as large
as possible in order to assist in this very Important movement which we believe will grow here*
In 1913 there were 19 trana-atlantlo lines out of Boston,
and five lines to nearby foreign ports, the Canadian ports
and the Vest Indies, and 11 coastwise lines fros all la



H. Bancroft*
psrtant points between Eaatport and Jacksonville*
In the year 1913 Just past there have been fourteen either
entirely new lines or linee that have materially improved
their service*

Six entirely new trans-Atlantic lines oaaa .
very much
here* Three trans-Atlantic lines/bettered their service
here and one of the nearby foreign lines has muoh improved
its service* There have been two new ooastwise lines,
one actually operating and the other ready to operate
• through the Panama Canal, both ooastwis* lines to the
Pacific and two ooastvlss lines very materially improved.
I speak of that as an Indication of what It is reasonable
jj to sxpsct In the next few years as to the conferee of the porjt
jj of Boston, and refer to the figure of $360,000,000 as the
foreign trade of the port, of whloh the financing is either
done here or might most advantageously be dens here*
The Secretary of Agriculture: Professor Sprague, you art
faKlHar with this Aott
Mr. Spragust

T«s, I have given attention to it*

The Secretary of Agriculture: And with the problems




O.M.W. Sprague*


confronting the OonmitteeT
Mr. Spragues

I think to.

The Secretary of Agriculture: We should he very glad to
hear your views as to the division of the country, and esand
peolally as to this section of the country,/aa to the
desirability of establishing a bank in this section.
Hr. 8prague;

There would sees to me to be two questions

to be settled in detcrclcing the location of regional banks,
and the relative else of regional banks; first, the general
working of the eyaten taken as a whole, and secondly the
service whloh could be rendered to the particular regions
into which the country Bay be divided*
If I stay, I should like to consider very briefly the latter
problem first, and then go a little sort into detail Into
the probless relating to the general working of this system
of regional banks*
I believe if a regional bank ia established in Boston it
will serve the business of the ooemunity better than a branch'
of a Sew York Regional bank, because of the special nature
of ttany of the Hew England industries, requiring therefore on
the part of bankers speolal knowledge..
There is a provision in ths bill that regions shall be



O.W.W. Spraguc.

determined with due regard to normal business convenience*
Bow busiceBB convenience in this connection »ay bo divided
into the service which »ay be rendered borrowers, and secondly
service in connection with exchange and making payments*
We can take the existing bunin*aa conditions and the requiresente of borrowers as fixed. That will not be greatly
changed aa the reault of the working of this Act*
Methods of staking payments will be vastly changed. At the
present ti«o it is true that low Tork Exchange la a far betti
and more satisfactory means in Raking settlesents between
banks than exohange on any other city) but under the working
of this system, the exchange on any city which has a regionalL
bank will be throughout the entire county exactly as good
as exohange on Hew Tork*

This la beoause under one of the

provisions of the bill all regional banks are bound to take
at par checks on every other regional bank*

Therefore It wl

sake no difference to * bank in lew England where Its balanc
are* Many banks In Sew England find that the course of
payment Is now such that they have to provide their eustoserjs
with an enonsous amount of Hew Tork Exchange, and naturally
feel that they would like to be connected with a Sew Tork
regional bank, and that would be the case if this system were



O.M.I. Bprague.
to icake no change whatever in the method of leaking payaent;
but under thia eyatens a bank which finds that there ie steady
stream of payment to be nsade in New Tork. will find, and so
will lte customers find that oheoks and drafts on Boston
would be just as good a oheck as oheoks on Bew York*
This is my reason for holding that in considering the
division of the country into districts, it is not necessary
to give any particular attention to existing nethods of making payments between different parts of the country*
There is one speoial reason in connection with the services

to be rendered by the regional bank in connection

with exchange and payments for setting up a regional bank in
Wea&lready have developed here through the Boston clearing
House an arrangement under which checks upon any bask deposited in all the various Boston banks are gathered together and sent in bulk to the bank on which they arc

This business here and throughout the country will

increase) whether handling it all entirely through regional
banks, or working in conjunction with clearing house organisations, tine will tell} but it is clear that the
Boston regional bank can take over their business or develop
it far sore readily than will be possible in any other part of


0. II. Sprague

the country. The result here will be almost at once
available aa a sort of object lesson for the managers of
regional banks throughout the country.
Row I will turn to the question of the working of this
system, and try to indicate certain considerations which it
seems to me should betaken into account in determlng the
location of the regional banks.
I am Inclined to think it will be |ound that there are thrjie

classes of regional banks. One classof regional banks
will be serving communities in which the local banks
have funds quite sufficient to meet all the requirements of
their locality, and have regularly a surplus in addition* T|»at
is uore clearly the case with Hew England than with any
other part of the country. A regional bank here in Boston
will have less serious problems confronting it than a regional bank anywhere else, for the reason that the local banks,
with their own resources, will be able throughout the year tp
supply local requirements, and it may be expected that
local banks in this part of the country, to even a greater
extent than at present, will lend to other parts of the
country, either by purohaae of commercial paper or by
direct loans to banks in other parts of the country.
It is to be presumed that the regional bank in Boston


0. U. Bprague

on the average fina conditions such as to enable It to
zs&intaina steady and comparatively low rate of discount*
There art other parts of the country in which local resources of the banks are ordinarily sufficient to meat local
requirements, but are not quite sufficient at certain periods
of the year. In these sections of the country the regional
banks will very likely fill up the deficiency, although in
a measure it may be met by the investment of banking funds
from other sections of the country, as Raw England*
Then there are other sections of the country in which
the resources of local banks are regularly insufficient
to meet all of the ordinary requirements of business borrow*
ero. in those sections of the country the regional bank
will have to be managed with a great . deal of cars, becauoe
there will be pretty constant pressure upon them from local
banks for rediscounts*
Row* it is impossible so to divide the country as to give
each regional bank territory which will possess all of these
different characteristics•

In order to accomplish this

It would be, neceeeary to divide the country by banks* putting some southwestern banks and some How England banks into



0. M, lf# Sprague

one regional organization.

That Id obviously out of the

These difference* In eectlone exist, and are

bound to manifest themselves in different conditions which
*ill have to be met by managers of the various regional
Row It has been suggested that th Is ayetan might work
better If in the northeastern part of the country there
was one enormously large bank, a bank which would Include
Hew England, Vew York, Hew Jersey and presumably Pennsylvania, and perhaps a few states still further South.


arrangement of that sort would seem to be going counter to
the whole spirit and principle of this legislation, and
moreover It would seem to me likely to prove unworkable In
Inasmuch as there must be eight regional banks, the more
you concentrate In one, the smaller on the average the other
seven must be, and inasmuch as It Is In tbe rest of the
country chiefly that you find those conditions In which the
local banks are unable regularly to supply the entire ds~
mand» of borrowern, you would be setting up comparatively

<)• M. ?• Sprague

weak institutions, just where they n**<X to be moot strongly

! buttreeeed and »oet carefully managed.

The contention hae been made that it le neoeeeary to

j! have an enoraouely large bank in Hew York, because Bern Tork
I is the financial center of the country and becauee the
jl a train In any emergency come© upon Hew Tork. It is perH
; fectly true that that hae been the case in the paat* Onder
|: our system surplus Sunds hate largely drifted to Hew York,
i| have been employed in a considerable measure on the oall


| loan market, and again because Hew York Exchange hae been
better than any other exchange, a very large amount of cooaerclal paper negotiated through note brokere— which is
the kind of assets banks are apt to liquidate when subject
to strain, has been possible in Hew York.


both through the liquidation of call loans, the payment of
commercial paper and the withdrawal of bank balances. Hew
York h*s in the past been subject to an exceedingly severe
strain, aore strain than it could withstand.




Oliver U» tm Sprague


Bu1 under the provisions of this bill the strain which



I Kew York will b* subjected to in the future will be


lest; than It is at the present time, partly because Chicago
and St. Louis and Boston exchange will be just as good as
any exchange. Commercial paper will not to such an extent
be payable in New York as at the present time. Call loans
will not be the most liquid assets uhlch banks can hold,
and therefore it will not be through the contraction of call
loans that bun lea will seek to secure additional funds • New
York will doubtless remain the central money market of this
country under any system of banking, but It will not be
subject to any such serious strain as has been the case in
the paste
The Secretary of the Treasury: You think, in other words,
Mr* Sprague, that the operations of thle system will tend to
restore or create a greater normality of exchange than the
present *ystem# as I understand you; that these various
regional banks, when once established, would tend to estate-*
llsh more normal coursee of exchange in the country•
Ur. Sprague; In the past, all banks throughout the country
have carried considerable working balances in Hew York

because of the necessity of providing Hew York exchange to


Oliver it. IF. Sprague

facilitate business in all their different localities, But I
if Boston exchange becomes juot aa good as Kew York exchange,,
! or Chicago or 8t« Louis exchange becomes just as good as
! Hew York exchange, there will be no particular necessity for
i having those balances in Hew York, no such great necessity*
; They will doubtless be found there, but relatively they

will be less important than at present*

And for all these

j reasons, when there is an emergency in the future, it will
! not be GO severely felt in Hew York as it is under our
' existing system*

Lst us suppose, for example, that there is a regional
bank An the southwest; that the member banks down there
have lent to about the full limit of their resources; that


\ there have been considerable demands on the regional bank
In that section. Presumably the regional bank then would advance lte rate, and the rales down there would be rather


higher than they .jure here in Hew York, and about Boston* for 1
the time being. Then In all probability there would be a considerable amount of borrowing on the part of the southwest


in this/section of the country. But if later* theee lew
England loane were oanosled, the strain would not necessarily j

fall on lew York as is the oaee under our existing system.


Oliver U. 1T«


If Hew England made loans to the aouth for the time

being, and then decided to cancel those loans, as a matter
of fact the drain would come upon Sen York; southern bank
balances in Hew York mould be reduced in paying Hew England;
but the southern banks would borrow in Hew York, and having
|| arrangements with Hew York banks about the si&e of the
balances which the southern banks carry there$ the Hew York
banks would be obliged to take over thaes leans which Hew
England was liquidating*
How that is not going to be the situation under the
working of this bill*

Consequently, Hew York Is not going

to be s ubject in the future, even if we have periods of
severe strain, to such a drain as has characterized the past
working of our banking system•
The Secretary of Agriculture; Another point, Mr. Sprague*
It has best* contended that we ought to have a bank of
dominant power in Hew York to create respect among European
bankers for the system in this country*

Would you say some-

thing on that point?
Mr. Sprague: That was/the point I was coming to next.
The bulk of foreign exchange business of this country goes
through Hew York, and doubtless the bulk of it will continue


Oliver if. tf. epraguo

to go through Haw York, although the growth of the business
in Boston of late years baa been very satisfactory and may
increase somewhat relatively in the future. But it will
still be true that the bulk of the business will go through
Hep York. And It has been argued that on that account and
in order to establish effective relations with foreign
banking Institutions, it is necessary to have the bank in
New York of iaposing site.
I think that this contention is based upon a very
dangerous assumption.

It is based upon the assumption that

these regional banks are going to get themselves into such
shape that they will absolutely need foreign assistance
from time to time. It is a perfectly feasible thing for a
small country to rely for funds with which to meet strain
upon a larger country. Belgium, for example; the Bank of
Belgium carries comparatively small amounts of cash, but
holds very considerable amounts of foreign bills on Paris
and on London; and in case of strain in Belgium, some of
these holdings are liquidated and a few million pounds more
or less, which can be withdrawn from Paris and London without disturbing these markets appreciably , when brought to
Belgium, a small country, have a pronounced effeot.

Oliver id. W. Sprague


The United States, however, is in banking resources

| vastly bigger than any single European country* What we

i should need, if *e were in straits and needed fund* from the

[ outside, would be so enormous in eunount that Europe ©imply
I could not provide It*

They would aet up arrangements and

would obstruct the movement of funds.

I hold that these regional banks must stand upon their

I own bottom, either singly or as s whole; that they must
j: have sufficient funds to meet any ordinary drain of gold;

that they ought to be in position, if International exohange
is against us, to see fifty or sixty million dollars go out
of the country without being at all disturbed. Thie should
remain a free market for gold*

It *ould be wholly undesir-

able, it seems to ae, to adopt eome of the obstructive
methods which have been adopted by central banks on the
Continent of Europe to keep gold from going out. The
reason they have adopted those arrangements very largely is
that they are endeavoring to conduct their banking business
upon too small a gold foundation, Unless *• are going to
beoome dependent upon Europe for funds with which to meet
occasions of financial strain. It does not very much matter
whether this bank Is imposing or not.

If these banks are

Oliver M« W. Spraguo,

well handled! and they have a sufficient stock to eupply
such gold at may be taken out when exchange la against ue,
the else of the bank will make very little difference. It
la not necessary for the regional bank in Ren York to do any
foreign exchange business*

The Bank of England does no

foreign exchange business whatever*

It influences foreign

exchange rates by raising its rate of discount, and so also
mi*y the Hew York bank Influence foreign exchange rates by
B A ad vanoe in the rate of dlsoount/ But the size of the
bank is. In this connection, of no particular Importance.
The Secretary of Agriculture; To what extent should you
look to any particular bank to discharge that function, or to
the system as a whole, through the Federal Reserve Board?
Mr* Sprague: That would, X think, depend upon how the
regional banks are handled. I look upon the Federal Reserve
Board1* functions as chiefly restraining functions#

If the

regional banks are well handled, I do not believe that the
Federal Reserve Board will find Its duties very ar&uous* If,
however, the regional banks are managed with a laok of
conservatism, or if they begin to work at cross purposes
with each other and struggle for gold among each ether*
as the Continental Central Banks at times do, then I think

Oily or K. V. sprague


the federal Beaorre Board would haw rery much to do*

The Secretary of Agriculture:
tried to oaap out the country?
Mr* Sprague:

«r. Sprague, hare you

I think that i t i s practically impossible

for any indiridual to map out the country Tory effectively.
i, My impression would be that there should be at least three
banks in the eastern states, from ifeine to Florida, on the
assumption of eight banks* If there were to be twelve
i banks, I should think there ought to be four banks in these
east em states*
The Secretary of the Treasury:

On the assumption of

eight, where would you put the three in the Coast states?
Mr. Bprmgue: T should put a bank in Boston and T should
put a bank Is Hew York, and Z should prefer not to designate
the third c i t y (laughter)*

I am not sufficiently familiar

with the relations of people in business and the course of
payments and so forth in those parts of the country, and
with the railroad nap.

t think certainly there would be a

bank in Chicago and one in St. Louis and one i s San prancisco,
But the area which troubles me as much as any i s the northwest.

X should not suppose that i t would be rery convenient

for Seattle to be in with 8an yrancisco, although Z am not

Oliver M, Y# Spraguo




: sufficiently well informed to be sure of that* And it would '
I seem to me that there might be a convenient arrangement to


! have one from Slnneapolis running out to the Pacific Coast* '
\ The regions • erred by the Great Northern and the St. Paul
j extension, and the northern Pacific seem to me, although I
j am a rank outsider, to be a unit* But I do not feel qualifis
| to express an opinion that has very much value about the
: exact location of all of these banks*
The Secretary of Agriculture I Are you prepared to say
what territory the bank should include, If it were estab*
MT* Sprague:
It should clearly include, I think, Xalne,


Yew Hampshire, Vermont, Vassaehusetts, Rhode Island, and I
should think it might include the greater part of Connecticut r
That, however, would be contrary to the present desires of
a good aany Connecticut bankers* But I am inclined to think
that that is because of a failure to recognise and see that
under the workings of this bill, Boston exchange will
become, for erery purpose, as good and as useful as Hew


York exchange* With a branch situated In Hartford, X


should think that the banke of Connecticut would be a* well j
served In the matter of handling ef checks and in all the

Oliver X. W# Spxague


various payment0 that they have to rsake between different
parts of the country, i f connected with Boston as th«y would
be if connected with Hew York*
The Secretary of Agriculturet

Have you made up any figures

as to what the strength of a bank here would be, including
that territory?
Mr* Sprague: Some of the other speakers are going to take
up that matter*
The Secretary of the Treasury: Hr* Sprague, I gathered
from your observations that you do not attach such great
importance to the foreign aspeots of our trade and commerce
as determining the position of these federal Reserve Banks*
Mr. Bprague:

I do not.

Consider this case:


the last 15 years, as before, we have had no organised
arrangement for influencing or manipulating foreign
exchange rates, and yet we have acquired a very considerable
part of the new gold which has been produced during the .
last 15 years* We are not in any danger from laok of geld
in this country at the present time, even though we lmve
been working without any organised sys tern for cheeking or
effecting gold movements* And in f a c t , what these European
central banks accomplished as the result of their various

Oliver H. V. sprague


derioos is to simply to modify orer a short period of time
the eourae of exchange. Tt Is not possible through a n y
!{ thing that the oentral "banks of European countries can do
i to prerent gold exports or Indeed gold imports, except over
j! short periods of time* They make the rates sufficiently

! attractive so that foreigners w i l l lend In the aarket on
|: short tine paper for three months, and perhaps with renewals


j, for s i x months; hut erren than, i f the course of payments
ij i s generally against then, and these notes mature, It is


• necessary for the gold to go out. Hew the luropsan banks
do need to handle this exchange situation with Tery great
©are, because most of them are working upon a wholly in*
adequate gold foundation, and jkhe temporary withdrawal of
fifty millions of dollars from nost of them is a Tery disturbing factor* Vow these regional banks might get down la
their reserves, and especially in their gold, to a point
at which the withdrawal of fifty millions from the country
would be seriously disturbing*
Saks a case In point, of a monetary oort, in the early
nineties, when ws were purchasing ss ouch silrer month
after month. Then the withdrawal of thirty or forty
millions of gold was disturbing, because we had an lnadequati

Oliver if. W, Sprague


gold foundation for our money structure. Similarly, if we
have an Inadequate gold foundation for our credit struetuse,
the withdrawal of forty or fifty million dollars will lie
disturbing, and we shall have to resort to all sorts of
devices in order to check, so far as possible, gold exports*
. But I hope that we shall net conduct these institutions in any
|; such "basis* And in fact, on the continent of Europe they
• are retracing their steps; they are seeking now to build up
the gold resorres of the Texlous central tanks, in order to
hare a more solid foundation for their gold structure. If
the Bank of Germany doubles its gold reserve, as is planned,
they will then be able to look with much more equanimity
upon the fluctuating movement of gold than they have been in
the last few years.
The Secretary of the Treasury: Under the system as proposed, ttr. Spraguet assuming that the question of gold
movements Is one of so much importance, as some of the
bankers who have testified seem to think, Is it not a faot
that under the machinery of this bill that we are In a much
oetter position to protect our gold reserves or Influence
the movements of gold, than we are under the existing system?
Mr. Spraguei


Oliror K* V. Sprague


The Secretary of the Treasury: And wo have not been
embarrassed by the movements of gold within the past 20
years, even under our present Inadequate machinery for
Influencing those movements*
Hr. Spraguet

No. our troubles have altogether been of

domestic origin in this country* Ve have ever-extended
or edit at times in connection with domestic operation* But
I recall no instances in our economic history, with the
possible exception of 1590, and that was a comparatively
mild affair, when the foreign situation has been a factor
of prismry importance in causing disturbance in this country*;

The Secretary of the Treasury: Adverting." fo* a moment,
Mr. Spraguo, to the terltory which you think should be
made contiguous to a federal tenem Bank i f one i s located
in Boston, you Included the whole of Vermont and Ifessaehusotts. vow the contention was smde in Vow York that half
of Vermont, that i s , the northern half, and half of
ifcssachusetts, the western half, as well as at least one-*
half of Connecticut, should normally be attached t o the Sew
York d i s t r i c t , I mean to preserve normal conditions* So
you regard that as having any f oroe?

Xr. Sprague! X do not.

I think i t i s a natural view te


Oliver M. ¥. Sprague


take, partly for the reason that some 10 or 12 years ago
charges were Imposed on check collections Both i s Bew York
and in Boston, on checks drawn on hanks outside of Sew York
I City and Hew England, with a few other points, I bell ore.
! The result was that banks, especially in the west of
J&ks&achusetts and in northern Vow Sngland, established
relations with banks in Albany and Philadelphia, and Boston
j: has, in a measure, loat connections with these outlying

I parts of Hew England. But so far as those connections are
absent, the absence Is due, so far as t know, to the
exchange situation In eonneotion with the handling of checks*
and that will be enti*3y changed under the operations of
this bill, I cannot see how it will inconvenience the
people In western Massachusetts or Western Vermont to be
linked up with the Boston system*
The Secretary of the Treasury: Yell, you hare undoubtedly
touched upon one of the most important aspects of this
problem here, when you refer to the faet that under the
bill the checks of these different federal Reserve Banks
will pass current throughout the country at par, which will
of course, materially alter the existing methods of exchange;
I mean the exohange as between the federal Reserve Banks*


Oliver !£• V. Sprague.


Mr. Sprague: Yes, I regard that as one of the very most
; important features of this b i l l ,

The Secretary of the Treasury*

Exaotly , and to that

| extent i t w i l l tend to oreate perfectly normal conditions
i of exchange at against what i s in some measure, under the
! present system, an a r t i f i c i a l system*

Mr, Sprague: Yes.

The Secretary of the Treasury! Tor instance, take the
City of Albany, Hew York* The President of their clearing
House, I think it was, appeared in Hew York and he said
that because of the advantages which Albany offered in the
matter of chock collections, that they had rery large
clearances at Albany, for the reason that wany banks whose
busintsu is utterly unrelated to Albany used the facilities
of the Albany banks, because it was profitable and advantageous to do it, but that it did not reflect a normal
course of exchange* And some of the banks in the country
offer abnormally high Interest rate* to attract country
bank accounts and create an abnormal condition. 7or those
reasons, I judge from your remarks, you feel that the
contiguous territory to these 7edesml Reserve Banks is not
to be determined wholly by the present clearances and

Oliver U. ¥• Sprague.


I exchange situations nor wholly by geographical considerations


10% Sprague: Bxactly.

T should think that we are going

I to hare largely a new s l a t e , so far as exchange and making
settlement "between tanks i s concerned, and therefore in
determining what the normal course of business i s , I should
hare regard rather to the character of the occupations,
the knowledge likely to be needed on the part of the nnage*
nent of the regional tank; whether a giren territory like
northern Vermont would be in i t s re-discounting operations
j serred better by a regional bank in Boston than by a
regional bank in Vow York* Vow that i s a natter bankers
will not present rery clearly to you, because they have not
been accustomed to re-discounting very much. The one thing
the banker has in mind, outside of c i t i e s , aeons to be the
natter of handling checks and exchange, and that i s what he
thinks of when he talks about the n o r a l course of business,
and i t aeons to me, that you are apt to get an excessive
amount of attention upon that subject*
Tor instance, two or three Chicago banks havt developed,
in competition with each other and for the sake of getting
country bank balances, accounts through aost of the country.
They have offered these banks par l i s t s and absorb exchange,



Ollrer If* ¥• Eprague,

which Is


oharged by A great sany banks* They hare not

handled this business on i t s merits as a purely "banking
natter, axe apt ing the handling of checks* They hare fiimply
thrown that in as a douceur in their competition for obtaining country balk balance*.

You might find from one point of

riew the normal course of business would bring pretty nearly
the entire country into the Chicago d i s t r i c t , but i t is
simply this oourse of business, of handling checks, which
has been largely absorbed by a few Chicago banks in their
eager coopetit ion for bank balances*

I do not see hew i t

i s possible to attach any weight to existing methods of
making settlements between banks in determining regional
The Secretary of the Treasury:

So you attach more

importance, Mr. Sprague, to the homogeneity of the territory
than to the dtrerslf ication of the country in the arrange*
ment of these federal Res err* districts?

I mean under

the system as planned, not less than sight nor more than
twelre regional banks*
Mr* Spraguet

Xt would be desirable, I think, te get a

considerable direraity of occupation, and also * consider*
able differanoe as regards the available bank resources,


Olirar M. w. Bprague


I relative to demand a for their use; but T do not aee how

! that la altogether possible bacauae — welly take the
: Pa 0 if to Coaat, I auppoaa that there is rather more accuou*


I lation of aurplua capital, in a eanse, in California, than
there ia in the State of waahington, becauae waahington ia
a newer part of the oountry and ita development ia more

Something, therefore, might be aaid for uniting

California and Oregon on that ground, that you would get a
part of the country that ia perhapa growing aa rapidly aa
any other part you can imagine, in which the demand for
capital ia far beyond the aupply, and California would be
the area near eat i t in which there ha a been already a
considerable accumulation of local capital* But at! 11 if
you take a l l the area from weat of the Xlaeiaaippl Hirer
and aouth of the Ohio, and i t ia pretty true a l l north of
i t , the local reaoureea are not ordinarily aufficiant to
meet existing capital requirmmonta, and X do not aee how i t
ia poaeible to get away from that. Therefore, I think that
we ahall find that the problem confronting different
regional banka w i l l differ enormoualy one from another*
The Secretary of the Treasury I la that problem ao
important, that direraifioatioB of territory, ia riew of

Oliver M. w, sprague


the fact that these unite which we are establishing hero
are thoroughly coordinated through the 'Federal Re servo Board,
and that through ordinary inters*to they w i l l , of course,
have transactions 'between themselves that will enable one
j, unit to transact business with another?
I Mr. Spragucl Yea, I think i t ia reasonable that a seotion
like Hew England should reap the ordinary advantage from
i t s position as a part of the country in which looal capital
! i s In excess of local requirements.

It i s natural and

proper and normal that in such a territory interest rates
should he rather lower than in a rapidly developing part of
the country* Under an effectual organisation of these
regional banks there nay be as later-regional borrowing,
to which you refer, hut T think there will be a great deal
more mtmbtr hank borrowing between d i s t r i c t s , on aocount of
the operations of this b i l l , and i f there i s a considerable
amount of that, inter-regional bank borrowing w i l l become
comparatively small*
As i f there was a bank in Hew Orleans, and there are
surplus funds in Hew York and the Boston regions, if the
seaber banks take a good deal of paper from about Hew
Orleans, then the demands on the Vew Orleans regional bank

d i r e r if, ¥* Sprague


w i l l fee so*Her than would otherwise "be the ca*e, and they
w i l l not be so likely to need to "borrow from other regional

I expeot i t w i l l vork out that way*

The Beeretary of the Treasury: precisely*

There is

{not anything in the structure of the new system which i s
going to Interfere with those noraal processes between
member hanks. As a natter of fact, the organisation of
this system is designed to ereate additional f a c i l i t i e s and
not to be exolustre of those which now exist*
Kr. sprague: The member banks might employ funds that
way to a much greater extent than at present, because they
ean always go to their own regional banks for re*discounts«
Let us say the rate around Hew Orleans i s s i x per cent, and
he rate in Boston i s four and a half per cent* A Boston
»nk might Tory well take en a considerable amount of Hew
>rleans paper, i f i t considers It good* That might force
;he Boston bank to re-dlsoount something or other, that
laper or some other paper with i t s own regional bank, but
t would re-discount i t at four and a half per cent.


he present system the Boston bank would Tery probably put
iueh surplus funds orer into Xew York, being carried by some
f the big Yew York banks, or i t would be employed on call*

OXlTftr K. V. Sprague


This system i s going to make i t feasible for banks with
surplus funds to tio up thos« funds, If you please, in
loans to other parts of the country, because they can re*
discount with their own regional bank, and for that reacon
I do not anticipate that there w i l l be any considerable
amount of regional bank borrowing*



0. «• ¥. Sprague

The Secretary of Agriculture:


I was Just going to ask you,

{ Ur. sprague, to What extent you think the banks in those

| soot ions Where there are seasonal demands would also resort
I to the federal Board directly for issue of notes on assets?

Tfir. SpragueJ

X should expeot that that would he the ease;

I hut the hoarier demands are likely to he for deposit credit,
I am inclined to think*
The Secretary of the Treasury:
MT» Spraguei

yor some tin* to cons?

¥or some tins to cone*

In fact, the Improve-

ment of this ay stem is going to lessen the demand for

Tn the past, in connection with orop moving, an

amount of money has gone out from the large financial
centers, variously estimated at from $75,000,000 to
has heen used*

By no means a l l of this additional amount
Returns of the national Tanks from year to

year t taking them as a whole, aerer show a reduction as he*
tweea midsummer or autunn, of more than #50,000,000, hut
there i s under our existing system a traasfer of funds*


hank in Oklahoma, not knowing 4net how much oash i t i s going
to need in September, hut knowing that i t w i l l need more than
usual —
The Secretary of the Treasury: And heing afraid i t nay not i


O.M.V, Sprague



get i t ?
SO*, sprague: And having Its reserve thousands of miles
away, naturally Calls for more than i t i s a t a l l likely that
i t w i l l use.
In tha future, whan this system is in working order,
and when "banks w i l l he nearer the source of supply of additional funds, they will not fee likely to draw from the
centers more cash than is needed from day to day or from week
to week* So t do not anticipate that the seasonable requirements w i l l sake neoessary a very considerable issue of
notes by the federal^Bank to the regional banks, but the
possibility i s there and the possibility is of very great

people w i l l sleep better o*ni&hts if they know that

they oaa get i t , if they need it*
The Secretary of the treasury:

Zf they need i t , they will

know that the r e l i e f i s there?
Jfi% Sprague* Yes*
The Secretary of the Treasury 1 Ve thank you very muoht
JO*. Spraguo, for appearing before this Committee (applause)*
Mr* Wiggins 1 I t l a s been stated that fools rush in where


Y, T>. Hls^lns


! angolc fear to tread*

The Secretary of the Treasury I Y i l l you please come for-

!, ward from the back part of the room, so that you oan ce more
readily heard,

I'r. HigginsJ

I do not know if you care to hare any ex-


tended remarks from a* a t the present time. As I say, i t
has been stated that fools rush in where angels fear to

There i s no danger of ay being mistaken for an

angel, but I have formulated a plan by which the d i s t r i c t s
in the United States are 3ald out.

At the proper time I

shall be glad to present i t i f you care to hare me*
The Secretary of the Treasury:

Do you care to present i t

in writing, or do you care to be heard from, Mr, Higgins?


I f you have i t in writing we w l U be glad to reooive it*


Ye have many such suggestions, and i f i t i s s t a t i s t i c a l , perhaps you had better submit I t in writing*

Ye shall be


glad to hare it*
The Beoretary of the Treasury!

Mr* Barren, w i l l you plea00

• t a t * your occupation and business connections?

C* W. Barron

Mr, Barront


X hare many occupations, but for the purpose

of this hearing, I am a financial reporter in three o i t i e s ,
Boston, Hew York and Philadelphia.
Hr. Chairman, I thank you for thin opportunity* I thought
I t would Bare a l i t t l e time if X should read what X hare to
suggest, and then perhaps you nay wish to interrogate me*
The purpose of the federal Reserve Act i s the decentralization of the national tank reserres and the establishment of
other financial centers supporting commerce by commercial
The resenros and the gold are only means to that end* The
essenoo of the Act i s the re-dsscount feature which is
specifically limited to commerce*
Boston i s the f i r s t centre in the United States for com*
mere la 1 paper because I t i s the one market in the United
States in which commercial paper i s sold erery day in
the year*

In the volume of commercial paper handled i t i s ,

of course, second to Sew York*
There are only three large open mrkete for commercial
paper, Boston, Vew York and Chicago, and the larger note
brokerage houses are i s a l l three*

0* ¥. Barron.


I These houses place in Vow England six hundred ml 11 ions of

j: eooaercial paper per annum, and i t i s estimated that 9O/£ of
j,j this
i s with
As this
will average to run four months, these


r figures mean that the leading note brokerage houses naintain j
I with the national banks in Hew Xngland continuously two hun- i
i dred jail lions of loans on counterc la 1 paper*



The total loans of the national banks in Hew England are
about £20 millions.


The majority of these loans are commer-

c i a l , so that taken in connection with the

stats banks and

trust companies there i s here a sarket steadily holding six
hundred millions in commercial paper*
The regional rsserve bank for Hew England, centered In
Boston i s , therefow, In the purpose of this act your primary,
your f i r s t and your essential regional reserve bank.
The total of loans of a l l reporting banks In Sew England,
including savings banks, as shown in the Comptroller's report
Just issued, i s |1,800,000,000, about ons third of which i s
probably commercial loans, so that we ass the thing balances
from both sides•
Boston and Vow England rank f i r s t in the United States in j
savings per capita of population and this i s reflooted in the;
lowest discount rates in the country for short tern maturit

ies* In no other seotion of the country can c i t i e s and towns

C» V* Barren


borrow locally so cheaply In anticipation of taxes* In no
ether section of the country are local mortgage loans at so
low an interest rate*
The purpose of the federal Reserve Act is to give commerce
the benefit of surplus funds* Ho where else outside of Hew
England are funds for short term notes so steadily accumulated
in volume to be available for commerce.

That is the essential point of what t wish
The Secretary of the TreasuryJ



Then, jar* Barron, you do

not believe in the theory that Sew England should be aade a
part of the Hew York district?
Mr* Barron: rt cannot be s»de a part of the Hew York
dlstriot under the purposes of this Act, because you want
to gather up the savings of Vew England, which go into short
term notes in el ties and towns which give you a low rate of
Interest on depositst *t Bankst lower than other sections
of the country* You want to take that supply for commercial purposes, to support ooiaaeree*

8alem and lynn and

Portland and providence do not know and will not know in the
future nanes in Vow York endorsing bills and acceptances.
The Secretary of the Treasury2

I asked the question

simply because I want to bring out the argument* The Vew


C, W. Barron


York Tiew of i t i s that a branch In Boston would accomplish


a l l of tha purposes you have in your mind. How, I just


wanted to h*r« you lay emphasis upon your argument against
that, i f you caro to present it*
Mr* Barron: I t cannot do i t , Because the names on your


acceptances and coaxorcial paper here in Boston will be


local and w i l l comnmad local capital*
not, and neither doe© Hew York money

Ban ton money doe*

flow to Xondon to !

take the discount* that are there offored t and I t will he
fto&t year* before London money can be cosunandtd Into the
Sew York and Boston markets.


i s the local market for

discount that you wantp that knows the local condituons and
the looal markets.
The Seorotary of the Treasury* Vhen you speak of Vew
England aft attached to Boston, what territory hare you in
your mind?
Mr. Barron 1

That i t seems te me i s your essential

proolen? There i s a section of Western Vew England that i s
naturally tributary to Vew York* That section i s Hartford,
Vew Haven, and the western part of Connecticut, west of the
Connecticut Hirer•

There might also be In the western part

of uusaelmsetts a district tributary to Hew York; that i s



C. W, Barron


possibly a Hew York country too, but i t i s sot so commercial.
Xenox and th« Berkshire* are possible Hew York territory,

! but that l i a s t a l l business and not a commercial 'business*
, Western New York, vest of Ifessaehusotts, i s politically,


commercially and in transportation attached to c i t i e s like

!; Springfield, Holyoke, and Pittsfiold.


pittsfield i s the




! natural centre for Lenox.


The Seoretary of the Treasures Row about western Vermont?
jrr* Barron: Western Vermont i s almost negligible,

i t is

a erall d i s t r i e t y and i t s commeroeain either run here or
to wew York, out i t naturally belongs to Vew England.
The secretary of the Treasury: Would you eare to express
aa opinion about other sections of the country, as to the
territorial divisions or location of the reserve banks?
ID*. Barren; yor the purposes of this Act your three essent i a l banks w i l l be Boston, Hew York, and Chicago, because
there are your commercial disoounts.
The Secretary of the Treasury)

How about the other five?

Mr. Barron I That i s your difficult problem*
The Secretary of the Treasury* Can you shed any light upon


Mr. Barrens I will* When you have developed the purposes;
of this Act in i t s extension the usefulness of the other

C« V* Barron

JO 3

fire will y>0 at check collection agencies and In the
fonaanoe of functions similar to the passage of s a i l s
through the post office*

The reserve* In the other fire

cannot amount to a great deal unless you can tare a local
commercial discount market to support t h « #

If either


can thero he reserves of any moment as respeots those. Their I
function will "be as claaring houses to serre their l o c a l i t i e s ,
and act as economic check collections*

Bach w i l l serve the i



country in i t s district and that w i l l he one of the great
purposes of this Act, in helping your commercial and • erring
for cheok collections. In this respect the future of this Act

will he similar to that which is done in Oermny, where the
collections are made thvugh the post office and the
Reisch Bank, with its fire hundred tranche* , so that any
merchant in Hamburg or Dresden or any other jart of Germany
having a hill maturing, eren if he has discounted that bill,
at 4*3/2 or 5 P*s* cent, will re-discount it within ten days
of its expiration with the Belsch Bank, at a higher rate of
interest, their rate "being six per cent. That is simply in
order to get the free collection. It is put to his credit
immediately on that day, whether It Is due in Baden or

Trankfort, and therefore the government through the Jteisch


0, V* Barron



I; Bank performs that office for him and lifts from commerce
(• the burden of collections*

That will be the essential

thing to consider in the establishment of your five other
banks, or as nany as you please to sake* But your essential
point in federal reserves and commercial discounts are the
three vities which X have mentioned*
The 8ooretary of Agriculture: Have you fixed the other
points in your mind tentatively?
Mr. Barron: X have a general view.
The Secretary of the Treasury: What is that? lat us
have the benefit of it*


Mr. Barron: Probably it would differ from other people's*
It is only an individual view*
The 8eoretary of the Treasury: We are taking all the
views we can get*
Mr. Barron: X think Washington should be one of the
Federal Reserve cities, because X hold primarily that the
banks are tor the people and not the people for the
The Secretary of the Treasury: Washington would sake four*
Vr. Barren 1 Washington is a growing centre, an educational|
centre, and the whole people who get instruction and educa* j



G* • • Barron


tion, and tha bank i t s e l f , "being somewhat of an experiment in
collect ion a, which, i s essential for the minor regional
reserve banks, you w i n get very great instruction at Wash- |

ington from establishing this "bank there.
coyer the Southern States*

It con readily

X think Yashlngton Is prefer-

able to Atlanta, and you would hare to determine in time
whether Atlanta would be a point for a second bank* But thej
whole Southern Atlantic Coast might readily go into l a s h lngton* You would hare to confer with the Philadelphia
bankers, to see whether Philadelphia, which i s less than
f i r e hours from Hew York, cares for a bank, or what i t s
situation w i n be when these collections are eliminated,
which as Professor Sprague has said, pass abnormlly through
Albany and Philadelphia*

of course if you should e s -

tablish, a bank in Philadelphia i t should corer Pittsburgh
and reaoh into Eastern Ohio*
The Secretary of the Treasury * It i s your idea that
Philadelphia night be attached to the "Washington bank i f
one i s established in Boston?
Mr* Barren:

It does not naturally go that way.*

Washington should corer the country south and Philadelphia
either stands by i t s e l f with Pennsylvania, or goes to Hew

C. V. B&rron


i York.


Of course X hare already spoken of Chicago* X do not


j think i t i s essential to hare a reserve bank midway be-




| twoen Hew York and Chicago, either at Cleveland or Detroit.



St. Louie, of oourse, i s a centre*

X do not think Denver

i s the place for a re»trw


bank, but that would depend on


I the natter of check collections*

Of course there should be two on the Pacific Coast,



mokes seven* Vow the onty other point i t seems to me i s the


o^estlon whether Hew Orleans would serve Texas and the
Gulf States better than 8t« Louis; and there X should say
you would hare your eight*

The Secretary of the Treasury!

wr. Beal, you are the

president of the Seoond National Bank and also president of
the Clearing House Association of Boston, X believe*
Mr. Bealr X am the president of the Clearing House asso*
elation and chairman of the Clearing House Committee.
The Secretary of the Treasury* You know the problem
confronting the consult tee of dividing the country late not

less than eight nor more than twelve regional district*


T. P. Beal







and the estab lishment of the "bank In each, one of thoae die- j
trlots* Ve aha 31 he vary glad to have your views

on that subject and particularly vith respect to the Hew
England situation.
Mr. Beal:

Tf I nay I would take the liberty first of pre-


aentlng the reaolutiona adopted fey the Boaton Clearing House |


at their meeting which they held «n the 2nd of January, 1914-.
Thoee reeolutlona read aa follows:

"Resolved, that thia A B B eolation helierea It desirable

! that Hew England b e made a Poderal peserre District, with a i
federal Reserve Bank located at Boston; and
Resolved* That the President of this Aaisociation, with
two other mamisera to oe appointed hy hin*elf $ be a Comsaittee
to appear before the Reaerre Bank Organisation Committee and
urge the expediency and wisdom of forming auch a yederal
Besenre District with a Reaerre Bank located in Boston,"
The on3y other points that 00our to ae in this connection
are that as a l l the reaerre banks are Joined together t and
as the Beserre Board la in Washington, with power to issue
the currency that mty be required In times of need, i t i s
not as necessary for the business men of Boston and Mow
England to associate themselves with a necessarily large


T. ?• Baal


"bank as It would be If there were no such means of getting
relief when it is asked for*
Of course, in oomaon with a great nany others in the
Bast, we believe in the first place in a large, central,
strong bank; but with this power to obtain relief from
lashington through the yederal jteeerre Board, where this
currency board is to be aside, It seems to me that great argument of being connected with a large and strong institution
loses a great deal of its force. It therefore has seemed to
me that the power to seleot members who would be better
acquainted with Hew England credit and more closely in touch
with such credit whloh we should hare, with a reserve bank
in Boston, is a rwy

important consideration* I understand

tlat six of the directors out of the nine would be chosen by
the member banks, if a resenre bank was located in Boston*
They would hare a rots la this selection, whereas if we
simply bars a branch of Hew York, we hare no choice in the
selection of the sersn directors to be chosen in that bank*
It seems to me that is a vtry strong argument why we should
hare a federal Reserve Bank here in Boston*
The Secretary of the Treasury!

What territory do

you think should be attached to or served by the Boston


T, P. S e a l



The resolution of the clearing house calls

|| for a l l of Hew England•

The secretary of the Treasury:

X know, but X would like


|; to get your view as to what should be done with western
|i Vermont, Xassachusetts and Connecticut?.

Mr. Beal:

X think western Vermont i s so siaall that i t

nakes very l i t t l e difference.
The Secretary of the Treasury: Whether snail or not i t
ought to be attached to the reserve bank where i t s business
and commerce w i l l be best accommodated, so however small
we want to give i t consideration.

With your knowledge

of the business transactions and commercial intercourse of
Boston with Vermont, what would you say should be done with
a l l of Vermont or the went era half of it?
Kr. Beal:

Being a Boston san, X should naturally think

i t would not be to i t s disadvantage to be associated with
The Secretary of the Treasury: Apart from being a Bos ton.
van, and looking a t the merits of the proposition, which i s
the Important question we are considering, where should i t go
for i t s own benefit and the advantage of i t s own oouaeree


T. P. Beai.

[and industry?

I WT* Beali

X do not feel I am quit© able to answer that

ij quest ion e

i: The Secretary of the Treasury: How a tout western




Mr. Beai:

X think western Ihssachusetts can Tery properly

i'"bo associated with Boston*
The Secretary of the Treasury: Do you think i t would
oe more advantageous oeomerciaUy and industrially to
have i t attached to Boston than to go to Hew York?
Mr. Seal:

Squally advantageous.

The secretary of the Treasury t

How about the whole of the

State of Connecticut?
Wr, Beai:

certainly east of the Connecticut Rirer there

i s no reason why i t should not be attached t o Boston, and
I think the remarks of Professor Sprague as t o the course
of exchanges after thus new system i s introduced, are a
rery good reason why western Oonneotiout should be attached
to Boston.
The Secretary of the Treasury: would you think that under
any circuxastanoes western Connecticut should be attached to


T. P. Beal.


?jr« Beal:

T thick izf view of what Professor Sprague

s a i d , I think i t should "be attached t o Boston.
The Secretary of the Treasury:

I thought you were re»

;, f erring to the eastern part of Connecticut?
wr. Beai: Ho.


Tho Secretary of the Treasury:

You were referring to west*

j. era Connecticut a l s o ?
*a% Beai:


I think in view of what Professor

Sprague said that western Connecticut should be attached to
The secretary of the Treasury:

Thank you, Kr. Beal*

The secretary of the Treasury:

vr. Rlpley, what do you

Kr. Hip ley*

I am vice-prenident of the Merchants • national

t am a l s o a aenber of the committee chosen oy the

Clearing House Association, t o which Hr. Beal has referred.
The 8ocrotary of the Treasury:

Ve should oe very glad to

have yourviews on the problem that we are considering*
Mr, Ripley*

X w i l l take up only one or two points*


|l 0

A. Kipley.


many hart boon tell considered that there is no need of
elaborating thea further, ^here are two, however, that
I do not think hare "been touc hed on In form, out which
seem to "be of distinct advantage for you gentlemen to con*
In the first place, you should consider the character of
How England business, particularly the character of the
Vew England loans* We do certain businesses here which
are almost unknown in the other states, notably is Hew York
where we should probably hare our reserve city if we did not
hare it here in Boston*
I will cite particularly the whole leather Industry,
beginning with the tanning of the hide, and goigg through
until It is m d e up into shoes. That is essentially a
Vew England industry, and Vew York knows but rery littla of
In that industry there is a good deal of credit asked for
and given, and ire think we know something about their credits
At times we hare received rude shocks, but at the sane time
we ought to know something about it as a natter of good
Take again the course of the wool trade. The wool



A. Biploy

trad* in Boston i s dis tinotly reculiar.


nothing of i t .


Sew York known

Von York undertook at one time to set up

the business of dealing in wool through the ins trumentality

:, of a warehouse! but that did not succeed* Boston i s the
• largest distributing centre in the country for wool going to

I! ranuficturera*

Another thing i s

our cotton business, and that perhaps

; i s about the biggest thing we hare in the amount of capital
! required*
Most of our cotton mills are required a t times to buy
| money* Boing large consumers of cotton and cotton coming
on the sarket only at certain times in the amount and quality
they require, they borrow money to sake such purchases*
Host of that money i s furnished by Hew England, a great deal
of i t by Boston, a large part by Providence, and a great
deal by interior Hew England towns, but most of i t by Hew
Xngland* A large part ef that paper is well known to
us, more than in How York, and a great mny mills, notably
in Sail River and Hew Bedford, are known here and in
Massachusetts, and in providence, but are not knows in Hew
York c i t y .
There i t seems to me i s a very Important argument for


A, Ripley



j, haying a ressrre bank in Boston.



that paper 1* handled


j in Hew York, It w i l l be l e s s well known, less wisely handled {
jj by therm, with reference to the reserve bank and with reference
i to the comoiunity*
If i t were handled here through a branch, the off l e a n of
the branch necessarily w i l l not haye aa close oonneotion with
our mnufaoturlng induatriee, and as intlnate a knowledge of
our credit, as thqr would hare if they were directors chosen
on the spot*

So such for that point*

The second point I have in mind i s



I anticipate

that sooner or later the federal peaorre Sank w i l l hare to
oonslder the question of performing one of the rery large
fune tions of the banks, that i s to say effecting exchanges
of credits* Vow England some years ago embarked on a new
system through the instrumentality of Boston, under the
direetion and eneourageasat of our Boston d e l ring House*
Ye have an arrangement whereby other hanks in Hew England
nay send their eheeks here, nty colloot their checks through
Boston, they being returned directly to the bank, the
remittance being made direotly to the Boston Clearing House*
Thai i s the reasen I sake this point, that this has giren
r i s e to a distino t course of business through Yew 2ng3and.


A. Ripley



j The tatter of chock collections ha* been handled In that way.

The Secretary of the Treasury: yree collections?



*n% Ripley: Tree collections In case they are free to



The systam Is fcrtefly this:

The Boston c l * r l n g House

\ undertakes to collect the checks» and gives the time and
! labor tree,

i f the lank remits at par, no charge Is

otherwise a charge i s made corresponding to the

charge made by the bank*


As I was saying, that system is one which we have developed!
which covers the whole of Vew England.

It binds Hew

Bngl&nd together, and It gives Hew England a certain entity
that is real*
That being the case, i t seems to me that i f a regional
reserve bank i s established here in Boston, the question
of handling the volume of Vw\ England chocks is very simple*
There i s a large amount of praotloal expsrienoe to be drawn
on at onoo.

i f on the other hand, that i s handled through

Hew York, the method i s going to be changed} and something
entirely different devised, so that thers again i s a
reason for setting up a regional reserve bank in this city*
Sow, i f the Committee w i l l pardon me, X have one more
thing to say that nay savor of a l i t t l e bit of local

A. Kipley



There i s nothing egotistical about i t , and i t

is the result of a perfectly honest belief*
I believe that Boston feels that It should have some
voice in the developing of this whole reserve systea, a
far larger voloe than It would have in oase It were »imply
a branch of a reserve bank located in Hew York*


there Is a bank here 9 the district has a member of the advisory council, and the number of men in this vicinity who
w i l l be Interested in the conduct of i t s affairs w i l l be
far larger,

I 0imply c i t e tno thing in the past as

showing that posslbty Boston*s banking experience has been
beneficial to the country, and that is the development of
the old Suffolk banking system of check collecting.
X think frankly that Boston ought to have as much
weight In the development of this new system as It would
have If there were a regional bank located here, and that
those In charge w i l l find i t helpful in doing so«
the Secretary of Agriculture:

Would you include a l l of

Hew England?
wr* Rlpley:

i f I s*y reply I would say this * If I should

say you ought to include a l l of Hew England, I should probably
hurt the feelings of some vry

good friends who I think want




A« Hlpley


to go to Vow York; and at the Bans tlrae I think thay are
really mistaken in their Judgments, and that i f I could s i t


i| down quietly with them and take them apart, we would come


ij nearer together*

I hare a great raany friends in Hart-



I ford and Few Karen. Yew Karen was my home for many year a,
; and I know that the men there and in Bridgeport and later*
bury would f e e l that the course of business trends naturally
to Now York; but I s t i l l believe they would be just as well
serred in every respect i f they were 0 on nee ted with a Boston
Federal Reserve Bank as with a HOW York federal Reserve Bank,
and that they w i l l have very much more voice and influence in
the direction of affairs there t and think the/ are entitled
to i t .
The Secretary of Agriculture:

You do not attach great

importance to the contention that has been made that a Federal
Reserve Bank here in Boston would not be strong enough to do >
much good?
Mr. Ripley:

In explanation may I give a rather homely

figure that occurred to me the other day, which seems to cover
that point?
The Secretary of Agricultures we shall be glad to have i t .
Vr« Ripley: The contention of the gentlemen who were


A, Rlpley



i. after a pederal Reserve Bank having we will say 60 per cent
of all the resources, dividing the other forty per cent
among the remainder of the -pederal Reserve Banks, seems to
be something like this* Supposing X had ten dollars in each
of ten pockets; If X gathered 50 dollars into one pocket,
leaving four pockets bare, X would be no richer thereby
unless it were possible that X could not get into one pocket.
As X understand it — I nay bo wrong, but from what the
gentlemen have said, X am sure X am not wrong — the main
object of the -pederal Reserve Board la to coordinate the
Federal Reserve Banks, make them help one another and to do
their duty by one another and not stand out as isolated independent entitles perhaps competing violently and struggling with one another. X must say the argument for sise
seems to fall to the ground entirely*
The Secretary of Agriculture: X do not remember the figures
as to the amount of banking capital and deposits here in
this section, but in the country at large, in the national
banks and savings banks the capital and deposits have doubled
la 15 years* We go through a sort of Industrial revolution about every 15 years, as to the amount*

ft Is

probable that a bank here would be very much larger in the


A* Ripley



•I oourso of ton or fifteen years*

Rip ley:

! saved •

We hare been a t h r i f t y community and have

T^ere are certain things that have happened of 3ate

;| perhaps to lessen the amount of

savings we can put by f

ji but I should think that was reasonable•

I The Secretary of the Treasury! As hearing upon the siae
; of these bank at and in relation particularly to the content
i tlon that a preponderant tank should be established in Hew
I York, T understand you to say th*t by reason of the prori!: slon of the bill that these units shall be coordinated
effectively through the -poderal pesenre Board, you do not
attach much importance to that contention* Sow there is
still another feature which has an important hearing upon
that, and that is the power of the federal Reserve Bank to
draw currency from the federal Reserve Board upon their
liquid assets. The fact that that power does reside in the
federal ^eserre Board aakes each one of these units -o:r:.L: .
stronger than would otherwise be the ease. Is that or not
in your judgment an additional reason why a larger numbor of
independent units all being as nearly equal as possible,
would be desirable?
1ST* Ripleyt

I would a little rather answer your question

i! 0

A. Ripley

with reference to this unit*


As t o this unit I f e e l perfectly

certain that whatever i t s s i s e , i t w i l l be amply competent
to take care of the wants of t h i s territory*

The Secretary of the Treasury: But we have to consider


the problem a i a whole, and these units must of necessity

; have a r e l a t i o n to one another*

Therefore I ask the ques-

tion with referenoe to the entire problem, beoause i t has a
very decided bearing upon the a c t i o n of the committee*
Mr. Ripleyx

Would you mind giving me that again?


The Secretary of the Treasury: Vy point i s simply t h i s ,
that i t i s not so necessary to have one preponderant bank.
The theory upon which i t i s asked that there should be * preponderant bank in some one locality, partioula rly in Hew
York, i s a s has been suggested, that that bank should
control forty to fifty per eent of the available capital
and resources of the country.

X say that argument becomes

l e s s important, does i t not, in view of the faotHhat
these several units are co-ordinated by the vederal Reserve
Board, and that in addition to the strength which that gives
them, they also hare the power to get currency from the
federal Reserve Board i t s e l f in time of need* Therefore the

units say be more equal in sise throughout the country




A. Bipley

than would otherwise be the case?
Mr. Bipley; that is, the power to get currency is an
additional safeguard for the •nail unit?

j! m e a n ,


That is what you

Alfred X, Rip ley

The Secretary of the Treasury:



la an additional

resource which the snail unit w i l l be enabled to avail
Itself of.

I have rather stated i t in the form, not so much

»f a question as a fact, to e l i c i t your view about that.
l£r, fiipley: I think that i s so* You cannot spread that
over 500 snail communities.
The Secretary of the Treasury! Not at a l l . I am speaking,
of course, with reference to the number of banks provided In
the b i l l .

We need not indulge in academies here, because

our powers are very well defined*
The Secretary of the Treasury: You nay state your f u l l
name, yrr, Davis, and you* occupation?
|fr« Davisi

Vy name i s B« C. Davis*

I am president of the

Chamber of Commerce of Jail River.
The Secretary of the Treasury: Are you a banker?
Kr. Bar Is 1 I am not a banker.
The Secretary of the Treasurys

Kindly state your

business AS well, please*
Mr. DavisJ

7ty business i s of a large number of things,

Interested in the development of the ettyj cotton manu


R . C* D a v i s


I faoturing, more particularly* and I am interested in banking
as well, but not particularly a banker* I represent a
;! commercial organisation which i s somewhat similar in i t s

i description to the Boston Chamber of Commerce, of the City
of Sail Elver, which bears te the cotton industry possibly
the same degree of importance that some of the c i t i e s in
the north of Massachusetts and in the central part bear to
the woolen industry*

Notwithstanding the very splendid

competition of the south, the southern part of Uassaohusetts
and the nearby portion of Rhode Island today control as many
spindles in the operation of the manufacture of ootton
cloth as the entire south*

The city that T represent

operates today four million spindles of cotton machinery
with a capital of about $57,000,000 Invested in the industry,
manufacturing a billion yards of cotton goods a year, and
with an investment in finishing cone erns of about $20,000,000
which in turn finish about 1,500,000 yards of cotton goods
every week.
The result of a l l - t h i s I s , gentlemen, that the city
needs considerable banking capital.
aggregate capital of $5,000,000.

about $63,000,000 a year.

It has banks with an

i t s clearings amount to

Geographically and naturally,


R. C. Davis

Its association has us ualty "been with Boston*


i t has

associations with Hew York as well, but i t depend* to a
large degree upon Boston for i t s financing, so that natura l l y when the question of the establishment of a Dank such
j! as you gentlemen are considering comes up, It appeals to us
:; as being Tory important that a regional bank should be
located in Boston, because if Hater i t noons essential and
important, there i s no reason why branches of that bank
could not be established in ether places throughout Hew
England. Ve believe also that the bank should hare as
large an area to cover as possible, so as t o give it as
large an importance as possible.
I quite appreciate the question you asked Sflr» Hipley,
and i t i s quite pertlzuuit, I hare no doubt, but If at the
same time lander the present administration, we must expand
our trade — X refer to the new tariff — to foreign
shores, we shall hare to hare banking f a c i l i t i e s of greater
amount than we hare had in the past*. Ve hope to be able to
do so, but to a considerable degree It oust depend upon the
banking f a c i l i t i e s that we can cosnaand« 3o that as a
result of a l l t h i s , we firmly believe, and I think that
other section of ifessaehusetts, Hew Bedford, which I s a very



R. C. Davis

large cotton manufacturing c entre, as well, and that section
of Rhode Island which l i e s immediately close to Massachusetts,
agree that this i s a l l important to us:

That with this new

currency requirement, that a bank as large as practicable,
I including Connecticut, Rhode Island and the rest of Sew

I England should be, if possible, established in Boston* Our
I a f f i l i a t i o n s are so close and so good, we f e e l we hare got
such advantageous considerations in our financial operations
heretofore, that there i s no reason why we should not continue in the future*

Boston knows our paper and knows the

character of the cone ems back of i t , which i t would take
years to build up in Hew York* 80 that speaking generally,
practically a l l these concerns that hare their business
j; located in that part of the state, are dependent upon Boston
for their financing* I thank you* (Applause*)
The Secretary of Agriculture 1 Will you stats your naas,
Mr. Blinn, and your business connect ions?
Mr. Blinn: X am Vice-president of the National Union
Bank of Boston, and I appear here in vv capacity as president
of the Uassaehusstts Bankers Association*

Chaa. P, El innt


The Secretary of Agriculture: Mr. know the
problem that we are trying to study heret



K r # Blinn:

I do t

The Secretary of Agriculture! We should be rery glad to


have your views on any aspectf of the problem you care to


Urm Blinn:

Shall I wait for Secretary MoAddo?


The Secretary rt Agriculture: Ho f it will all go in the

reoordf and he will be back in a few seconds*


Mr, Blinn: As President of the Massachusetts Bankers
Associatlont X addressed this communication, which I will


not read, but which I will leave a copy off to the various


banks and trust companies, members of our organization! 190
all told:
•Boston, December 30 9 1913*
To the National Bank and Trust Company members
of the Massachusetts Bankers Association:~
The federal Reserve Act11 provides that the
Secretary of; the Tr«sa0uryt th# Sftcretary of Agriculture
and the Comptroller of the Currency acting as *the Reserve
Bank Organisation Committee* shall divide the United States

into at least eight but not more than twelye districts*


Chae. P. Blinn, Jr,


. and shall designate a city in each of said districts in


i which there shall be organized a •federal Reserve Bank**




The Committee has announced that it will hold hearings


in Boston on January ninth and tenth next to determine

j whether or not u ¥cder&l Reserve Bunk shall be organised in


This Association w i l l be represented at said hearings

'I but f as there seems to be a difference of opinion among
? bankers as to whether New England should have a federal
J Reserve Panic in Boston or should deal through the Boston
of a yederca Bank to be organized in tfew York
I it is important that the opinions of our members should be

You are therefore requested to indicate your preference
b y signing the attached slip t returning the name in the

i accompanying envelope*
Please give this matter y o u r immediate attention so
that the views of the entire state » a y be presented t o the
V e r y truly yours,
CHAS * V * BlfXHH |




P . KLinn, Jr.

528 i

In our opinion a 3?eder'il Reserve Fank(should not) "be
organized in Boston*





(Cashi er* ) *

I **eoeived 110 replies. The purpose of the letter was
to jret the opinion of our members as to whether they would
prefer to deal with a regional bank to be organised in

'[ Boston, or with a regional bank to be organised in Hsw Jg0rk



and 28 replies favored ffew York.


Ireoeived 110 replies;

82 replies favored Boston

An analysis of that vote falls to reveal that the 28


votes favoring 7J$w York came from any particular section


of the statt.


thought by some people that the western part of Massachusetts


would favor Kew York, the poll of that section of the state


map be interesting*

The votes Were scattering*

As it has been

Taking the cities in the Connecticut



Valley and the c i t i e s and towns west of the Connecticut


river t the poll stands 11 in favor of Boston and 10 in favor

j! of Kew Yortc, practically equally divided*
prepared recently a tabulation of figures to show he
;i .Boston would compare in siss with eight regional banks to


Chas* V9 Blinn, Jr#


bt organized invar idus parts of the count ryt and for lay own
purposes X divided the country into tight imaginary districts*

Z hare the tabulation here with the detail** which

I will introduce in the testimony.
The Secretary of Agriculture: Did you undertake to map
out the territory?
llr. Elinn:

I dirif yent sir*

The Secretary of Agriculture: With the eentrest
Vr. Blinnj

Yeof and X h&ve the details here*

The Secretary of the Treasury: Hare you a ©ap?
l£r» Blinn:

I havenot a map*

X hava the ntmXem here.

Shall X introduce the figures?
The Secretary of the Traaoury: Yen*
Mr, Blinn:

X located the cities at follower

¥ew York,



Chicago, st* Louie f Boston f Ssm ?rancisce f ¥aehington t


either Wew Orleans or Atlanta;

X did not decide upon those

and the eighth city w a s Denver*

Xn the Hew York district X included t h e States of Sew
York, Pennsylvania, Hew Strnsy and Belaw&rt*

I m^y say

at this time that X Ac not present these figures to advocate
these districts, but to determine h o w Poatun would rank In

size, X w a s obliged to define imaginary districts.


Chaa« P* Blinn, Jr*


The Secretary of Agriculture! Did you include all of
Hew Jersey?
Mr* Blinn:

I did*



Tha Secretary of th« Treasury*

All of Hew Jersey and

I Pennsylvania*
!| Mr* Blinn; The entire s t a t e s of Hew York, Hew Jersey,

i Pennsylvania and Delaware*

In the Chicago district I


took the City of Chicago and one half the balance of the
jiState of Illinois* eliminating the Chicago bank* the full
states of Indiana, Ohio, Michigan, Wisconsin, Minnesota,
North and South Dakota, and Montana:
The bank in St* Louis corers a district of Missouri,
half of Illinois outside of Chicago, Kansas, Oklahoma,
xan, Kentucky, Arkansas and Nebraska*
The bank in Boston corers the whole of Hew England,
{including the six Hew Bngland states*
San Traneiseo covered the States of California, Wcrada,
Idahot Oregon and Vaahlngton*
The City of Washington covered the District of Columbia,
Utryland, Virginia, West Virginia and Forth Carolina,
Hew Orleans or Atlanta district covered Louisiana,

teorgla, Mississippi, Alabama, Tlorlda, South Carolina and




Ch&s« P. Bllnn f Jr.


Denver covered the States of Colorado, Vyoming, Utah,
Arirona and Hew Mexico*

Vith the districti defined as X have indicated, the

j hank In Boot on would rank In fourth plaoe*

The Secretary of the Treasury:

Boston today

Vlll you state the capital

of these various hanke as you outline them there?

Itr* Bllnn:

The oaplt.*! of the Kew York institution would



Th« Secretary of Agrieultur*:

Is that on th« thrt« per


;j cant or eiz per oent b&sist
Mr. Blinnj

On the six per cent "basis.

Its deposits

would be approximately #168t000,000 and total resources of
approximately $200,000,000,
Chicago would have a oapital of $22,000,000 and deposits
of $103,000,000, total resources of Approximately
St. Louis would nacre a l i t t l e less than |l&,000,000
capital, deposits of $53,000,000, -n<J total resources of
Boston would hare a capital of 19,000,000, deposits of


Chao« ?* Blinn, Jr*


|34,000,000, and resources of $44,000,0G0#


San Francisco would hare a capital of $7,405,000,



deposits of $28,000,000, and t o t a l resources of |35,000,000*


Washington would hart a capital of $5,377,000, deposits


of £19,000,000, and t o t a l resources of $25,000,000«>


Hew Orleans o r Atlanta would have a capital of

j $5,822,000, deposits of #16,000,000, and total resources of
\ $22,000,000.
Denver would have a capital paid in by its somber banks
of $1,894,000, and there would be a deficit to be sub:

scribed by the public or by the government to bring its
capital to the minimum cf #4,000,000, and would require
deposits of #9,243,000, mnA total resources of rising
The City of Boston at present ranks fourth in the
country, from the standpoint of financial resources, also
from the standpoint of clearings, and sometimes is in third
place, going ahead of Philadelphia, from the standpoint of

It seeme to me that if there aust "be eipht bank|f9

as the lm defines, that Boston is of sufficient financial
importance to have one of the bank a •

That concludes my testimony*


Chas* P# Blinn f Jr.

The Secretary of the Treamiryt
•} you, llr. Blinn.


We are rery much obliged to

You may attach that statement as an

| exhibit to your testimony*

(The tabulated statement introduced by Mr* Blinn

j was marked as an exhibit to his testimony, and is as



;j Kote:

Aot c a l l s for reserre of 1% by Central Reserre Agents




with Federal Banks. 6> is used in the oaloulation
and no allowance is mads for balances which will bs
withdrawn from Central Reserre Agents}

theory being

that 6yC of gross will equal approximately 1% of net.
Figures based on Comptroller'e Call of October 21st,

Chae. P. Blinn, Jr.


Capital of Regional Banke.
6% Capital &
Surplus of
Member Bank
1. Nor York


2. Chicago


3. St. Louis



4. Boston


5. San Franoiaco


6. Washington


?. lew Orleans
or Atlanta


8. Denver




a. 105.920

Chaa. P. Blinn, Jr.



Hew York




St. Louis


Total Resources.





4. Boston




8an franoisoo








Hew Orleans
or Atlanta









Cbaa. F. Blinn, Jr.




Haw York











X*w Jersey

etook owned by Bank*


Total R««ouroet .<

I 38,763,880

Cnao. P. Bllnn, Jr.


Capital & Surplus

# 69,050,000

Deposite (Het)














VI aoonein









Ho. Dakota



So. Dakota











Stock ounad by Banka




Total ftaaouroaa



Chas. p. Bllnn, Jr.


Capital & Surplus

| 51,905,000

Deposits (Hat)

Illinois £

























Stook owned by Banks
Total Reaoureas





Ohas. P. Bllnn, Jr.

Capital A Surplus

Papoaita (Fat!

# 96,396,000










Rhode Xaland











Stook ewoad by Banka
Total Baeouroaa

| 9,946,440

Ghaa. P. Bllnn, Jr.


Capital & Surplus

I 85,068,000


















Stocks owntd. by banks




Total Reaourc«t




Chas. ?. Blinn, Jr.



Capital & Surplus

Popoalta (get)









West Virginia








Di»t. of Columbia



Stock otmad by Bank*




Total Btoouroos




Oha*. P. Blinn, Jr.


Capital & Surplus

DaposKtt (Hat )
























6 ^


Stook oimtd by Banks



Total reaourca821,974,830

Chaa. P. Blinn, Jr.



Capital & Surplua













Hew Mexico







Stock owntd by Banke


• Public



Total Stock




Total B«source«





The Secretary of the Treasury: Mr. Sawyer, you nay «tate
your full name and occupation*
Mr. Sawyer: John F. Sawyer. I am cashier of the Union
national Bank of Lowell*
The Secretary of the Treaeury: I preeust you want to
express theviews of your city, and we would be very glad to
hear from you.
Mr. Sawyer: Speaking nore particularly for ay own bank,
our affiliations are so naturally with Boston that our bank
wiahee to be affiliated with Boston rather than with a lew
York bank, and would like to see a regional bank in Boston.
I do not know how it will work in our own case, about the
requirements, but the topics I have in mind are oaring for
the collection of oountry checks, that have been spoken of;
and the particular bank that I represent being interested in
furnishing the payroll* for our cotton stills, we always wish
to be assured of a large supply of currency*

Ordinarily we

can turn it over in Lowell, so to speak, but at tl»e* we
depend on our friend*, and they have never failed ut yet*
The Secretary of the Treasury:

Ie It your Idea, Mr.

Sawyer, that all of the Sew England states should be attached


John F. Sawyer


to Boston, if a Reserve Bank ohouId be established here?
Have you given thought to that phase of the problem?
Mr. Sawyer: I have not given sufficient thought to it to
The Secretary of the Treasury*

Of course* it goes without

saying that if a Reserve Bank wae established bare, tonsil
would be attached to that .
Mr. Sawyer; Tee, we should expect and hope 90.
The Secretary of the Treasury: We would not attempt to
divorce Lowell from Boston, I can assure you. Thank you*
The Sooretary of the Treasury: Tou nay state your name,
Mr. Batchelder, and your occupation.
Mr. Batohelder: H. M. Batchelder, President of the
Merchants Rational Bank of Salem.
Gentlemen, X have no authority to speak for anybody
except ay own bank, the Merchants Rational Bank of Salem.
We have a very decided interest in this question* Our bank
ie over 100 yeara old, and hat been in constant successful
being ever since it was bora. We have a territory largely
manufacturing leather, shoes and cotton. We certainly



believe that Hew England Is geographically situated 90
it would be entitled to a Federal Reserve Back. We believe
that bank ought to be, of oourae, in the oapitol of the
State, Boston. We have 450 national banks in Massachusetts
with a capital of 1100,000,000, and loans and bonds in all
those banks of #672,000,000, deposits of #501,000,000; and.
the savings banks in addition have a billion and a half of
deposits. It is certainly a very thrifty section and a
highly developed manufacturing section.
It appeals to me, gentlemen, that the system which has
been established by the Boston Clearing Rouse of clearing
country oheoks has been a very great success and a very
great benefit, that they should ba cleared for all the banks
in Hew England free, provided they are notified daily, which
they alHioat invariably do. I certainly bsWteve Hew England
would be batter served by a regional bank here than by a
bank in Hew York. It is true, as several gentlemen have
said, that fundamentally considered, it is important that
Hew England should have a regional bank.

The regional

bank management would know auch bettor than any oity
like Hew Tork about toe paper that would be offered for


H. M. Batchelder.


Z do not know, gentlemen, that there la any further
presentation necessary*

The ground has bean pretty

thoroughly covered by the gentlemen who hare preceded as,
I would be rery glad to answer any questions that I
The Secretary of the Treasury: Tou feel satisfied
that so far aa the oonmerolal interests of Hew England are
concerned, it would be better to organise Hew England
into a Federal Reserve district.
Mr. Batchelder:

I certainly do.

The Secretary of the Treasury: And have a Federal Reserve
Bank in Boston?
Mr. Batchelder: Hot only for the banking interests, but
for the cowaercial interest*; more especially the commercial interests, perhaps*
The 8earetary of the Treasury: Tou think the whole of
How England should be incorporated la that terrltoryT
Mr. Batohelder:

I think oo. If there io any particular

little oorner which feels that it it more closely affiliated
with Hew York, I do not know that we in the eastern part of
the state would oossplain.
The Secretary of the Treasury; Tou would be generous

to Hew York to that extent?


H. H. B&toholdar*


Mr. Batcheldsr: 2 would let then: be generous* If they
wished to.
Mr. Gibbs: I am Assistant Cashier of the Thames Rational
Bank, Horwlch, Conn*

I do not know tbat I can say much,

hut it baa boon suggested that I night say something about
our district.
The Seoeetary of the Treasury: If you will give us your
views, I suppose you want to speak wore particularly about
the place where Horwlch falls.
. Mr. Gibbs: As I understand all you care particularly
about, all the points that I could touch upon have been
already covered, except how this will affect our bank
individually, or our district.
The Secretary of the Treasury; Tea.
Mr. Gibbs: What the aeotion should be, I have r.ot
attempted to decide* Briefly stated, our bank would be
affected by the law in thle way. For upwards of 30 years X
do not recall that we have ever radiocountsd a note. For
the past year, and X think the past two years# we have not
borrowed a dollar*

The present systesi of Boston collections


Hathan A. Gibbs


we find excellent. And for your benefit I have taken the
figurea for the firet eix days of thie year, covering the
checks whloh have come to ua through Boston from two Boston
banks and the Clearing Bouse, and from lev Tork from eight
banks on four days, nine on another day, and eleven on
another day.

On the latter day the letter contained only

one dollar. We reoelvedcin those six daye through the
Boston Clearing Houoe $180,000, and through the Hew Tork
banks $39,000, lees than 30 per cent through Hew Tork. The
way it would affeot us would be this: At present we maintain a conservative business, serving our customers, going
more for security perhaps, than in branching out In extended
loans. We keep in our own bank and in Boston reserves
of IS per cent.

Under the new law it would be

distributed in the same way, only in Boston it would be wit!
the regional bank and not with a local bank.

We keep in

Hew Tork banks our entire working balances, and we would
do the name under the new system, so that the change from
one to the other, if we cheek up the Clearing House as it
i« now arranged, would sees not to affeot us at all.
I submitted to our directors the figures as to how it
would affeot us if we went into the system, and wo have

voted to go In, and I can give those to you briefly, if you


Nathan A. Gibba


think it would be or value, or can put them is writing.
The Secretary of the Treasury: If you will put then in
writing and aubalt them we should be glad to have theas*
Mr. Gibbe: As I figured It, if we get nothing on the
|96,000 which we put in, wo *ould loae #320 a year in
interest. I will put it in writing*
The Secretary of the Treasury:

That will not hurt you

very much, at the worst*

Mr. Heard:

I am Preeident of the Amoskeag national

Bank, and alao Preeident of the New Hanpehire Banking
The Secretary of the Treasury: We will be very glad to
hear your views on this problem.
Mr. Beard:

I have but Just a word. We, and I apeak

for a Committee appointed by the New Hampshire Bankers
Association, have canvassed, so far as we were able in the
limited tine at our disposal, the banks of our state. While
there has been eoae difference of opinion, the preponderance
of sentiment among our neabers is in favor of a regional
reserve bank to be located in Boston.




The old Hew England traditional idea that Boston is the
Hub of the universe etlll remain* for us Tery such of a
reality, in a great many respects.

Exchange with us tends

toward Boston. The point raised by one of the speakers will
well illustrate that faot.
imposed by our

Owing toncertala conditions

Boston banking friends, it was necessary

for us to open up banking connections with'Philadelphia or
with, Albany or other points out aide of Hew Englandf especially
for our banks located in the manufacturing centres, to
collect and clear certain items. It will be such sore
natural for us to send those items to Boston, for as it works
out, as our balance is increased in Philadelphia or In
Albany, we have no use for exchange on Albany or Philadelphia, and we oimply aok that the surplus amount shall
be transferred to our credit, to our Boston correspondenta.
We feel that a regional reserve bank located at Boston,
managed by a Board of nine directors, in the selection of
six of whom we would have a voice, would better serve our
The Secretary of Agricultures Would you ear* to indicate
the fraction that prefer other connections?
lir. Heard: Well, it was very very small indeed. I have



not the figures•
The Secretary of the Treasury: You would not figure it?
Mr* Heard:

I could hardly figure it.

Mr* Prince: I an connected with the Yindha* County
National Bank atDanielson.

I represent one of the smaller

inland banks of Connecticutf situated some 75 miles from

Practically all of our collections out*l£<* of our

immediate New Tork funds come to Boston.

The checks,

which are %n important its* to us, that we send to Philadelphia, are practically all New England items* with the
exception of the southern and western part of the United

It would normally come to Boston, As a previous

speaker has said, we have mo use for Philadelphia funds*
ITc have to daw
or Boston


from Philadelphia and transfer to Hew York
Our situation is suoh that we very oeldom have

to borrow. We are taking care of our own local industries.
Occasionally we do buy paper, and it is the eenae of our
people that we belong and should be included in the Boston
The Secretary of Agriculture: How far are you from Hew

ffathan D. Prinoe.


|i York?
Mr. Prince: We aro nearly 200 miles, perhaps 175 milea.

The Scoretary of the Treasury:

I miles of Boston?

And you are within 75

Mr* Prince: We are within 75 miles of Boston, yest sir*


The Secretary of the Treasury: Kr» Mayorfthe problem
confronting the Committee! X may say to you, is this* TJndar
the requirements of the Act we must divide the country into
not less than eight nor more than twelvt districts, and we
must locate a Ttderal Reserve Bank in each one of those districts*

The question immediately confronting the Committee

isv if Boston is selected as tht headquarters of such a bank*
what territory should be serred by that bank*

Any information

or light you can give us on that subject, we would be very
glad to receive.
Mayor Fitagerald*

Veil, Mr* Secretary —

The Secretary of the Treasury?

Without wishing to

anticipate your argument, I may say this,th^t of course the
Coraaittee is fully aware of Boston's


importance, and I do not think we need any particular light


Mayor John S*# Pit age raid*

or argument on that score*


¥hat we arc more interested in

discovering for the moment is what part of the territory
contiguous to Boston should "be included in this district*
Mayor Fitjsgerold:

Of course, Mr* Secretaryt I first want

to thank you in behalf of the oltlsens of Boston for the
very kindly sentiments and fair play whloh you hare shown
toward our city in the discussions which hare gone on in
other sections of the country, and your appreciation of the
importance of Boston*

I represent at this hearing today a

very proud people who have a wonderful history* Of course*
when a situation like this develops, where a selection of
eight important money centers is made, it is very important,
of course| to them that Boston should be given due consideration, and for them, as I have sald9 I want to thank
you for the spirit which you have shown* where Boston1 s
name hasfceenmentioned*


Mayor John F^itse^**!^


From what I can glean in the public press, "both

j Secretary Houston and yourself have been very kindly and


la regard to thie particular point you epe&k aboutt I would
that the pentleaen who are intimate with the hanking
associations of thia city and of t h i s part of the country,
are muoh more familiar with that subject than I am, and
their knowledge i s wider and better than nine*

X would

sayt how ere ry th^t i t has been mj ambit ion, since I have b?en
Way or of the City of Bo at on t to centre a larger part of
the thought of Kcrw l&iftland upon Boston, than has been the
case for perhaps 15 or 20 years*

I do not know what the

cause of i t la, but for some reason c i t i e s like Springfield
and Holyoke embraced in the western part of Massachusetts
har* had business relations with Sew York to a large extent
than I think i s good for Hew England1 a interests and for
Boston's i n t e r e s t s *
I think the game i s true to the south of us in Providence
and Hartford and Hew Haven -~ not going further west perhaps than Hartford-- th**t they should bt wore closely allied
with Boston in business because of the fact that they are

Hew JEngland cities and contiguous to our territory. I think


Kayor John ¥* Fitzgerald


their business relations have been far greater with Few York
than ehould be the case* Whether it was because of the
tremendous power exercised by Few York through its control
of the money of the country I do not knowt but nevertheless
it is a fact*
From that standpoint I think I could argue that a regional
bank should be located in Boston» and that these communities
which have been doing business largely with New York should
be Included with Post on, so that Sew York should not exercise so preat a power as it has in the past, and ~~ I
say it advisedly —

I think to the detriment generally of

the country at large*
This is not the time to speak about the conditions in which
we find ourselves now in Boston in our railroads and in our
terminals, due to the manner in which the Hew York financial
interests have handled the problem here; but it is of
course say duty as the if ay or of the city to point outthat
factf and the injury that ha* come to the people who own
stocks in those roads, who are now struggling in the black
waters of despair, because of the mismanagement that was
engineered from Vew York, Therefore, I should sny, with
our eyes wide open to what has happened, it is our business j

here to guard the situation so that this tremendous



Hay or John F« yitsgerald*


power which has been wielded In the past w i l l not tot possible,
in the future*

So therefore I hope that Boston w i l l

be b u i l t up as much as p o s s i b l e , not to do any injury to
Sew York, but to protect the i n t e r e s t s of the investors
here and the people generally, ths s i x or seren m i l l i o n s of
people that we have here*
8ixty years ago, Kr. Secretary, Boston was the f i r s t commercial c i t y in the country*

We ore ISO miles nearer

than any other part of ths United States*

The Cunard

Company s e l e c t e d t h i s port a s i t s f i r s t location* We owned
twice as much shipping in the old days as Hew York, of the
ships that went to Calcutta, which was the big shipping port*
At ths present time Hew York has 27,000,000 tons of merchandise against four million tons of merchandise for Boston*
Then you look across the water you see how keen competition
i s there* Antwerp i s second, with 26,000,000 tons,Hamburg
third with 25,000,000 t o n s , Rotterdam fourth, with F4,000,000
tons, and London f i f t h with about twenty-two and one-half
m i l l i o n t o n s , following one another rery olosely*

Hew Yoi+k

has secured t h i s tremendous lead l a r g e l y f I think, n through i t s control of the money power, which puts us at a


Mayor John S^itsgar&ld*


Then this question should be considered from the standpoint of the investment which has been zaade by the United

You will recall the fact that the United States

has invested $20,000,000 in this harbor here at Boston,
and It i s called upon to expend $100,000,000 in TStem York
Harbor for business which might very well come into Boston
It seems to me i t i s the business of the rest


of the country to look upon this situation from the standpoint of dividing the business proportionately, with due
respect to the interests of the people of the country as
well as of the individual cities*

Some $16,000,000 to

#20,000,000 hare been spent by the United States Government
upon this harbor*

Boston carries four million tons of

merchandise now against Hew York1! 27,000,000 tons* I have
given you the figures to show how business i s handled in the
various ports of Europe*

Hew York has too large a pro*

Bhe has 300,000 cabin passengers a year* We

doubled our cabin passenger business last year, so that we
got 12,000, but our passenger business i s practically nil*
Yet the United (States Government has made this huge expenditure,

Without perhaps increasing the depth of the harbor


Mayor John F# Vltzgerald*


Bout on to forty feet, to eiake it equal with Haw York, for a
comparatively email amount of money we can do three times
the business that we do In this harbor, and therefore the
people of the country can get three time5 the advantage that
they now enjoy through the expenditure of the 116,000,000 to
$20,000,000 appropriated by the government of the United
Z realize that there are othor men here who wish to die*
ouas this subject| and I am not going to take up too much
of your time*

I will simply say that this city is the oldealt

city upon the American continent*

People come here from all

part a of the world to see ltt and we hare preserved it a
institutions* It waa only the other day that a distinguished visitor here said that Boston had preserved its institutions, that the talk in its streets and in its carsf
and its atmosphere generally» were more nearly typically
American than any other City in the country*

If you go up

to the head ©f the street you will find the old State House
preserved* You will find Old South Church*

You will find

the reminders of Paul Revere and Bunker Hill and Concord and
Lexington, and th# home* of our great poets, the men who
have made Boston famous* You can see Faneuil Hall, and the


Mayor John P* 71tsgeruld*


present generation have imbibed the spirit and preserved the
institutions of Boston, not only historically tut in the
expenditures that we are making, 00 as to make it a clean,


healthy city, 00 as to make it a city that is worth seeing, '
so as to make It an attractive city*

We spend more money

for our schools per capita than any other city on earth* We
have morer parks and public playgrounds and bathing establish*
mtnts here than any other city on earth* We have the biggest
trnt hospital in the world*

We have a police department

and a fire department that are unexcelled* Perhaps it Is
not apropos to this discussion, but to indicate the character
of the population here, I saw the other day that our
rate for burglary insurance was less than in any other
city in the country, if not in the world,because ofthe
fact of the excellence of our police force* So, as
Russell Lowell aaidt it is a city that Is no mean oity,
a city of which every citisen Is proud, and they are
watching Jealously the actions of the officials of the
United States Oorerment, to the end that thl» oity which
witnessed the birth of the republic, whose people at ail
times haye sacrificed their own intareets in order that the

Mayor John 7, Fitzgerald•


overnznent might be preserved, w i l l get an honorable deal,
aid I know I t w i l l get nothing else from the honorable
entlemon who hare bean so courteous as to coma to t h i s
I t ? and l i s t e n to the arguments that are being made In I t s
eh&lf (Applauee.)
The Secretary of the Treasury:

Thank you, Mr# ?itager&ld«

you hare any data t s t a t i s t i c a l or otherwise, that you
r e to have Incorporated in the record f we shall be
ad to receive i t , and you may submit i t i
Mr. Titspreraldt

Thank you very mucfa«

jThe Secretary of the Treasury:

Mr, Hoyt, you represent the

Ue and leather industry?
lilr. Hoyt:


JThe Secretary of the Treasury: You are familiar with our


Ai^r light you can give on it will be gladly

Jr. Hoyt:

X wish X were more familiar with It*

X think X

( say something that Is pertinent to the subject* X have
thjp honor of representing the New England Shoe and Leather

Charles C* Hoyt




Association, and the >Iew England Shoe & Leather Association


represents the hone and ainew of the shoe and leather Indus- !
try of Hew England.


As has already been* allotted t o , we have held our own r e I!
I- in ark ably*

A thousand firms do 'business in the neighborhood

j of Lincoln Street, and i t i s the l a r g e s t market of t h i s
kind in the world*

The United States census shows that

the t o t a l product of the shoe and cut sole Industry was

Of that amount Hew England did 1293,000,000

or 67*22 per cent*
In the l e a t h e r business 9 tanning and f i n i s h i n g , the
c a p i t a l employed was $45,000,000 i n

Hew $n?land, against

1332,000,000 for the United S t a t e s , and the s a l e s were
s l i g h t l y l e s s than those figures*
I f the Kay or had heard the e a r l i e r remarks which you made
in regard to the newspaper a r t i c l e , I an sure he would have
apologised to you on behalf of the oitijsens of Boston
for the statement that was made*
At the same time i t i s true that Hew England has been
pretty hard h i t by the t a r i f f •

We s h a l l not know just

how hard i t has been h i t for perhaps a year* Te do know
in Kew Sngland that the present t a r i f f Ian has *eant rery



C. Hoyt


dr&etic reductions in the rate of protection which Hew
England hud, and it is quite possible that those rates were
too high*

l£y own trade felt that in going to Washington

and accepting a reduction in the duty on shoes from 25 per


cent to 10 and 15 per cent, and a corresponding reduction in
leathert we had met the reasonable demand for a lower tar iff9
and we were somewhat injured when boots and shoes were
admitted freet and various kinds of leather were admitted

We do not know how that is re ing to work out*

But in regard to this regional bank bill, if some of us
do feel that the sentiment of the South and Wast and the
policy of the administration has not been quite &s keen in
the interest of reasonable protection as we had hopedt
yet we feel that on the faota

which hare been presented hers

this morning, showing where Boston desires to have a
regional bank located h«rt9 the administration in Washington
desires to show & reasonable &nd proper regard for the
interests of this great section of the country*

Ve want

to be considered a part of the United States, and we think
this is one of the cases where, by the arguments that hare
been presented her#t we can pro ye that we are entitled to

this regional bank*

Charles C# Hoyt


The Board of Directors of our Association unanimously
adopted some resolutions which are as follows:
"The Special Committee appointed to consider the question
of the establishment of a Regional Reserve Bank in Boston
submits the following report:
•We appreciate the argument that by combining with Hew
York we would be able to form a batik of great resources which
would give our banking interests large powers of re-discount*ing without recourse to other Regional Banks through the
Federal Reserve Board9 and would allow us to meet, without
embarrassment, all rediscount demands from other Regional

Ye understand, however, that this is not the intent

of the new law.
Banks In smaller

The plan is to establish Regional Reserve
units* relying upon the co-ordinating

power of the Central Reserve Board to produce the same results
as would be brought about by haying one large Reserve Bank
inffewYork covering New imgland*
*We believe that this is sound reasoning*

A Regional

Reserve Bank established in Kew England, no matter what its
sis* may be9 will be in a position to give all needed assle
ance when necessary» In our opinion it is better to
rely upon our own resources and our own men Inasmuch as our

Charles C* Hoyt


interest a are not identical with those of Hew York. We are
[largely interested in manufacturing merchandising and port
development, and anything, either sentimental or actual,
(which w i l l promote those i n t e r e s t s should be advocated* Hew
York's Interests, as stated above, are not identical*


are largely financial and commercial, and for t h i s reason
your Committee strongly recommends the establishment of a
Regional Be serve Bank in Boston.11
The Secretary of the Treasury:

I may repeat, referring

to your remarks, that the purpose of the Committee in holding
these hearings, i s of course to n e * lig>*t#

We have the

duty here of exercising a very responsible judicial function,
and i t i s the purpose of the Committee to hear from the entire
country, and to get the factsftaLnd then to moke a decision
upon the f a c t s as


Of course we are largely

familiar with a l l of t h i s information we are getting here
to-day about the importance of Boston commercially* This i n formation a* to Boston, and the contiguous territory, i t s
manufactures and industries and commerce generally, i s of
the highest importance in enabling us to reach a conclusion}
and we hope that when we do reach a conclusion i t w i l l be one
that w i l l a t l e a s t bs — as we certainly shall endeavor to


Charles C* Hoyt

make it —


of advantage to the country generally*

In ar-

riving*^ that conclusion, we are "bound I think to serre every
part of the country (Applause),
]£T. Hoyt:

Permit me to say that the low rate of burglary

insurance would tend to show that the regional tank would
be reasonably safe in Boston*
VThe Becretary of the Treasury:

We do not think that is

as strong an argument as some others that have

been sub*


The Secretary of the Treasury: Kr* Phelan, as a member
of the House of Representatives you helped to construct this

We shall be very glad indeed to have you give us

your views*

You know the problem with which we are immediate;)

dealing, better than I can explain it to you*
Hr» Phelan:

X come from the shoe manufacturing city of

ICfnnt which is the largest shoe manufacturing city in the

Other speakers have mentioned the importance and

magnitude of the shoe manufacturing business in this State, sc
that I am not going to dwell on that* further than to say
that the manufacturers dhvn there are united in wanting a


Charles C!* Hoyt


Federal Reserve Bank located here In New England.

I de-

sire to remark in passing that too many people seem to think
this is a "bankers1 question, whereas the bill was designed
primarily to help the borrowers! and the manufacturers come
within that class Applause)*
The Secretary of the
benefit the business
Ur# Phelan;


The bill was intended to

of the country*

It was intended to benefit the business of

the country. l^y statement would aeeia to narrow it a
little bit*

It will help the business of the country by

helping borrowers*
The Secretary of the Treasury;


I just wanted ti

give it the broader significance*
Mr* Phelan: Yes* I stated it a little bit too narrowly*
But in view of what has been said in Hew York, I did
want to speak about the spirit of the bill*
Some of the New York bankers advocate a northeastern
bank, to include everyt&ing I think north of Baltimore*
and some I think would include Baltimore*

I think thmt

kindof a bank is entirely contrary to tht spirit of this

We had the fight in Congress*

There was a demand

for a single central bank, and there was a demand for the

regional banks. How that fight has been settled by the


James J. Phelan


Congress of the United States; representing we presume the
people of the countryt andit has "been decided in favor of th
regional tanks and not a central bank*
It is to be noted in passing that the same kind of men
who are advocating this big eastern bank are the men who
were advocating the central bank, and when they did not get
the central bank they now want to get the nearest thing to
it they can, by trying to get what amounts to the same thing
in the eastern part of the country*
In regard to Sew England, either New Sngland must be made
separate section, or it must be tackedon to New York*


is different from Philadelphia or Baltimore, or some of thes
places, where you might put it with one part of the country,
or another part, here, there or some place else. Hew Englani
must either be put with Sew York or be put by itself*
If Boston is put with Hew York it seems to follow that
Philadelphia ought to be put with Hew York*

There is

stronger reason for putting Philadelphia with Kew York, on
account of her greater proximity to ¥ew York and other reasons
which I will not mention, than to put Boston with Kew York*
So I think if the Committee should decide to put New
England with New York, it would also include Philadelphia,


James Jt phelan


If you do that you are going to get into one federal Reserve
Bank abcut 43 per cent of the bonk assets of the country *
Now, as I have said beforet I think that is against the spirit
of the bill9 and I am going to point out how it is, in on^
or two respects*
In the first placef in what perhaps may seem to be a
minor matter, the bill provides that there shi*ll be fire
members appointed at large by the Presidentt outside of the
ex-officlo member*}• No two of those oh&ll com* from the
same ^ederaa Reserve district»

So the President will be

obliged, no matter what his preference in the matter may be,
to select not more than one representative on the Federal
Reserve Board from that part of the country representing 43
or more per cent of the banking assets of the country*
While they have 43 per cent of the banking assets» they
will have not more than 80 per cent of representation on the
board, and no discretion or choice can be exercieed by the
President to change that fact*

That is provided by the

law itsalf•
In the second place the lasr provides that each Federal
Reserve Bonk shall havo one member on the advisory council
so that this 45 psr cent of the banking assets of the country;


James J* Fhelon


will be represented "by only one member of that advisory
How the very eazne bankers who are asking for this one
tog b&nk here in the northeast are the men who were most pergistant in demanding that there should be bank representation on the federal Reserve Board itself, and when they
found they could not pet that, they were lnslstant In their
demands for a Federal Advisory Council, a, demand which was
allowed them*

Yet these same men ar$ advocating a plan

whereby they will get only one representative for 43
per cent of the banking assets of the country.

I think that

Is a most extraordinary policy*
Again|there you hare 43 per cent of the banking assets
of the country represented, you are getting a pretty big
bank with which to deal on the question of governmental
control»It was decided by Congress wad I believe it represented an overwhelming majority of the people, that the
government should control the federal Reserve Board* If you
have a bank with 43 per cent of the assets of the country,
that bonk Is going to be controlled in Its local dealings
at any rate and largely administered In spite of the fact
that you have a Federal Heserve Board above it, by ths six


Jams a J.Phel&n


directors who are elected by the banks. There will be
|iine directors of the Federal Reserve Bank in the East. Six
cf those will be named by the banks. I do not believe
Congress ever intended to give the banks the control, or two
thirds of the control of a bank as large us the bank that

would have 43 or 44 per cent of the banking assets of the


I believe that was entirely contrary to the inten-

tions of Congress.

I believe if they had had a dentral bank

they would have had a different provision. They would not
have a bank controlled by the bauriks. If they had had a
central bunk, I think they never would have consented to
have the bankers represent si* ninths or two thirds of the_
directorate of that Board.

In fact the idea behind the bill

was that up at the top in control of the vhole organisation
the government should be supreme, that is the people should
be supreme, but that in the administration of tht affairs of
the "bank, the banks there stives because of their experience
one thing and another, and because of a desire for
Ifalrnees and Justness, should be given two thirds of the
['(representation on the directorate.

But when that was design*

|ed, it was intended that we should have these regional banks

id not have what amounts to a central bank*


James J* Phelan


Another thing in connection with this big bank in the 3?&st
which make8 It objectionable*

If you have a bank comprising

and Ifew York alone, it will be much worse than if you

tookin Philadelphia and some parts of the South*


fact, if you have that kind of & bank you are going to get
into trouble

when you try to divide up the rest of the

country into six diet riot a*
several trouble**

You are poing to get into

One trouble which I think will be very

serious, in addition to what has beeb mentioned, ie this:
There i« a provision in the bill allowing the federal Reserve
Banks to rediscount agricultural paper when it has six
Months to run*

Personally I was opposed to th&t provision,

but nevertheless it went In, and I acquiesced*

If you

divide the rest of the country into six regions, you are going to make each one of those regions necessarily smaller
than if you put & bank In Boston and Hew York, and leave

Then you make them smaller, you are necessarily

going to restrict the kind of paper that will be rediscounted
in these farming districts* You are likely to get Into a sltua
tlon where you will have two or xnor* agricultural district
banks* The danger of this six months9 paper is that it will
the assets of the banks non-liquid* The only way that

James J# Phelan

57 s

six months9 paper oan be handled, freely, is to have a
source from which to get 90 or 60 day paper in sufficient
quantities so that you can keep most of the assets of the
bank liquid and still handle this six months paper*

If the

six months paper is going to amount to anythingt you must
divide up the different districts of the eountry so that
each district will hare soue other kind of paper to draw on*
The larger you make the bank in this part of the country*
the wore difficult you ar« going to find it to hare that
kind of a hank in the agricultural parts of the country.
I do not want to take up too much time, hut X want to
point out those few things, to show the danger that a large
bank in the eastern part of the country would be f and that
it would be entirely inconsistent with the spirit of the

How, as I said at the beginning, you must do onn of two

You must either make Boston a separate city, or

you must tack it on to Wew York*

If you tack it on to

tfew York| you are paipR to i&ake a stupendous bank in the
X think it would be better^ for other reasons9 to
two strong banks In the Bast than to horeonly one, be


James J




cause you take an extra chance by having but one bank to
call on in time of trouble• As the Secretary of Agriculture
pointed out, there is #oln£ to be business between those

They are not separate units by any means*

They are

brought together by various provisions of the bill, among
those provisions being one which gives the Jederal Reserve
Board the power to permit these banks to do business with
one another by rediscounting, and in certain cases compels
one bank to rediscount*
The Secretary of Agriculture:

It supervises the local:

rate of discount*
Mr* Phelans

Yes, it supervises the localfcateof discount,

but at the earns time these banks undoubtedly will do con-*
slderable business with one another, and when funds are Idle
in the Kant it is a very easy matter for those funds to be
applied to other parts of the country, by one of the federal
Reserve Banks, through other Federal Reserve Banks, for
rediscount purpose s*
The Secretary of Agriculture: Do you think there is strengjth
in the argument that Boston ought to have a reserve bank
because of the fact that it will give six men selected
from the community, by the community*


Mr. Phelan:

James J. Phelan

I do*


I did not touch that, because that had

been touched upon by others*

I think that was the ipirit

of the bill, and was also in the mind a of those who framed
the bill| that the banks ought to be In charge of local
men, because the country is so great and its economic and
other conditions are so varied in different parts of the
country that in order to administer this system properly,
men familiar with local conditions ought to be in charge
of the banks*
And in this connection I night point out something that I
think has not been brought out, which again shows that the
proposition of a central Hew York bank is inconsistent with
the spirit of the bill*

A branch bank In Boston does

not amount to the aame thing that a regional bank in Boston
amounts tof in this respect, in addition to what has bean
If we have a federal Reserve Bank in Boston, the banks will
name six of the n%$ nine directors, the government naming threjei
If we have a branch bank here in Boston, only four of the
directors will bemsuned by the banks, three being named by
the government| because that Is the prevision of the bill*
In other words, although Hew England is a section of the


James J. Phelan

country of vast inauatrial Importance to the countryf we
have more governmental control, we will have an opportunity
|for greater governmental control here In Hew England, than
f?e would have in New York, because of the branch proposition.
The Secretary of the Treasury;

With a- branch bank, the

headquarter* bank would eelect four directors for the
branch bank?
j Mr. Phelan: Yea, I realize that, but there are three

directors , bear in mind,

Out of the BQrtrt men,

three would be three government employes*
The Secretary of the Treasury: I understand, and perhaps
you made an error in your statement,

Youaesumed that four

of the directors of the branch would bo chosen by the banks
Mr. Phelan: Yea, I did*
The Secretary of the Treasury: Whereas the bank itself,
that is the headquarters bank would chose them*
Mr. Phelan: I mads that error. But we still get away from
the local situation.
The Secretary of the Treasury: You get still furthor away
from the home situation.
Mr. Phelan: Yes, hut the proportion is four to sevtm,




J. Phelan

instead of six to nine, a© it is In the Federal Reserve
The Secretary of the Treasury: The proportion of governmental control In the Federal Reserve branch would be larger
than in the administration of the Federal Reserve Ban k in
Ur. Phelan; Tee. That ie the point I wanted to bring
How, I could point out several things in the bill that
show the inconsistency with the epirit of the bill of having
a large bank in the East,
The Secretary of ths Treasury:

I do not think the Com*

mittee neede any special argument on that particular
question. I mean that X think the point has bean thoroughly
Mr. Phttlsn: I did not want to let it go unanswered in
the record# because it was brought out largely by the news*
papers in Hew York.
The Secretary of the Agricultures Speaking of these
agricultural sections and the loans on far© landsf that
difficulty you spoke of would be lessened by reason of the
fact that the loans are restricted to 25 per cent of the


Janea J. Phelan.

capital and surplus, or 25 per cent of the time deposits?
Mr. Phelan: I did not mean to speak about the farm loans,
If I dlJ it was a slip of the tongue*
The Secretary of Agriculture: I thought you did*
Mr. Pbelan: I wish, to speak about tho six nonths*
agriculture paper.
The Secretary of the Treasury: Hot the real estate loans?
Mr. Phelana Hot the real estate loans.
The Secretary of Agriculture: I beg your pardon.
Hr* Phelan: If you get a small bank out in the west or
southwest, you are going to have more trouble with the six
months' paper.
The Secretary of the Treasury: I gather fron your argument
that you are Inclined to the belief that the minimum number
of banks should be established rather than the maximum, be$
cause tho larger the number of' the banks, of course the
greather probability that anpir,ely agricultural or some purely
agricultural dlstrlots will be established. I mean that you
would gst less diversification of indstries?
Mr. Phelant I will say yes, in spits; of the fact that the
House bill had the number from 12 up as a olniauou

I do think

that at any rate in the beginning it is much better to start


James Jt Phelan.

with the minimum number, so that you will get your banka
;j strong and get them working right.

If subsequently you

can serve local Interests better by increasing the number*
you have the power to do so, or the Federal Reserve Eoard
bao the power to do It* That If It can be done, I am
!; Inclined to think It would be better; and I would just likefco
eay In addition to what I have Bald, that I think a thing




o of as much importance as anything in establishing these
!j various districts, is to got a varied kind of paper to deal

j) vithj because in that way you are more likely to keep the
ji Federal Reserve Banks buoy, you are taore likely to do a

steady business, and that particularly applies in the
agricultural districts; because if you got a district that
la purely agricutlural, tht banks Bill be very busy for a
few months, for a short period, but for another long


period, they apparently will not be doing nuch of anything.j
The Secretary of th;« Treasury: It is very difficult to get
a diversification in these districts. Take Hew England, whi)sh
is thoroughly homogenous in that respect, you cannot get the
divlersification here and you csmnot in lew Tork.
Mr. Phelan: Tou do not need it either in Sew York, or New

James J. Phelan.

: England, because that business Is steady. It Is manufacture
, ing business.

The Secretary of the Treasury: Then you have a surplus?

ij Mr. Phcslan: And you Kill always do a rodiscountlng
!; business.

Mr. Sprague: I am the President of the Central Hatio&nal
Bank of Lynn, and I represent the Lynn Chamber of Commerce,
Lynn being tha home city of Mr. Phelan *ho has just addressed
you. Perhaps naturally I ought to follow bin.
You have heard something about the Importance of tha shore
industry of Hew England*

Lynn In the largest manufacturer

of shoes, not only in Sew England but in the world today
and the total value of her manufactured product for 1913
was over eighty million dollars. The amount of cur wages
is nearly 25 per cant of tha total value of our manufactured goods 4
The highest rates of wages paid In tha country are paid in
the City of Lynn in the shoe Industry. Therefore, it is vary
essential that we have a good supply of currency.
We receive checks from the entire country, from Seattle to


Henry B« Sprague.


Texas, because our goods are distributed over the entire
country, and the custom has grown up of late, very unfortunately for us, for each customer to pay his bills In an
Individual check on hia own bank. Kow the hope of our city
la that the collection of cheeks* tihloh Is a feature of the
new lam will be of the greatest importance to us • notwithstanding the great value to us of the privilege of rediscounting, the great ooet to us In doing our business* Is tke
collection of these checks* We have been turned from
the natural channel of the collection of these checks to
Albany, which h&s offered us the greatest facilities at the
least coat, so that our reserves In Lynn and in most of the
aanufacturlng cities of Hew England which receive similar
checks, have been turned to Albany abnormally, tihieh is an
unnatural place

fpr us*

The Secretary of the Treasury: That Is a perfectly artificial movement,
Mr* Sprague: it is a perfectly artificial movement, a
perfectly artificial place to keep eur reserves*

It has

taken It away from Boston where It belongs and tied up the
larger propertlon of our reserves In Albany*

We should

come back to the City of Beaton. In the case of our own

Henry E. 8prague

jparticular bank, the larger part of the reserves of
ban*, which are

considerable, because we are compelled to

jj carry nearer 66 per cent, tirnn the 15 per cent permitted to
icountry banks on aocount of the need© of our buslaae&~ the
larger part of our reserves are in Albany*

That Is

taken away from Eoaton and Sew England, and it should be
brought back here.
The Secretary of the Treasury} To what extent do you
atfteuae that Ke* England reserves are carried in Albany
ijturcugh that artificial inducement!
ij Mr. Spr&guo: I think store than fifty per cent of tho

roeorvoo of Sow Xngland citiee, if I may cite Lynn as an
example— are oarrled in Albany, shereae nona of eur
roaorvos should bo carried there. They do not belong
Tho Secretary of tho Treasury: Roughly upcoming,
you toll us what it amounts to in dollars and contsT
Mr. Spragua: I cannot tell you but I will have a statement of that submitted in writing.
Secretary of the treasury* then it l« oubaitted it
be Bade Exhibit A to Mr* Spragua** testlneny*
Mr. Spraguet That along should sake all Hew England united

Henry B. Sprague*

!| for a regional bank in Boston. Aside from that la the
great Importance of the fact that the shoe Industry
&uat be a large borrower of money, and ita natural source
of borrowing is In Boston*

Its paper ie knotm In Boston v

Our relation with Boston are moat Intimate*


manufacturers have Offices In Boston*

The most of our

We are a part of

j! Boston* and Haw York does not know uc and does not wish to
i know us In the sense that Boston does*
At one o'clock ?.M.# the Committee took a recess until
! 3:30 o'clock P.M.



Secretary of Agriculture; Major Higgineon, you know
the problem that we are confronted with?
Ur.Higginson: I do.
The Secretary of Agriculture: Of dividing the country
icto not lest) than eight or more than twelve districts?
and loos-ting a Federal Feeerve Beak in each district. We
ehouidbe delighted to have any information you can give us,
especially about the eaetern section.
Mr. Higglneon: It would seem to ae that we had better
have a bank here, because there ie a great deal of buelneea*
and Kew York or any other place would not be likely to know
about our securities, our paper, how good a note ia; &n&
because there ie a great de&l of bueinee^ here which ought
to be oared,for here. And Inasmuch as thle law has been
aade, and the regional ban! ayetea adopted, which ie , as it
*?ere, en trial, it ccnu to ae it would be against the policy
of that theory to limit the number of banks. You have leeway
enough and *e may Juat as veil have twelve aa eight, a» 1
understand itj but at any rate that la the theory, that the


H. L. Higginson.

banks ehould be distributed and that eaoh region ehoula have
it» own ch&nce. For that reason alone it would sees to &&
quite a clear thing that wa should have & bank hare. In
Kevi York they cannot know what we want and cannot know the
quality of what we have to, offer, and if they get a lot of
notes, how do they know how good they are?

They v?lll know

the quality of the banks, probalty, and that ie all. And
it io a case of knowledge.
Tb« Secretary of Agriculture: What territory «ould you
include, Major, in the district, if a bank were located here?
Ur. Kigginaon: Veil, X «hould t&ka in most of New
England; a good part of Connecticut, I suppose, deal* more
with Hev Tork than we do, the veatern part of Connecticut
and perhaps the western part ef Kaasachueette duals more
vlth Sew York, parh*-i& fro« the Connecticut Valley detm,
than they would deal with Boston} therefore, I would let them
go there. People will go where they want to in any case,
will they not, if they can?
The Secretary of Agricultural


Mr. Rigginson: And what is more, an the power of the
whole thing rout a in faebingten, I take it th< real rub
of the whole thing rests with the Reserve Board*




H« h.

oblige these bank* to accommodate the others, but people
Tvill go where they wont to go.

A msm ^111 keep hie account

In Uav* York, and therefore he will go there. But It ought to
ba ©aid that I know about a* little about it as any boa y in
thiu to?tH«
Tha Secretary of Agriculture:

You ora modest.

Mr* Hlgginaon: I do not know,tl»3 truth id ^orth *.hil©
sometinea, Mr* 8ecv«tary*
The Scaretary of Agriculture: Tou look rather at the
aggregate of reserve po*er eotabliGhed under this Act and
the coordination of the** agencies through the central bosri,
do you!
Mr. Hlggi&een; I do*

I regard the central board uu the

v»hol« thing*
The Secretary of Agriculture: From that view you do not
rv%&t& the argument that there ahould be an overshadowing
bank In Hew York of great importance•
Mr. Hi^ineon; I u

i Democrat, ana I believe in making

thing* reasonably equal•

Tou cannot prevent the pouer that

one aian or one »«t of men $ay hava # because oi their industry
and ability and power to puoh# you cannot change that»


you do* you will hava to change the tmiveree,, and that 1$



H. L. Higgineon

not an easy thing to do, even for the Deoocr&tic Party.
The Eeoretary of the Tre&8|uryj

That is the first time I

have heard any limitation of its powers suggested.
The Secretary of Agriculture: Tha argument has been
advanced, Major Hisginaon; that a bank with approximately
45 or SO per cent would be essential to camasend the reepect
of Europe and to accomplish certain control over discount
ratee ana foreign, exchangee and give the requisites command ••
of banking powers, to furnish relief here and there, to
Boston, fcr instance.
Mr. Higginson: Veil, Mr. Secretary, I believe absolutely
in a central bank and branches, and I believe you have a
oentral bank and branches; you call it something else. I
know the view with regard to the whole bill. I kno% how
the President thought about it; he was kind enough- to tell
me before the inauguration what he meant to do, $xu\ that l&
the way tbeyvant to approach it. But you cannot ch&»ge the
real nature of thine* • A» regards the influence with
Europe, I rather think character does it & great deal aore
than aeans, and any branch. It they know they are held
together, if the committee at Washington it Khat you should
make it, they will get all they need*


B. L. Hlgglnaoc.

The Secretary of Agriculture: They %ill look to that
rather than to any one of the eight or twelve regional
Hr. Hlgslneon: They will, if yeu get firet rato ©en, and
I have no doubt you will.
The Secretary of Agriculture: Your chief grouncf for
thinking there ought to be a bank here is that you would
have elx men eelected by the banks In this community who
would kno« the eituatlon.
Mr. Higglnson: I should think so. Usually when we want
to know a thing ws go to the men »ho do know it instead of
asking a man who doee not knot; It, and It Is on account of
that, and that theory which you have set forth, that you
are going tat it in a certain way, and let us try it out
and aee, I dare eay you are right and It would be a very
bold man who would say you ara wrong. Everybody I know la
pleased with the lot aa it It. Lot us try it. If you are
wrong, you «ill learn it. There are things called newspapers which will be after you, and If the citizena cannot
get what they want, I fancy they vlll epeak to you about it.
There is one thing I should like to ask the Secretary
or the Cabinet* and that is about whether directors ar« to



H. L. Riggineon

quit their bonks or not.

I deal *ith &y bank all the time,

and I am a director then*, and I do not think I get anything
more out of them than any other follow does;

but If «e are

to quit or go to ^ail, I prefer tha former* (Laughter) Wo
©hould like a riding upon that very much indeed, and *h*n
you ara ready to give it I hop© your will have the kind&da*
to do ecu
The Secretary of the Treasury: We will do almost anything
to keep you out of jail* Major.
The Secretary of Agriculture:

We h&vo aaked that that

question be preeented formally, uo that v?& aight have it
fully coftoiclered, &n& it will be pr**e&tod»
itr. Hisainson: I have no doubt you v,ill do it a* ©eoa
a^ you can, and I hope both of you &re impressed with the
fact that tie wish to be good, und *e will try our beet*
The Secretary of Agrloulture: Thunk you, Major*
The Secretary of the Treasury: &»y I ask juet one

You referred to the fact that *eatorn Haesachu*#t*

and Connecticut perhaps might be included in the He* York
district, upon the theory that they had more relations
nith Have York perhap* than tilth Boeton*


there ie baaed largely upon the au^ttion of



H. L

io it not?
Mr* Higgirson: Yea. Well, Mr* Secretary—
The Secretary of the Treasury: I ma&n exchange between
the bwike of that emotion and Hew York or Boston, ae the
may be*
* Hig&lnaon: Yea, cf the man who go to Hew York*


ereat many of thoee men In that part of Connecticut *ould
rather go to Kavi York than here*

Hev> York ie E wickeder

place than Boot on, you kr*o%# znd therefore mcra ugraeable*
The Secretary of the Treasury: I had not heard that
You eeo# Major, we continue to get information as
go along*
Mr* Higginoon;

Well, I am very gl^d.

I <**<* not »uppo*e I

could teach a How Yorker anything* and I remember, Mr*
MeAdoo had been there some tine*
The Secretary of the Treasury:

You eee, X am not a native

product, 00 I am i»ttll able to learn*
Mr. Hlgginaon: I «&a born there and caae here, beoauee
it BO happened, and you were not born there end Kent to
York, and we are on the ease footing*

Secretary of the Treasury:

graather authority than I

Well, you can speak

K# L. Kigglnson

Hr. Higginson*


&y o*m belief is that you cannot

do wh&t they da not want to «io* Kv&n the Democratic
party cannot do that.
Xhe tSeoret&ry of the Treasury!

X do not know* some of

thob© banks say we are compelling them to ^o what they do
not want to do with this alleged power of compulsion.
Mr* Hlgglnaoni

one of the learned men in the bu&inexm

said to me the other day, "Why ahould we go into thia plan
until we know *hat that cosualttee la in Washing ton* • X
there you hare to trutt to the lord and the gentlemen who
hare it In their control, and, X do not believe there are
gentlemen who $111 manage it better than you*

At any rate*

there is tho important point, if you get first rate men.
First rate men do not want t» go on tb&t Boardr

You do not

pay * decent priee for an able man, but that is not your

Congress is wiser than moot of us, and they know

about vhat a fellow ought to hare.
The Secretary of Agriculture*

There are a great many men

willing to render public service.
She Secretary of the treasury! Regardless of compensation.
-r. Eigginsons
worth haying.

I lenow, but sometimes their service is not



0? SOBER! W.
Kr. Taft:

I am President of the Merchants Kfctlon&l Bank

of Providence, the largest national bank In the state, X
came doisn here today to favor Boston aa a reserve city for
Hew England, or such part of Hew England as would seemtoeat.
Uy Dank accepted the Act on the 23th of December and on last
Monday presented this resolution.
The Secretary of Agriculture:

will you read the

Ur. XaftS


That the President and Cashier be, and

hereby are, inatruoted to advocate Boston aa a Federal Reserve
The Secretary of the Ireaauryj

Bo you undertake to speak

for the banks of Providence, or only your own bank?
Ur. Saftt

I speak not only for my own bank, but there

are eight national banks there, and f i r e of them hare

yerbally to me that they appro Ye of Boston,

of them i s in favor of Hew York and the others are nen~

There are two state banks tharo, Mr. MeAdoo*

that Z think are favor able to Boston.

They have said the

same thing, and three trust companies in the Clearing


Robert V. Taft

[ *hioh hare not, as far ael knot*, etatedtheir preference.

She Secretary of the Treasury:

Is the bulk of your

r exchange *ith Boston or *ith Saw York?


Hr. Taft:

I thlxUc the bulk would be with Hew York.


The Secretary of the Treasury:

You think the bulJc would

;| be with Hew York?

UT, Taft:




She dooretary of Agrioulturet
Hr. Taft:

That I s at present?

At present, yea.

The jJeoretary of the Treasury:

i s that due to normal

causes, or i s there any artificial stimulation anywhere
that occasions that?
Mr. Taft:

Business no doubt, tends toward Sew York rather

than Boston.
The Beoretary of the Treasury:

Vhy do you think therefore

i t would be better to be associated with Boston instead of
Ke* York?
Mr. Taft:

Partially for patriotic reasons.

I think Hew

England i s an important part of the country and should hare
a Beserte Bank.
She georetary of the Treasury:

Bo you think that the

business and commerce of Rhode island would be Just as well


Robert W* T&ft


oared for by incorporation into the Hew England district as i;*
it were in the Hew York district.
Kr« Taft:

I think so*

Of course, it ie pretty hard to

tell just how it would actually work out} hut I should think
The Secretary of the Treasury:

In view of the fact that

the hill proyidea that every federal Reserve Bank may accept
checks at par from other banks, and checks and drafts drawn
upon any of its depositors, you will have established an
entirely new Byatem of exchanges*
Itr. Taft: Yea,
The Secretary of the Treasury:

So that checks on the

Boston Reserve Bank, for instance, would pane current and
be juat as much in demand for any purpose*
Mr* Taft: Providence la a par point at the present time*
The Secretary of the Treasury:

So you would probably be,

under those conditions, juat ae well served at Hew York?
Mr* Taft: I think »o*

Would you like thia statement of

our bank?
The Secretary of Agriculture^ Yes, that may be filed aa an
(The statement presented by ITr, Taft ia as follows):


Robert W. 2&ft


Abstract of Condition of *he Merchants Rational Bank at
the close of business Jan. 3 , 19X4,

Loans and discounts


U. «J. Bonds,


Other bonds and securities


Banking House


Due frott Banks o*»her th^n fieserre 174,84a. 38
Checks on other Sanxs


Due from U.S.Treasurer
Cash in Vault
Due from Reserve



2 ,12&,964.69 $10,852,961.65


H ,000,000*00

Surplus ;


Undiyidsd Profits


National Bank Notes outstanding


Bonds Borrowed




7 ,824,064.06




tSccrotaiy of the Treasury*
}jrr* DaTiat

A* 3>AVId.
You are president of the —

I am Cashier of the irational Bank in Bethel f

! Vermont •
The decretory of Agriculture*

Could you t e l l us anythiqj

you hare in your mind in connection telth bhi& problem?
KJ% Davis:

This morning aomething *aa said about the

western part of Vermont going to Hew York. I thinlc there
( h a reason for that: The exchange question* But under the

I nev t i l l | that question i s eliiainated, there i s no

| and under the new conditions I *ee no reason why they

I go to Sew York,

I think th«y would drift back to

Ijfaher© they wore originally) because of quicker


quicker returns, and the reason for their going to Hew York
now especially i s the ewhango they get there, oheoks
collected free o? exchange, and of course that i s important.
The secretary of Agricultures

What part of Vermont do you

l i r e in?
Mr. 7>ayi&i

About the central part of the tfteue. our

Dank in particular has come to Boston in spite of the
exchangei because of quicker returns, and we think i t i s
better business.

|| pjb

B« A. Dayia.


Tho secretary of Agricultures

You believe there shou32


be a bank established here.
Mr. ^aviax


I think Vermont would deaire a bank tobe

established here*

It would naturally oome to Boston because

I! i t in nearer and affords quicker service.

That la the only

: point I had in mind, was the question of service.


the t3eorotary of Agricultural

Thore are *ome gentlemen

j; from out of town present* &nd I think

*e ought to gira thorn

!l an opportunity to 1?e hoard, beoauaa those «ho l i r e hare are


| of course at hone.


Kay I adc If those gentlemen from Boston j

!j would be willing to giro way to these gentlemen from gpring|'i

j! field, ?all Rirer and Holyoke, and others «tho are here from
out of town.





She Secretary ot the Treasury}

Mr. Rogere, Z presume you


j! knon our problem, the dirision #f the country into districts?

T&r, Rogers: Yea.
The Secretary of the Treasury}

Ye would be glad to haye

your views on this question.
Mr. Rogers*

I wiah to say that I am not a banker or

rersed in banking, nor am X an officer or director «r in any



John Jacob Rogers.




way connected with any national bank* jry point of view, I
suppose, i s that of the man on the street*


I represent the



district of *hich the City of Lowellf about 2fl miles to the j
of here, i s the largest place, and during this Christ-



! mas recess of Congress I hare feeen putting in moat of ay




time in Lowell and in the towns about Lowell in the district * |
{trying to get the sentiment of the people on as many differ-




r ent points as I could*

I have talked with a great many ment 1

j and X hare talked with men nho were supposed to kno* some*


thing about this feanki$ question and this federal Boeerre


Bank question, and *ith abgrsat many men «ha did not pro-


t^&m to iaxov anything about lt A


But as far as I hara been

able to see f there has hwn a vary striking unanimity of
feeling that Boston should he one of the federal Reserve


jj cantree; and I think that that i s ascrltoatole to the fact


!| that from the time we go *>o school and study geography, we



i; In this ceotIon of the country are accustomed to regard
ij England ms a unit by i t s e l f . Thai i s perhaps an historical

situation and perhaps a sentimental situation in part, but j
it has its real root in the results which flow from it, and
Z think it results 1 too» in the feeling that the people of
Hew England all share pretty much* that they vant to he
i! of St. Louis
Federal Reserve Bank





John Jacob Rogers.


regarded as separate and as eohesir* &s they pes&lbly can
Of course, v,e know that in iitm England, rightly or
wrongly, there i s a rery general suspicion of J?«w York and
itB tanking method*.

That may "be checked as the result of

the enaotiaent of t h i s l a * t but I t certainly i s a fact tobe
reckoned with at t h i s tiam#

And I think that i f we are to

have a moot efficient and fair t r i a l of t h i s l a * , as far
as Heir England alone i s concerned! i t would be aohiered by
causing Boston to be made one of the Federal Reserre centrae
Hoi I w not prepared to say that there ought not to fe*
a l i n e of demarcation at the southwest section of How
England which would flow into Hew York.

It i s a commuting

section there in part, and of course their business conn act i o n s would flow into Hew York City rather than into Boston*
But in a general way X should say that* the smallest cone
which should flow into srew York from Hew England, when these
Unas were made up* the acre desirable would be the result
That i s a l l I car a to say,
t h e opportunity to be heard*

I thank you rery Much for



0? HR. JOHH J.
&r. Martin:

I am President of the Exchange Trust Company,

and President of the Massachusetts Heal estate Exchange.
I might Bay this much, Mr. secretary, that I am here
as representative! not as president of the Exchange Trust
Company, out of the Massachusetts Real Bat ate Exchange.2hat
Is a body of 700 or 800 men who embrace the entire State of
Massachusetts, and I am seat here ftith a message from those
men at a collectire meeting, as a body, to say that in their
wi&dom and in their best opinion, Boston should be the
centre Reserve city for one of the banks.

we believe this,

and as there has been so much said by my predecessors, so
many words have been taken from mo, that i t i s rather hard
to get back without repeating, but we men here of Massachusetts know each other and we know our methods and our way
of dealing, and we are somewhat sceptical, that were we
the t a i l of Hew York, we would not get the service to which.
Sew England i s entitled.

As you know at this time, and

apparently for the last few years, H«* England has had an
awakening, a decided awakening,

she people are ooming store

into their own here, and we want to continue in that line.
I believe i t i s the policy of the government to encourage

Jobn J. Hartin

the different flections of the country, and we belieTe that
Hen England should be enc0unified toy giving to Its people the
aerrice of the tank, which we ask of you.
One matter here today has not been touched upon, and that
i s Maine.

I have been recently in staine and X might say

this for the bankers I hare met in H&tae, that they are in
hearty accord with haying Boston made the banking centre.
Por instance, speaking of the agricultural interests of
Maine, the great potato

crops we get from H*ine and the

great lumber industries, i f those were sent tg Hew York,
gentleman, through a branch bank, i t would be simply in a

We are a great growing community and we want to

hare direct administration of our banking affairs.
One point I sight make i s this!
stress they all run to one hole.
to aroid.
other bank.

You know in times of
That i s something we want

we do not want to be hitched or taoked on to any
We want to hare a bank of our own so that in

times of stress we may be able to deal with our own people.
Who i s the better Judge to deal with people than the people
in one* s own community?
Xa addition to these other officas, I «a also VioaPresident of a boiler concern, one of the largest concerns

John J» nartin.


iin whe country, here in Boston* W« ship our goods a l l orer
the United dtates. There has been rery little said tram the
anufacturers standpoint*
tiro situation.

He la s*he vital point, of the ta-

It la our manufacturing Industrie* which art

!j largely interested in this, and they must bo giyen support
at vhe critical moment and hare vheir smaller banks to rail
jdlsoount thair papert and that is where wo art going to
build up Vow BnglancU

Gentlemen, we are entitled to the bank here and we want

the bank here. We are a unit in the matter*

fhen you


bpeak of Vermont-, one of the principal ciuioo of Vermontt
{JBrattlefeoro* la only l l o oileft froa here* v«i are not spread
out ao much, we hare the rails spread out like an octopus*
and as the bankers have said here, we get la olose oonaaunication with each other in rtry short time*
The Secretary of the Zrea&uryt

There are a number of

people from out of town here and we should l i k e to hear from
ha&* In anybody hers from out of town who i s particularly
ous to get away* i f so 9 I wish they would make themselres known*
Hr» Starena:
peak to you*

X am from Hartford, and would be glad to



j; The Secretary of the Treasury:

ve would he glad to hear

from you and any owhere, i f they will hand their names to
!the Secretary*
' Mr. St eyerie: X am a delegate representing the Hartford
li Clearing House. I hare a letter from ovary member of the


i Hartford Clearing House addressed to yourself aa decretary*
jjl hare a letter from the Buainesszaent s A0soclation t and I

\ an hero not to oppose & regional book i s Boston but m<srely
j; to ©jqireso the preforanoe for the city to be In the dietriot
of Hew
I have not any Argument to present, but eiaply the fact
that the sentiment of Connect lout is almoat unanlaoua and
the sentiment of Hartford Is entirely unanimous in faior of
Now York. X wish it were otherwise, bacauee I liyod In
Boston ayself So years, and would be rery glad to hare it
otherwise. But the fact is that not only our exchange
is largely in Hew York, only 16 per cent being in Boston,
but the acquaintance of Hartford people and Connecticut
people Is largely in new York, the transactions are largely
with Few York, and Hew York inTestmeats are better known in
Hartford, and I think Hartford inTestnont a are better known


K. W. Bt,evens.

in 2Jew York.


The tfeorctary of the Treasury:


Under this h i l l where all j

exchanges are parr eel between the Reserve B&nJc and member
bonxBf would It make so much difference If Hartford wa» in
the Boston district or Mew York district?
Hr# Stevens:


I think that would hare a rery material

I effect 9 to roll ere the ultuatlon so far aa exchange 1B
I concerned. And I *ould like to nay right here, as an
j; expression of say o^xi feeling, that the Clearing House


featurqs and pro T! si one of the nm b i l l strike me as

, the Aoet important.

Sho f i r s t thing that "broke down in the


panic ot 19Q7 was our collection f a c i l i t i e s , and I think

II an improvement in that oonmotion i o fundamental.


And the

I; proriaiono of the n«w b i l l seem to me suoh that they oan
and they ought to provide worierfully improved f a c i l i t i e s
for the collootion of cheeks} and of course, ffew York
exchange would not be as important under those conditions
as now.
She Secretary of the Treasury!

You und or tit and, of course,

Itr. gterens, that the normal course of t ransftotlons between
the member banks i s not interrupted by t h i s system.


creation of federal Reserve banKs themselves i s a©rely an

H. V Stevens

additional faoll&ty.


Now in that aspect of the case, and

in view of the parr ing of exchanges here* and the elimination of the importance of Ifew York exchange© as i t Id now*
would i t in /our judgment maio any material difference to
Hartford whether she wan attaoted to the Boston d i s t r i c t or
ji the Hew Yortc d i s t r i c t , I mean as a practical commercial
i proposition?

£r» sJterena:

i t i s Tory hard to answer that question, s i r ,

:: The foot i s today i s that

i t i s very much against the

?| sentiment of Hartford and indeed of Connecticut*

That i s

the f a c t | and I do not see how I can veiy well go fcacat of


K. V. Stevens

Iha secretary of vho Treasury*

Bo$ but I moan disregarding

mere sentiment f m<i looking at the question from the

| economic standpoint f because the Committee • uat look at i t

from that —
. tit cyans:
The Secretary of the Treasury! ffot only as to ishat *ould
be beat for the d i s t r i c t , tut for the country as an entirety.

Looking at i t from that atandpoint, * o ulti Hartford he

injured i f i t was attached to the federal Beserre Ban& in

IT. rfterensr Hartford i s A vary largo buy or of coxamerci&l paper.

Wo haYe not eufficient borrowing doiaand in Hart-

ford for our money,
aeroial paper.

wo b&re to t>uy & largo amount of

Ihe commercial p«|>ar which we own would

better known in Sew York than In Boston.

Tbat would t»o

one inqportant thing to consider in the case of rediscounts,
although I do not think Hartford would be inry l i k e l y to hare
many rediscounts.

And yet under t h i s b i l l X do not see

how we eon t e l l what the future I s going to be.

I t hae good

p o s s i b i l i t i e s , and we may be Tory glad to avail ouroelTea of

I f we should hare occasion to do that our

paper would be better known in Hew York than in Boston.


H. W.

The decretory of the Ire&ouryj



w e l l , i f your paper i s good,

and i t i s rediscounted upon the endorsement of the member
banks anyway, assuming that the Boston resources were sufficient,

you would hare no trouble.

She question would,

arise as to whether the resuroes of Boston would, from
your point of vie*, afford you at a l l tines as adequate

as those of Hew York,

2tr, Stevens:

I see what you are driving at,


I have a very large sympathy with that view, and believe in

It seems a pity that Kew England should nut be s o l i d

i n support of a regional roaerrQ bank.
Xhe gecretary of the Treasury:

I have no opinion either

X am simply trying to develop the economic f a o t s here,

whioh of course are the determining factors.

I wanted to

get from you an expression i f possible as to whether or not
there would be any actual disadvantages to Hartford i f she
was connected with the Federal Reserve Bank in Bo»ton as
against new Yor&, that i s disregarding sentiment altogether.
ifr. stevens:

ihen Mr. Bllnn gave h i s figures t h i s morning,

showing that the capital of the Boston bank would be something l i k e $9,000,000, with deposits of $34,©00i000| I could
not help thinking for a moment that I would rather have
stock in that bank, with that proportion of deposits to


H. W. Stevens,


capital, than to have atoolc in come of the other banks,
do that from the standpoint of a stock investment, stock
in the Boston bank ought to sell pretty well, as compared
with the How York bank for instance, and with the principle
which i s back of the regional bank system* I do not know
that/would be any serious loss to Hartford, X want to be !
perfectly frank and fair in the natter —•
The doc rotary of the Treasury:
lir. gt evens:


I am simply bringing you the facts aa they

exist at the present time.
She secretary of the Treasury:

of course on the question

of r oeouroes you are aware that the actual capital and
deposits of these banks do not represent their ultimate resowoes at all?
Mr, Steven as

certainly not.

She secretary of the Treasuryt

suppose that the Reserve

Bank hasthe right to apply to the Federal Reserve Board for
issues of currency against i t s liquid assets, and then in
addition to that government deposits which are not considered
in the figures given here —
lfr. tStevens: I understand that.
She geeretary of the Treasury:

do that the resources

of any oa« of the units of this system will be as great as


E. V. at evens

uhoir ability to put up a gold reserve?
Hr. Stevens:


The secretary of the Treasury;

I mean the resources in

• oxcooc ot their deposite and capital will be as great ae
their ability to put up a gold reserve, and their liquid
; papar?
Mr. Stevens:


Of course we la Connecticut realise that

«e must go wiiere ve ore put, and i f wo are put In the Boot on
district, of course we will have no alternatlTe, and you may
be very sure that we will do the beat we can for ourselves, i
and for the district also*
She tfeorotory of the Xreasuryj
meet It in a patriotic
Mr. at evens!

X sun quite sure you will


But the feeling — and that i s what X jnust

report —
Zhe georetary of the Sreasurys
Ur. gtevens:

That «as the sentiment?

She sentiment i s strong in favor of the

Hew York district,

X have never thought that there was any

thought whatever that Connecticut or western Connecticut
would be put into the New York district,

neither have I ever

had any doubt in Jay own mind that there should lie and would b
a regional bank in Boston.


Silas 3 . Adams.


0? dlLJUT B. ADAJIo.
Kr, Adaasj

I represent the Portland Board of trade.

Tie decretary of Agriculture:

we shall be Tory glad to

j hare your rlews«
lfr* Adamsi

I am speaking now aaFresldmt of the Portland

Board of Trade.

X made a personal canvass of our financial

i n s t i t u t i o n s , and with two exception & X found them in fayor
of the selection of Boston as a city to hare a regional

one of the two exceptions said that rtieir board were

perfectly w i l l i n g to accept the docifelon of the Bo eton bankore, as whatever their decision was would of necessity
have to he accepted by Portland.
The other gentleman was cashier of one of our largest financ i a l Institutions*

H* said that ha would prefer that Boston!

be a branch of New York because of the larger resources *hich
would accrue from that arrangement*
?rcm a personal canvass of the merchants, the customers
of the Portland financial Instltutlonsi X find without vxepption a sentiment In faror of Boston being selected as a
regional bank*
I took pains to inquire the attitude of *ome gt the other
boards of trade and Chambers of Conmerc* throughout th«


a l i a s B. Adam©,

dtate, and with your permission I will read the following
•Lewisfan, 129.

Jan. 6, 1914.

I tJilae B. Adans, Free. Board of Trade,
Portland, vains •
Lei«ieton and Auburn banks unanimously faYor Boston for
regional bank,
Johfi L. Keade."
X haye also reoelred the following telegram from Augusta:
•Augusta, sjaine, Jan. bt 1914.
Silas B. Adams|
Portland, Main a.
Banics/all approTe regional bank in Boston*
0. X. Haoomber. •
I hare a l «

reoeired the following telegram fron Yater-

•Watorrille, Ke., January S» 1914,
a i l a s B, Adams,
presi. Board of Trade,
Portland, Traine.
Yaterrille banks andiraterrille Chamber of Commerce faror
Boston as regional

bank city.



Wat err i l l a Charoberof Commerce,
Frederick c. Thayer, President.
W. K. X. Abbott, secretary."
Also the following telegram from the secretary of the Btate
Board of Trade:
•Bangor, jralne, jan. 3 , 1914.
dilau B. Adams,
President Board of Trade,
Portland, value.
7. ¥• Adams Cashier of Merchant a ^rational Bank and Gey. A.
Corby oashicr

decond National in Boston today advocating

regional bank in Hew England president Chapin of Bangor d e a r *
ing EouBe informs me Bangor banks are unanimous i n favor of
Boston as regional bank olty.
2 w i l l state that Z saw Mr. Adams of the Merchants National
Bank of Bangor here in t h i s room t M s morning*
That i s a l l X can gire you in my o f f i c i a l capaoity.
As a manufacturer located down in Maine, quit© actively
interested i n f i v e different industries, I want to c a l l
your attention to the fact that smtlment cannot perhaps be
absolutely ignored because sentiment eometincs creates the


Silas B. Adams,


hardest kind of hard facts.
Speaking *ithmy assodatos, they seemed to think that i f
BoBton was not

selected as the location for a regional bank.

How England would in a way lose i t s prestige.


as we are, do&n in this remote corner of the country, where
«e must bring our raw material away up there and manufacture
i t , perhaps with sore skill than anywhere else in the countr,
. . out


a l i i disregard tbat ~ and then send i t back to tha

ouetom&r, with the impending advanoe in freight rates, we do
not relinquish any of vhe prestige that we Hew England

require in order to bold our plaoe in this

grand procession of industry.

Consequently, i f you are con-

vinced that the sentiment of Hew mgland i s in favor of
Boston, X know It will reoeiro the fullest consideration at
your hands.
The rfecretary ot


Vhat time does i t taice the

mall to pass from Bo a ton to your hornet
irr, Adaast

Three and one half hours.

The Secretary of Agriculture:
Ifr. Adams]

And from Hew York?

i t i s ten hour* at present,

under the

revised time tables which are t)iroatening, i t may take
us longer.


£ilas B, Adams,


The secretary of Agrioulture: Bo you think a board
selected by the banks In this section would know more about
conditions in ir&ino?
Mr. Aga&a:

I am Tory glad that* you raised that point*

Ve feel of course that Hew England men should pass on Hen
Sngland securities and on Naw England paper. Why should it
not be natural for the mm

who is best posted In each


unity to pass upon tho merits of the paper of each community? Ye <& naider that of vital importance, that Hew
Sngland should hare a representation on the board,
She Secretary of Agriculture: And Maine has no feeling
In faror of a division of the State?
Igr* Aiamss

Ho# X may say that rain? has for generations

regarded Boston as its big brother. X know that the
commercial organisations look to the Boston chamber of Coan
xaeroe for their inspirations and that the most harmonious
and cordial relations exist between the organisations in
Maine and the Boston chamber of Commerce and kindred organisation**

The state line is not a Tory sharp line of demar-

¥h* decretory of Agriculture: We are Tory much obliged
to you#

yranois E. De*ey


The secretary of the Treasuryj

jfr. Dewey, I belieYe you

are the president of the Uechmioa' national Bank of

irr. Detey!


The Voro ester Clearing House i s asked to

I send a representative to attend this meeting, and X appear
here a s i t s repres en tat ire*
our banking relations with Hew York hare always been
; entirely oatisfaotory, but I presume i t would hardly be
expected that the heart of the ooamonwealth would f a i l to
throb in unison with a heart

located at the hub of the

uniTerset and owing to our proximity to Boston, and to our
indirect relations with Boston banks and bankers,
men, we feel that i f the predominating sentiment —
as i t oertainly appears to me — i s in fayer of a reserre
bank in Boston, we should aoquitsoe in that Judgment, and
should willingly accept that oonoluslon.

That i s a l l X de-

sire to say.
The {Secretary of Agricultures

Yould i t be a dist«rbane« to

four normal conditions, Mr. aewty?
We* Dawey:

It would not.

v/a cannot feel that i t would b«

dioturbanoe of our normal conditions*


JranoiB H. Bewey

The secretary of the Treasuryj


i t would preserve them,

would i t not?
Ifr. Do way:

It *ould keep them rery auoh in harmony with

what they *ro at present.

We have of course now a reaerye

agent in Boston, one in Hew York and one in Philadelphia,
and our collections are made in aooordanoe with those dietricta and are made catisactorlly and well*

I cannot see

that there would fee any disturbance by the new arrangement.

The secretary of the Treasury!

You are the State

Treasurer of the State of Massachusetts?
Mr. tfansflold} I aa not yet, tout will be.

I am State

Treasurer elect, and X take office on the third Wednesday
in January under our Constitution.
I approach this subject frcm two standpoints.


being the Treasurer elect, I have also been for many years
attorney for the American pederation of Labor h«r^ and for
rnry many labor unions and f o r organised labor generally,
and X feel that X represent the people, the laboring people,
not only as being attorney, but also because, being Treasurer elect, X suppose the Treaeu&r elect represents a l l of the


*• *• Mansfield,


people in this commonwealth,
Some wee&s ago I received from the central yabor Union of
Worcester a letter complaining very bitterly that the
laboring nan there could not get money on mortgagee of their
hoaes If they wanted to raise any, and that letter was sent
by me to the banking commissioner at the state Houae in

it met with the obvious reply that there was no

law to compel than to lend money , and that they could refuse to lend It if they wanted to, and also that mon$r was
scarce| and so on*
I am not authorised to speak officially on this subject
on behalf of the laboring mmx$ but I am r&ry sure that X
know their attitude, and that if they did have a meeting
they probably would authorise me to come here and say a word
for them.
X feel that the establishment of a bank here would to a ee*4*
tain extent give them confidence that they

could get money

a little more easily and more readily than under tormw conditions.
As State Treasurer, if x am at all authorised to np%9& in
that capacity, i suppose X rnprBB^nt the accumulated moneys
of threo and one half million people here, and that X am


7. T* jyanefield,


really the only banker who represents the peoplcg asfar as
bankers go*
X moat

in BO far as I oan officially speak for them,

earnestly urge that a bank be located here; beoauae

it seems to me that all $rew England, and the capital of
Hew Xngland ought to have such a bank, X understand that
under the terms of the law state boa as and short term notes
In anticipation of taxes, can be invested in by these banks,
and if there is to be established here a bank of Hew England
people and with new England money, it seems to me that as
Treasurer of the Commonwealth i would much rather have that
bank here than In Hew York*
X am also aware that I cannot say anything Tory new but
if I hare been able to say old things from a new standpoint*
or a new angle, I feel I hare done some good*
The laboring people, organised labor especially» wants
more and freer money. I cannot speak for unorganised
labor, because they hay* no method of exp re using what they
do want*

They hare no machinery for the expression of their

wants. But X hare no doubt that the ordinary laboring man,
regardless of unionism, and regardless of organization, would
be in faror of a bank here in Boston,
the Secretary o f the treasury: ¥* thank you very much.



Joseph H. O*Heil,




axAisjcsanj o?


She seorotary of the Treasury: You were formerly a
member of Congress, and you are now the president of the
Federal Trust Company of Boston?
Kr» o'Neill


I come here today aa the represents

tire of who trust companies of tfassaehusetts* There are
41 trust companies In the organisation*

we held our annual

meeting the other day, and they passed a resolution stating
that In their opinion i t was tor the best interests of Hew
England to hare a regional bank in Boston.
Under our law a trust company cannot become a member hank
odd so they adapted recommendations to the Sayings Bank
Commissioner of jjassachusetts to hare that law changed BQ
that they could become members of the regional bank.
those Votes were passed unanimously*
She Beeretary of Agriculture*

Are any of these truafc com-

P&nles in the western part of the State?
Mr. 0'No Hi

There are in the western part of the gtat«

members of the association.
I do not know.

Vhether they sere there or not

There were about 22 or 23 representative

at the meeting.
The geerotary of Agriculture:

22 out of 45?

, _-

Josqph K. O*Neil



Mr. o'Heil:

out of 41. How that i s official,

personally X hare been in favor of any kind of legislation
in this drection for the last twenty years, and of course
I herald with delight the passage of this b i l l .
in i t ,

I believe

X believe i t i s a great thing for the country, and

X do not believe tbat any more strongly than x beliere that
we ought to hare a regional bank in Boston, and that under
the terras of this law and the meaning of i t s passage, we
ought to have one here.
Z will go further than that.

I not only would not

allow the western part of Connecticut or Massachusetts or
Vermont/go out of the Hew England district, but I would
try to do what the b i l l i s meant to do9 asl understand i t ,
to equalise things as much as possible, and X would put half
of Hew York In with tfew Snglaod, and X would put them in
with the regional bank in B"*ton (applause).
Bow we know what we can get from Sew York.

Shore has

not been a bit of sentiment against a regional bank in Bostoz
that hasnot been engineered from Hew York.
In the panic of 1907, notwithstanding the fact that wt
had millione of dollars in He* York, Hew York said "Well,
we are going to take cars of ourselves, and we will not give

f pjb

JoBtph H. O'Heil



you your money." o f course under this t i l l that could not

I got Mr. Blinn to give me Ills figures, and when I

saw that acoording to h i s figures Hew York would hare
$26,000,000 and Boston only $9,000,000, I would shave off a
few millions from Few York and tack then en to Boston,
and do what I believe as a good Democrat this law was meant
to do, to oqualiao as much As they possibly could the
banking interests of the country.

You tie them together

so that they are practically one system.
The secretary of the Treasury} There would you put the
dividing line in NO* York — at Broadway for instance?
yr. O'NeilJ

At Tall tftreet.

The secretary of the Treasury*

which half of Sew York

do yju want, the east or the west half?
Mr. O'Heilt

oh, the northern half.

The Secretary of the Treasury}

v&ich half do you think

ought to bo put with ]few England?
Mr. O'tfeilt

The northern half.

The secretary of the Treasury:

i f half of irew York were

attached to the Sew England district, would you have the
line north of Albany or south of Albany?
Mr. O'Heil:

South of Albany.


Joseph K« O*Keil

The secretary of the Treasury:

I would Just like you

to be a l i t t l e more specific, 80 we m^ fco able to make the
Ken York people understand »hat you want*
&r, o f Heil:

wr\ secretary, you and I both hare spoilt

quite a while in Washington* and wo know that the best
place to get s t a t i s t i c a l information i s down at the capital
of the country, wad I an entirely willing to leave that to
the commission in charge of i t f because X know they can get
the best possible information in the country#
The secretary of the Treasury:

ve used to think well

of those stati&tics 9 but whea

we started out on this


told us that those

and banker after banker

clearings did not indicate the normal course of thing a, and
that those s t a t i s t i c s were not an/ too reliable, we
f e l t that we ought to take to the country and see i f
we could not get some real truth.
]p% O»Heil:

This U U Is not a bankers b i l l .

The decretory of the


i t i s not intended to

Mr, O c e l l i

Ho, s i r , and therefore X would not take too

much stock in the bankerB.
my idea f i r s t o f f i c i a l l y .

YOU rasa ember that I stated
That was as a banker;

No*, X am

talking *s a oitieon of the country, and X do not see vhy


Joseph H. O'Keil


i t i e any harder than i t i a for you to put a regional
bank as you ought to In gt» Luul*f and one In Chicago*
and s p l i t

I l l i n o i a In two*

I do not soe why you cannot

do tho Baffle thing in n&w York*

You icnow X do not l i k e

t h i s domination of Hew York any more than you do,
The rfoorotary of the Treasury;

You have me at a dis-

advantage, as X am a judga on the bench at this minute, and
cannot reply to that.
10% o'Bell:

Perhaps that i s on* reason *hy I made the
i t i s not often I get you #o (laughter).

She secretary of Agriculture}

BO you think thic d i s t r i c t

ought to include a l l of 3te« England.
Mr. o'Heil:

A l l , a b s o l u t e , yea, and more boo.


forget that — more too.
The decretory of Agriovdvuro:

You would not extend i t intc

Canada, *ould you?
Mr. o*Heili

Thy, my dear *ir,

i am in faror Qt taking

Canada, and hare boon for t h i r t y years,

x,et me t e l l you

there I stand now.
Tat secretary of **•* ireasuryj
l y nant to grab

*e hope you * i l l not e«|ual-

Joseph H. 0 § Heil


Kr« O17roil:


Yes, one f l a g from the Arctic 10 the

Isthmus for me,

I m a radical,

The secretary of the Iroaery:

X own up.
The Committee

tit t h i s

isonant can only consider the unit octet ate ©•
Mr. O'Keil:


The rest i s aside.

The secretary of the Treasury:

^re are r^ry glad to hare

had your views, and *e thank you very much.

y r . Hichborn:

Jfr# chairman, I should h e s i t a t e rery much

at t h i s time of the day to take the time of t h i s honorable
Committee, and I would not do I t but f o r the fact that I
have Done distance to go, and the further fact that I represent today

24 separate ba&k* In the a t a t e of Maine who have

aaited me to come haro and exprese t h e i r vie*a in favor of
t h i s bank In Boct o n #

X should be remiss in wy duty there-*

fore provided X did not take your time for a fe«r momenta.
1 adtoit that t h i s duty w i l l be speedily performed, Tout X
get comfort in the thought that t;hl& board la BO imbued
with r i ght ecu ones a, no broad In i t s views and so l i m i t l e s s
In capacity! I b e l i e v e , as human men go* that you need
not the a s s i s t a n c e of sty lame and halting tongue to guide

C. F. Eichborn

you aright*
The reso-rcea that would be available to a banJc In thia
good c i t y of Bo Eton have already lie en given to you, and
i t would be cumulative for ma today to talk further upon
that line*

The records also abundantly disclose i t .

But I *iah to eay therefore they will be in a very general/
way and very brief.
l e in New England are a homogenous people*

Th<* blood of th<

Korth i s aabuclated with the blood of the ijouth.

she Inter-

e s t s , of the Saat are intern ingle d %ith tho tos of the West.
Xha monoy in tha c i t i e s today la largely the &onoy of the

Xho cuccotisful bueineus man of Uie c i t y t^day

i s who barefoot

farmer boy of the country of yesterday.

A bank located in t h i s City of Boston, made up of men
in H&W England, must of n&c#*&ityt have a more v i t a l Jcnowledg
of and a more v i t a l in t ere at in the affaire of New England
than could possibly be obtained in any other «ay*

In e o i l ,

in climate| in agriculture t In muroantilo, mechanical and
maritime pursuitB» we are aub&tantlally ona#

Our dt^anca

are p r a c t i c a l l y the came, and they are practically considered
ata^la, what you might c a l l a l l the year round bu$lne$J!% Ve
have no great crop movements, no foreign c a l l s , no great


0. ?• Hichborn

seasonal demands,


go I con aider It to be practically i*»

pots&ble that any section of Hew asgland could at any tim©
make ouch a deanand upon a regional bank in ihia c i t y as to
variously embarrass i t or *rm inconrenience i t in meeting
the demands of the rest of the district*
The Becret&ry of the Treasury!


you framed in your own

jnind a definite idea as to how much o f the 17e* England di&»
J>rict fihoulci be included in thia region 9 i f *e establish a
bank here?
Mr. Eichborn:

I * i l l come to that in a moment $ include i t

in what I mad going to aay, in %h&t X think in the patriotic
part o f it*
I would not be a bib surprised, ur. chairman, i f in a
short time| you found t h i s regional bank in Boston loaning
to other &eetlon&i inetead uf being cimbarraoead by i t a o*n
Uo% I am coming to the patriotic aide of i t just for a

I have rieard' i t aald in t h i s good c i t y of Boston

that tie ought co look at the thing in a broad nayf and that
*e ought to s t i f l e our pride in the matter of t h i s regional

Why, ltr« Chairman* I l i k e that broad nay* but I use

i t in quite a different senae*


Charles ?# Hichborx*


0o to the banka of Hew England and look at iheir

s e c u r i t i e s , and what are they?

They are the bonds and

atoc&a, the bondo ©specially, of the c i t i e s and of the toons
and of the counties and of the states and of the railroads
and of the industrial businesses of the great growing wast.
Ah, Hew England money has been considered in a broad nay*
d t i f l o your pride, do they *u*,yf l!r# Secretary, s t i f l e Stew
England pride?

Or, in the **orda of our good old B&ve

Barker, strike out the name of BuiUer Hill and call i t
Buncombe K i l l .
Looking at the thing in the broad *ay, as they state
to you, Mr. decretory, as I look over the development of this
country I r e a l i z e that >je* England may well toy, ••All of
which X &&H| and a very large part of which I was% Her
voice i s s t i l l potent in the councils of the nation, and
the na&tea of her honored dead are among thoee moat conspicuous, among tho&e who hare made thia country great and
t h i s nation famous*
Never, irr. Secretary.

Wipe out tha pride of NGW 350gland?
Let Hew England s t i l l he Sew England,

one in accomplishment a, one In aims, on& one In purposes*
and do not undortsute at thia 0tage 0t the game, in thi* great
government that tfe* England ho3 done so much for. In eatab


Charles?. Hichborn*


lishing one of these great banks in this great new
do not make the mistake of attempting nototo sunder the
civic and the historic and the mercantile t i e s that have
bound us long together and made us strong and made us

I thank you for your time (Applause)*

Ihe gecrutary of the Trcaoury:

xr# atreclcer, you may

state your name and busineoa*
VT. dtrocker:

Chorloa B« rftrecker, publisher of the Boston

financial ye*a.
She secretary of the Treasuryt

YOU know that «e are

wrestling for the moment ulth the problem of dividing the
country into not lesa than eight nor more than twelve
districts and of locating * federal Reserve Bank in each


I emphatically believe that He* England

ehould be represented and that a regional bank should be
placed her© In Boston*

X believe that as the Committee i&

charged *ith the duty of choosing such regional bank*. It ie
better tor the region or section in which they are chosen tc
have i t 8 representation from the mmx who know the bueinesa

Charles £» atrecker.


and the commercial world In ihaa* sections, and who are in
sympathy with these people, the manufacturer a, banker a and
merchant a,
The decretory of the Treasury:

You think He* Bagland1*

Inter eat & would be best served by hating a regional bank in
Bo eton?
UTm Strocken


i want to corroborate what

ay good friend Joe O9Keil said, thai X think we will get
better service and I know TWO will get better service i f ire
have a regional bonk here in Boston than If we are passed up
and tackodon to the position of being the t a i l to Hew York1 a
The dec rotary of Agriculture}

Would you Include the whole

of Hew England?
Mr. 81rocker:


I would not l e t sentiment of

any c i t y In New England debar It from c&ming into the Hew
England regional bank,

z am froa ifiaaouri by marriage, Mr,

rfecretary, and they have got to ahow me.

i f they cannot be

served aa well here in Bo&tont then they Should not come
The Secretary of Agriculture:

ve hava Juat had a strong

argument in favor of respecting sentiments


Charles B. dtreckor

UT« tit reciter:


Hontiment la all right «

The Secretary of Agriculture:

HOW are we going to do both,

because gome gentlemen arerery strongly of the opinion
from sentimental aa well as other reasons, that the western
part of Connecticut should go to Be* Yorjc# Would you
violate that sentiment and disregard any commercial conoideratlono In reaching the concluaion, or would you respect
economic conditions?
Kr. atrecker:
would only l e t

I would respect economic conditions,


sentiment play It a part BO far as I can

without perhaps making too s&all a bank in one section and
too large a bank In another section*
The gocretary of Agriculture;

You think they could be as

*ell served here, and in order to establish the balance you
would lean to the inclusion of the whole of the eeotionf
Kr. fltreoker: Y«B, I think the Tory intent of the la*,
"regional tanks* would cor or that, and Hew England certainly
means all the states in Hew England,

i agree Kith Joe

O'Hell, that i f you are going to give up a l i t t l e piece of
Connecticut, perhaps we might have a l i t t l e piece of new

I should make one region out of sew England, and

there i s no reason to say mind but what a regional bank in



I Boston would serve faithfully and truly all of New England
Statement of F, W. Estabrook
The Secretary of Agriculture: Who do you represent, Mr,
Ur. Estabrook: I represent a country bank of New Hampshire
r was represented this morning by Mr. Heard , who is Chairman
of the State Banking Committee, and I will not take up any of
your time except to endorse heartily everything he has aaid.
I should dislike very much indeed to be obliged to do
business as a manufacturer or banker with any other city
than Boston,

I am not acquainted with New York.

The Boston

j banks always use us well, and I think it would be a calamity
for New Hampshire to be obliged to do business in New York.
As it is new we keep our reserves in New York and Albhny,
and I think the greater part in Albany, on account of these
collections, but certainly it would be no improvement.


sentiments of Mr. Sprague are endorsed in that respect.
The Secretary of the Treasury:

Would you keep your

reserves in Albany, for instance, except for the inducement
held out there.
Mr. Estabrook;

Simply to avoid collection charges.

F. V. Xatahrook.

The secretary of the Treasury!
Mr. Sstabrook:


That i s the only reason?

That i s tho only reason,

Th« secretary of Agriculture:

No ooaxxerelal reason?

Mr, SatabrooJes Ho,
The Saoretary of the Treasury:

So i t id an artificial

condition to that extent?
Mr, Istabrookt


The Secretary of the Treasury*

And underlie b i l l i with

tho par ring of a l l exchanged, you would find It more to your
interest to deal with a hank In Boston* would you not?
Mr. Xstabrooks


Tho Secretary of Agriculture:

You think that you oould

t>B nuoh hotter aerred with a Beaerre Bank with a local hoard
than a brunch with a foreign hoard?
Mr. Zataferook:

X certainly do.

They know us and How York

knows but l i t t l e about «•• and they know our paper hotter
Mr, Aiken: Oentleaow, I am here as Pre aidant of the
Voroeater National Bank and am here at the request of Mr.
Blinn, President of the Maaaachuaetta Bankers Assooiatlon.

X cannot add anything to what haa been said in favor of

A, I. Alken.


Boston as the loo at ion for a Federal Reserve Bank* beyond a
confintatlon of i t t and X would like to strengthen i t as far |
as I eon In that respeot,


Ye are a l l anxious to cooperate and to carry out the
spirit of this lav as veil as i t s letter, and wo beliere
that we hare more hers in the whole of Sew England* including
Connecticut, a geographical unit* the natural trend of the
trade of which i s towards Boston.

Ml Massachusetts "bankera,

so far as I knowt are anxious that that "bank should be
established here.

There are two of our great industries*

the paper of the nanufaoturers engaged in which we "buy, which
are cotton spinning and the shoe Industry* and those are
"both r«ry much "bettor known in Boston than they are la Sew

And as a country "banker I think X should feel that

the dlreotors of a federal Beserre Bank 1A Boston would hare i
much "better kaowledge of that paper than such a Board in
Bev Tork would hare.

X should present »y paper of that sort

to then for re«dlfleount with auoh greater confidence than I
should i f I hdd to take i t orer to Hew Tork.
I think there i s another thing that i s worthy of eon*
sideratlon, and that i s the establishment of the collection
system whioh.exists here la Hew Xngland,

Xt seems to we

A, L. Alien.


in studying the lav that one of the most perplexing things
1 a going to fee the working out of the handling of eontry

Ye have an admirable system which has been

worked out after years of experiment with i t , eoTering
practically the whole of the HewBngland states and the
Hew England oitios» find therefore we are a complete group
oorered now by that system.

The organisation i s intact and

the business of those banks all naturally converges to this
centre, and I believe we would hare a large enough bank to
take ©art of all our needs* and I boilers the overwhelming
sentiment of the How Inglmd bankers Is that they would
prefer to do their business here, and they could eertalnly
do i t more axpeditiously here and perhaps with more consider}*
ation from the Federal Bescrre Bank than i f they were attached
to Hew York.
The secretary of the Treasury} May I ask you to what
•xtent you keep your reserves in Albany?
Hr. Aiken: We hare no Albany account. Ye keep a large
account in Philadelphia for exactly the sans reasons as
The Secretary of the Treasury:

That Is purely abnoratal.

Is i t not?
Mr. Aiken: Absolutely.

It i s to ny mind a bad method

A. L# Aikea.


of collecting our aeoounts*
The secretary of the Treasury: fhe whole system ia that
respect la Toad,
Mr. Aiken: Very.
The Secretary of tho Treasury:

And of oourse» the pm*

Tisions of this b i l l art intended to correct that situation)
and restore normality l a th« collection of exchanges. You
talnk that would be an advantage > do you not?'
Mr, Aiken;

Very gvs&t indeed*

The g ecretary of the Treasury:

lir. HitchelU

We are such obliged to you.


I just want to say one brief word. I hare

tried to gather the sentiaont of ay distrl«t» which i s
largely metropolitan talcing in Brooklino and Nowton and
oitifts where many of tho resident* do business in Boston* and
many of the business zasn doing business hers l i r e in those
efcties ia ay district.
I did believe at first that there was some sentiment
for a branch of a bank here* froa reading the newspapers*
of a Federal Bank in Hew York} but I find In talking with
business en and other people in ay district that the senti

ment ia praetieally unanimous for a federal Reserre Batik

John J. Mitchell.



! ho re In Boston.

I cm uoref solliar with tho shoe business

than any other line of business! because It i s the principal
business In ay city* and the man engaged In that business
are men who forty or fifty years ago alone started those
saall faotorlas and hart built up that business* and their
naaes ore kno*a In Boston to the bankers and *e feel as
though It would be BOB of a personal matter. They knt*
the history of these men and their standing) and we feel as
ifi i f we had a bank of our own i t would servo better and
more expedltlously and store satisfactorily, end we are auch
in favor of it 1 and I think the business men throughout the
district are not only delighted with the b i l l but would be
Tory much pleased to cooperate with the working of i t by
hying a bank here.
The secretary of Agriculture:

Bo you oara to express an

opinion as to whether a l l of Sew Inland should be included*
Mr, Mitchell:

X think a l l of Hew England should be

In talking with some business man I think there

i s & sentiment that eastern Sew York should also bo included
in this district.


The ^ecretary of Agriculture:

You may state your rnma

and business?
llr # Vlaux:

Frederic H, Viatuc, Secretary of the Beaton

Heal Estate 2xehange#
The secretary of Agriculture:

You know the problem that

la confront ing us?
Ur# Vlaux:


The secretary of Agriculture:
ttr# Vlaux;

Ihot do you represent?

I represent the Boston Heal Sat ate Exchange

through i t s executire eomltbee,

The Boston Heal Set ate

Sxohange I s one of the important "business organizations of
the c i t y , and i s composed of the real estate landlords*
brokerot operators and other people Interested l a Boston
real estate*

I t s membership probably represents half of the

assessed YaTae o f real estate of the c i t y t some f i r e or
s i x hundred m i l l i o n s of dollars #

jteion& i t s Tlce*presldentst

are Col, VUllsm A« Oastont now president* of the #ia*aut
Banki Joseph B# Bussell» i^io vas l a t e r president of the
Chaaber o f Comaeroet and also declined the appointment of
Collector o f the Port; Churleg Pranols Memo* 2nd» of
Harrard Ooll«g«} H«nry parkaunt rtio l a now the president of

Frederic H. Vlaux.


the largest saving institution in the city.* and so forth.

This i s the action of the Sate cut Ire Commit tee] we do not
have a director*a aeeting until Monday* but I have no doubt
the directors will approve the action of the committee. They
decided to represent to you gentlemen that Boston* next to
Sow York, i s the centre of the largest tributary population
within a 50 mile circlet second in ocean comraerce, probably
the second centre in financial importance, of high rank in
manufacturing industries* and the chief city of 3«» England*

: and i s entitled to and should hare a l l the aid and comfort
for i t s multiple activities in times of stress that the
new Banking Act nay eire* without dependence on another city
whioh may need all the possible resources of a regional bank
to meet i t s own requirements; and* accordingly* the undersigned urge that Boston should be aade the Hew Xngland site
of a Reserve Bank,

This i s signed by J. Sumner Draper,

President» Frederic H, Viaux* Secretary! Francis &• Bangs*
Jaaoa W. French and Xdward W. Orew, the Executive, Coaaittee
of the Boston Seal Eat ate Exchange,
X will state that although Sew Sogland Is rather a
small spot on the map* yet i t i s soae|*pUrtof this great

Z suppose you have had plenty of statistios

Frederic H. Viaux.

thrown at you.


We simply gathered up the nunber of raanu-

faoturing establishments In Mew England from our latest
statistics in 190V, and there are over 251000 which i s
9*4 per cent of the entire United states.

She capital was

15*6 -per cent; the value of the products of the saas 12,9
percent i the workers in the same* 16. d per cent of the
entire workers of the United states.

In 1911 the loans

and discounts of all the banks in Hew England were 12:53
per cent of the whole United States.

The flaring a deposits

in Hew Snglond were 27.51 9W cent and the total hank
resources were 12.41 per cent.

I suppose the present

s t a t i s t i c s are about the some.
Hew England i s first in cotton manufaoturoa, first in
woolen manufactures, firsts in shoe manufacture a, first in

Boston i s first in per capita valuation, first

in per oaplta banking power* second in import ** third in
bank clearings* forth in foreign coameroe.
If the prlnal serrioe of the regional banks I s help in
times of financial trouble* Boston* and Hew England are too
big to be a bob on the t a i l of Hew York's kite and starve
on the eruartjfl that f a l l from i t s


And Hew York* in

a elaa» by i t s e l f 1 i s too big to look out for others in

Jerome Jones,

time a of stress*


It a regional feank will than hare all i t

can do to loo): out for the vaat interests of the metropolis,

The secretary of the Treasury:

¥111 you kindly at ate your j

full na»e and occupation*
Ur0 Jo no 5:



Jerom Jonea* a Boston merchant* Itr« Secretary

and gentlemeni Z will only take a couple of minutes. What X J

say la practically cumulatiTe of wfct you hare heard l>efare#, |
Z hare "boon a merchant for forty years and hare a pride f a !

Sew England pride, a lUss&ohusetta pride, in Boston as a
great financial and comaereial oentro.
fair play«


X put i t in two word**

We think fair play would glre us a regional bank'

j; in Boston* and we resent unfair diacrlmlnation.

Howi Mr# Seeretaryi Z hare read the erltenoe glren in

I Hev York* and X hare heard soste of the erldenee here today,


As x read the eridenoe siren in How York It seemed to me


" that a l l the Hew York hankers claimed was the centre of the

!, watermelom and they were willing to slve VL& the shell.
j! XJnaniaously they asked for a regional hank there that will
control Sew Sngland* That would oe» as X thinks unfair

That Is a l l .


Hr. Brackettt

X oa Vioa-President and Cashier of the

People's national Bank of Brat t i e DO ro.
The secretary of the Troaaury:

Will you be good enough

to t e l l us what your Tiews are about the territory which
should be included i n a ragion of which would be serred
by a Federal Reserve Bank i n Bo at on?
Mr. Bracketti

Z should take the whole of Hew England.

I Tery much hope you w i l l «iye us & "btaUc her& i n Boston*
Boston cankers ore rery much store i n touoh with our afftdrs
than Hew York bankers are*

And again* the Sew York bank

would o« so yery large that we would not ore at« a ripple on
the surface.

Of our business at the present time 96 per cent


! of our checks come to us from Boston*

The secretary of the Zre&Buryi
lir. Brackett:


That i s at Brat tie oaro*

We are in the southeastern pert of

the state.
The Secretary of the Treasury!

Yea» I know* 3X> you keep

any part of your reserves in Albany?
Mr, Brackett:

Unfortunatelyt yes> air.

The secretary of the Treasury^

How about Philadelphia?

Wilbur H, Brackett #


Mr. Brackettj


The secretary of the Treasury:


We use Albany instead of *hiladelphia #
The reason would b« the

j same In either case?



Ur# BracketL :
The seoretary of the Treasury:

That i s a purely abnormal



; situation*
Mr, Bracket t:




Zn our state we used to think we were


mostly Republicans* and we like tho indirect tax rather than I

!: the direct.

The expense at Albany i s praotieally the same

as i f we kept i t in Boston*

The seoretary- of the Treasury;
Mr, Bracksttt


It is?

Idle aonoy oYsr there figures alxaost

identically with the exchung* charged ho re.


The secretary of Agricultures You think all Hew England
should be included in a district i f a bank were established
Mr, Brackett:

Yea» i should like to see i t ,

X oan see no

advantage in a large bank in Hew Tork» because the proportion

would be the some.

The secretary of the Treasury!

You would not get homo

jj rule i f that were the case*
Hrm Bracket tt

Stv York i s not ae«vt stated with our "banksf


Wilbur H. Brackett.

and they are not acquainted with than.


A number of our

banks here would take our paper i f we hare «a excess l i n e of
i t today} they hare an acquaintance with then* end with ua»
and we would not expect that in Mew York,
Mr. Bates:

I m President of the First national Bank of

Portsmouth i 3 . H. Mr, secretary* X came do am here today
to say some thing i n favor of Boston* i f there was an opportunity,

I may state that we hare gone into the Federal
and sent i n our approval the day after the "bill was

signed and passed the resolutions as soon as they were
received* and we want to so In to help make Hew England a
oottmereial oentre» as i t has always stood for* and which we
hop* to preserve.

Of oourse* the s t a t i s t i c a l figures you

have already had presented* and i t i s not neeeseary to
repeat thera$ but the collection item* of course* has been
touched on a great many times* and we have to keep an acooun
i n Philadelphia! which we would toe r^ry glad to give up i f
we eouldwork i t soae other way.

Although being a United

States depository! we hare not yet had any difficulty i n
transferring our funds into the United s t a t e s treasury

John K# Bates.


wheneyar wo had an excuse* SO that we do not hart to work It
around perhaps as aoae of the other honks havef because we
are peculiarly situated l a Sew Haapahiret being go close to
the Hary Yardt and furnisblns funds for them* and consequently get reimbursed again.

But vo prefer Lo do i t


Boston instead of Hew York.
There was one thing that X wished to mention*


the panic of 1907* *&ero Boston was of greater advantage t
us than Sew TorJc, we formerly used to hare those transfers*
that i s t *e would pay out in the neighborhood of §25>000 to
§301000 i n cash weekly to the Havy Ynrdi and we used to hare
i t roinrtmrsod to us throu£i our Bow York ao count. But during
the panlo of 1907 «• ohongod that to Boston and eonsa&uently
Boston had th« ttiTant«c» of the ioaedlat* transfer of
4301000 whleh «• could £»t A8 «t neodad i t i BO w« did not
f e e l the n e c e s s i t y of haring to ]ce«p an abiwraal amount of
oash on hand> ttoe&uao «• w r o treated ao v e i l in Boston* and
«t haT« kopt Vff that ouatoa «T«r since.

In fact* that i s

•here we should har* gone.
Xh« Sooretary of Afirioullura:

How do you happen to Jco«p

your account i n Biiladalphia instead of Albany?
Mr, Batesi Welli throuch my prodeoessor} we were por«onthe pmsidant of
a l l y acquainted v i t h / m e of the banka there ( and he paid ua
Federal Reserve Bank of St. Louis


John K. Sates.

a personal v i s i t about the ticae when t h i s matter came up,
and that i s why we went there.

The Secretary of the Treasuryt

The reasons would be the


same in either oaae?
Mr. Bates: Yes.

We also keep a Chicago account for the

same reason.
The secretary of the Treasury: To the extent that you do
that* i t does not reflect a nornal condition of exchange}
i t i s purely arbitrary* because of the collection facility
ttr. Bates;

That i s the situation.

The secretary of the Treasury:

But under this bill* with

the parring of exoharssc between the banks* you would find i t
far more normal certainly to do business with Boston* would
you not?
Jtr. Bates:

Yes* sir.

The secretary of the Treasury:

It would suit you better

on the whole?
Sir. Bates: Vnryrauohbetter* yes.

Kr, Tuaki

X first want to express to .ou the pleasure


Winfield Tuck,


X hare in g e a r i n g before two men associated with our
grand President and to speak in behalf of Hew England, not
on the l i n e which has been urged before* as X an not a
banker} X am simply a nagasine represent at ire of Mr. Bryan* s


Commoner and La Follette's aagasino.

Prom the (Mgperionee

I had for 25 years in selling goods through Sew England,
X m. going to speak as they would theaselves* for the

! merchant a of Hew England.

As you said to Mr. O'Hall* and


as X belleTe* in watching the progress of this bill* this


was intended to be something for the people and not wholly
tor the bankers} and X think the people from Newport, Vt.


an extreme point near the C an art i en Line* on Lake Meajphremagojg,
a l l the way down* *r*ry merchant you would consult* whether
a dry goods naerohant or a hardware nerchant or a lumber
dealer* would be In factor of a regional bank in Boston. X
feel quite confident they would* and X think they would consent to i t .
X would like to refer to one other matter which has not
been touched on. 7he Mayor told you of the great importance
of Boston* that X know you knew about before you erne here..
But consider the educational f a c i l i t i e s we present to you. |
Stop and think of Dartmouth* Williaas* Holy Cross* Bates*

Winfittld Tuck,


{ Colby, and Harvard, right in this seotion,


We ought to be represented in this b i l l by a regional

:, bank ia Boston,

X do not intend to take up your time and do not vent

• to repeat anything that has been said* but I think X apeak

j nearer than the Treasurer of Massachusetts speaks for the

!' caaraon people. The bankers are here to apeak for thoaaelTes.

Sight here I would say that X attended just to l i s t e n to the


j' bankers in their convention held here a. l i t t l e while ago,
i and X want to say to you, and X do not know whether he ia
:; in the room witfcin the sound of ay voice or not, that I foel
I sorry to think that the only banker in the convention *ho
II had a kind word to say about the b i l l waa Joe O*Heil»
i President of the Federal Trust Company of Boston,

Winfield Stick


To my mind the whole sentiment of that bankers1 convention
was against this b i l l ,
How that we have the b i l l I m Yery glad to Me these
gentlemen here, and all speaking In behalf of Boston for the
regional bank} and Z know that two such men would not
hacve been selected to be associated with V^odrov Wilson
and w i l l i a Jennings Bryan unless you were f«irainded enough
to civo i t to us ana I know you will.


(Applause and

I thank you.





Mr. aastont I will not bother you with any4 extended re*
j marks* beeausv eTerything that oould be said has been said

j! already.

I want to giro you a few l e t t e r s to show the

sentiment of some bonks that hare not been represented here.
There were soao other gentlemen here froa other parts of

Hew Sngland
ts« bains
who were
here Ttoielr
be heardi,
|i but
they hadand
to Xassaehuset
loaTe without


would hare bean substantially l i k e that whioh you hare
heard froa a l l parts of Sew Xngland.
The first letter that I will present i s froa the

Williaa A. Oaaton.


rale National Bank of Sprin^rale, Uaine. It i s as follows:
•Stpringrale* Uaine, January 7, 1914.
Williaa A. Gastom Presidoat9
national Shawaut Bank*
Boston, Massachusetts,
T>«ar s i r :
Our bank i s Tory strenuous in i t s desire that we hare e s tablished a rtaerr* bank in Boston.

The new currency b i l l

was passed to (jet control of affairs out of Wall street} but
i f the reaenre bank for our Hew Bngland district i s to go to
Sew York, Z f a i l to see how we hare mended natters so far as
our part of the country i s concerned. We hare rather juoped
froa the frying pan into the f i r e .
Hespeot fully,
Goo. w. Hanson.*


Here i s a long lett»r t putting the case very forcibly*


froa the People's satlonal Bank of Claromont, Se» Hampshire.


It iS M


Mr. williaa A, a as ton, President,

•Claremont, 1?. H.» January a* 1914.


Tho national Shassnut Sonic,



Boston* Haas.


William A, Qaaton«


. Bear

I have the pleasure to aoknofledge itooeipt of your

I l e t t e r of tho sixth instant, but regret to inform you that
} X shall be unable to attend the hoar ings in question to be



held the ninth and tenth instant in Boston*
I desiret ho waver $ to embrace this opportunity to register

jj ay earnest plea that one of the Federal Reserve Banks shall b


j; located in Boston.

I believe that the business interests

;! of lev England ure so closely identified and intimately related
•j to Boston as to aake this Jj&perativei and in any measure to
disrupt t h i s condition and relationship would cause serious
ineonrenience to the "business interests of Hew England* that
are naturally tributary to Boston* and that i t would proye
generally unsatisfactory and harmful to those interests. X
hope that your arguments will so irapress this Federal Or*
Sanitation coaraittee- that they will decide upon Boston as one
of the c i t i e s proper in which to locate a Federal Reserve;

such action* I a& sure t would meet with the hearty

endorsement and approval of not only the banking hut the
entire business interests throughout Hew Sngland,

Very respeotjfully yours*
Geo# A.. T«nneyv Cashier."

A. Oaaton

Her* Is another long letter froa the Hational Exchange
j: Bank of Prorldenee, Bhode x siand. That i s , I think,

|i tho oank next in si sa in Rhode Island to the hank froa

« which you hard t h i s raornixia.

As yon know, there are Tery few national hanks in Bhode

I oannot spcraV for the trust ooapaniaa ia Bhode I s -

land* hut generally speaking I holiere that substantially all
the national bosks in that state v i l l follow the lead of
the Exchange 3ank» whose letter I here ho re, aid the
Merchants Bank from which you heard this morning,


following i s the l e t t e r froa Mr, Dooley* of the Hational
Exchange Sank!
*ProTldenoe> H. I . , Jan. fit 1914,
Mr. Williaa A, Oaston» President
national 3havmut Bank,
Boston* Mass,
lly dear Mr. Oast on J
In reply to your Istter of January dth> i t


ae pleas-

ure to »ay that I faror a federal Bes«nr« Bank A Boston* It
fc. in the fitness of things that i t should \» located there,
and la keeping with the purposes of the Federal B eserre Act.

¥1111 aa A. Gaaton.


The newspapers indicate a disposition on the part of gone
bankers to favor a large regional bank at Hew York, with the
possibility of Boston beooaing a baa oh thereof.
A central bonk with branches was not ao cop table to Congress*
and failed to receive I t s approval.

So establish then In any

section of the country * bank with the quasi influence and
power of a Central Institution "Limited* would appear as
poaeibly violaiive of the spirit of the nev law. Some xaay *vejt
regard i t , however unjustly* as an effort to keep measurably
aliro oondltionst real or fancied* which by the passage of thi
Currency B i l l , i t was intended to do away with.
One of the requirements In the Reserve Act which govern
the organization Committee in their selection of cities for
reserve bank i s that a due regard to ths geographical, induottntal and finunoial condition i s to "be observed.


these conditions in Tl#v» Boston i s surely worthy of every
consider at ion, for i t i s naturally the 'banking and financial
center of practically a l l Hew Snglandt with U s rast and
varied Interests.
Bew saglandt a conpaot territory and saall compared to
other sections* i s •bounding l a industrial enterprise with
large invested capital, and i s aoneygtrongi and Boston has

!i •

I l l l i a a A, Qaoton.

been a sure source of supply in case of need in the pat
In tines of stress or panic, Boston has taken goad care
of i t s depositors tho needed aoney, whether banks or people,
squally as veil as other reserve cities, and poaaibly better
than some,
During 1907t the beakers and financiers in a large central
reserve olty seemed un stole to take oore of anybody but themselves* and i t would be unfair to them to say that even this
they did with my signal sueee&s« In their efforts **to save
the county and the situation 9 ' they gore a practical i l l u s tration of the sentiment of St. Paul that nothing i s quickened except i t first dies.

Boston during that period

deaoitstrated i t s ability to holp, and served Hew England
Under any oirouaat acxoeo the presence of a regional bank
cannot but add enormously to the strength i t already enjoys
With Boston*s enviable record as a banking and business
city and i t s geographical advantage! i t Is assured a favoruble
i&» and X trust the outcome of this hearing will be th
of a Federal £aserve Bonk there«
Boston has always been numbered otsong the larger planet a,
tiny should i t not take place saong the satellites?


Williaa A. Qaaton.


V«ry truly youra*
Miohaal 7,
Horn Is a letter from tho Pi rat sational Bank of Roulton.
lialne, expressing the aaias sentiaenta.

It i s aa folio vat

"Houlten* Maine* Jan. 7, 1914.
Hon. V, a. UoAdoo»
Chalnaan Bsaorro Board Ors^izatlon coaninoe,
Dear 3irt
For* aid 1A behalf of th« national Bauica of Aroostock
County» liaina» X wuld 1M»S to aU£s«iat| an& urgo aa atrongly
«a poBalible 1 tht great laportanoa of hmlng « Fadaral
Bank oraatad la Saw England to ba loo&ted at Boston, as wo
f l m l y bellaT* that in no othar way can th« bualneaa lntaraa
of thia reaata section of Sew England be stibserred,

I aa»

Tours moat rwopectfully1
l i l l i s a C. Donnell*
Pres# Arooatook County Bmkera Aa8»n, •
Hare i s a l e t t e r from wr# John L, BUlardi a Tery proaiaant a an of ceaneotiout.

Be a ay at
•Ueriden, Ct,, January 7, 10X4,

¥1111 aa A. Oaetan,



William A. Gaston.


Tho national Shawaut Bank,
Boston* Mass.
My dear Mr. Gaston:
I «a in receipt of yours of yesterday* n t h imitation
to attend the hearing to be siren in Boston by the Federal
Organisation Committee relative to the locating of a Federal
He serve Bank* at Boston*
X would T9ry much like to be present on one or both
days of the hearing bat regret» owing to preTious engagement
that I cannot be there, Personally* I would favor the establishing of a Reserve Bank at Boston o>dng to the population md wealth of the City and i t s surroundings as veil
aa the natural tendency of Hew England in general as to
looking to Boston as a basking oontor.
Tours very truly*
John 1. Billard."
The secretary of the Treasuryt
ttr. Gastom

Fro* who* i» that letter*

It la from John L» Billard of Moriden*

The secretary of the Treasury* He i s a business aaa
Mr, Oast on: Y«s» conneoted with banks* a man of large
influonoe and large wealth.



WUliau A. Oaaton.


Here i s a lot tor from the Herehant* national S*& of
Providoneei Bhode I aland:


"Prorldeneei B, X#> Jan. 7»

At a no at ins of the Board of Directors of the Merchants
national Bank, held Monday* January 5th, 1914* the follow*


Ing resolution was passed:


VOTEDt (That the President and Cashier be* and hereby ar«i
instructed to ad TOO ate Boston as a Federal Beserye City.
H. J.
Secretary of the Board of Directors.*


X hare also the folio wins l e t t e r fron Mr. Thomas C.
Thaohori tiho represents the Cape cod D i s t r i c t in the
House o f B« present at i r e s .

You are undoubtedly acquainted

with Mr, Thaher.

He l i r e * i n Yarmouth* liasaaahusetts,

His letter i s as foUovss

State street i Bo a to a, Mass.
January 8» 1914,

Bank Orgontaation Committee*
Z regret that ovlns to an engagenont i n Washington X shall
unable to J»e present at t h e hearing toniorrow,
X desire to state that as a foroaer merchant tiho was en*

i s

Villiua A. a*ston,

in 3s»aton in the wool business for over twonty-five
years* I advocate the location of a regional reserve bank In
Boston* for these roaaontt
Bo at on. la the large at veal market in the world er*oept
London, and i o the cantor of this country's boot end ah»«i
loatbar and hid« trade, «ad stands third in bonk oaearnea»#
Jl«w Sn^lond pro<luo«s the >»ulk of the cotton and wool t«xtll«is.
Tho B««r 2asl«tad pooplo a ore raoro proportion at eljr than othor
portions of our country, «s tlioir savings banks shew.
Capital i s abundant thero,


Corttiln H«w York bankers tfeo p«rhapa formerly advooated
©no central b«nk for tho untirs country race now Edvooata on*
F«d«rsl rossrv«i bank -x S«w Torki to proyidi for th> country |
as fAr vast as ?itti^ur«h» mtd for all Sov Xnglondi with a
branch -at Boston*

I boliart that this would be amistako.

Th« rso«nt «tt«ittpt by Jtn» York parties to control th« entire
U«w Xnglaad trmaportation system hm just ended nora or
l e s s disastrously for the people of Sow Xnsland.


l a s t l y t I belUTS as one «ho TO ted for the Currenay B i l l
tbdt the aen «bo fr«n«d this b i l l end ^»o rtsjeotcd the plan of
one central b«nk» did not h«re in mind the ereation of one
supreaoly strong beak et Sev York and »<5yo» puny benlcs else*

Vllliaa A« Oaiton.

where, fcut intended that there should fee <* least
strong regional reserve banks throw-out the oountry.


therefore believe that there should he one regional bank
at Boston to pro-ride for Mew England.
Very respectfully yours»
C. Thacher. •


I hare also a letter from Harriaati Broth* rs f Bo atom asking for the opportunity to be heard taao
X shall he very gl*d to answer say questions,
new arguments to present,

I hsere no

Xhey here been presented to you with

great force by a great many people.

Z think you must hare

listened to almost forty witnesses already todqy,

I simply j

want to c» on record here as saying that X think I ast one of J
the most urgent advocates and believe most strongly in the
idea that we ou^it to hare a regional bank h^r^ in Boston to
protect our own interests,

I do not like to say anything

against Hew York bankers* Lota of them are friends of aine,|
Almost a l l of then are friends of sine* and none of them ar<
enemies j hut l a oase of trouble Hew York will look after
i t s e l f and not after Hew England. We found that out in the
panio of 1907, She Boston banks had on deposit in Hew York1

I 0

Williaa A. Oaston.


: banksi subject to check* froa $25,000,000 to $30,000,000


I and when the necessity came to get i t 9 they could not get
| a cent of i t .

The Hew York hanks said *We hare got your*

money* and we are going to use i t } * and they did,


i f we ore attached to a Hew York regional hwki X ageusia
that that bank tilll he dominated and controlled hy the Hew
York Interests*

The auount of aoney i t oould command

depends on the amount of gold In i t s yaults*

When Hew

York wants money* Mains and Hew Hampshire and Hew England wilJL
want money» and will want more money then they w i l l hare
a right to proodbly* and i t i s easy to say who will get i t ,
Sew York or Hew Snglmd,

I think Sew York will get i t ,

because i f they hare got control of the issuing of money*
they are going to protect Dew York md not Hew Sngland. X do
not want to hare that thing occur which ocourred in 1907#
That i s one reason why we i n Massachusetts and Vew England
demand a regional Dank of our owni where we can put our
own resources and depend on them i n ease of trouble*
The secretary of the Treasury j

colonel* from your knowledge

of commercial needs* and the ordinary course of ousiness
transactions in Sew Xngland* do you attach any iayportanoe
to the suggestion which ^as To*en »ade %y a great many of the i
Sew York bankers that In any oase the western part of

[! •

Williaa A. Ooaton.


Connecticut and possibly the western part of Massachusetts*
and perhaps the wa stern part of Vermont( should be At ached
to the Sew York district* evsn if a Poderal Beserve Bank
were looated at Boston?
Mr. Oaatoaj

I do not,

X do not think i t i s worth consider?-

ing* to separate apart of Vermont or apart of Ma&saohugettJ
fron Sew Bnglaid.

The only question that arises in ny mind

at a l l i s whether Sew Hsvftn and Hartford hare not had for so
Ions a ti:ae relations with Sew York that that snail part
of Hew 2ngland o«x be better aarred by a Sew Tork b « k thai
by a Boston beak«

X beliere that i s the only topio tor

consideratlon> end I beliere that with the instaliAion of
the new kind of btmklngt whioh we will h ere under this Aatt
that part of Connecticut oan be served Just as well by
Boston banks as by ffew Tori.

It i s true that their bank*

Ing relations hare bonded to run more to Hew York than to
Boston* and by their bunking relations X n»m the bsnkinc
relations of the basks in western Connecticut* She banks in
eastern Connecticut hare always been served by Boston in
the aaini but X do believe we eujght lo hare all of Sew
Englandi for the reasons that have been stated over sod or«r

It aakas a bigger book relatively, and X think


William A. Geston,

Hew England 1 B * unit and should "be treated a* a unit,. and X
do sot think the sentiment of Hartford and Hew Haven there
is of very much importance in this ease. Z think the
natural selection of a territory Ilk* ITew Bngland comaendB
itself of the attention of everybody, and that you ought
not to take nine*tenths of Ve» Bngl&nd end place one*
tenth Of tfew England in another jurisdiction*
She Secretary of the Treasury; Does your bank do a large
foreign business?
Mr. daston: No, practically none at ally for two reasons*


VUli«m A. CM ton,


In the first place, wo do not believe thuxo i s a great
dead of money in i t , and in the second place we do not want
to interfere with certain private bonking interest* that are
y«ry dose to our institution*
the Secretary of the Treasury:

Do you attach any import-

Mice to the claim that i t i s necessary to hare this preponderant bank in Hew York in order that foreign bankers
may hare more respect for the power of the banking insti4u»
tions in this country, end that i s might therefore be better jrib|f
to take care of any situation that might doyelop.
Hr. Gaston: Ho, s i r , Z do not attach any importance to i t
at a l l .
She Secretary of the Treasuryr

Relatively speaking, the

foreign transactions are very small,, an compared with the
total value of the domestic transactions*
Mr. oaatons Very snail in comparison.
She Secretary of the Treasury:

Of course, they are

entitled to some consideration* but not to preferential
Hr. Gas torn tfew York will do just as much foreign business
If i t has a distriot that properly belongs to i t , as i f i t
bad Hew End and hitched on to i t .


Will ltd k. Gaaton,

The Secretary of Agriculture: It Is not going to interfere
With that,
Kr. Gbotom

It is not going to Interfere with that it all.

The Secretary of the Treasury: Take the ease of Hartford
end Hew Haven* In view of the fact that under the federal
Reserve Aot if they were attached to Boston it would be *
question only of their re-discountlng, end that the Boston
>ank in case of neoeesity would serve their ordinary transactions, th&t would not interfere with the ordinary courts
»f their daily buainess with their correspondent banks.
Xx* Gaetoni

Kot a bit.

The Secretary of the Sreasurji

Taking all that into con-

sideration, would you consider doing i t in -violation of the
ordinary business procedure*
Mr« ana ton:

Sot at a l l .

The Secretary of the Treasury} Would you consider it
in violation of the ordinary business procedure that new
exists if they were attached to the Federal Eeserve Bank
in Boaton, or to the one in Hew York?
Kr. Oaatoni

X do net think so in either ease* It is a

imaller natter, getting a o CUB toned to cone to Boston instead
f Sow York, and X think in times of banking trouble Hew


Villian A, Gas ton.

England has been able to take core of i t s e l f just as well
or better than Hew York.
Tho Secretary of tho Treasuryj Vould you go so far as to
eayr howevur, that that part of Connecticut which might
possibly be considered within the suburban son* of Yew York,
ought to be attached to the Hew Snglsnd territory?
Mr. G SB ton: Of course, X understand that under this Act
you are not necessarily bound by state lines*
The Secretary of tho Txeasuryx

Ho, ws ean disregard stats

lit, Qastonx But s t i l l there must be great convenience
In observing state lines es fsr as possible, and i t seems to
me that the inconvenience of western Connecticut Is so l i t t l
that i t will bs so l i t t l e disturbed by hitching them on to
tho regional bank hers in Boston, that i t had better be done
Xt i s only a matter of a l i t t l e inconvenienes and a l i t t l e

X do not think i t i s a matter of moment at all*

The Secretary of the Treasuryt

Governor Valsh, we s h a l l

be glad to hear your •lows on t h i s question,
Governor Yalshx

X am not hero as the representative of

[ **•

Governor David I. Walsh.


; any banking interest, but as the representative of ell of the
I Interests and all of the people of Maaeachueette, As euoh
I X think I voice the oentiuient of Kassachusetts -when X say

that there is a Tory strong unanimous sentiment in the
community for the establishment of a Reserve Bank here in
I Boston*


Begardless of my ovn opinion, the fact that Cofeonel
Gaston* a man of splendid standing in the community* one of
our leading financial men, and incidentally, fend i t i s no
hara, a good Democrat*, has seade the atateaent here which he
has nade9 would lead me to follow whatever racomaednates
he Bight choose to make along this Una.

But X want ta

say this to you, «nd X think i t i s & very strong argument
why Boston should t>e recognised i s this matter.

That i t

that Vassaehuaetts i s the only state in the Union that has
endorsed the policy of the national wtolnietrttioit on the
currency legislation) for my election l a s t Kovcsfee? was aft
endorsement of the policy of the national administration
upon the tariffs and also upon the currencyr for that b i l l
had then passed the House acd was before the Senatt} and i t


showed, that the attitude of the cosmumwealth la very friendly i

toward the adminiatrationt &ad toward the splendid construct* ;

lve work that the administration has been doing in the


Governor David X# V*lsh,


Interest of the people of the eotantry*
The Secretary of the Treasury*

Governor, I m vary so£ry

to have to interrupt you to say that while X do not want to
mar the glory of tfaasaohuBsets In that raapcct, you will
have to share it with Hew Jerseyr bec&use she did the same
Governor W&lahi

X am very glad to accept the fcsinndment

you suggest, tfr* VcAdoo. X know they did not have annual
elections in How Jersey, and when X made the statement X
did not recall that they had their election this ye*r»


course, we were ao interested in th& result in H&ssaehuaetti
that we did not think of any other state in the Union*
Tha Secretary of the Treasury; Tha issue waa made then,
and X Maura you X would not have made an exception In
favor of anything except Hew Jersey,
Governor Walsh: But aa Haw Jersey la not an applicant
for a bank* as X understand, thor ought to be ho question
tb&ut Boa ton being given tha bank that it deairea*
X do not know very much about the financial questions
Involved here, *nd X do not know very much about the detail^
of this Act* X do know ita purposes, and X know they wer«


lofty and in the interest of the people and not in the

interest of the bankers alone, and that the people of tha i



Governor David I , Walsh.

country approved of the purposes of this b i l l , • And I know
that the tanker* of Boston and Hew England showed thet we
ought to "be one of the cities to receive one of those "banks.
If wo Instead of a l i t t l e over 200 miles from Hew York,, were
500 or 1000 miles way, there would not he any question* I t
seems to me, "because of the showing of financial conditions
!, here In Hew England and In Boston.

It Beams to ma there.

can "be no argument against the establishment of & bank here,,
exoept that we are. so near to Sew York, and ought to use the
advantages of the Hew York 1»enks« Sow i f upon the statistics
we are entitled to be recognised, i t saeas to ae that ought
to bo a very powerful factor,
Z want to answer one question put by ifr. tfcAdoo to %r«
Qfcston when he suggested that western Massachusetts might
possibly be connected with Vsw York* X do not ears what
you do with western Connecticut, but the railroad have been
trying to divide us in two up here in Kaeeachueetta, and
you ought not to l e t the national Oovernnsnt try to do It
by cutting western Massachusetts from the financial
institutions of Boston.
She Secretary of the Treasury:

Z have not suggested that

i t be QUU off.
Governor Walsh; I know you have not*



Governor David X. Valsh.


The Secretary of this $r<t&aury: X said the question had
boon raised* and Z only wished to get the Haaeaohusetts
point of view.
Governor Yalsh; X. know you did.
Shit Secretary of Agriculture:

X wae going to ask i f you.

eared to eaqares* an opinion: as to Whether e l l of Sow England
should t>o inoludod in this district*
Governor Valeh; X en going to bo vary frank about that.
X really believe that the eitios in the vicinity of Hew York,
In Connecticut,, might well be exempted, although X appreciate
the wery strong argument in favor of keeping Sew England a»

But £ can aeet many reasons why i t would be * groat

toource of convenience for the people living at Bridgeport
and Vatarbury and Few Havon and other conneetiout oiti«s» to
be served by a 1few York bank.

X am not really prepared to

pass upon that,
She Secretary of Agrioulturej

So you think any sues

necessity arise* In Vestern tfas&behuBettsY
Governor TaXshs Kor ulr, X do not think there i s any euch

But 1 want to eay that X sitteerely nope the

administration will look kindly upon the til aim Kade for
Massachusetts and Boston*

Speaking for wyealf, X shall not

only consider th&t this Committee i s acting for sound and






Governor David I , Yaleh.

l o g i c a l and equitable rose one, in selecting isoaton, but thai
i t has Also shown another mark of i t s interest and appreciation of the people of New England and of Uaaeachuaetts.
Hr# Stevens:

Hr» Secretary, may Z addone word more?

The Secretary of the Treasury:
Mr, Stevens:


Z notice that the gentlemen who have

answered your questions concerning the d e s i r a b i l i t y of
Connecticut feeing included in t h i s regional d i s t r i c t think
that the sentiment In Hartford, Few Heron and so
forth should not count, but they are very p o s i t i v e that th
sentiment In Boston and Hew England should count.
that i s human enough,


Zt i s perfectly natural,, but Z Bimply

want to tmqphaiae the fact that the aentiraont i n Hartford,
Sew Karen and Bridgeport and those other plaees i s not raor

The natural channels of trade from Hartford ani

that portion of Connecticut flow to irew Toxic,, just a* n&tujr*
Ally *a the watter runs off from the h i l l s i d e into


Connecticut River end down into long Island Boundr i f you



The Saorstary of the Treasury:

V?. Qulncy,. of courae

you know what our pxt&lesi i s , the division of the country
into not l e s s than eight and not more than twelve d i s t r i c t .
¥ ? . Quiacy:

1 an f&niliar with that.

The Secretary of the treasury!

And the loeation of

one Reserve Beak i » each d i s t r i c t *

Ve shall he very glad

indeed to have you submit any xivm

you here on thut subject,

v i t h rel*tioft to the Heir Ztagl&nd problem f i r a t , «nd theft
erexy pert of the country to which you have given consider*

3Jr, Qalncy:

I think* Mr; 3ecre.te.rjy thfrt nothing needs

to be *dded to tl» argumants slrea^y proeented i n hehelf of
Hew £n«lfcnd.

In f a c t * 1 cannot, t e e any argument eh&tcver

against the claim of $ow 38n^Ltnd», oxoapt the plea which was
made i n Haw Xork* that i t would be de&ireble to etttafellsn one
bankef over»ha4owing e t e o , and that i n order to obtain *
d i s t r i c t which w i l l produce <* bank of th»t e l s e i t would be
desirable to inolude Hew England with Hew York*

I t seeas

to m$ that i s absolutely ths only arguaent Z haro been able
to find thai bears against the e l a i a of Sew


Josiah Ojoiney


I t seems to mo perfectly obvious that any division of tbt
country upon any principle of oquality, or with eta attempt
to get enywher* near an equal to*!** or a* nearly as possible
«n equal b«sis from the standpoint of bunking resources and
of business and of industry, must inevitably load to the
conclusion that whether there aro eight districts or twelve
districts established, Dew England should be treated as on*
of thoss d i s t r i c t s .
Z regard the question as to whether western Connecticut
should go with Hew England or with Kew York Is a minor
detail which wo ean readily laay* to the further inquiries
of this Organisation Conmittee.
X should l i k e to say * few words somewhat supplementing
what Congressman Phelan said this morning against this d a i »
whieh Z have suggestedt which, seems to me to be tho only one
that stands la the way of our claim,, namelyv that i t would
be desirable to estftbllsh a bask of rexy largo *i»« i n yew.
l a the f i r s t pl»ec» i t seems to me perfectly dear that
the factors of the foxsign offoct and influence of tho
number of banks was deliberately subordinated by Oongrss*
to what we may call domestic considerations* i t seems to me


Joslah qulney*


perfectly clear that i f the design of Congress had been to
establish a 'banking system which would exert the maactMunt of
influence orer the foreign trade of the United States, and
would ffire no the greatest possible financial control and
financial steading with reference to our foreign trads*
either one central bank would hams been established, or not
ij more than four banks would have been established! because i t
sees* to me th&t if" we consider merely that aspect of the
question, the arguments In th»t direction are overwhelming.
But. i t setae to me perfectly clear th&t congress decided
this question after the fullest consideration, in view more
of internal economic condition* then with intem&tion
trade as the chief object in viewy and Z agree entirely with
the view expressed by Congressman Phelan, that the argument
in favor of the proposition to divide the country in such *
way as to produce * bonk of preponderating, or
relative else as eomp*ro& with the other Federal B*serve
banks* would be contrary to the spirit of this legislation*
and contrary to the decision arrived at by Congress*
We had f i r s t ths qua at ion of the central bank thoroughly
thrashed out and decided in the aegstivo* We had next the
question of four districts or a larger number of districts

thoroughly thrashed out and decided, and then finally vs

Joslah Quincy


had the question whether districts should "be limited to
t eight as one propootion,

or Aether an unlimited number of

districts not lezm then eight should be allo^d upon the
other handr and Congress arrived at the compromise, which
so ona to me a vary reasonable onof embodied in this b i l l *
that there nhouXd "be not l e s s than uight nor mora than
twelve districts, leaving discretion to the Organisation
Coaamifctss r,nd to the Federal Reserve Board tfhen efipointed
to dcoido tn tx nuzabcr bettrecn eight t^nd t\i«lve4
And It sae&s tc me that this discussion gives your
CommitUe & very dasir&ULe factor of elasticity, i f X may
efcll It $&$ in arriving at your decision} because It seems
to me that i t Is at least difficult for you to absolutely
and finally define the limits of any one district without
coneid^iing the ttfiole problem from a national standpoint,
which involves the mapping out of every district, to include
every portion of the United States.
h great coal of emphasis haa "been placed hero today and
very properly so as this Coamlttse I s hearing our local
argument* If X aay call i t no* for a regional bank in Eew
ISoglandr ui>on the sectional aspect of this guttstlon* But
speaking for myself ~~ find X am sur* X ap**aic form any others


Josiah Quincy


here, — we recognise that this i s fir at of all a ntlonal
question*, and that this Committee must decide thtr question:
of the division of these districts upon national consideration*} primarily, and that those Should overweight e l l local
Therefore l o t ja* occupy * few Btosents ia soaie brief
ugSeotionB froia the national Btwi^point, or from the eteadpoint of the coiqplete asgpiag out of the country into
I t •eeaaa to mo do a Irakis not merely to avoid th« creation,
of ft district with Tory large capital for the purpo&o of
giving Hew York City & very largo bank, including «& advocated bofore thia ooanittce In the hcai-inge in Kow York,
porheps 40 per cent of the total banking capital of the
country, but i t teem© to aa advicobltf to move in the other
direction and to ende&vor to ley out % district which will
not give How York *ny unnececuary or undue prodenninwice in
respect to ths eiae of the capital of & Pederol Rea«rv«
Bank i s Wow York.
I thisk that policy i s desirable for several reasons.
I t seems to mo probably impossible to give tha Federal Reserve
Bank of tho Hew York district thu desirud prustlgo Bfer«ly by



making i t larger in capital or larger in ^business then the
largest of the hanks in Hew York City.

It aeeme to roe i t

i « approaching the problem from the wrong standpoint* in
view of the fact th&t i t i s a national &yet&mt to euggeat
that i t ia desirable to establish a bank: i*hieh will
flarlly \>Q larger and mar« important than my other
in trew York City#



Jo8lab Quincy.

I do not regard it In the least as Inconsistent with the
successful working of thia system, to have a Federal Reserve
Bank in New York City, which will not be as largo as the
largest of the banke in Hew York. The strength of thia
system must consist in the co-ordination of the banks, whether
eight or twelve in number, under the direction of the Federal
Reserve Board, rather than in the aize of any one bank* And
while, as we all know, it is not possible, it is not feasible,
at least, to so divide the territory of this country that
there will be even approximately equality of banking capital
and of business within the districts which your committee is
to decide, I submit that it is desirable, in defining those
districts, to endeavor to reduce the necessary inequalities
within as narrow limits as possible, instead of pursuing the
polioy of aggravating or exaggerating thoee inevitable in*
Now that brings me to this specific point. It seems tp
me the sound principle of procedure under this Act, the
policy which is most consistent with the ideas of the framera
of this legislation, with the ideas of Congress in passing
this legislation, would Involve the separation of Philadelphia from the Hew York district. X am only touching



Jo a lab Quincy.

upon this so far as it s&ems to me to be related now to the
principles which should govern this committee In dealing
with the whole problem from a national standpoint* in which,
to be sure* we are especially interested from a local standpoint, but which we b&ve to recognise lsf after all, a national problem*
How In order to bring the thought of my mind In a
concrete form before the committee* I have Interested myself
to prepare a little map and a brief memorandum to go with it#
showing how the oapltal and surplus would work out if we
should divide the country into ten districts. I believe
that this Committee should seriously consider* and I have no
doubt that it will seriously consider* availing itself of
the discretion which Congress has placed In It* and of
giving as much consideration to the question of going beyond
ight districts within the maximum limit of twelve* as t$>
the question of how the country oould best be divided into
8ight districts.
It seems to me that when the decision was arrived at against
tour districts and when the minimum number of districts was
fixed at eight* that a basis for this system was established
thich makes its success rest upon the power of the Federal
leserve Board to coordinate this series of banks in their


tj action so as to make It a truly national system, and so as
to enable the various banks to cooperate/any rate, for


the purpose of protecting the gold supply of the country*
And now that being the basis upon which this system reets,
It does not seam to me that It makes any serious difference
whether *e have eight banks or tea or possibly twelve banks;
because In either case* even with the minimum number of
eight banks* we oust depend upon the possibility of aotabllshlng a coordinated aystem under the very large power of
the Federal Reserve Board, exercised from Washington. With
such a system In mind, It seema to me, speaking roughly
and suggesting a tlvision of the country by states, without
going into the breaking of state lines, that there Is a
pretty strong argument In favor of ten districts rather than
Now my suggestion as to the ten districts would be
briefly this: The first district, starting from the northeastern part of the country, could consist of the Sew Englan
States, leaving the question of the inclusion of a entail
portion of Connecticut with Hew York as a detail. The seoon
district to consist of the State of lew York only, and of
tbe northern half of the State of New J*r*6f* The third



Joslah Quincy.

district to consist of Pennsylvania, Delaware and the southeifn
half of Sew Jersey.

The fourth district to consist of

Maryland, the District of Columbia, lest Virginia, Virginia
and Rorth Carolina, which is the same district suggested by
Mr. Blinn this morning.

The fifth district likewise the •»•<

:j as suggested by Mr. Blinn, a district composed of the
Southern States, Tennessee, South Carolina, Georgia, Florida,
Alabama, Mississippi and Louisiana.

The sixth district I

would make with the principle in view which I have suggested,
of trying to come somewhere near equalising the districts,
or at any rate avoiding any unnecessary preponderance anywhere) I would make it somewhat different from the one
suggested by Mr. Blinn, to include the States of Ohio,
Indiana, Michigan, the northern half of Illinois, Wisconsin,
Iowa, Minnesota, Sorth Dakota &a& South Dakota.

For the

seventh district, a St. Louis district, consisting of
Arkansas, Missouri, Kentucky, Sebraska, Kansas, Oklahoma and
Texas. An eighth distrlot, which could be called the
Denver district* consisting of Wyoming, Utah, Colorado,
Arizona and Bow Mexico.

A ninth district consisting of

California and Sevada only.

A tenth district consisting of

the four Northwestern states, Washington, Oregon, Montana


Joslab $uincy*

and Idaho.
Koir If those lines were followed, that would produce
roughly about these results*

In adding up the figures, I

have only added millions, to that the figure* are not quite
accuratef hut I will hand in to the coo&lttee tomorrow a
careful and accurate statement; but the mainraeulta are
what we are Interested in today*

In those districts, New

York, putting capital and surplus together, would hate a
total capital and surplus of $353,000,000 approximately, and
would therefore, of couree, stand at the head of the list
In point of banking resources and in si&e*
The Chicago district would come next with $312,000,000.
The Pennsylvania district, as I would call it, would come
next with 1306,000,000. And here I would call/special
attention to the fact that a district consisting of Pennsylvania, Delaware and the southern half of Hs* Jersey only
would be nearly as important as the Chicago district on the
lines suggested, and would approach in importance the New
York district•

And I submit that It would be an exceeding-

ly desirable result to produce three or four districts
very considerably stronger, as they would be in banking
strength$ bavins banks of considerably larger capital than



Joalab Quincy.

the other Federal Reserve Bank, which would be in so&evhat
tb<3 aa-ra class aa compared with each othar, although they
would be in a different claeo froa the banks of the rest of
the country, than it *ould bo to have any one bank or even
any two bank* which would have to ba placed in & class by
the&aslves, owing to their being ao much larger than any
otuer bank.
Tho fourth district in else on these lines as suggested
Mould be the St. Louis dietriot, which would have a total
capital &n& surplus flf about $273,000t00o£

So that we

should have roughly four msjor districts, ao they sight be
called, of preponderating banking importance and cossKarcial
importance, which eeeae to me highly desirable.
laen we pasa fron those four major districts we necessarily aake a very considerable drop in the banking resourcejs
or oapltal which would como within the succeeding diatriote,
Kaw England would come fifth, with about $161,000,000 of
capital and surplus. The Southern States would come sixth
with $91,000,000* another large drop. Then would cose
California and Nevada with #81,000,000 and the Washington
district would com* next with —

that is, the District of

Columbia district, with $73,000,000. The four northwestern


Joslab Quincy.

states would cons ninth with £43,000,000, and the Denver
district would cons next with $40,000,000.
How, of course, even In that division we necessarily
have groat inequalities. Roughly, ac&e $353,000,000 of
capital and surplus in the Hs* York district and roughly,
$40,000,000 in ths Danvsr district. But then a ars ixtevltabl^,
and X suggest the desirability of so laying out theos dietriots In the first plaos as to allow somewhat for the futur.
growth of the country, mills ths Denver di at riot is now
coaparatlvaly s*all in banking resource* and in population,
it is obviously a very large district tsrritorlally and will
undoubtedly grow to bs a very iaportaat district.

In ths

saae way, the four Sortbweetern States at the prsssnt tins
ars not very largely ssttlsd, but are having such a rapid
growth and have such largs natural resources, that it seems
to «s they could stake Ysry appropriately a dlstrlot by themselves, as the system develops in the future.
I aa heartily in f*>vor of having one of these bank*
located at Washington.

In the first placs it »eea* to as

Washington would be a desirable centre for the banks serving
the northern part of the Southern States} but entirely
aside from that, X think it would bs of very great bsnefit




tc the Federal Rsasrve Bank tc hava one bank opsr&ting
laaefii&tely witMn i t a observation in the City of Washington;
and moreover, I think tfcst tfc# dsUblielraerit of a bank in
Wnohington vould have a very important national educational

One gro&t adv^nta^e «hich we bava derived from the

ciocuieion of thla subject of reforming our currency and
banking syater. for the l a s t few yc&ra, f r o i the action which
Congn*3f9 has now taken, in thi« # that the Ate or lean people
have been educated up to underst&r*£ or kno?r banking and
to understand tha bantlnv; oporatlcne a» they n&vi»r h^ire be^tt
In the paet.

And I think that tba value of having one of

tbeae banks in Vaehlngtcn9 the National Capitol $ a&d p^rticularly under the obaer^atiocL of Congress, wouldfea^rea
distinct beneficial value from that standpoint•
But the ono point upon «bioh X wl#u to s'l&ca the moat
etreee # which s**$e to me from my atudy of the matter the
moat iaiportant point to urge upon your<ii%%9$p la that i n
*rrivin& at & policy for the divlelcn of tbd country Into
<U*trlcte f you should consider the tmdesirabillty of
linhlng one bank of predotslnatlng nlte vj\£ the era^ta
deelrability of «ot*bli*hln& a cla©^ of three or four
which vould he eettewhat equftl in e l s e ^nd r«eouroe»«


6 84


Joaiah Quiney.

course, vse all know that one of the avowed objects of this
legislation -»aa to effect ac&e desres of financial decentralization*

The finances of th« country have been

centralised very largely and to an unnecessary extent I»
Kew York, and this Boreisent to descentr&lise the #oney
control of Ke* York ie, In a senite# a part of a larger
rorepent te rcMch thia ateiniotration la ccfc*ritted# in an
endeavor to offoot do^oentrallsatl^n in other fields,
r.etably lr. ccnt.eoticn «rith the control of industry by very
large corporate org&zilzfttiozu

But side by aid© with this

acvecent for decjBritr«.liaatiiari gee? ancther ir.oveffent for
cccblnatlcn, coordination, cooperation within efc&Il Xiaito
and within aaaller lines* Bo that while frcsr. a national
standpoint, Rew England, for inatanoe, is to derive the
benefit, as we hope and expect* of being decentralised
financially with respect to Bew York, in to be given the
control of its own reserves, fcr instance, within its own
, under tft* new *yst&s Hew England likowiae in to
* like every other auction cf the country in, the
benefit of a better coordination and cooperationsof Ite
o«m Internal banking reaouro^s within the Federal Beaerve
urSt to be est&bliehed wider the new eyatem*





Jeai&h Qulncy.

Juet one other thought In conclusion*

It 00090 to me

that the method in studying this question requires a divialc
of the country Into an area of seta si so baaed upon geograph
oal linos, which will not be too large nor etc o an: all, for
the purposes cf study. I thinit that such an area say veil
be composed of an area bounded by one degree of latitude
which is about 70 siles, and 3-1/2 degree* of longitude,
which 3*1/3 degreee would cover a distance of about 155 »ile
at the southern extreme of the country and about 105 Kile*
at the northern extreme of the country*

The whole United

States can be divided into less than 400 blocks of that size
and each of those blocks oan readily be divided into ten
smaller blocks, which would be coincident with the unit areai
used in the Parcel Post system*

If this Coaasittee is going

to break state lines, m& I have no doubt that you will find
it convenient to do so, it seems to &e that you rust break
those lines on a cure logical principle and not merely by
laying down a line arbitrarily*

It sees* to tie also that

the statistics which bear ugon this whole question,
namely, the statistics of population, of manufactures^ of
national banks and state banks, capital, surplus, population
and so forth, oan beet be studied by blocking the whole




country into comparatively Baall areas as I have suggested,
by attaching the statistics of various sorts to each area by
nu&b*r, giving each area a maber, and then you have a basis
upon which, as you draw your lines here and there, you can
carry your statistics with your line and can readily study
j the various factors which enter into this probleas upon whatj. ever lines a ay suggest themselves for your consideration!



I will merely pasa In a little ©ap of that character,
which contains the lines which I have suggested, laid out
upon the &ap*
The Secretary of Agriculture: Did you Indicate the ten
cities that you had it mind, ur. Quinoy?
Mr. Quinoyt

I think I did not mark thett on that map*


think there would be doubt in soase of the districts as to
the cities* It seems clear to &e that, taking the districts
In order of arrangement as we have the* there, in the order
In which they come, starting with Kew England, that of
oourss Boston should be the city for the Federal Reserve
Bank In Hew England* Bew Tcrk City for Hew York* Philadelphia for the Pennsylvania district; Washington for the
district grouped around the national Capitol*, fhen we oo&e
to the southern district I have no opinion to express whether


Josiah quincy


Atlanta tr How Orleans would be the best point*

Vhen we

; come to the middle western district9 Chicago is obviously
| the point*


The Southwestern di strictf St. Louie, I have

no doubt would be the point*

The Rocky fountain district,

as It might be oalledt would obviously hare Denver, it seems
to me, for it is the most central point*

The California

district would have Son Franclsoo and the Vorthwestero
district would hare either Seattle or Portland;

they are

about equal in banking resource*! and 1 hare no opinion to
express as between these cities*
The Secretary of Agriculture: You will file those revised
statistics tomorrow, will you?
l!r* Qulncyt

I will file tomorrow the suggestions and

statistics ae to those districts» worked out with more care*
The Secretary ot Agriculture! Perhaps you had better
attach this map at the time*
Hr* Qulncyt I will file the whole matter tomorrow«
&r* Gaetoni I want to file this letter with you* It
came in a letter, the outside of which was addressed to me,
but the Inttide is addressed to you*

It oontains the protes

of the Cleurigg House Association of New Haven, or the wish
that they be joined toflewYork*




Joel ah Quincy.


The Secretary of the Treasury: We will take an adjourn-

i> irent now until ten o'clock tomorrow ncrning.

Whereupon, at 5:00 o'clock P. U. an adjournment waa
taken to Saturday, January 10th, 1914, at 10:00 o*clock
A. 1U




Eoston, U&ss* January 10th, 1914*

The Organisation Committal mat pursuant to adjournment
at 10.00 A.M.

Parties as before.

Hr. Harrii&an: I reside In Boston. My address 1* 53
State Street*
The Secretary of the Treasury:

l£r. Harriiuwi, tht queation

before the Committee is the division of tb«* country Into
districts, not lee* thim eight nor more than t*elve# sjsi
the eotabliflhaent of a headquarters bank in each district.
I understand from your letter that/have some views tbat
you would like to submit to th« Committee, and we shall be
vory glad to bear you. Will you be seated,
Hr* Harrlman: I should prefer to stand, if it suite
your pleasure«
The text ie m paragraph one of your call, for dividing
the country into geographical divisions, Involving transportation facilities » ani other ccaaunication with other



parts of each district, the industrial development of each
section, which involvee the general movement, and eo forth.
The Act ltdelf ctlle for the* division of the country, a*
The Besenre Bank Organisation Committee shall designate
not less than eight nor uore than twelve citiae, to be
itnottn as Federal cities, and shall divide the continental
United 8tates» including Alaska, into districts, each district to contain only one of such Federal Reserve citiae*
The question of dividing the country into groups haa &1~
waya been done heretofore on a voluntary ba*i& for convenience.

The Interatatu Coo&eree Commia ion hae divided the

country into teagreups for etatiotical purposes*


s^me Coauciflglon hae also divided the country on anctliar
basis for the express companies, into five group*•
difference between theoe divisions its that etate

lines are

largely considered in the firett broken however in t*o
in.fitoneee for statistloal purpoaeo.

The second division

shows that the country ha* been divided into five parts,
ana these parts are arrived at, or that division was arrived at by reason of the monopoly of ths territory the
express compiles enjoy*


The Comptroller of tb$ Currency, for the purpose of
statistical exhibits, has divided the country into utx

These groups held the lines as defined by

etate boundaries.
I simply enow you these groups as Indicating the need
from « transportation, indvatri&l and hanking point of
to arrive at a standard rfivleion, In nivich the operations
of each territory shall be conducted under uibatantially
similar clrcumGt&nce* and condition*•

A littls over a y«ar

ago the problem became more complex by reason of handling
from the transportation and rate£makin& roint of vie*,
the pareele poet matter, and I exhibit a m&p of the par*
c«ld poat diatrlcte* ^hlch has adopted the method of cutting
th* country up Into equaraa, choking a asap here with 3 # 800
divisional nquarea, or unite

of area, if ycu pla«tee•


is £4 inches by 36.
The Secretary of the Treasury: Are you going to l^ava these
htxd other documenta *ith the CoA^nlttee?
Mr* Harriman: I will l^ave them ip»ith you.
Here le another map of the country for the purpose of
racognisin^ vhere the transportation change1» of the country
*ra # &&& the movement cf commerce.

That le the Interstate

Commerce Commission express map, first referred tv, and
that divides the country into nine hundred blocks, one degree


It Is possible only by that method to compare parts

of the country with other parts 6f the country under similar
circumstances and conditions*
Kot« tha criticism Is that under these two systems it
requires first on the parcels post map 3900 aapa to make a
study of the country*

It includes, from the directory

and registration point of view, a directory of over one
million five hundred and sixty thousand


The next map of the Interstate Commerce Commission, by
which over three hundred million rates are reduced to about
two thousand pages, Is ehc*n hare*
Bow I hope gentlemen that my citizenship Is above my profesalcnal wark, and I am about to exhibit to you a map only
eight Inches by nine Inches, cutting the habitable portions of Continental North America into only 390 divisions
requiring lss& than one thousand pages tc answer any of
the questions Involved in the banking Investigation, or in
the rata making or the parcels post operations•
I will not speak of the quality of the work, but In order
to furnish you a sample I submit to you a chart on both


Qeorge W. R. Harriman


a geometrical division, or a geographical division* and a
ij state lino division.


: The ehart before you sho*s tha cities which you have
schedules for hearings, showing the geographical places and

i: the dates •
I exhibit another chart which shows you the geographical
location of the first banks that furnished formal acceptances
under the Act,
The next chart that I show you Is a chart of the geographical places of the reserve cities•

It also *bo*s the

three central reserve cities*
The next chart I place before you is/ohart shewing the
geographical locations of the 151 clearing house cities,
all of which you tee are reduced to standard form, BO that
you can Interlock these charts, one with the other, or
the evidence of any witness appearing before you*
In order to bring the matter to a clear conception I have
since yesterday Interpreted the evidence of Mr* Charles P.
filinn, Jr* # of the National Union Bank, who presented the
views of the Boston Bankers Association* showing the eight
cities that he would uue as central reserve cities*

The next chart shows his geographical division, made on


George W. H. Harriaan. •

ji state lintio, with the exception of *here he varied In

j Illinois, cutting the state financially in two,
[I The next chart shows the capital and surplus of the reft
I gionsl banks according to his plan, giving the basis for


formation of those companies* with the capital and sur~
plus account as provided for In the Federal Act.


The next chart shows$ according to Mr. Blinn'a evidence,
the capital and surplus of the country for each state


and the last chart of Ur« Blinn'a evidence shows the com*

i bined capital and surplus for each of the regional dlstricte
that he proposes.
The Secretary of the Treasury:

Tcu mean of course of the

national banks, the member banks?
Mr, Harriaan: The national banksf the member banks*
The Secretary of the Treasury:

The districts that he

Mr. Harriaan: The district* that he suggeaUd,


believe hie statement is based on t h e —
The Secretary of the Treasury:

On the Comptroller9s

Mr. B&rrlttanx On the Comptroller1! call.
The Secretary of the Treasury:

The Comptroller's

:; is


George I. R. Harriman.

call of October Zl, 1913.
Mr. H&rrlaum: Tea. No* gentlemen, the point I wish to

[| Iring out la this* that heretofore I have shown you the
jj charts* *hlch show groupings of the country purely on *.
voluntary basis* Tcu however are the first committee,
are the first authorized bddy charged In lun to out, the
country Into twelve regiona# and It le one of the most
aomentous and Important deoisione that you must arrive at
that aXfecte the industry, commerce and prosperity of this
country^ one of the aoat momentous problems that vae ever
before a body for oolution and decision.
Now In order to Illustrate further the eyatem which I
believe suet be basically standardised before you can go
very far, 1 call your attention to the fact that the state
lines are political lines* while the movement** of trade
and commerce are not United to state lines* They are governed by natural features* rivers* lakes* mount ine , gape
In mountains* bridges across rivers; and I as a citixen an
directing my attention to that part of the country in *hlch
%e are situated*

In order to m*ka myself clear as to the

Importance of these geographical eonsideratIons* I call

your attention to the fact that there are only ten doorways




George V # R. Harrlman

eo to epeak to Raw England In tha whole line from New York

I to M ontreal. Think of it, gentlemen, one of the moat
i important financial centers, geographically and commercially
: in the country, iith only ten bridges or gateway* entering
|; It between He* York and Montreal*

Each one of those

bridges is a franchise feature which controls the movement
of trade and commerce.

They may give to one district a

privilege which another district may not enjoy, even though
the latter district may be advantageously situated geographically.
To Illustrate , away back In 1885, there was a c&nal built
I; between the head waters of the Penobscot Elver and the beadwaters of the Xennebee* To all intents and purposes the
natural resources of the Penobscot should have gone down
the Psnobscot basin; but by reanon of that canal they
were sent down the Kennebse basin*
It Is because of these features that come into this work
of yours* that It is faecesaary to pay attention to trans*
portatlon channels of commerce and industry, because
those transportation channels have U k e n the line of least
resistance* along the river valleys* and were influenced in
their first construction by the geographical features*


George V» E, Harriman

The state boundary linoa, being political, and of an
arbitrary nature, are not suitable for standardizing
statistical, financial, transportation or any other kind
of information that la bated upon the laws of science.
80 that I have withdrawn absolutely from the state political
boundary lines, and have adopted the geographical lines,
the merldlano cf longitude and'the parallels of latitude.
In order to reach a decision an to where those major
divUiona shall be, of which I «hov ton, I have first considered the country In ito transportation, financial and
lndaetrlal operations^ and have grouped thoae atatea
inhere the operations In each *ere under uirollar olrcumetanoee
and conditional and I have arrived at nine group in-.e, or nine
regional divisions. Am for inetanco, the operations in
the Uisoiattippi Valley and OulX Qrpupe are eubetantlally
similar In all static• In tha norther Colonial group* as
I h^vc designated it, they are operating under similar clrcuaatunoe* and conditions. That le, Maine, Vew Hampshire,
Vern&ont, and the Hew England otates, Hew Tork and Fennaylv&nin
sre subject more or lesn to maritltn© transportation Influence
both ujon the mwater front, and the St. Lawrenoo River, the
lales and the canals. So that In my basic division X

I _

'' IS

preorge w. R. Harrimaa

found nine regional groups, and if you will notioe upon one
of the charts is the location of the uefceral states that
have been indicated, and it will surprise you to see the
coincident lines as regards those states.
Having than datur&ln&i on a geographical division by

•- major linaat and groupings, the question wag ae to hot?
to properly take th* Information of each group, and be
able to co&p&ra it with other group© of similar import.
I therefore concluded to use an atlas unit of one degree
in latitude and two and one half degrees longitude, 00 that
it was poo Bible in those groups of unite* to thus statisticalis.e your information.
I show a chart of the Bent England group, over which
Is euperpoeed isy atlas unit, and in theee atlae units Z
show you the caplt&l and surplus for each 15 minutes
square, so that it is possible for you to see the mountains
of finance as well as the mountains of rock and earth;
so that it le possible for you to detect the depreeelons of
nature as well »e the depression* of credit. It is upon
that basis, comparing the 390 blocks, block with block, and
plotting the Information as you receive it, that it is
possible to eliminate all guest in your work.


George W« R« Harrim&n

The til Ados of your decialon iu going to be reached in the
nay as all groat decisions are reached, baaed upon
kno*led&e and the knowledge of tha country can only be
interpreted through the facto*
I show you the Hew England division ao a representation
of tbu smallest unit outting that I have for national
purposes* •
When we come to local purposes, I show you an enlarged
scale of one of the atlas units, designated on t&y system
a43 4,468*.

In that unit you will find the location of

every banking city *dad tba transportation channels of com**
aiurtication to it, the geographical location and the amount
of capital and surplus, ai}4 such facts ae you need to
have for the purpose of reaching a decision as to the
territorial Influence of each particular bank*
I have not had the opportunity to take theregional
cities9 but I show you a chart which shows one of our
Southern cities,and the heavy black lines show the
radial local Influence of that city, expressed on the map
In miles and in transportation channelst that ie Its local
I she** you another chart which shows the national in*



George V. R. Barriman

fluence of the 0009 city, that lo as to ho* much of the
country It eztunaa over, sho*lng you that it is on the
ij direct line between Hew York and Hew Orleans, and. has
direct connections with the sea.
Sow gentleaen, in brief, I hava shown you in a few
isinutes the result of a large number of year* of Doric,
based upon fch acourate and careful study, applying rules
of scienoe to trade and to oonmerce, and I believe I
show, in suggesting it to you, that you have the means on
a email paper basis of properly class ifying your views, and
reaching a conclusion, eliminating all chance of guess.
In order to show you that It Is a work of no mean proportions, I call your attention to the fact that I am aow
engaged in the study of a problem similar to this, following
a correspondence with over seven thousand banks and trust
companies of the United States, and dealing with the
transportation problem, whereby we have <Haclosed 3&,000
alles of actual and urgent necessary construction to bring
the transportation system up to its normal demands. Just
as a brief, it gives you the scops of ay correspondence,
it giTes you the various methods we have of classifying
and shows you in detail the method of handling.


George t. B« Harrlman,

I wish to say briefly, but mitt as much dignitj
and force as possible, that I daeire to appeal wholi
and entirely to your intelligence, to the rules of so
to the essence of fair play* and to eliminate aormch
as possible the element of guess* of discretion which
today permeates cur whole govorn&antalstruoture, and
prevents us from arriving at conclusions which the
Supreme Court can sustain•
I call your attention to the fact that if the group*
Ings of the Interstate Commerce Clm^lselon statistical
exhibits had been on financial lines instead of geographical linos, w«i would not have had such a decision
as the Mlnno&Gta rate decision, which has practically
restricted the whole railroad development of this
I A conclusion, speaking oolloquiaiy your duties are
siore than human* because you are dealing with dollars
and cents# and I feel sure that in presenting this to
you, and calling your attention to It at the early
stages of the hearing * your business acumen, your desire
for a scientific conclusion and one that can be sustained
at law, will commend itself to your attention for sore than
a cere passing glance, and I will very gladly put this

George ¥• R# Harria&n,

matter In one f o l i o for you and leave I t Bith you
for your oen*iteration.
I thank # you, gentlemen.
Tie Secretary of the Treasury:
obliged, Mr# Barrl&an.

l?e are very xnuoh

These exhibits sbowtaat you

fcave given a great deal of very tierlcue and hard
thought to theee problems*


The Seoretary of Agriculture: Mr. Abbott, you know
the problem that we are confronted with here,
Mr. Abbott: Ye»»slr,

The Seoretary of Agriculture:

l e should be very glad

to have any views you care to express,
Mr. Abbott:

There is very l i t t l e that X think I can

add to what has already been subnitted to you as to the
desirability fcf a regional bank in Beaton, for the purpose
of dealing with the Hew England interests* under the new

But there i s one think) vfcich X think has perhaps


not been fully dealt with, and that i s that i f the law i s to
be carried out in what X understand to be the spirit of
it, namely, if there are to be eight regional banks whioh
are to be reasonably of the sane else, so far as they can j
be made of the sane Bias, and homogenous, which X under?
stand to be the spirit of the law, then it is praotioally
having a Sew England bank among the eight* Otherwise,
the preponderance of one of the banks is going to be so
great that all the others are going to be practically


dwarfed. It seeae indicated that there should be three
or four banks in the northeast»if there is to be a reasonable


Gordon Abbott*

parity between the various regional banks, which la *hat
see&a to be the spirit of the Act aa it read*. That see**
to me an important point tfhich has not been dealt on very
acuob as yet.
The Secretary of Agriculture: You do not attach importance to the suggestion that there tought not to be l> so&e
eort of proportionate distribution?

You knew of the con-

tention that there ought to be one overshadowing and overwhelming bank*
Mr. Abbott: I cannot believe that that would lead to a
•Biccth working of the system* because I doubt whether a
system composed of one very large bank and five or six
very weak one* would be successful, to say nothing of the
prcb&ble necessity* In case of the creation of one cr two
rtry strong banks, of having a difficulty in creating six
smaller banks whose capital would, under the sis per cent
olauta, bi sufficient, Z think it may be found to be very
difficult to do that, if one or two prependoratingiy large

banks are created; because we have gone by the discussion
of how etany banks there should be; the law says'sight#
The Secretary cf the Treasury: Do you think that in view
of the coordination of these units thrcugh the Federal


Gorion Abbott

Reserve Board, Mr. Abbott, tbat they could be, as far a*
practicable, »ad* of equal s i ate? I gather that that is
your theory*

I say,as far as practicable•

Kr. Abbott: As far at practicable*

The Secretary of the Treasury: Tes«


Mr. Abbott: It ie evidently impracticable to oafce then

j a l l of equal aiste, and probably i t would not be desirable,



!: because to do so would be ditloo^te the natural trend $t .


i; finanaial tranoaoticna#
Secretary of the Treasury: I laid enphaeit on the
\ practicable j ae far aa practicable, I said.


Mr. Abbott: Tea, I agree with that entirely.
The Secretary of the Treasury j


inmt iiad you i n your mind

as to^the other c i t i e s which should be isade headquarter*
j! on the Atlantic Se&bcardf assuming Boetcft were cne of them?

Kr# Abbott; I should say Hew Tcric and Philadelphia*



| The Seoretary of the Treasury: Any other©?
I Mr# Abbott; When you e«t south or Pennsylvania and New


Jereey, and cfeal with the sottheasterb part and the southern

part, Z an not ifami liar enough with the lcoal trend of
jfinanoe to have what eeaae to se a very sound opinion as to
the beet vay« X think that ie the difficult part of the


Gordon Abbott*


problem, the division of tbe territory south of the Hatcn
and Dlx*on'* line jwid eant of 8t» Louis # and I am net
competent t c form aa opinion en that.
The Secretary of,the Treasury: Have you any,definite
vie*e a» to the reoainier cf the country* »ay *hat citie&j
for inat&nce, ahculd be mad? the J^«adauarter» of the Hoeerva
ttr« Abbott: I should &»t>tur>a San Franoieco for the Pacific
Slope, and S t . Louia for the ocuthir/eot

&» far a* the

Bookie* f and Chicago fcr the ncrth^e»t«
The Seoretary of the Tmaaury:
Mr# Abbott: Th&t i s

Thc^t ie eix*


The Secretary cf the Treasury:

fthers ivould you put the

o t t e r two?
Vr» Abbott: That leayee th& central part, including the
eoutheaetern part of the country, for d i v i s i o n , and that la
the d i f f i c u l t part of the prgblom.
The Secretary of the Treasury:

Tou are not able to

a euggdfttion about thoee.t
Kr# Abbott;

X a* net ablo t o make a suggestion about tbcae

¥.hich X f e e l wculd be worthy of such con«ideratlcn # becau9e
X do not knot? enough about the condition**


Gordon Abbott*


The Storetary of the Treasury: Do ycu think that all of
Hew England should be Included In this district?
Mr. Abbott: I do.
The Secretary of the Treasury: Even western Connecticut?
Mr. Abbott: Z think it la going to work view
of the fact that osohange is going to be a parity,yes, to
include all of He* England. X think there icay be a good
deal of feeling, and I have no doubt there is among the
bankers of Hew Haven and Hartford, but Z think when they
consider that esohang* wiii be at a parity between the
varicue regional banks* that the feeling which grows out
of existing conditions, that when they want to get money
fron the west or south at the present time it is more easy
to get it through Vew York than through Beaton, if that is
clear to the*, they may modify their views.
The Secretary of the Treaeury: Assuming that the Boston
exchange, as it would be VXI4MT the *yetem,would be as good
as ffew Tork/for these purpose8,how far do you think
their views are affected by the question of tise and
accessibility of ffew YerkT
Mr. Abbotts

Time and accessibility of ocures,are what

are going to be uppermost in their minds.

Cordon Abbott.


The Secretary of the Treasury: Are these really serious
factors in your judgment, under the oirouastanoee?
Mr* Abbott: I ought not to pass upon that, it seess to me,
because I have never worked under the peculiar conditions
they are working under.

It eeene to me that the Board

will have to judge of that fro* the testimony that they aay
The Secretary of Agriculture: You would suggest Philadelphia for the section south of Jew York rather than
Mr. Abbott: It Yes, it would then be a question of whether
Baltimore would be included in Philadelphia or included
within the southeast.
The Secretary of Agriculture: You would not favorthe
euggestion that one of these banks be located in Washington?
Mr, Abbott: Why, Washington is not a ocnseroial or
financial nor manufacturing oity, and I should aseuoe it
would be considerably to the comfort and add a great deal
to theeffioienoy of the Reserve Board if it did not have a
Reserve Bank in the oity in whlob. it sat*
Ths Secretary r*f the Treaeuryr ¥e thought it was a «anu


Gordon Abbott.



Mr, Abbott: It i s about to be* X believe.
The Secretary ©f Agriculture:

That i s a l l , I believe,

Mr. Abbott.
Mr. Abbctt: I would like, i f I cay, t o * add one thin*
And eay that X have bad an opportunity of discussing with
Mr. Warburg the suggestion that he ha* cads, that If there
are three or four banke which, in view of the preponderance
of capital in the northeaet, mtet bo large regional banks,
that eoma system ef inter-correlaticn through ooasdtteea of
tho various banke would be an excellent thlnfc, to promots
the fluidity of the di to cunt market.

That i s going to be

one very inportant benefit of tbt ne« Act,and just eo far
ae you oan get credit to flow freoly by sseaee of intercourse
between regional banke, juet so far i t is geing to tend
towards a flexible and friotlonlese working of the syateit.
The 8ecreta.ry of Agriculturt.

Kouid you net have that

through the Federal Beserve Bcari?
Mr. Abbott: Welli i t i s going to beeasler, in view of
the day to day oharaeter of that cert of business and the
nearness of the banks, i* we


lew York, Boston and

Philadelphia, i t i s going to be a greatdieal easier both for


Cordon Abbott


the banks and the Reserve Board, i f I t « e r e dene through
comiEittooB from the Boards c f the regional batics* I should
aesune t h a t there would be one s e a b e r a t l e a e t of t h e
Central Board who would be l a o l o e e r touch perhape than t b e
o t h e r s , perbape i n o l o e e contact wltb t b e northeaetern
r e g i o n a l banks* I think t h a t t h a t would be t h t s o l u t i o n .
The Secretary of Agriculture:

Veil, that ie a aatter for

tbe Board to settle*
Mr. Abbott:

That le a aatter of detail, roe.

The Secretary of tbe Treasury:

Thank you, Mr. Abbott*

Is Mr. Hlffglns bereT

Mr. Biggins:

Mr* Secretary, nobody i s better aware than

ayself of the faot that tbe presentation of figures that
X shall aake i s s©sowhat crude.

In tbe important ru»h of

events, i t i s quite nsoeesary that the latest figures
attainable be used* As tbs report of the Comptroller of
tbe Currency for 1913 bas not been available, X bays been
obliged to take the figures for 1913* All tfas figures that
X present are trea tbe Comptroller1* reports*

As the subject i s a large pas, and as X believe itto


W. D. Biggins.


b§ necessary tc cover it a» far as possible as to what is
going to take place in the next yean as well as the condition cf affairs that exists at the present time, I have
gone 30 years back and hats taken 1892 as a comparison, in
order to ses what progress bae bean «ad* in the last SO
years, that we say forecast to a certain extent what will
take place in the next 30 years. The result of thess
figures is unsatisfactory to ae, because there ars other
elements that Z think should be taken into consideration
and that will alter what the conditions will bs in 1932.
To clarify what X say say, so that you may know exactly
what X an talking about, when X speak of capital X speak of
ths capital as rade up fro* capital and surplus only, but
in the national banks, the stats banks, ths loan and trust
companies of ths statss, as given, in the Comptroller's
repert. The deposits, as X havs made them up, include
ths amounts due to national banks, due to stats banks and
bankers, dus to individual depositore, to United 8tates
officers and to ths Tinned Statss itself, and all of ths
slenents that raks up dsposits as shown in ths usual
Comptroller** reports.
One of ths elewnts that it


to as is an inportaat


W. D, Higgina,


j one for you to consider, Mr, Secretary, is the influence
j! upon the growth of the wealth of this oount ry that, to

|| mind, has COM through the use of the reserves for the 50

yeare that the present national banking system has been in
oporation. We obssrve
I financial

in a preliminary survey of the

poeition that in the •mall section of country

f; north of Virginia there is, TO will oay, 50 per cent of the


i; banking capital of the entire country; the area of that
section being about six psr cent of the total area of the
| United States,

it is a well known fact that »cney, by

which we aean in this connection loanable funds* is a potent
factor in the dsvelopaent of any business community. Is
i t not entirely probable, therefore, that this large
aggregation of capital which represents wealth* be due in a
large sieasurs to the restrvss that have been placed in so
large a ssasurs in this ssotionT It seens to me that i t
is altogether probable that this i s the fact, and therefore,
i t seeM to ne that one of the elemente that should be
considered by your Coma i t tee in ths lay-out of ycur districts
i s , la SOKS measure, ths development that you deeirs to
produce la ths different parts of ths Ehited states•

Ths districts as I have laid thorn out are, for Boston,


V. 0 . H i g g i n s .


,; Maine* Hew Hampshire* Vermont* ^ssaohusetts and Rhode

i! Island* Z have placed Connecticut with Kew Tork. Further

I consideration of the subject inclines me to think that the
western portions of Connecticut only should be attached to
i He* Tork* and that the remainder thereof should be attached
to Boston. My reason for this conclusion i s that I believe*
j! I have not had opportunity to lock into the subject
•j thoroughly* but I believe that the f a c i l i t i e s between

that section of the country that I have new spoken of* as
attaohed to Kew Tork* are better in connection with Kew York
and that territory than they are with aspect to Boston.
But I have laid out Kew Tork as comprising Connecticut*
Kew Tork and Ken Jersey; Philadelphia as consisting of
Pennsylvania* Dataware, Maryland* the District of Columbia,
Virginia and Vest Virginia; Atlanta as consisting of Korfch
Carolina* South Carolina* Georgia, Florida, Alabama, Ken*
tuoftr and Tennessee. low considering the possible effeotof
massing of reserves* the thought has entered «y mind la
connection with this particular territory* th&t if Savannah
has the Harbor that it is my impress ion she has, that is a
point I have not been able to look up* that it might be worth

»ltlle considering such a point* beoauoe of the possibility

f. D. Biggin-.



of lta development ae a port in connect ion vith thie nattor;

Haw Orleans oonaiata of Xlaaiaalppi, Louieiana, Yaxaa,

^arkaneaa, and Oklahoma; Chicago of Illinois, Michigan, tied

j: oonaln and Iowa; Minneapolis of Minneacta, Montana, forth


Dakota, and South Dakota, Cincinnati of Ohio and Indiana;
Denver of Colorado, Rev Mexico* Utah and Wyoming; St. Louie
of Miaaouri, Xaneaa and labraaka; Baa Franc ieoo


California, Aria on*, Hevada and Idaho; Portland of Waehingtp
and Oregon* Thia eonalata of 12 diatricta. I night aay
that original} j 1 sapped this out as a ten diet riot affair,
but when I o*»e to ooneider that, aa i t aaei&ed to »e, i t
ttaa daairabla to throw tbeea areaa over aa largo a portion
of the country aa poesibla, in order that the oountry sight
benefit by the principle of which I hava spoken, I divided
the gan yranoiaco dlatriot into two rarta and tha Chicago
diatrlot X aUo divided in tha aama way; ao that you oan aaa
that i t ia eonewhat crude.
There areeevaral other element* which I think should
be taken into coreideration beaidoe tha mere saaaing of tha
figuree. lly figures would ahew, for instance, for Beaton,
aa X have laid out tha territory, that—
fha Secretary of tha Treaeurys X vould auggaat, Mr.

* . D. Biggins


Biggins, in Tie* of the limited t i n * a t tbendieposal of the
Comaittee, that any s t a t i s t i o a l data should bs passsd ovsr
t o the Oomaittse, beoauss ws oould not carry i t in our minds
anyway, and»t w i l l put i t i n the record.
Mr. Biggins: Tee* Would you o refer these figures, or
s n a i l X maks up soas figurss tor 1913?
Tha Secretary of tbs Treasury:

Just as you l i k e , Z think

those w i l l refleot your ideas; i t i s only a natter of
bringing tbs- figures up t o date.
the purposs.

X think that wiU oorer

Xt indioatee the principle upon nhioh you

Mr. Biggins; Tee. 8hall X hand them t o the stenographsr?
The 8eoretary of the Treasury: Tee. Xt nay be vade an
exhibit t o your tsstisumy*
(Ths statement produced by Mr. Higgine i s as
Me«orandu« re the d i e t r i o t s t o be formed under the
federal Reeerve Act - - p r o c e e d by 1 . D, Biggins, 75 State
8treot, Boston, Uaae.

The n s u l t s presented are arrived a t by a

preliminary surrey and important elements concerning ths




subject have not bean even considered; hance the district!
as here lot id out should probtbly be changed considerably.
Thsae districts
A»ounte are In millions of dollars

Maice. Hew Haapehire, Voraont, Massachusetts
Capital Deposits Capital Deposits

Capital Dep© its






New York





















Hew Orleans







































San Francisoo
















St. Louis



W. D. Hifgina


and Rhode Inland.

jj New York:

Connecticut, Hew York and Hew Jersey.


Philadelphia Pennsylvania, Delaware, Maryland, Diet, of
Columbia, Virginia and West Virginia.

Wo. Car*, So. Car., Georgia, fla.,Ala«, Kentucky

New Orleans* Hiss., La., Texas, Ark., Oklahoma.
Chicago s

Illinois, Michigan, Yisoonsin, Iowa.

Minneapolis: Minn., Mont., Ho. Dakota, 80. Dakota*

Ohio, Indiana •


Colorado, Ve* Mexioo, Utah, Wyoming.

St. Louis:

Missouri, Kansas, Betoraska.

San Tranci soot Calif., Ariscna, Kerada, Idaho.

Washington, Oregon.

Memorandum re the districts to be formed under the
Federal Reserve Act—prepared by V.D.Hlgglns, 73 State fit.,
Boston, Mass. A shoving of the capital investment of the districts as laid out in Exhibit *A» and the resulting capital
investment—capital paid in*- in the reserve banks in 1912
and 1932, the latter estimated*



Amounts in million! of dollars


Commercial Reserve
Bank 11



Few York












Hew Orleans

























St. Louis
















I am Vice President of the Banker* ISlectric

Protective Association*

It has been ray 'business for the

latst IX years to be Acquainted with bank officers of Hew
York and Ktw Bngl*ndf and for the last five y«arst while it
has not been my business exactly, or exactly a pleasure to
talk this currency bill over with a great majority of those
men, I have had perhaps unusual facilities for knowing
their opinions.


It seers a to me this hearing has largely been a waste
of time, because I believe that when you came here you had
already decided to fire Kew England a regional bank, whether
they wanted It or not*
The Secretary of the Treasuxy; I would rather you would
proceed with facts rather than violent assumptions* You
may give us any facts you hare in mind and allow us to draw
our own conclusions*
The Secretary of Agriculture:

If that is true, there is

no nesd of your saying anything further*
Mr* Whiting:

Kof X assumed that, because X believe you

to be sant and progressive men, In spit* of being brought


W. R. Whiting


; up to think that no r«* mo or at could be either.

The Secretary of the Treasury: That may be again a

; violent assumption, so we prefer you to limit yourself to
i facts.

Vr. Whiting:

I was going to limit my Belt to Connecticut.

i| I believe the n\M of your difficulty lies in Connecticut.



I and I Y«ry strongly oppoae giving Naw York Connecticut* In
; the first place, I believe it belongs in New Fngland. In

I the second place, X an absolutely satisfied that it is a
i mistake to fat up Hew York unnecessarily*

In the third

\ place, X believe it will aid the working of this bill to
avail yourselves as far as possible of state and sectional
spirit and pride*

And another thing, the statement was made

hers yesterday about how Connecticut favored Hew York* The
statement was not mule that for a generation the
5ew Raven Railroad has largely dominated Conneotlout—
The Secretary of the Treasuryi

Mr, Ihiting, you are getting

aside from the question. If you have any facts and anything that relates really to the problem before us, we
should like to hear it* You are simply expressing opinions
here as to whatyou think the bankers and some others think

about this. We would Ilk* to have any faots which would



W* R# Whiting

enlighten the committee about the problem!


anything bearing

I; upon the cctrjneroial status or transportation problem or
bankinp: capital and reserves and so forthg we would be glad
to hare*
l£r* Whiting;

Veil, there has been a strong tendency

since the last panto for Connecticut bankers to open
accounts with Boston banks*

I will undertake to get the

exact figures of those and send them to you, if you consider
them isaterial*
The Secretary of the Treasury:

X suggest you do that,

and we will attach It as an exhibit to your testimony*
Mr* Vhltings


One other thing that seems to me

has not been touched upon in this discussiont in talking
about Conneetlcmt's facilities for going to Hew York or
Boston! a branch of either the Hew York or the Boston bank
located in Connecticut would senre the Connecticut bankers
equally well In either case, so it does not seem to me that
is mattrial*
And then agdn, their ways of doing business do not
J2«k* that of great importance*

Bight here S3 miles north of

Boston you will find banks that correspond with Albany only
and they send their accounts direct to Albany and then back

to Boston and from there back to Albany* You see the point





! there*

It waa treated ae rather amuaing that the idea of

|! including a part of Hew York State with the Hew England

;j bank ahould be eoneidered, yeeterdayj

but Albany la 202

': mile a from Beaton and 169 mile a from Hew York, and erery(; thing that cornea down through the northern part of New Yotfck
cornea through Albany9 ao i t would not be at a l l impracticable
to include any portion of Hew York that you wanted to north
of the Hew York Central Railroad*

It cornea through that

channel now anyhow, and i t would not »uke vtry much difference which way i t turned at the fork*
The Secretary of the Treaauryt If you w i l l submit any
atatlatlna you have, we would be glad to receiye them*
Mr* Whiting: If you regard that na of any importance
I will*

If not| I do not care to aubmit them

The Secretary of the Treaeury*


I do not know what the

nature of them would be*
Kr# Whiting:

I m*m the growth of Boot on account a •

The Secretary of the Treaeuryt

Yeaf you m<*y aubmit any

figurea you dealre»
o? i* mom
Mr. Soy n tan:


X happen to be the only 1 IT ing man who


B* SXoody Boynton



j can flay t r u l y that lie was acquainted with Samp eon Lloyd
with hie bank of five hundred millions, which you know waa
j th« largest in the world, whoae guent I was,representing
i the pro^i

b*nks and boards of Kew York, in 1877, at the

; Board of Trade i n Great B r i t a i n ;


«id I was l a t e r the

of eorce of the leaders in Snfrlond, through t h i s great man,

1| and the rej resent at ives of Queen Victoria*
!; X hare t h i s to eay, that in private conversation for
; o n e h o u r with t h i s great man h e took u p the matters o f m y
|: country a s they existed, and h e *&ld »I wonder you do not

copy France, as you are so close to her*
panic for 100 years*

3he has had no

X wonder that you have not uooom-

plished that freedom from panics that ahe has accomplished*•
Vowf slrt we are Indebted to the President of the
United States for the practical adoption of that system*
Tr&nce i* not one eighth the sise of our county* It is
perfectly proper to have tight or twelve regional banks*
X have only a word to read In regard to Boston* X know it
is a pleasure to you, coming from aeorgi*, to know that
here in this place of eljfht generations, to which our people
are returning, that you are sitting In a place likely to be
one of the most important in the future of human history of


the world*

K# Xoody Boynton


Right whera we are the waves used to dash, and

where all our city extends, the ocean used to come and go,
within my reraenbronee*

Into &11 these places where you

stop, at the Flag* and all those vast regions, the ocean
came in*
The President and his Cabinet may be assured of their
Increasing appreciation by consenratire Hew England*


welrorae of the greatest Secretary of the Treasury by all
our people is but &n expression of their deep gratitude to
the President and his Cabinet for the great boon of the
regional banks and the currency bill*

They will prove an


I era of continued prosperity, expanding without panic for
| centuries to oome. They trill make the name of Wilson,

of Bryan and especially of KcAdoo immortal*
There has nerer been any question that here one of the
largest banks of the republic will be established and expand*
Here where the wealth and the population equal the Dominion
of €an&d&9 where a thousand billion dollars of investment
wealth, and a larger amount of business unite from six
states in this great commercial metropolis, they should
all be united with ens great regionsa bank*

The six states

offlewEngland art on« and forty millions froa th«a


B* Moody Boynton


; descended are steadily returning to their beautiful sea
coast and mountain homes* They revive the geneology
of eight generations*

They will build here a city for the

future worthy of its matchless harbor and its position
two hundred miles nearer Europe*
Just a wordt if you wifrl permit me*

I was asked by

this great man why Boston, with bcr matchless harbor, nearer
Europe, and selected by Great Britain as the great port of
America, has failed ofher high destiny*

I said, of course,

they ure not perfect, and they drove away the commerce and
destroyed their railway connections that connected the
waters of the west with Boston, and refused the $50,000,000
tendered by the Barings in a critical time, and it
crippled them*

They are now getting ready to recover*

Our harbor with its two arms and extending one hundred
miles into the stormy sea gives thirty miles broad entrance
and shelter in every oonmerct*
they quarrel and send it hence;

Her sens are so Individual
they print new op ape rs

principally for advert 1Bing, local goods for money, but we
will rouse them to a new life and duty by the aid of this
great act here where free schools and free government hud
birth, where the home of Chief Justice Sswell who proclaimed


?• McottyBoynton


liberty were thaa two centuries ago still stands; here where
from this harbor went forth the heroes that captured a
thousand ships in the wars for our independence and made
Lexington and Bunker Hill effectire;

here where the prelude

to the American Constitution and the Horth Western territory
act that gar* freedom to the continent were written* The
spirit of progress and liberty is not dead; the spirit of
sectionalism is dead*

The great heart of Hew England goes

out to the great president and his Cabinet with rising tide
at each achievement for the liberty of all men and the
prosperity alike of the poor and the rishf championed by the
jrreat administration so ably represented here today*
•Ho step backward* is tht* motto, of Kew Fnglund# Here
where you meet the salt sea spray once broke and still
dampens our palatial warehouses, and no hostile fleet ever
dared to enter it since the fleet sailed a*ay from the
hostiletfunsplanted by our patriots on Dorchester
Heights in 1775 • We stand at the dawn of universal peace
of world-wide brotherhoodt of prosperity that shall give
peaceful homes and happy conditions for the uncounted
billions who shall crowd earth as it becomes the new he ay en
by human progress* This great step of currency reforza and



X* Ifoody Boynton

banking union, ia the greatest in history,


i t i s modelled

after the Bank of prames in part, end each of i t s ten banks
» i l l have * larger space to eerre then that Bepunlle*s . u« rise to the occasion* and instead of strangling
enterprise* which fro« this spot extended the railways
across the oontlnent, end then gave them to Kew York, l e t us
recall and increase our union Mid enterprise and extend
our swifter ton fold more economic roads, now under
consideration by the Ifationel Government until our single
rail trains shall oonneet the oceans in a day utd carry
the freight of a eonteneni at l e s s than the cont of water
transit to every city and town within a week where now i t i s
"but one Ails per hour. UB uphold the great financial
men «ho seek to Rive «B liberty and a special praise i s
due to Senator Veelcs who not unrrlsely preferred one great
b&nk, like the laiik of ?ranc* with a hundred branches.
She Secretary of the Treasury: if* thank you* lit* Boynton.

George Gr*h«&.

Secretary of ihe £r«e«uxy:

lir. creih«nt you w a tha

president of the International ?ruet Company, of BosttmT
i?r, Oxahaai

Ye*. Ur. rJeJ.crotfiTy» I do not think X

had tootter wdd « t i n g l e word to what h»e already h%uu a*ld
i n regard to the location of a FedersJL RoDcrro Banlc i n

Ziiswttuoh i«o I «a president of i» li»rg» trust cossp&ny, th«
nternationAl Yruafc Coapwiy, X should lifce to know i f jretc
hare arrivud tit that ttago of the inquiry \6iexe you axo
ktole to suggest an «jddiiionsl dcoi^n&tion, or » n«ae for *
trust company that comes la under the new currency *gt?
Tor instance, owt name i s tho International Truet Coa«>way.
X.should like to know whether I t i e to hme m prefix or wr
addition to i t s nemer to indicate th&t i t oomes in under
thti noif currenoy iwjt,
She Secretary of the T^o»euryj

You meon, I f you com© i nee

the system, whether wiy ellerftfelon of your t i t l e i e neees*
Vr# Qreheas Yea,
Xhe 3ecr«tary or the ftreetftoys X do not think th*t a&tter
h»s been considered »t e l l ,

Xt i e «t subject for the ?ed«ral


George. Grahta.


Reserve Board to pe*e upon after i t i s organised^ but «*t
the moment no change of naae Is neoeeo&ry, If you should
come Into the aye ten,
»r« arehseu

X think ve ought to here something to

designate i t * otherwise there la no apparent distinction
between a truat company that comes in end one that stays
The Secretary of the Treasury: You can print on your
letterhoada and put on your window* the abatement fch*t yoa
axe a mentor of the Federal Reaarro Syatea.

I t in eaay

enough to diaaeainate the neceoa^ry infoxtto>tioit on that

Z do not think any ehsnge in nane * i l l be neoeaawcy

although Z would not care to b« quot&d »s having nradered
an official opinion/that subject, Xt i s a natter that will
aero to be dealt with later on, For the noment* nothing
of that kind i e nooeesary.
The Secretary of jfcrieulturei

»o thing eeeata to b« con-

templated in the law*
Wr, araheaj

I ehould think they would find i t neceBeexy

to put on the word "oOT«reigtt% or sonetnlng of that kind*
Turther than that X hare nothing vhloh I deaire to eay. X


Qeorgs H# Towle.


I thank you*
sTATEimrrr OF SEORGB * .
Mr. Towlei

Gontleman of the Organisation Ciimaltteer I

«n Chslxaan of tht Regional Bank Comaittee of thft Chtctb«r
o f Cofflmoro«#

Z d«*lr« to sutelt for the eonilder»tion of tha coaoaltte*
the follovini? l«tt«re tnd telegraow which hew Ibeon raceiY«d
froa Y*rlou« ehaofbtrs of coi«a«rc« and othor is^ortoot
Iho 8«oret&ry of th« troeauryi
«nd th»y


You may eutait the»f

lie Bfr&t fc part of the record.

¥ P . Towlo: The»a t«logrsa» aod l e t t e r s *r» M follow*:
"AtUeboro,, »a««. 9th Jo».
Joset A, KcEl^b«nr 8«4*9r«»
Boo ton Chambox of


Othar business appointnent »akas i t iflposeTblft for ma
attend you hewing today.

Ma. strongly in faro* of

Bssorvs Bank t*T Haw England to bo loostsd in Boston*
H«artHy endorse your co*nnitte«*s report on this

of frs4s»«


George H. Towlu.

9 r 1914
J M , A. VcJTibbun, Secy.,
Chamber of Comaeroe, Boston,
The Pitchbuxg board of trade and uerch& &* r e l a t i o n
b e l i e r o s that i t would fee for the real "benefit of not only
£ow England but the entire country to hsve one of the reserve
banks i n Boston.

She reputation geographical location sad

traditions of 17ev Snglutd certainly e n t i t l e UB to one of
the benke*

I very nuoh regret lay i n a b i l i t y to attend the

meeting t h i s morning,
P, 0. Xrichole^ President, *

And Business lion* u Aasooistioa,
George K. Taylor, Presidant
Prank F# Cox,
Oeorge T, J.uttms, 1 s t Viot President
Louie P. (lowing, 2nd Viet* President,
Aohton H. Thsyer,
J. ITarrsn Poland, Seoretary and Tre*aurer J. Eobert Held
• a k e f i e l d , J«n, 6th, 1 9 U .

See. Chfittber of Commerce,
At *, Keetin/r of the Vakef leld VerohimtB and Business men's

i t f i t TO ted unanijnouely that this Moooifttion
endorse the aotlon of the Chanfber of Commerce of


George K. Towla.

Boston, in their endeavors to hare Boo ton en the map, and
that i t would be for the Best Interests of Sew England to
here a Regional Bank established at Boston,
A caunittee n i appointed to attend the hearing "before
the Org. Com* at BOB ton 9-10 Jan, Mr. H. IT. Uolbo&r, Thoa.
Hlekey, P. H« Atwood* 0, H# Vinehlp* J# 6. Srlfflthe*
the l e s t 2 I think are nenbem of tho ehomber*
X am

Yours truly*
J, V« ?ol»ndr see,*
"Serwoodt, K«ss. Januaxy 7, 1914.
Tho Boston Chamber of Coastoroer
Beaton, Vase.
Tour eonaonieetion of January l»t^. sddressed to the
Horwood Board of Trad©, concerning the •BtaTallehaent of s.
regional ressrrt b»nk for *e* England at Boston, was duly
reeeired end was presented at the regular January , eating
feeld l a s t erening*
The matter vae paaoed 1A the hands of a spoolal
conaaitUe, consisting of the undersigned* sad whether we
are able i s attend the hearing or sot we wish to place our


C«org« H. Tonic

solves on record in favor of * rsstrve bank of normal sis*
for He* England to ba located at Boston.
In the spirit of your circular we toll eve that such an
institution would better eerve tht needs of this vicinity,
would keep in olossr touch *lth Sew England interests,
would ltuplr« grsc tsr confidence in tbs Foieral Reesrvs
subsasf ana &ors sursly afford rslisf vben actaally nsedtd
thtuei a auob larger bank outside our own boundaries.
We think this the intent and spirit of the act and
that by the carrying out of its provisions along this line
the Country will be aore certain of a eucoessful lssus in
the new Federal Ressrve Act.
Most Rsspeotfully yours,
Idson D. Sftitb,
Henry X« Everett,
Harold V. Qay,
Special Committee.*
"Borth Berwick Hatlon*l Bank
Borth Berwick, Maine, Jan. 6th, 191*
To the Reserve Bank Organisation Coaalttee:
At a regular meeting of thedireo '.tors of this Bank a
vote was taken expressing the wishes of the directors, that

George 8. Towle

Boston mi^ht be chosen by you for the location of a regional
bi-nk; and I * M Instructed to transmit to you their desires.
R.S. Austin, Cashier.*
Attleborc, Uaos., January Z, 1914.
i£r, Jaaoa A. JlcXlbbon, 8ac.#
Eocton Cb&abor of Com&erce,
1?7 Milk Pt.,
Boeton, Mase.
Dear S i n Tour circular letter of January 1, received.
The writer is etrongly of the opinion that one of
regional banle sbould be located in Eoetcn, and he ia alee
in favor of Hew Englani *• one of its districts.
Aocording to the sentiment here throughout the Town
of Attleborl the Currency Bill ie favored, especially by
those who hiva studied the same so £.0 to understand it.
If you will kindly infer* the writer at that tiae on
January 8 # the hearing is U fee held, he «ill notify eons of
the bu&inees people here, who %ill be pleased to be

George K.

Tours truly,
Frank Moesberg,
Htjor c. Houghton, Prasidsnt
Gaorge L. Dunham
J. EUgar Jfellen
) Yico Presidents.
Charles A* Boyden, Treaeurer
Carl 8. Hopkins, 8eer«Ury
Erattleborl,Vt. January 8th, 1914
Itr. Jsunas A. Uollbbon,
8«ar«tary of the Boaton Chamber of Cooaerce,
Boston* Mass*
Doar itr. Moltibbon,
Tour lett«r of January let, also your night letter
of January ?tht i>t hand.
Har« appointed* as repressntative of our Board of
Trad«, to attend tha haarlns of the Eoc*rv« Bank Orfi^r.iEation Cooublttss* in your oity to*norro«, Jan., 9th, Kr. 1. H.
Brackett, Cashier of the Psoplos* Satlonal Bank of this

X think that there certainly should be a Beserve Bank


George S. Tov<le

in Boston for all of Vtvn England, eond truet that the
Coralttae will feel that they

should aetfcbliab euch a Bsgk.

Tours vary truly,
M. C. Houghton.*




Eclfa»t, HUzttf, January 6th, 1914
Boeton Cb«ab«r of Co&JK«ro«»f
1?? Milk 8t.,
Boston, li&te.
Gectlaaon:lo herewith aokno«l«dg« the recei;t of the Report of
the 6p«ci&l Comaiitt«fl on Beglon&l Reoerve Bank and tho
Belfast Board of Tr*do, imcniaoualy, dndoraae the reoommandation that fi*« England thould be a»da a Federal Reeerre District and that a Federal Reserve Bank should be 4st&bllch«d
in Boston*
V* believe this to bs tho beat *ay inrvhlch to serve
the people of Sen England and are therefor glad of an
•pportvmity to expres* our opinion* on this very important

Oeorgo V. Towle

Thle opinion you o&y convey te the Reserve Bank
Organisation Costal ttee at its hearing on this subject January fcth.
V*rf truly yours.
The Belfast Board of Trade,
By M. L. Slug*,
The Secretary of the Treasury: If there are any other
gentleaea preeent who desire to be heard briefly, ve
shall be r.led to hear frosi tbea.

Hr. Allen: dentle«en, if the Organisation Coanittee^ 2
represent the Portland lational Bank of Portland, Maine,.
I do not visa to take your time except to say that our
Institution Is In favor of a Beeerve Bank In Boston* We
think we ean be better served by it than by one in Sew Tork
I think all the arguments have been presented that are neeeesary*
The Secretary of Agriculturei Would it change the
ocurse of your business any?



Charloa 0. Alien



Mr. Alien: The «*11 facilities will bo batter, and the

i expreea faoilltloa will bo better reaching Boston, and Z
I asauae that there will be a clearing feature connected with

i- thio system which will be of Talus to us*
f Th« Boston system of clearing checks for Hour England is

i very helpful to ue, and we hope that something aa good will


[ be arranged bythe Federal ay•tea.
The Secretary of Agrloulturet

Hae your bank had any

connections with AlfeenyT

Mr. Allent

We oollect a large amount through Albany,

I and alao through Philadelphia.
The Secretary of Agrloulturet Would that be dlecontinvadT
Mr. Allen: W» expect It would. We hope that that say
all be avoided by the BOBton faoilltica.
The Seoretary of the Treaeuryt Ateualng for inetanoe that
we had a bank at lew York, would you not be more oonvanianeid
by making your clearing* through that bank with branohea
In the largeet oltlee in Hen England , than you are by the
prevent ayatoai of elearing through Albany, or collecting
through Albany and PhiladelphlaT
Mr. Allen: Perhaps aa well, but Z think a collection ayatev. In Boaton, for Maine and for all lev Engl&nd, would be


Ch.rles G. Allan

much better than any system that could be arranged In Hew
York, If 1 understand you correctly,
The Secretary of the Treasury: That say be, but I was
only asking, aa between the preeent eyetest and a bank in
New York. I wanted to see now much an improvement even that
ttould be ever the preeent condition*?
Mr. Allen: I think the preeent conditions would be better
for ue than to depend upon lew York.
The Secretary of the Treasury: That is, to send them to
Philadelphia, right through Few TorkT
Kr. Allen: Ho, I mean to send tfce» to Albany, for Hew
Hampshire, Massachusetts and Vermont. Albany would handle
our iteme better than Hew York, as far ae that territory 1*
The Secretary of the Treasury: Ae far ae the rest of the
country was concerned, would you be better off at Hew York
than at Philadelphia?
Mr. Allent


The Secretary of the Treasury: Does any one else dsfl^re
to be heard?

Zf there are B O other gentlemen to be heard,

the hearing at Boston will t« oloned.
thereupon, »% 11.05 o'olock A.K** **»• Coaaittee adjourns* to aeet in Washington, D.C. on Monday, January 1«,