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New Orleans, La.
February 11-lc. 1914.

Law Reporting Company, Official Stenographers

3 2 *272.
.vi 3 7 £-

r' 9
for. StacJ«


Hew Orleans, T.a. , 'February 11, 1914.
Vat pursuant to adjoum m wt at 10: 0 V. " .
For the lew Orleans Clearing House Association:
80L WEXLW (Kew Orleans, L a .) President of theVhitney
National Bank,


1. M. POOL. (New Orleans. La. ) C/o, Hibernia Bank

A Trust Company,
For the las Orleans Association of Commerce:
Thomas J. Freeman (New Orleans, L a .) ,
▼. H. PKXICK (wew Orleans, L a .)
V. J. RAtfflERS (new Orleans, T a. ) ,
LBOK C. FriOH (Hew Orleans, L a .) ,


L. PALUKt (*«t Orleans, La. )
LOUIS JT. GOLDSTEI* (Hew Orleans, Ta . ) ,


X. B. HARRAL (wew Orleans, T a .)
1. IV HAROTH (Vow Orleans, L a .) .
K. J. OLAXEY (new Orloan a, La. ) for ths wew Orleans



RD0AR 1.

STTJW (R o w Orleans, T *# ) for the Vanufaetur ers

of Row Orleans.
CRAVfOBD H. KLLI8 (*ew Orleans, t o .) for the Latin
American Trspieal Prult Trade.
V. B. THOVPSO'S (lew Orleans, L a . ) Cornells si oner of
Public Utilities.
L. K, BBf’LX.'Hf (wow Orleans, L a .) Bpeelal 7*«s>uty
Collector of Customs, low Orleans.
THOS. V. LOHG (Hopkinsville, K y .).
H. C. RODF*, (Loulerille, Ky. ) president Citlsens
; latlonal Bank.
JTOKW K. LRBTTIERS, President L o u lrrU l* national
Banking A m


KJfBRY X.. JfWXARTHOHK, ( I w U t U l i , Ky. ) Tlret national
PRAWC M. aWTYS, (Loulswills, Ky. ) Union Rational
J. IV 5?TCTABT (Louisville, Ky. ), President union
Rational Batik.

VZSLCT nRAVC (Clarkarllla, Tenn. ).
T. X. TLOO Ri'OY (Monroe, L a .) Orochita latlonal Bank.


D. APOAH (Monroe, l a .) fortho Union national Bank*

X. w. J00T2 (Hattiesburg, M is s .), for the Hattiesburg
Clearing Houso Association,
MeCAFfCTIL (Ds Funiafc Springs, 7 1 a .), for ths
First National Tank.
LOUTS B. TAKLKY (Montgomery, Ala*), for the City of
Montgomery, A l a ., and the Montgomery Clearing Houso



The Secretary of thi Treasury:

Oentl«nen9 please come te

The federal Reserve Act devolves upon this Committee

the duty of dividing the country into net less than eight
nor mere than twelve districts end the location within each
one of a yederal reserve Bank.

The Committee is required

by the Act 9 in laying out these districts, to have due
regard te the convenience and cu stomary course of buslnsss,
and It does not require that the Comzalttee shall aaJce the
districts necessarily coterminus with stats lines.
This i s s national preblesL, it is as economic problea,
and one which relates to the country as a whole, and the
districts have to bo considered with reference te the country
as a whole.
Tt i s not pos8ible 9 therefore, for the Committee
to give consideration te questions merely of local pride or

What we seek are faets which bear upon the

economic problem itself,

and we dsslrs to have the witnesses,

as far as posslbls, confine themselves to such facta.


ws have had to say te some of our friends in other cities
who were leaded with oratory, It is not oratory ve want,
but facts; net that we object te oratory; we would bo glad
to have it I f we had time to hear it; but oratory is not
always founded upon faet, and unfortunately, in solving of


Rel Wexler


economic prebleas we here te deal with facts*


we shell

ask ths witnesses te put their testimony before us in as
concrete a form as posslble 9 so we will be able to give
everybody who *ants to sprees their Ti owe as fUll an oppor­
tunity ae possible*
Vo will take up Vow Orleans first*
is present*

I sse Ifr. Tixlor

Which of these gentlemen wish to bo hoardt or

hare you selected a committee to represent thent
Mr* Wealer*
be heard*

These gentlemsi on this list will desire to

They will nake their statsnents sufficiently

brief eo ae not to take up too nuch of year time*

The Secretary o f the Treasury:
state for the record your
Mr* Wexler:

tfr* Wexler, will you

nane 9 residence and occupation*

Sol Wexler; president of the Whitney Central

national Bank end Vice-President of the Whitnqr Central
Trust & Barings Bank*
The Secretary of the Treasury:

And do you represent the

Clearing !feu se Association?
10% WsxlerJ
Asso elation*

I r 9 resent the Vow Orleans Clearing House


Sol Wexler

The Secretaj-y of tho Treasury!
Mr. Wexler!

By authority?

3y authority#

Tho Secrotary of tho Treasury:

Are you an officer of the

Mr* Wexler!

I am a member of Its XxecutiYO Committee*

Tho Secretary of the Treasury:

sow you may proceed* Wr#

f e d or*
Mr# Wexler:

I fully realize, Hr* Secretary, the tremendous

responsibility and grows difficulties with which you are
▼estsd in selecting the cities in which Regional Banks ars to
be located —
The Secretary of the Treasury!

^tfare you proceed, if you

hare a map of the district, you might present that to us,
because ve w ill understand your argument better*
Mr* Wexler:

t am costing to that in a second*

In edweoating tho City of Mew Orleans as the only
fitting and logical location for a regional bank te ssnre
the 'vast territory embraced in what is known as the Oulf and
contiguous states, I ha to glwsn tho most careful consider*
ation to the claims of our slstsr«citles and states for the
definite purpose of ascertaining if I hare bees blinded by
local patriotism in my conclusions, and with the full
Federal Reserve Bankiiof St. Louis


Sol Wexler



intent Ion # i f I found th e claim* of any other city in this
territory superior to that of Wow Orleans, to lay aside
eiTle ambition and yield our cleims for tho cos ea good*


patriotic citizen of thig country end no good adherent of
tho *>«aoeratio party hao tho right te approach this subject
from any othor standpoint then that of disinterestedness and
altruism, for the success o f the system of banking end
currency which we are about to install Iht o I t o o ths welfare
of this and future generations, the future success of our
party and tho financial and oOTamarclal supremacy of tho
But, the consideration and study of the reason e for the
leoation o f a bank hero in connection with and in comparison
with those of any city within a thousand miles of us, gires
no cause for hesitation la placing before you the folio ding
Important facts immediately bearing


and pertinent to

tho subject*
We bellore that tho territory to bo serred by low
Orleans should embrace all that territory shown on this map
within tho rod lin^s thereon, radiating from Louisiana as
the centre westward to tho line of Vow Mexico, thus taking
in tho State of Texas; eastward to tho Atlantic Ocean, taking


Sol Yexler


in tho States of Mississippi, Alabama, Florida

*nd Georgia;

and northward taking in that part of tho fltatc of Tennessee
lying west of tho Tennessee Hirer•

This to ri tory containo

660 national Banks, with on aggregate Capital and Purplua
of $146,900,00 0, capable of furnishing a capital to tho
Regional Bank, bn sod upon
deposits, based upon



por cent of # 8,900f000t and

por cont of an aggregate of

#475,5°Ot®00, without counting Government deposits, of
Vo estimate that in tho sane territory, State Banka and
Trust Companies have an aggregate eapltal and surplus,
aocording to the C o n tro ller 1o report (all hoiks not being
represented), of $ 130 , 000, 000, which, i f c
j 0 por cent of
th«a cane into tho syatea, which I boll ore to be a censer*
▼atiTe estimate, would giro an additional eapltal of
$ 3, 900ft000t and

additional deposits of #8 , 000, 000, or

combined with the national banks, a Regional Bank
^U ^

U let,

, ,

with a Capital of

112 800 000.00

and Deposits of

#32, 000, 000.00

Clrcul atlon


Recounts (profit k lass)

7 6 0 .0 )0 .0 0

Sol V e x e r


Gold against Deposits, - 3>£ of 132,000,000. #11,200,000.00
Gold against federal Reserve Votes issued
40^ of #* 2, 500,000

# 33 , 000, 000.00

B ills discounted

#83 »6oo,ooo.oo

Balance Gold on hand

i ___

200. 000. 00

#128 , 060, 000.00
and, as tho total bllle payable as shown by tho Comptroller9s
report of all of tho banks in Texas, Louisiana, Klsaissippl,
Alabama, Tlorlda and doorgla, for tho last ysar, at the
xlmum period, only aggregate #34,600,000.
The Secretary of the Treasury:

That Is natisnal banks

wr. Wexler:

That is national banks alone.

Therefore this

bank would havo more than double the necessary capacity for
taking oaro of tho re-diseounts of that ssctlon, by national
banks only, and if tho state banks wore included, which of
course I cannot giro you accurately, I aw satisfied it would
haws a margin of


per soot to take care of it, provided

there wore no growth in tho deposits whatever.

This does

not Include United States deposits at all.
Federal Reserve Bank of St. Louis

Tn this territory the most remote elty having a

Sol Wexler



national bank to the west of ua would bo BL Paio, Texas, *
1 ,1 9 2 mlleu, or 3^ Hours; to the eaat Brunswick, Georgia, -


a ile s , or 26 hours and 40 minutes; to %ho north Paris,

Tonnossoo, - 529 miles, or 16 hours and 10 ainutoa.


so at western city would bo noaror Houston by only 362 Miles,
farther froa Atlanta by




mile a; farther froa Blminghs*

farther froa '{eaphia by



The territory abore described la connected with Hew
Orleans by Veatorn Union and Festal Telegraph lines and long
distance telephone; as far as the aeuth of tho Rio nraade
River by


and by rail by the

Southern Pacific and its aany connections;
Texas and Pacific







Atchison,Topeka k Santa To •




Louis Is Baa Traneiaco

I# 0* Texas k Voxico


La* Kwy. * navigation Co.
To tho eastward by tho

Louisville Ii Hashville and its nany connect ions#
Southern Hallway




Mobile Ii Ohio




Queen k Crescent System





Sol Tazlor


V«0, Mobile cc Chicago (now building Into Vow Orloono)

1 * 0.

^reat Northern and

tfulf & Ship Island.
To tho northward by tho
Illin o is Control and ito many connections;
Yazoo k Xlesi isippi Volley ■


Leulsrills k Mashrllle,
Tho on tiro territory is also in conn action with Vow
Orleans by steaatooat and barge tran q ertatlon through the
Interooaatal Canal being hi lit by tho United States ftorem*
sent, now constructed from Texas almost to Vow Orleans,
and proposed to be constructed from Vow Orleans eastward
to Pensacola, which will put Hew Orleans in co~:munioation
with points along the Sabine, Calcaelwu and Mermen tea u
Hirers to tho west without going into tho open sea.

At the

present time Hew Orleans reaches the territory lying along
the Pearl Hirer, Anita Hirer, Pascagoula Rirsr, Warrior and
Alabama Hirers, all connected with the Mississippi Hirer,
through lake Bergne Canal,

The Mississippi Hi o r running

through the City of Hew Orleans to the 'htlf xxxX puts it
in connection with the Hod, Arkansas, White, Ohio, Missouri
and Illinois Hirers «id with all of their tributaries, so


Sol Wexler


that probably no city in this country affords such varied,
ext on sire and competitive transportation facilities to the
iomestic territory it will serve by rail, s«a, river and
canal, as the city of Hew


But, if in your wisdom end as a result of your investi­
gations you should see fit to exclude froa this territory the
St at e of Georgia on the east, you would reduce the eapltal
of the Regional Bank located here, according to the Comp*
troller * s figures, all banks not being represented, only
# 2,421,000, and its deposits, #4,552,000; and if in addition
to Georgia you saw f i t to exelude that part of Texas claimed
by Saint Louis, Denver and Kansas City, lying west of
Austin, you would reduce the capital of the Regional Bank
#19153»000, and the deposits # 2,774,000; &nd, again, if
you saw f it to exclude the part ef Tennessee lying vest of
tho Tennessee river, you would reduce the eapltal #591,000,
and the deposits #1 , 657 , 000; or, if you eliminated all three
of tho last named sections, tho total reduction o f capital
arising from national and

state banks would only bo

# 2 ,5 98 9000, and deports # 6 ,2 4 0 ,0 0 0 , leaving, If one, two
or tho three were eliminated, the following capital and
Federal Reserve Bank1of St. Louis

Sol Wexler


national Banks
C a p it a .
Papa alt«.





20, 800, 000.

Woot Texas


21 , 515, 000.


Woot Tennosooo




Georgia and Weot


18 , 315 , 000.

Georgia and West



West Texas and
West Tenn.


20, 960, 000.

Georgia, West Texas
& Wost Tenn.

6 , 302, 000.

1 7 , 760, 000.

Entire Territory
Exeluding Georgia



State Banka.
C asu al.
Dasoatta. _
Satire Territory
Excluding Georgia

♦3 , 900, 000.


8 , 000, 000.


6 , 668, 000.


Wost Texas


7 , 711 , 000.


Wost Tennessee


6, 897, 000.


Georgia and Wost



Ooargia and V««t


5 , 567, 000.


6. 608. 000.


5 . 276. 000.



Vaat T<>\-*■ and

Vast T*nn.
Oaorgia, Waat Texaa
* Vaat T a n ,

Sol wexler


iS U

Tho Secretory of tho Treasury: Taking tho territory and
excluding the eereral portions, whet would bo tho result ae
to the remainder of tho territory?
#6 , 502,000 of capital from notional banks,

Mr, Vexler:

an^i figuring


p«r coat of tho otato banks, an additional

# 2, 555, 000, or #8 , 661,000 of capital and # 25, 000,000 of
deposits* that lo, taking in what is eaferaeed within tho
yellow lino only#
Tho preeant banking eapltal and surplus and doped ts of
Vow Orleans oo compared with the cities of Atlimta, Houston,
Birmingham and Vaiaphis are ao follows:
Hew Orleans

.Capital A Surplus i. P.P.

^c p e s lf.

♦ 18,797,0 0 0 .0 0

♦86, 032, 110.00

1 5.000.000#oo


1 5 .4 0 0 .0 0 0 .0 0

42,0 0 0 ,0 0 0 .0 0

, ,

, ,


7 085 100.00

27 289 000.00


8 ,8 0 4 ,6 0 0 .0 0


Tha oaa.aratlra total raaouraaa ara aa follow*:

Sol waxier


Total ptou rcei.

S ite »,
Woo Orloono



110 f000, 000.00


51 . 000. 000.00

Hou Ston

57 . 000. 000.00


35 . 510. 000.00



Tho Copltal ond ourpluo of *&o Regional Bonk to bo
loootod hero, taking In tho territory only embraced in the
yellow linoo shown on tho sop, will bo | 8 ,655,000.0 0 Cepltol
|23 9036,000.00 deposit*


A statement of tho comparative distances of the
principal cities froa Vow Orloono is os follows:
Treat City of

Ts City of

Vow Orleans









dumber of












Little Keek




W<nr Orleans











San Antonio


Galre ston


The establishment under the eld lav of Central Reserve
Cities orsated an artificial flow of m o i n t o
Rose-ve Cities net justified V

the Central

the natural eeurse ef finanee

an d of commerce, but vhich after many years esse te be
regarded as natural and which will lnrert te natural local
channels just as aoon as the compulsory feature is removed;
and as tho natural channel te which money should flew is te
the point from which it can be most readily and quickly
obtained and to which the products grown, manufactured and
exported drift*

The points frea which a section purchases

its a p p lies hawe an insignificant effect upon the trend
ef raoneyf for the exchange created by the shipment of a
oarload ef hay fresi a Texas point te lorth Carolina can be
converted into cash mere <juiekly by depositing it with its
local bank and it in turn with the regional bank er with
its nearest correspondent, which for the territory referred
to would be lev Orleans; though in respect te distribution


Sal Wexler


of merchandise low Orleans is mmy milliono in excess of any
othor city under ronsideration at this session#
Thi a h il l , as I understand its provisions is intended
to decentralise the eontrel of money and credit under central
control, end to attach to the city of Saint Louis the great
States of Texas, irlssl jfsippi, Louisiana, Vest Tennessee,
In addition to its legitimate territory, would a b » l u t a &
defeat the purpose of the h ill and

concentrate in one city a

control newer Intended either by neture geographically nor
by the framers of the b ill.

Te plaee

s regional bank in

Birmingham, or in *enphls, or in Houston, would be to
oreate an impossibly weak bank in relatively am 11 inland
industrial eltles having neither knowledge or experience in
International trade, nor in the handling ef the variety of
merchandise* — the preduotlen of our own country and that
of every country on the glebe, such as eos^s to the port of
lew Orleans, ssd could be properly compared te plaoing a
Regional Bank in Albany inatead of the city of lew York, or
in Milwaukee instead of Chicago*
trow Orleans purchases new a eensldsrable percentage of
tho foreign exchange, arlvlng from the eaqports o f cotton*
from cotton exporters located in Hemsten end Galveston, and


Sol Wexler


will purchase every dollar of exchange created in the o t lr e
territory Wiener or tho facilities arising froa the Regional
Bank are at its disposal and its natural connections are net
diverted hy operation of law to othor centres.
It has ho on said that Hew Orleanot being at times a
re~dlooountlng city, cannot facilitate the territory, which
statement surely arises from a ml sc one opt ion



as well as from a mi sunder* tan ding of Hie purposes of the

Regional Bank,

Tf tho fundo now carried hy Vow Orleans

hanks in Chisago an d ^ew York as reserve were carried at
home, Vow Orleans

euld never need to borrow a dollar and

would have surplus funds

to lend.

There is never a time

whin the Indebtedness of Vow Orleans benks to their corres*
pond onto is not less than ths amounts which they have on
deposit with them at the time; and, If the reserves ef th'
great states of Texas, Louisiana, Mississippi, Alabama,
Georgia, Florida and Tennessee, or the parts of these
referred te as an alternative territory, are kept it
Regional Bank here, where they belong, not only w*
bank bo able te care for the requirements of itf
liberally, but it will be able to Help out etl*


Sol Wexler

in their time of need*


Tn tho panic of


no one hod

the trouble to draw funds from Wow Orleans os n s

experienced in seme of tho other cities*

wew Orleans exchange

at no tine wont above $2*5° por thousand, while Pittsburg and


Louis exchange wss oold at


por thousand discount.

Wo bought foreign exchange In Saint Louis with our balances
to got tho funds out of that city.
Furthermore, if I correctly undorotsnd tho proper method
of conducting a regional bank, its credit facilities should
alwsys bo a reserve facility ussd only when tho general
credit facility of tho country for legitimate oomercial
purposes has been exhausted,

just in tho same manner as tho

Bank of Sngland maintains a rate of interest slightly in
excess of the general private discount rate, in order to
force tho stock e f credit to be taken up first and thus not
compete with It , so do I understand tho Regional Bank will
see to it that its facilities will bo kept in reserve,
thereby proventing undue expansion and thereby being eertaln
to have the eredit facility when urgently needed*

Tor this

reason, the great general credit facilities of the country wtl
be just as available to banks as heretoIbre and they aro
adequate in ordinary times, and when Inadeqoato in times of

Sol Wexler


great industry and largo cropof and periodically at oortain
seasons of tho year during tho heavy marketing period, tho
Koserre Banks will stpply tho deflolmiey*
It has also he on contended that a Bank located in a
section of groat agricultural importance should hs tied tm
a hank in a different territory, — this contention haring
been made at the Saint Louis hearing mad it is much mors
spsoious than sound*

There is no city of importance in this

union — other than Hew York, Boston and Philadelphia «—
which does not serve an agricultural community to a greater
or lose degree; nor are there any crops of great volume or
importance grown in the United States which do not more
practically at the same time*

Cotton, Cora, Wheat, Oats,

Barley, Bug^r Cane, Sugar loots, Hies and Fruits, constituting
Rirhty ( 80^ ) psr cent of our agricultural production, more in
tho fall of tho year, practically at tho mime time; and no
elty properly serving sueh a community, whether it bo Saint
Louis, Chloago, Minneapolis or Kansas City, Is any aero free
from strain at that period than is Vow Orlsans; many of them
borrow surreptlously abroad or soil out of their portfolio
to othor cities, in ordor not to show the same In their bills
payabls, under the absurd Idea that a bank should not eaploy


Sol Wexler


tho Idle funds of another section when needed In its own —
eh 11© Vow Orleans to serve its section openly uses its
credit fs e ll!tie s and facilitates ths stupendous volume of
buslnsss which is naturally tributary to it.
Tho volume of foreign exchange against actual exports
of merchandise handled in Vow Orleans last year aggregated
#174 , 207, 400, this exchange feeing created locally and in
Mississippi, Alabama and Texas, and being against tho
greatest variety of commodities shipped te almost every
country on the globe.
In addition to the foreign excrange above referred to
Vow Orleans Issues commercial letters of credit for the
importation of merchandise of approximately #20,000,000 per
annum, and which business shows a constant growth from year
to year,
Tho volume of country ehecks cleared through Wow
Orleans last year, drawn on points in tho territory claimed
as our legit insto territory, aggregated #478,042,000, and
come to us from all sf the States in tho Union; end, were
it not for the "window dressing* proclivities of some
conqpetltlvo c ities, which handle business at a lsss in order
to swell figures and footings and which Wow Orleans has n e v *


Sol Wexler


done, it would bo ton times tho amount and, ss soon ss the
Regional Banks sro established and tho unfair embargo upon
business imposed by some country banks for the serriee dis­
appears, the volume handled hers will be eqsal to the entire
volume of business in this territory.
I want to anplify that to ssme extent by this state®sitf
that a great deal of foroed business gses to certain sections
by offering to handle collections free of charge.

This is

very desirable, but this handling of items without cost
imposes a loss upon tho banks handling it , because tho
country banks throughout the country make a charge,


all the largo banks in Vow Orleans employ an analysis system,
ij and whenever the tolumo of out of town ltssu involves a loss,
we disoentlnue handling tho buslnsss.

That policy has been

consistently adhered to and it is not In ^any other sections* j
The Secretary of the Treasury:

You mean you discontinue

to handle it at a loss?
Mr. Wexler:


The Secretary ef the Treasury:
Mr. Wexler:

And you lmposs a charge?

Yes, and eoa^etitlen very frequently loses us

ths buslnsss, bocauss some othor olty, in order to got the
apparent bttancc, will offer to do the business for nothing.


Sol Wexler


It to not a balance, It lo la tho sail; la othor word*, If
a balance of $10,000 lo carried vlth u *, aad we receive
from such a point


a day of out of town item* aad they

are In tho mail for four days. Instead of having $10,000
we have #6, 000, end wo are paying twe per eent on his
balance, and it i s costing freon #1*50 to #2*5® to collect
his item, end if wo charge him nothing wc are at a loss ts
that extent*

Our own bank could treble the number of out

of town Items wc handle if we were dlapessd tc do that st a
loss^ for tho simple purpose of showing clearlngsi
The total clearings of ftev Orleans amounted to over
# 1,000,000,000 last yoar, a m
(100)>) por coat in tho last


an inereass of one hundred

In considering those clearings, it must bo remembered
that yew Orleans clearings are sot tied eaeh day in eaeh and
not in Cashiers 9 checks, a custom which prevails in other
cities and which Cashiers 9 checks are again seat through tho
Clearing Heusest thus erecting a duplication which rives a
fictitious amount and croates tho impression of a much
larger volume of business than is actually conducted.
wow Orleans is the only pert south of Philadelphia
which has any number of regular sailings to foreign ports*



VesdL or

Merchandise can be consigned to lev Orleans for export to
meet regular salllnr daye9 while In nearly all ef the other
Oulf and South Atlantic ports, this business is done by
tramp steamers with no regular sailings.

The stsamship

linos sending their ships to this port are dhown on this


To Panama and Central American Fepubllce, ve have almo *
da 11.

sailings, furnished by three steamship linos haring

their main offices in vev Orleans.

The practically water-

grade haul for railroads ts the south, m d the freedom from
snow and ice throughout the year, makes it certain that the
Port of Vev Orleans is the natural funndl through whioh the

entity ef experts an d imports ef the entire territory

between the Allegheny and the Foeky Mountains must find its
way to and from foreign markets*

vow Orleans as a pert is

America’ s pert and is so desirably located that it should
be a national port m d should be,

nd T beliere will erentualfr

bo, dereloped by tho watlonal aorernment to enable it te
ears for economically the stupendous quantities sf incoming
and outgoing merehandlee to and frem the root of the werld,
fer which this city will be the depot.

The trend ef tranv*

portation will henceforth, with the opening ef the Pan asm
Canal, be north and south and ns longer east and west.



Sol Wexler


lo as Inevitable end certain os tho law of gravitation.
oaro for tho present a Regional lank


far this territory

must bo established hero; Its as na gen ant here will neod to bo
as able in many respects as that of Wow York; Its business
will bo as complex end its variety equally as groat*

As to

tho future, within a deoado the Regional Sank at Wow Orleans
will bo second only to that of Wew York in slss and in
i-rportance, if wo grasp our opportunities and do not allow
Cteraany and Italiand to capture tho trade of South America,
Central America, Australia and the Orient.
I havo made no mention of tho variety of our agricul­
ture and industries, and shall only enumerate them here to
show the variety thereof, and that a Regional Bonk estab­
lished here will servo a greater variety of commodities than
a Rsglsnal Bank in almost any othor elty*
Tho agriculture of tho section shswn on tho map as
bsing served by a Regional Bank located hero is as follows:




Oats, .


Sugar Cane,



Citrus Fruits,


Togo tables ef every kind.

Sol Wexler



The mineral production is at follows:


O il,

Xatural Qae,



Building Stone.
Tho live atook production is



Tho So a products are


Fresh and Salt Water Fish.

The Forest products ars


White Oak,



Poplar and

aany other hardwood varieties.
The essds manufactured are

Cot tan Cloth,
Knitted Ooods,
Steel Bail,
Ftps and rolling s il l products ironorally,
Tin and ftalvmlsed Iron Caie,
Saah, Dsors a Blinds,
Gross Ties,
Wagons m d Carts,

Sol Wexler


Lard Compound,
Cotton Seed 011t
Cotton Seed Heal and Caxt,
Vlxed Stock ond Poultry Teed,
Cigars, Cigarettoa and Smoking Tobacco,
S&ucae, Plokl'Js, Preserves, Vinoimr,
Voices es and Syrups,
Jute and Cotton Bags,
Alcohol, natural and denatured,
Boats and boat oars,
dasolino, Naphtha, Lubricating Oils,Paraffin,
Rosin, Turpentine, and Tar,
Roasted Coffee,
Clothing for Men, Women and Children, and
sway more too numerous to mention, but sufficient surely to
show that there need be no fear of an inadequate diversifi­
cation of collateral.
It is indeed unfortunate that some of our sistsr-oitiss
cannot see tho manifold advantages of a great Regional Bank
on tho Gulf Coast at Woo Orleans, and allow their potty
trade healousios to favor a more remote city, not realising
ao they should that every dollar kept near home is as
available to them as it would bo If tho Regional Bank wore


coated in their own city.
Several gentlemen, experts in their lin e, will givo you

a few facts pertinent te the subject, ond, when they have


Sol W«xl*r


been heard, wo will leave oar case in your hands in full
confldenco that neither political influence, potty jealousy
nor anbltlen will sway your Judgment.
lew are there any questions on the subject which you
would like to ask?
The Secretary of the Treasury:

Secretary Houston will aak

some questions*
The Secretary of Agriculture:

You m y hawe facts with

reference to part of this territory, Hr* wexler, but we have
net had given us te date, but I should like to a4k you one
or two questions about a certain part of the territory which
you hare included*

So far as we hsvs information up to

date, the greater part of Tfcxas dsslres in the first place,
a Regional bank in Texas; and in the second plaoo, so far as
we have gathered unanimously, a Regional lank te the north*
low I see you hare included Dallaa, Pert Worth, Waco, Austin,
San Antonie and Houston*

laeh of these oltios net only

strongly urges a district as its second choice connected
with a bank te the northeast, bat strongly pretests against
coning to the east*

Hare you any info m at ion bearing on

Hr* wexler:

I think I hare*

Tho State of Texas has

Sol w r ie r



always shown a rory itrtag antagonist

to anything that

might tan 41 to build up th t port of low Orloono.

In our

unfortunate days fHei «o had yellow forer here, upon the
slightsst rumor, Texas closed up in order to prohibit mer­
chandise from Louisiana being shipped into Texas*

They want

sc far as to prohibit sulphuric acid from being dipped into
Texas for fsor it might contain yellow forer germs*
Tho whole idea, to ny mind, of Texas being desirous
ts be attached te the City ef


Louis is tho fear that hy

placing their business in connection with Bow Orleans they
may be building up a rery much greater competitor than they
hare today,

vow I hare the greagest regard mid respect for

| the Texas bankers; many ef them do business hsre and we enjoy
a large business from Texas, but business Jealousy has always
been a rery predominant factor in the State of Toxaa.
Tho Secretary of Agriculture:

They represent that the

course of business in Texae to north and south.

They repre-

ij sent that their eonaectiens ars in that direction.

Vow tho

Comptroller's report shews that ef the fire hundred and odd
national banka in T e n s , 52 hare reserres in this eity,
while orer


here thea with one northern city and 143 with

wow #utt here you to sqr as te the eourse of trade


Sol Wexler


and the connection* of Texa* with thi* Accticnt
extent would it naturally come te this

To what

sect ten, er does it

come to this section rather than te the nertiv
Mr# Wexler:

In the distribution ef certain classes of

merchandise, such for instance, as shoos and dry goods end
one or two articles on which Ft. Leuis make* a speciality,
and of which errery city specialises in seme one lin e , a
rery large percentage ef that business goes te St. Leuis;
but in tho distribution of many other commodities which Wew
Orleans specialises in, all of it comes frem Hew Orleans.
Tsks the entire consumption of sugar, jute bags and wiftai
gunny cloth, #hich is an important item, and many other th in *
I could enumerate, they are distributed frem Vow Orleans
into Texas.

Besides, every line of businees located in this

city doss a oertain amount of business in the state ef Texas.
Cotton and cot ten bales are shipped out of Texas either
through Galveston er Vow Orleans#

?t dees net go to St.

Cotton buyers located in Texas certainly de not do

their business in St# Louis#

And While I will adsUt there

are a larger number ef reserve aeeeuats carried in St. Leuis
than in Wow Orleans, I think it is very largely due to tho
fact I referred te previously, that St. Louis is doing a
Federal Reserve Banki of St. Louis


Sol Wexler


forced bustness with a great man: of these betake hy off •ring
facilities which wo do not offor ond which wo do not bolloro
wo should offor, and which, until this embargo upon tho
handling mt an d collection of chedcs lo removed, will go to
tho city which off ore the greatest inducement.
Tho Secretary of Agricultures

They represent that not

only arc their banking relations north end couth, hut their
trade relatione are north and south, and banking relatione
naturally follow that.

Those c it ice without exception

■eke that representation and urge that they be connected
with a city to the north, if no bank ie established in Texas.
ur* Wexler!

Of couree, Galveston stands out as one

exception of a Texas olty in that respect.
The Secretary of Agriculture*

yoe, T did not mention

!• Oslveeton.
Ur. Wexler:

And Houston, It is certainly preposterous to

aesume that Houston would be bettor eerved by St. Louis than
by Vow Orleans, only overnight from here*
The Secretary of the Treasury!

Whose judgment are we to

accept, Houston or Vow Orleans?
Hr* Wexler:

I should think you would aeoopt tho conclus­

that you would arrivs at frem the geegrapioal location

Sol Wexler


lj and the natural oo ndition a*

Bt« Louis ham made a campaign

all throuh the State of Texas, r l s l t ^ g all these el ties by
committee; they hare certain friendly relatione with theee
bankers by reason ef haring done business with them, an d o
rery great amount ef personal

1nf luence

has be mi brought to

bear te bring about theee statements, end they hare been
brought up there for that purpose*

X bell ere that it is the

I intention o f this b ill to hare commerce *oes te Its natural
channels an d not to unnatural ohannels9 end I boiler e that
j! the building up of e larpe amount of this business in Si*
Louis has been due to the establi a ment of central reeerre
cl tie s , such as Wew York, Chicago and St# Louis y which has,
orer a great period of years, eausod buslnsss to drift there
for unnatural causes*
fhe Secretary of Agriculture*

Te whet

«temt would the

i! central reserve city affect the increment ef cosenodltles?
Itr* Wexler*

it dees net affect the morament of eommeditles*

The Secretary of Agriculture:

By the mercttemt of commedi*

ties -•
yr. Wexleri

You mean from St* Louis, for instance, into

tho State ef Tcxss?
The Secretary e f Agriculture*

I meat* the trade relstlons.

Sol Wexler


tho mcreaent to and froa*

I cannot ^Ito yau m e t eoaparatiTO figures

between th o morcnent of merchandlss from Wow Orleans into
Texas, and tho TOOTaasnt of aerchandlse froa St* Louis into
Texas, but I bolicro it w ill compare Tory favorably.
in riiff«jrent linos of aerchandlse, but


Tt is

boiler* tho

agpr*gate in dollars and eonts will bo Tory nosrly if not
<(Bito as groat*
Tho Secretary of Agriculture:

Haro you node any figures

to tfiow what t he capital o f a bank would be, if you exclude
.r. Wexler:


Sitirely Texas?

The Secretary o f Agriculture:
vr. wexler:


I think I hare*

The Secretary of Agriculture:

jt you hare not, you can

file it later*
Hr* Wexler:


Tho capital and aurplu% including

Oeor*ia, Is $145,000,000, of which Terns has #7 ^ , 000, 000*
That would IcaTS aay #75,000,000 for the regaining States,
aad Obi por coat ef that would bo #4,500,000*
The Secretary of Agrieulture:

wow take Florida and


Sol Wexler

Mr# Wexler:


Taka Tlcrlda and Qeorgln out?

fhe Secretary of Agriculture:
report t a f the


I no tic# In the Comptroller1i

Florida national banka, only eight carry

reaerraa Here and only 17 Oeorgla natlanal banks.

To what

extant would It da violence te the natnral aovenent of
business in decrgla and Tic rids, te relate them to lew
|trr# Wexler:
then at all#

I do not think it would do any violence to
I think it would slnply mean that their bueines

would go te the channel which it naturally ought te ge to,
and will gs to as soon ae the regulations of law peralt —
The Secretary ef Agriculture:

To what extent are regulat*

ions of law responslbile for the present moveaent ef trade
in Oeorgla and Tier Ida#
wr# Wexler:

I m s net referring te trade#

Yen Bade

reference —
The Secretary c f Agriculture:

neee net trade give rise

to these banking facilities?
**r# Wexler:

I dc not think so at all#

As T have just

stated, the qucstioVef *here a nan buys his merchandise has
very little bearing up on the financial state ef this propc*
sit Ion or the territery which should be served#


Sol Wexler

The Secretary ef Agriculture:

Then it would be purely

artl ficial?
Xr« Wexler:

t do : ou mean by artificial?

The Secretary ef Agriculture:

There 1 c nething natural in

l t 9 It le all artificial*
T-T, Wexler:

Vet at all*

Tor inetancet take the iron trade

of Pittsburgh, all erer the United states the hulk of that
business Is concentrated in the City of P i t t s b u r g


city In the country has oertain ^ e d a l U o s in sliieh it does
business, but that would not necessarily imply that a reserve
bank should bo established in every one of these eitles*
The Secretary of Agriculture:

suppose the banking business

of Georgia and Florida were normally with some other city,
would you think it could be established In cenneetlen with
some ether city?
Mr, wexler:

I think so.

The Secretary of Agriculture!
Ur0 Verier:


The secretary of Agriculture:
Mr* Wexler:

Then it would be artificial*

What would be artificial?

Te force the products which thay handle late

some ether channels, the goods which originate in their own
section, to force the business arts lag frem that ce^aunity


Sol Wexler


into a channel which would bo artificial*
Tho Secretary e f Agriculture:

Do you not think it would

bo unnatural to keep tho businooo activities separate froa
the coon editiee?
VT0 wexler:

I do on that claco of business, but I think

it hao very little relation to tho place they purchase their

Tor instance, nearly all the dry roods in the

United States are purchased in taw York*

What bearing has

that upon tho location of a Regional lank in a particular

And wr* Houston, this fact aust bo borne in ain4:

In orery state there are local jobbing centres which really
do tho bulk of the business*

Tor instance, take within a

short distance of Wow Orleans, we hero the cities of Vicks­
burg and Shreveport and so forth, which do the jobbing in
that particular section*

Wow Wow Orleans furnishes its

apecialtiesin certain lines, •> d St. Louis its qpeeialties
aad Wow York has its and Chicago has theirs*
The Secretary of Agriculture:

Haro yea anything to shew

to what extent Hew Orleans deainates these states in a
business way?
Hr* Wexler:
to a

lew Orleans as a part handles the ccsrttdities

very gre*. extent that are grown throughout this territory


Sul Wexler


to which I hsura referred.
The Secretary o f Agriculture:
Hr* Wexler:

(?ewrria and TXoridat

Wo, that rooo naturally to the Atlantic

8• aboard*
The Secretary of Agriculture:

Rare you aqy *xpsessions

froa othor states showing that they desire to be related
Mr* Wexler: Hone whatever* I have one or two froa
you will boar from, but froa Georgia we bare



I aa free to m? 9 so far as Georgia is concerned,

there would bo no obj eetion on ay part to Georgia being
excluded from this territory*
Tho secretary o f Agriculture:
Hr* Wexler:

How about Florida?

Florida, T think, belong* to thisterritory*

Or if you con elude to divide 'Florida, tho west eido of
Florida should properly belong to Wew Orleans and this
district; Pensacola and Do Tunlak and that motion have
closer relations to Wow Orleans than any other city, and
tho nature of its business is acre nearly like that e endue ted
in Wow Orleans*

I cannot conceive of an inland city being

qualified to handle tho business that is h&ndlcd at a port
like this*

Sol Vexler



Tho Secretary o f Agriculture:

You know tho law require*

us to hare duo regard to tho cenrmiience ond customary course
of trade?
Kfl% Wexler:


Tho Secretary o f Agriculture*
In mind

And I am asking you to hoar

and dlsou** tho course of tr*de in Texas, and in

Georgia and Tlftrlda whiehi you hare Included*
i*r* Wexler:
tom .

Wall, when wo say trade, that is every wide

What is particularly m b raced In that, I would not

know just exactly what to say*

Tor instance, we handle in

Wow Orleans —
The Secretary of Agricultures

Vo mean by that this* Take

Vest Texas; they hare an enormous cattle business that goes
to fort Worth and Kansas City*
¥r. Wexler*

Yes, we hen die ab aolutely none of that ,

therefore I hare exeluded, T hat o drawn a lino throwing
San Antonio and the eat tie raising country entirely out of
our territory there*

Tho rest of Texas could ho hotter serred

from wew Orleans than from anywhere else; it is closer te it
and its trads relations with vow Orleans are entirely
natural, ahsclutsly so*
to Vow

has the railroad traaapertatlon

Orleans and it has sea transportation to Vow Orleans*


Sal »exl*r


It has better freight rate* or equally as pood aa to any
ether pert, and the distribution of hardware and of groceries
and of ooffoo and that class of sisrehandiss from Wow Orleans
Into Texas is grsatsr than it is from any other city in tho
The Secretary of Agriculture:

Doss Wow Orleans distribute

ae st o f tho hardware and la^loanato that Texas uses?


I do not say most of then* They distribute
a fa ir proportion*
I donot think any on# mmst/of thes*
The Secretary of Agriculture:

Boos net Dallas itself

distribute a gredb dealt
w * Wexler:

T b e lls * it does*

I maintain that ths local

markets within a stats are do inr the bulk ef the jobbing
business withia a particular state aad a particular section,
and it


ths specialties which come out of the centres*

'PCr instance, we distribute out of W«w Orleans

2 ,200,000

bags of our oof fee a year, and that £ees te every city in
the union aad a great deal ef it goes ts the Tory states
ref erred te here*
of sug&r*

Wo distribute m ay asky millions worth

Ws distributs many millions of melasses which

gees late these states we refer te*

.We cannot distribute


steel rails and wire; er agricultural impl e a s t s aad things

Sol wexler



that ore not made heret but —
The Secretary of Agricultures

The *iain tM ng t am trying

te got your riew on lo Juet thiaS

What might ho is a

question that cannot Tory well he discussed hy us.



In what direction i s th e normal oourso of trade

!| in Texas fluid in Georgia and Tlorldiu
Mr. Wexler:

The normal course ef trade in Occrgia is net

te Vow Orleans*
The Secretary of Agriculture:
Ifr. Wexler:

The normal course of on tho aast coast

of Florida is not to Yew Orleans*
Tho Secretary o f xauxSboonxxx

And Florida?

And Texas?

The normal course of trade in Central Texas

and in la stem Texas le te Vow Orleans.
The Secretary of Agriculture:

By Central Texas you mean

San Antonie, Vaco, Austin, ?crt Worth aad ftallas?

Hr. Wexler:

I exclude Saa Antonio.

!| business with Wev Orleans.

Sea Aatenio dees son*


The Secretary ef Agriculture:

They represent that it Is

not with Wow Orleans.
Hr* WexlerS

Yes, I understand that they make euch reprc-

sentation, and I think —


Sol Wexler

The secretary of Agricultures


Here you any foots to ahsw

i that it is.
’’r. Wexler:

I have soae facts on eome lines of buslnese

! hero which will be referred to by eome of the other g m t l m m
who are in the mercantile line, which of course is sut of my
lino; but X think we can ntake a Tory ffcir showing of the
distribution of merchandise in volume, in doll are, into
Texas with any ether city in the union, but not in variety
of commodities, becauee as X hare said, we hare our special­
ties here as every other city has its special ties.


i; whole thing hinges on the faot —
The Secretary of Agricultures

X hare not emphasised the

banking relatione, because X reeognlxe that conditions hare
been artificial.
Mr. Wexler:


The Sooretary of Agriculture:

Although it dees eppear

from the actual tables that their connectione are relatively
slight with wow Orleans*
vr. Wexler:

Tf you will hear fronr the gentlemen Who are

«*g*ged Hero in various linos of business, they will make
clear to you the volume transacted in these various sUtes,

X think you will find th * very strong.


Sol Wexler


One point you hare to bear in mind in consideration of
Texas in this matter is that Vev Orleans is an old city; it
has been here for n*any years and it Has been the city which
has been the competitor of all of this entire section of
country, and there is mere jealousy in the state of Texae
than there is in any other state we know of.

We hare felt

it in their Railroad Commission and in every other


and they would make every effort that they could possibly
make to prevent a Regional Bank coming to Wew Orleans. They
would rather be connected with Hew York than to be connected
with flew Orleans or anywhere else,

simply from the fear that

the establishment of suoh a bank in Wew Orleans would create
a greater competitor than they have at present.
The Secretary of Agriculture:

They represent it le purely

a question of the course of their trade, and if you hare any
facts, we would like to have them.

Expressions of opinion

do not get us very far.
Mr. Wexler:

I realize that.

The Secretary of Agriculture:

wut as a matter of fact

they show great hospitality to Wow Orleans; they included it
in their district.
Mr. Wexler:

Yes, I know they did.

That was very kind of


So1 W oxler


The Secretary ef Agriculture:
The Secretary e f the Tr eaeury:

That is ell.
In Tier of the fact that

these reserve banks are tc cxerelse a particular function as
between ether member banks and that they are simply deposi­
taries of the rascrrcs ef the banks within the district and
exercise a re-di-counting function and may exercise a clear*
ing house function and other functions contemplated by the

Act, hew far do you think it is of Tltal importance that a
particular city should be deelrnsated as the headquarters
for such a bank.
Mr* Waxier:

Oh, I do net think it is of Tory T lta l

importance, ifr# MeAdoo *

T think the bank if organized in

the manner that you propose te organise then can serve the
community with equal satisfaction or Tory nearly ofual
satisfaction to a bank located there, except in places which
do an international business*

I believe that the great

ports of the country such as Wew York and Wew Orleans and
ji Boston end places o f that kind, it is absolutely necessary
that a headquarter*/should be established there because there
is net the

necessary experience for conducting the clase of

business which is conducted at pcrte, ae distinguished from


Sol Wexler


Inland towns, for doing this businesa satl sfaeterlly st
inland points, and the volume is largo and many transactions
eould com* up «hich would probably Vavs ts bo roforrod to
headquarters, which could not bo deferred for ths length of
time necessary to do that*
The Becrstary o f th e Treasury:

ret us be 4»ecific«

vow is that a legitimate
were is a vederal Reserve

lank which is located somswhsro within this district at eome
accessible point,

*?ow tho ordinary course of your business
aa between depositors and the banks 1 s/rjoing to bo inter*
fared with; you are going along Just as usual,
Hr, Wexler:


Y es,

The Secretary ef tho Treasury:

Your foreign transactions

sre conducted between the banks and individuals just ss now,
nr» Wexler:


The Secretary of the Treasury:
Vederal *eserve Bank itself only

You have recourse to the
under certain spoclfled

Mr, Wexler:


The Secretary of the Treasury:

guppeso that bank was not

in Wew Orleans but at so^e other

convenient and accessible

; point within this territory, and

you had occasion tc re-

801 W«xler



discount eernc paper; do you not think that the 'bank could do
| it just ss veil if it were loos ted for lnstsi oe9 st Houston
or vcnphls or Atlanta» ss if it sere looated in Vow Orleans
vr. Wexler:

Wof I do not.

I do not think they would knew

anything about the trsn esct ions, —
The Secretary of A&rlculture:

Who are they?

Who/wre the

vr, Wexler :

We do no t knew whs they sre yet.

The Score ary of Agriculture*

Put do they coma fro* Wew

Orlean tP
*r . Wexler:

vo9 they will not all come frm Hew Orleans!

even if the hank l a located hero.

*ut if the bank Is located

here, all the information necessary is here, and It is not
asMrfheres else,

vor lnstsnes, what would Atlanta knew about

a foreign transaction with iirasll, perhaps involving a rediscount of ♦200#000 or # 300,000 or a ship trsnssctlon sod
the nany other transactions which come up st a pert of this
ohsraoter which an inland city has never heard anything
The See rotary of the Treasury:

yet us touch on that point.

Here is the vederal pesorve Bonk; its directors are chosen


Rol Wexler

from tho an tire district; the banks art classified in order
that the various kinds of basks nay hare r present at ien on
that Board.

Six men, therefore, are che sen from the ant ire
T ct us aseums, for illustration that the Feserve

Bank was located at Atlanta. How Hew Orleans would probably
hare due representation on that Beard.

TXe government

itself selects three representatives on that Board, and they
certainly would be/tielected with reference to tfce entire
situation in the district.

Wew suppose also that a branch

bank was located at Wew Orleans,w composed of seven directors.
They would Km norc localised than the directors ef the
; Reserve Bank itself, because they would have to be drawn
frem a smaller area in order to serve this situation.


I take the ^rasil transaction to which you refer, it would
originate here and be passed upon by the local Board cf seven
men, and would be passed up te Atlanta, te the Reserve Bank,
upon which Beard Wew Orleans also has a representation.


you not think under those clreumstan cos they would be
cjttalifled te pass upon that transact lent
Mr. Wexler:

I t it had tc be referred to Atlanta, I do not

think you ceuld de the business.
The Secretary ef the Treasury:

I am assuming Atlanta


Sol Wexler




a point.

*nr. Wexler:

T understand*

But if it ha a to bo referred

to any point, I do not think wo could do the busiaeaa at a
port like this,

j t the branches are so established that they

have the sane right to do business that tho Reserve Bank
would hvwe, and it is merely a question whore the custody
or over lordship, you might say, of tho branch


to bo,

and their accounting and so on, T do not tMnk it would make
any differeno o to wow Orleans or any othor port,

^ut X

think it would make a very material difference if a bm k
located here had to got permission to effectuate a certain
transaction before it could be done, from an interior point.
I think it would be very much more desirable for the interior
point to report to wew Orleans, Whioh does all classes of
business k X tho interior point does, as well as many others,
than for a place like How Orleans to go to an interior point
whioh does one or two classes of business.
Tho Secretary of tho Treasury:

Waturally, in the organl*

sat ion of these banks, although the branches will havo a
local directorate and very largely an Independent nan tgoiosnt,
yet tho general policy, of course, is to bo determined by

reserve bank of tho district.

That inevitably follows.


Sol Wt,xlar


The branch In this ease will be more likely to bs independent
than the average branch bank, because ths branch bank is
largely directed by an individual, a manager whs has te
rescrt ^ncrs to hoadqfuartcrs than a local directorate would
hare to do to ordinary transactions! and undoubtedly the
local branch would be able to conduct them wit out baring te
refer erery transaction tc headquarters* Hew assuming that,

does it become so important that the Beserre Bank itself
should be located in any one particular olty in a district*
1 could illustrate it better by taking the Treasury of the
United states, which is looated at Washington, with certain

Vow at a certain time we hare made deposits

throughout the country.

Xaoh section of the country was

served according tc its requests, frem Washington, just
as effectively as they could hare bee* served if the T©deral
Treasury had happened tc be at New Orleans or at Chicago*
Mr. Wexler*

Yes, that is rery true.

The Secretary of the Treasury*

And tks same thing applies

tc these bankst because they do net exercise a daily function
of re-dfciooun t or ef discount and deposit; they do net deal
with individuals*
l*r. Wexler*

But, nr* HcAdoe, I dc not think your comparison


Sol wexler

lo correct,


^he federal reserve lank at Washington would

stand In that relation at Washington to a ll those banks.
The Secretary of tho Treasury:

It would occupy that

relation only to tho region of which It was tho headquarters.
The Secretary of Agriculture:
Ur* T»«xler:

?rere Is a central location, located right

between tho lines wo have here,
distance than

You moan the Reserve Board.




at which there Is no greater

miles, taking in this whole terri-

wov you hsvc recognized the desirability of Hew Orlean

es a location by the establishaient of nearly all the ftovemment of floes here in this territory, tho Secret perviee,
the lighthouse Department, the Quartermaster • s department,
the Postal Department, and everything of that kind.


steamship lines hare recognised it as s pert by coming to the
city of Vow Orleans*

The tropical fruit lines have selected

Wew orleane as their proper pert, and the railroads ef the
country have been building and endeavoring to get connections ;
into Wow Orleans ever since the bulldiag ef the Panama Canal
started, in recognition of its location.

And there le net

one single argment that cask be used against the location of
Wew Orleane as a shipping point fer a regional bank, w x t t i
except the st at oa at ts that may be made by certain people is

Sol Wexler


the State of Texas that they would rath or trade in St. Touis
than in *ew Orleans.

I have hoard nothing, T havo not semi

an argument to tho contrary.
Geographically wo havo tho
location. Wow vo l»3rtmteai tho Panama Canal for tho purpose
of o t r o l l i n g tho enormous Oriental 'business and tho tooth
and Central American business.

Where are wo in a position


to grab this territory without having tho head quart ers and

having tho fa c ilities for banking right hero whore it


What rood reason could there be fbr placing it in

an inland city?
The Secretary o f tho Treasury?

That Is not tho only

Tho poirt ls 9 what good reason there i s for

; so looting one city as against another within a givoi
territory; what prevailing or paramount reason i s there, in
view of tho limited function whioh those banks exerelse; in
othor words, arc wc not really attaching too much import w ee
tc the location of the wed oral pe curve lank Itself in each

We had testimony in Wew York from some eminent

bankers, one or two, who said It was not really vital te have
a reserve bank in tho City of Wow York, so long as it was at
am accessible point# ae that it oould exerelse tho functions,
for whioh

it was to bo established.


SoX Wexler

Hr. Wexler:


I fully agree with you, and in my first

states <»t T eaid that if *.ha branches ars properly organized
it will not sake a rery great difference where it happen* te
be located, if the branch is riven the authority te de the
businesa and do it promptly, beoau st banking business wust
be dons pronptly, it cannot be subject te delay.

And as

long as you are out for the purpose of aaeertalning where
they should be located, and as long as one has to be loeated
in this particular territory, then what g»ed reassn is there
why it should not be located in the City of Wew Orleans as
against the City of Houston or Atlanta?
The Secretary of the Treasury:

That is what we are trying

to find out.
¥rm Vexler:

vbat is what I an trying to toll you.

The Secretary of Agriculture*

*here is another point

whioh is more important tha* the selection of the cities,
and that is the location of tho district.
VT. Wexler:


The Secretary of Agriculture:

And our major problem is

to define the district.
VT. Wexler:

We have the state of Louisiana, we have the

State ef Wiaelaelppi and we have the State ef

Alabama, and




Sol W«xlor

ve hare un /7u« st 1on ably the vest side ef Florida; we hare

a large portion of Texae, if not all of it;

wo hare Cuba and Porto Rico, all in olooo connection; n>nd I
think you will probably hare hoard froa oorao of thooo eta tee*
We hare all thio business centering in/froia abroad, and that
wo aro anxious to cultivate —


of tho Treasury:

You can still do that.

Whether a Regional Bank is here or not.
ssr. Wexler:

rery true, but why should it not be here?

The Secretary of the Treasury:

That is what we are lock­

ing into.
The Secretary of Agriculture:

That lo the reason we are

asking you these questions.
W . Vexler:

That lo correct.

The Recretary of the Treasury:

Why should it not bet
You hare referred te the

fact that the balances or reeerres which asuty of these other
citlee keep there arc attracted by certain alluremente In
the way of free collections and payment of interest.


is the custom in Wow Orleans?
*3% Wexler:

Wo pay two por cent on balances.

The Secretary of tho Treasury:

now about tho fro 9 eheck



Sol. Vexler

Hr* Vexler*.

Vo choree evory bank that does buslnsss with

us tho actual sunount that wo pay for tho collection of thoir
Tho Secretary of tho TrearuryJ

\nd provided thoir balance

docs not Justify no chargo?
Mr* Vexler:

X was going to oayt unless thoy

carry a

sufficiently largo balance which, calculated along tho lino
X previously mentioned, would giro us a compensation equal
to what we could get if wo charged then for exchange*
Tho Secretary of the Treasury:

Vo had the earn testimony

as to tho practice in Houston and Dallas and Tort Worth,
which arc reserve cities*
Mr* Vexler:


The Secretary of tho Treasury:

Thoroforo you are all on

a parity in that regard*
Mr* Vexler:

Those Texas oitloo and ourselves are, hut X

think some o f tho osntral reserve cl tics arc not*
Tho Secretary o f tho Treasury:



speaking of Texas

now, because you havo got Texas in this district*
¥r* Vexler:


Tho Secretary of the Treasury:

So that these rooorveo

would indicate somewhat tho natural flew of business, would


Sol Wexler


they not, an between these different points?
Hr. Vixltr:



Tho Secretary of tho Treasury:

The amount of reserve

balances would Indicate a no rani condition*
Mr* Vexler:


Tho Secretary e f tho Treasury:

Vev Orleans, 7 see, holds

ths reserves of othor bahks, $ * , 051 , 674 , by the st<ite»ent ef
the Comptroller of Octsber 21st, 1913*

Wew let us take

Houston on the other hand; Houston has the reserves of
other national banks amounting to $7#6*2,97*# or about
$ 39600,000 more than lev Orleans*
vr. Vexler:


Tho Secretary of the Treasury:

And in the matter of

state and private banks, Vev Orleans has $2,206,000 of their
reservss aad Houston $ 5 ,05 2,000, a difference again of
almost $5,000,000*

lev of trust companies and savings

banks, Vev Orleans has $2f050,000, and Houston $984,000;
but sq/th& whole, Houston seems te be a reserve eentre ef
greater importance, for Instance, than '"few Orleans*

Hr* Vexler:

T et me explain*

The State ef Texas, yeu

covers an area I think larger than Louisiana and

Mississippi combined, end our other states • •





The Secretary ef the Treasury:
Mr* Vexler:

Yes, but yeu state —

The Texas bunks are probably the enly ones

that carry their reserves in Houston, and it is perfectly
natural thsy should*
The Secretary of the Treasury:

*o , there are six reserve

cities in Texas*
Mr* Vexler:

I understand, that carry their reserves in

Texas banks, I should say*

*ov the Texas banks, some of

them are carrying their reserves in vev Orleans or Bt* Leuis
and Chicago and ether cities*
The Secretary of the Treasury:

But to a very ana11 extent

in Vev Orleans*
Mr* Vexler:

I admit that*

The Secretary of the Treasury:

Of course, no reserve

city in Texss could carry it in Vev Orleans* because it is
not a central reserve city*
Mr* Vexler:

Yes, but this is the natural place, if it

vere not fer the central reserve city feature, because they
can gat currency o v m i g h t frem Vev Orleans vhleh they
cannot get from any other place*
The Secretary ef Agriculture*

Kansas City has a larger

but that is not a central reserve city*

Sol Wexler


Mr# Wexler:


yes, but you ore referring to states where

there Is a larre population and a great number ef banks.
The Secretary ef Agriculture:

But you offered the central

reserve city point as a reason for that, and new you say


Is not the reason.
VT. Wexler:

»o, I say It is the reason.

I say If ve were

a central resurve city In Hew Orleans, which we could be if
vs chose to bo, these reserves would naturally be carrlod in
Vev Orleans*

It is my opinion they would come here just as

they do to the next nearest eentral reserve city, which is
St. Louis.

Vo carry a certain amount in St. Louis.

The Secretary of Agriculture:

Kansas City and Vev Orleans

are on a par in that respect, and yet they have three times
as much reserves in Kansas City.
Mr. Vexler:

Because they have three times as much popu­

lation and money up there as ve have.

Vs eaanot produce

wealth like they have.

All the immigration has been to the
west Instead of the south. Ve have had no ima lgration
here until recently.
The Secretary of Agriculture: Has it not any relation to
the eeurss sf trade?
Mr. Vexler:

T do net think it has the sllghtsst relation.


Sol Vej&or

The Secretary of Aprlculture:
Mr* Vexler:


Tho cattle business, for

that w*y, does It not?
Yes, but we might contend that tho sugar and

si olasaos and cotton business coses horo.

Vo got tho full

proportion of tho business of our ceimaunity,

Ve cannot mske

it greater than it is, and we cannot plaee our figures in
competition with states that have fire and six times as many
banks as we hare and fire and six times as isany depositors
as we hare in our whole territory.
The Secretary of the Treasury: us take the state of

Texasf on that proposition, because you are proposing to
attach Texas to this district, and they are proposing te
attach Louisiana to thoir district; they say that banking
transactions are indicative of the business*


Bo you agree

to that?

?fr. Vexler:

To a certain extent, yes, I do*

The Secretary of the Treasury:

Certainly so far as the?

are localised they do indicate business, because you do not
hare banking transactions *ttvout business*
Hr* Vexler:


The Secretary of the Treasury: * Texas banks hare sane*
Federal Reserve Bank of St. Louis

like $ 75 , 000,000 capita and surplus, «nd Louisiana


Sol Wexler


bag £13 *000,000 appro* mately of capital ond surplus,
yr. Wexler*



Tho Sfjcrctary of tho Treasury*

Vow they say that consider*

ing the antire situation, that their vhole $75 *000,000 of
capital and surplus ought not to ho attached to the point
which can contribute only

$13 ,000,000

of capital and surplus,

because that does not indicate that the volume of businesa,
the greater volume ef business, is in the smaller capitalised


Vr. Wexler*

But T think area should be considered in

connection with that.

You might just as vail take five

ststes, if you like —

The Secretary of the Treasury:

I am taking — if you do

that, ve get down to Houston alone as compared with lev
Ur. Wexler:

yes, take the number o f banks, Texas has

519 national banks as against Louisiana 51 and Mlcsl sippl
35 ond Alabama 90.

Vow ve cannot expect to have the came

amount of reserves arising from 100 banks as ve would hare


The Secretary of tho Treasury*

I f lev Orleans vac

exercising a dominant influence within

this nearby

Sol Wexler



territory, i#r* wexler, It would bo natural, would It not,
that that dominance would bo reflected In your banking
operations/ as between theee coansunitiee?
VT. Wexler :

i?oro i t one point*

It io reflected Tory

much more than thooe figures show,

Tor instance, wo will

buy today Half a million dollars of exchange out of Houston
or Galveston*

That money does not remain here with us*


transaction is made and the credit is given, and tomorrow wo
will probably got a telegram to remit that to low York*


volume in dollars that Wew Orleans does with the State ef
Texas, I venture to say, If tho figures wore obtainable,
would bo more than tho volume of business in a banking way
done with all these reserve cities*

m t the deposits do

not remain hero* but tho business is turned over in wew
Orleans, and it is a clearing for a groat deal of that
business, but thoir deposits do not remain hero.
The Secretary of the Treasury:

precisely, and the same

argument is presented by these Texas cities; the voluoi^ of
exchange arising out of cotton transactions in Houston, they
I claim, i s not reflected in their deposits, but that that

exchange is sold in Wew York and some in Philadelphia,
Just as you claim that those exchanges between Wew Orleans


Sol Vexler


and Houston are net reflected.
^r. Wexler:


The Secretary of the Treasury:

And with reference to

other large transactions originating: in grain end

11 t o

at Tort Terth and Dallas tho ease argument applies,



ve are getting do si to the residuum refleeted in the rfiape
of aetual deposits in the banks and the capital required to
do tho business, and also in the reserves as oarri ad here,
the normal reserves carried In the different conmunlties;
Houston, Taxes, for Instance, would appear to be la that
regard do lag a very much larger buslaess than wev Orleans*
wexler; But, IOr* Secretary, is It not a fact that
the retfduum ask os very little difference?

The residuum is

not what counts, it is the volume of business which counts.
I may here an account on our books that carries $ 5,000
balance, and may ds $ 2, 000,000 of business*
The Secretary o f the Treasury:

lut the residuum has

relation to the business undoubtedly, and results frss the
amount of business (tone, and the larger amount of budtoees,
the larger the residuum, if profitable.
Mr. Wexler:
The Secretary

Wot necessarily*

of the Treasury:

I say, if profitable.


Sol wexler

«r. Vexler:


H#t necseearlly,

I can show you cotton

aoeounts which will do a volume of business of #4,000,000
or ^ 5 , 000, 000, whose average balances will not bo $ 2, 000;
|| and you will find that generally tho oase.

I think the

residuum has very little to do 4th it; it is tho volume of
business, tho turn-over, the liquidation of the commodities
|j into cash and putting cash into ccsrcodlties which counts.
The Secretary of the Treasury:

Coming to the cotton

buslnsss, hare you sens figures on that?
rr* Vexler;

They will be presented by ¥r.

The Secretary of the Treasury:

01 army*

Because wo hare had that

fact presented by other c itie s , ond thoy claia to do a wary
much larger volume of cotton
Vr. Vexler:

business than Yew Orleans.


The Secretary of tho Treasury:

Vhero do you carry your

reserves principally?
tfr. Vexler:

Vs earry our reservss largely in Vsw York.

The Secretary of the Treasury:
vr. Vexler:

VHat percentage?

I should say ef our total, 70 por cent would

be carried in vev York and

2$ per cent in Chicago, and

possibly $ psr c«it in st# Louis.

Secretary of the Treasury:

Vh&t are your trade


Sol Vexler


relation* with Ft. Louis, ore they In tIran te or not?
Hr. vexler:

Ve ship St. Louis s greet deal of our sugar

and oof fee and molaeses and rlee end commodities that are
green here, and a rood deal of our imported merchandise
which comes here poee te St. Louis*
Tho Secretary of tho Treasury:

Vhat is the time to St.

vr. vexler:
of that kind*

I think it is about




hours, something

nut in a banking way wo hare very little

business with St. Louis*

St, Louis earriss as large

balances in wew Orleans as Vow Orleans earrlos in St. Leuis.
The Secretary of the Treasury:

That would indicate that

there was e rather constant flow or equipoise between the two
wr, vexler:

They carry Juet as much here as we do there.

The Secretary of the Treasury:

As you hare just said,

the carrying of your reserves with Vow York and these central
reeerre cl tie* la largely artificial; I will net a ay wholly,
tut largely.
Wr* Vexler:

ryf course, our money arising frem foreign

exchange tran motions largely drifts into Vow York.

Ve buy


Sol Vexler



a largo rd tm e of cotton and lumber and cotton ooed pro duct s,
and so forth, and these of course, are emit abroad, whve
they are discounted and the clear bills eeld against them,
and woo York is tho only largo marieet for foreign


In this country#
The Secretary of the Treasury:

Yes, that is due to a

large measure to the tranaportation facilities of Hew York —
Hr, Vexler:

V e il, tho Imports there are so large, but our

Imports are growing rapidly, and wo ha t o a certain counter
demand whioh is Increasing all the time and w ill increase;
but the greater market is in Vev York, and it finds its way

of course, It finds its way back through the sub*

treasury; but so far as St# leuis is concerned, we do a
oertain amount of collections, wo setd a certain amount of
Items to thoir territory andthey sent a oertain amount of
items to our territory, and that creates reciprocal balances.
Tho secretary of the Treasury:

Hew far do you think, with

the par ring of exchanges between these reserre banks after
they ore established, it is going te be necessary to ke«f>
exchange and
balances for/such purposes, we will say in Vev York?
xr# vexler:

I do not think it v ill be neeossary#

T think

cur balances v ill dwindle down to no more than i s nscessary



to carry on our transaction*

I think cnt of the beneficent

measures of the b ill Is going to be to ke«p the aoney In the
section eh ere it belongs*
The Bee rotary of the Treasury:

Taking this district as

you here laid it out here, you hart* of course, what was
frankly stated in your paper, a district of rery large
borrosing or seasonal deaand*
Hr. Texlar:

A. maximum of $ 5 *,& 0 0 ,0 0 0 , including Georgia*

The Secretary o f th e T r e a u r y :

Sow excluding reor^ia *id

the other territory, what is the maximum?
Kr, Wexler:

is $ 2 8 ,GOO,000, excluding eeorgia,

Excluding Taxas, Texas borrows $16,000,000; Louisiana
borrowed $ 5 ,8 0 0 ,0 0 0 , Eftssissip?;! $1,5 0 0 ,0 0 0 , Alabama
$ 2 , 900, 000, and Florida $2,600,000.
The Secretary of the Treasury:

That is ae disclosed by

the reports to th e Comptroller?
Ur. Vexler:


The Secretary of the TreasUk*y:

of course, Qiat does not

reflect at all the borrowing of this district at the time of
soaeonal demands?
10r* Vexler:

Why net?

The Secretary o f the Treasury:

jt is only shat is

Sol Vexler



declared lay the national banks of direct re-discounts tc the
Conptrollor, and as you know they do not fire you any more
of their re-discounts than they can help*
Mr* Wexler:

to, but tho pro si option is r r a j bank rakes

an honest sta tenant.

They are r e t ir e d to swear to it. There

is nose re-di aoounting done indirectly.
The secretary o f the Treasury:

But they do a lot of re­

discounting which does not appear in tho statement; by one
subterfuge or another they arold the necessity of raking the
stataaent; it te perfectly fccll sh, but nevertheless they
do it.
**r. Vexler:

Yes, s ir f but here we do it and go the U n i t

tc finance th * business*
The Secretary of the Treasury:

At the tiac of the extreae

sectgenal deaand the financing of this di strict oould net be
accon&llsHed with that much rediscounting, could it?
Ifr. Vexler:

Vos, I do not think there is any question ef

Taking the figure there frem the statement of the

OcB^trcller, I see no reason it should be in excess of that*
The Secretary e f the Treasury:
nr. Vexler:


All the stats banks re*


sol Vexler

The Secretary of tho Treasury:


And that lo refleeted to

some extent —
Sir. Vexlor:

Ve lend to the state banks, and then ve In

turn may borrov.
Th* Secretary o f the Treasury:

But to the extent the

state bait** are not reflectod, aany ef then of course ougr
re-dlscoun t vith other state banks, and it m y net be shown.
*r. waxier:

I f you take the $26,300,000 exclusive of the

State ef Georgia, and add to it an additional 50 per cent,
you would get $4 2 ,0 0 0 ,0 0 0 , whioh I think would be a con*
servative way of arriving at it.

Tf you take Texas out

you *111 only h*ve *18,000,000.
The Secretary of the Treasury:
from the

looking at the question

standpoint of the efficiency ef the system and

the econcraios of the situation, hci» far would the argument
hold good which was very strongly advanced before the b ill
was passed, in demanding that so few districts should be
laid out that there should ae far as practicable be a large
diversification of industry end agriculture and other
productive enterprises within the distriets, and that they
should be laid out in ouch a vay that there should be,
along vith the berroelng end, a very large lending end?


Sol Vexler


I do not know but what yea hare advanced with groat paw or
oosio of thooo arguments >ourself,

T would like to know what


your views aro oinco tho b ill has been passed#

Tf you will resicaber, I advocated ono central

bank with a a many branchoa ao the bualnoaa of tho country
r e t ir e d ,

t a till bollove that would havo boon tho ideal

system an£ wo would not bo Investigating thla subject now
If that woro tho oaee*
Tho Secretary o f the Treasury:

Tf that wore tho caae,

would not the argument you made here thla morning againat
branch banka bo er si stronger*
IIr# Vexler:

* 0 , T do not think ao,

Tho Secretary o f tho Treasury:
at ill acre and would not bo


Th^r would be locallaed

apt to ce&rceinleite with

vr. Vexler:

Vo, and I aa hoping that you will organise

theae branch banka


they will not havo to do It*

Tho Seeretary of tho Treasury:

Of course, thla la an

academic dlaeuasionv ao to get back tc tho original quo at ion—
Mr. Vexler:

I Bade tho point at that time that the fewer

regional bank a we had. the bettor, becau ao there would be
greater strength in tho aaallor nuabar.

I still bell eve


Sol Vexler


that it ahm>lutely sound in principle#
The Secretary of the Treasury!

Than your riev is now that

we should hare the minimum number Instead ef the maximum,
eight Instead of twelve, or any intermediate number?
»/r# Wexleri

y « « , T think eight would be better than twelve#

The Secretary of the Treasury;

j s this region laid oVt

vith r fertnce to the diTision of the country into eight
nrr* Wexler:

Yes, sir#

The Secretary of tho Treasury:

Assuming eight, L



▼lew that it would he better to lay out this dlstrlet so
you could hare a borrowing ond connected with a 1 aiding m d
if possible?
Ur# Vexler!

I think that is all purely apeclous talk,

there is nothing in it#

I do not know any section o f this

country in the fall of the year that is easy and able to
lend any better than my other section#
Orleans as a ease in point.

I will take Vow

We are just as easy In tho City

of Vow Orleans from the month of September to the month of
March as St# Touia or Minneapolis or Kansas City er any
other city; and the Texas cities are just as easy as any of
those & ties#

They all hero the same strain#

Why? because


Sol Vexler

356 9


wheat, cotton, oats, com and everything d i o lo moring ot
tho sauto time, and at thi, time labor lo employed ond tho
m nuf acturers aro .-mploycd and tho payrolls aro the highest, \
and it is all humbug te talk about attaching ono soot Ion to
•mother section, bocau ss ono is a borrowing seotion te a
greater extent at one season of tho year than another,
Th* Secretary of the Treasury:

I think I heard a rery

eloquent argument from you before tho b i l l was passed, In

favor of /ju s t that arrangement.
KTi Vexler:

V eil, that war, when we were talking about

one central bank.
The Secretary e f the Treasury:

lo, that was when wo were

talking about having a fewer number of districts, three or

ho* are you going to meet that?

ttr. Wexler:

Well, you decided to have eight.

I am going

to meet the situation on eight, I am not rolag back to throe*
The Secretary ef the Treasury:

sat can you alter tho

-,*>f ^

facts as represented heretofore.
?ir. Vexler:


The faete remain, that if you aro going to

confine it to three, that you would stt a eh around those


three tho business that would bo best accessible to theee
three cities,

New you are going to havo eight, and you


Sol wexler


ought to attach to those elfJit the business most accessible
to tho se »iffht*

let me ?ir<a you a case in point*

ato ut the question of lending or borrowing*

They talk

Vo hare an

Industry In this state, tho strawberry crop; a little town
of lees than 1J00 people up here ship $5,000,000 of strawberries, and they nova in the otmter*

jt is not a drop in

tho bucket to the requirements coming in tho fall*
in the spring and suaraer*
not oare tfiat It is , a

jt stoves

And so has every section, I do

oertain amount of its industries

that move all the year round*
Tho Secretary of the Treasury:

p**""""*'-* .... ...
Admitting that,'howev«r,

the point T particularly want to got your view on is this,
whether or n o t , having eight districts, it is better to
start out with the fundamental proposition urged so strongly
by bankers before tho pas cage of tho b i U , that the districts
should be as diversiflsd as possible and should contain a
lending end along with a borrowing end?

low ehould the

coma it toe approach it from that tftaadpolnt?

If not, why

W . Vexler:

Well, if It wore possible, If you could pick

out a section of this country that was a landing section at
an entirely different time from when tho rest sf tho section

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

. .



*>■;.. k ,




Sol vexler


was o borrowing section, I should say it vould bo desirable*
But T defy anyone to do it*

Tt io net in the United Stst^o*

The Secretory of the Treasury!

?ut you think if it can

Ibo donof that is a sound basis upon whioh to approach the
Mr. sexier:

Yea, T think it would be aot but I hare t a k e n

it up T o r y carefully and hare tried to oonaider it , taking

particular section of the country, taking St* Louis or

Chicago or any othor point, and T cannot find ohore their
•train 1 a any different from our strain at tho ease oe&son
of tho toot, and yet they do a more direraiftod business.
Tho Secretory of tho Treasury:

pofsrring to your renark

oa to tho otrain which coma a upon all the banka in the fa ll,
and the necessity for roliering that otrain, how ha a it been
dene heretofore, where do you got tho voney?
Vr* Vexler:

Ve borrow money in vev York ond in 1 urope,

whererer the rates aro more adrantogeoua*
Tho Secretory of tho Treasury!

vr* Vexler!

You do not got it from

Ok, no, Chicago and St* Louis havo thoir

tongues hanging out Just as ve hare at the saato season of

Sol Vex1 or

Tho Feerotary of tho Treasury:

357 2

Hsw far has Ve* York be«n

a bio generally to take cart o f tho situation?


low York has always taken care of anything

vo hare erer asked them for,
Tho Secretary of tho Treasury:

wew York has newer lent


you back as much ssoney os you keep there?
Xr« Vexler:

Y e llt wc hare not asked them fsr it, because

under this reserve requirement ve hare always had to carry
such a large reserro on a buslnsss like ours that we natur­
ally would net borrow that much from them, and we can goner*
ally borrov money much cheaper in London than in Wew York,
and ve use what or cr faoility is beet, and sometimes get it
at Paris, just as Vev York and Ohioago do, without shoving
it In thoir b ills payable*

The only difference is wc show


The Secretary of the Treasury!

Do yeu not think it ought

tc be shown?
Vr, Vexler:

I certainly think it onsht tc be shewn, and

I hare nerer hesitated to shew it,
♦ 5,000,000,




vs borroved

Because the country had tc hare it to

no re the cr ops, and roll ere the situation; and v * did it
and shewed it, and we were proud tc shew it , snd t&*t wc



Sol wexler

could get it and do the business*


But a let ef these pluses

&» and borrow money frem Europe and shew it as b »nks and
bankers* deposits*
The Secretary e f the Treasury:

You think that the do*

st ruction ef this whole artificial system ef reserves is
a Rood thing for the country?
Vr* Wexler:

The best thing that oeuld happen*
The Secretary of the Treasury: Well, we twxiL that way

II ourselves, all the w*y through*
vr* Wexler:

And I *mnt te s ^

this, in view of the

criticioas I made of this b ill as it was in passage —
The 8 eerotary of the Treasury:

T am r*ing te relieve you

of any embarrassment on that account hy net asking say
xr* Wexler:

That is all right, and X want te say yey haws

rot a mighty ?ood b ill out ef the whele thing*
The Secretary of the Treasury:

b ill provides here on

page 14 that "Upon the endorsement ef any sf its member
banks*, and this is Section 1 5 s f the Aet, "with a waiver of
demand, notice and protect by such bank, any federal fieserre
Bank may di mount notes* drafts, and bills ef exehmi go



S*1 Wexler

note®, draft®, and bills of exchange Issued or drawn fsr
agricultural, industrial, or commercial purposes, or the
proceeds of whioh havo been used, or aro to be used, for
such purposes, tho Ted oral 9 es?rve Hoard tc have the right
to determine or de/lne the character of tho paper thus
eligible for discount, within tho meaning of this Act* •
Now there arc eose other provisions about tft*y'heing
construed as to prohibit such notes, drafts

ind bills of

exchange, secured by staple agricultural products, or other
goods, wares or merchandise, froa being eligible for such

!• * «
tfr. Vexler:


The Secretary of the Treasury:

The Committee has asked

the clearing houses in each one of the cities ws have
wlsited, and we are addressing the same inquiry to commer­
cial bodies, to st&mlt a memorandum on or before the first
of March, giving us their views and ideas as to what would
be an appropriate definition ef commercial paper, within
the meaning of this Act, and along with that memorandum tc
give us an idea of any local paper that hae peculiar
<&ar act eristics, describing it fully, mid also giving
suggestions as ts tho standard form or forms of drafts.

Sol Wexler



b ills , notes, an! so forth, that nay bo employed under the
7ederal Reserve wy stem; an doe should bo Tory glad i f the
Clearing House of Hew Orleans would #ive oonsideration to
that problem and submit such a memorandum on or before tho
first of Maroh.
nr* wexler J

Ve would bo rery glad to do it.

Tho Secretary of the Treasury5

On p^re 19, Section 16

of the Act, it is provided:
•The federal Reserre Board shall oak* and promulgate
froa time to tiao regulations governing tho transfer of
funds, and charges therefor among federal reserve banks and
thsir branches, and aay at its discretion exercise the
functions of a clearing house for such federal reserve banks,
or a ^

designate a federal reserve bank to exercise such

functions, and m y also r e t i r e each such bank tc exercise
the functions of a clearing house for its acabor banks.*
Ve should bo "lad to hare your Clearing Houso submit
your views m d s a fe s t ions as to how that provision o f the

b ill aay be best effectuated.
nr. wexler:

Tt is a large problem —

nr. Secretary, that provision of the bill is

tho ono that is bothering us more than any other, because
ve do not understand just exactly what was intended to bo


Sol sexier


In the dl .cunelon which took plaee at Washington

the idea was to endearor as far as possible to oil si note
this Tory hoary embargo upon business which is created by tho
heavy collection charts levied b;

all banks all ©rer the

country, and which X think i s Tory desirable to bo done,

and which can bo done through the agency of these regional

I suppose your question is directed as to How that

best can be done?

The Sooretary of the Treasury:


The purpose of

the A<* is to substitute a syetea cf elegances for the
present slow and cuabersome and expen0iT0 systea of cheek

Mr* Wexl*r:

And of transfer of funds.

The Sooretary c f the Treasury:

And the transfer of funds,

vr. Waxier:

Ve are paying rery h m ry rates for the

transfer of funds today, whioh should be dene by a mere
bookketpin# entry.
The Secretary of the Treaeary:


Ve eould like tc

h are your Tiews about that.

Ur. vexler:

I would be Tory $lad te do it*

is e f the highest Importance

T think it


Sol Wsxler

The Secretary o f the Treasury:


of course, there is

another feature of the Act in that same section requiring
•every federal reserve bank xs receive on deposit at par
from member banks and federal reserve banks checks and
drafts drawn upon any of its depositors, and when remitted
by a federal reserve bank, cheeks and drafts drawn by any
depositor in any other federal reserve bank or member bank
upon funds to the credit of said depositor in e^id reserve
bank or member bank*

nothing herein contained shall be

construed as prohibiting a member bank from charring Its
aetual expense Incurred in collecting and remitting funds,
or for exchange sold to its patrons.

The federal Reserve

Board shall, by rule, fix the charges to be collected by
jj the member banks from Its patrons whose checks are cleared
through the federal reserve bank and the charge which may
be lo o sed for the service of clearing or collection ren­
dered by the federal reserve bank. •
>«t . Vexleri

does it nott

Yes, it says may handle without charge,
t* does not say must.

The Secretary of the Treasury:

x* says It shall not be

construed as prohibiting a mssiber bank from charging aetual


Sol vexlor

*fr* Waxier*


Tut in thi beginning, that the lederal reserre

bank m y receive —
The Secretary of the Treasury:

it says ahtll reeoiTo*

That Is also a Tory important phase o f thi • problem f and
wo should bo glad to hat o the Clearing House ouha it any

i suggestions or opinions it hut on that*
*0r* Wexler:

Vo sh all toe Tory glad to*

The Secretary of Agrieulture:

You included as a possi­

bility the state banks in your nhowing?
?#r* Woxlor:


The Secretary of Agriculture:

?»an you tell us what is the

t law in this state as to state banks subscribing?
Mr* Wexler:

There is nothin* in the law of this state to

prohibit a state bank from owning stock in another bank.
The Secretary of Agriculture:

was there beoi any ruling

by the Attorney oeneral or the State banking Department?
’fr# wexler:
So, but it has bo«o done Tory frequently*
and A iie nerer been any object ion by *he State Banking Depart*
The Secretary o f the Treasury:

Ts there an afflrnfctiTe

j; provision in the charter perm itting them to hold such stock?

Mr* Wexler:

I do not think there i s , but we Ho t s a Tory


. Sol Vexler

. 3579

good state banking deportment, and a vary excellent las and
▼ory good Bupervid on.
The Secretary of Agriculture:

Aro we to hoar froa that

departmen t?
Mr. w*ixl«r:

I do not know whether they aro horo or not.

Tho 8aeretary of tho Treasury:

tf you would bo «ood

enough to invito him to appear, wo should bo glad to hear
from him,
vr* V e x le r :


I do not know that there i s anything

affirm ative in tho la w , but it has never been objected to ,
beoauao I kr.ow ve havo occasion at times to take a l i t t l e

stock in a country bank, to help them in their establishment,
and it has never been objected to*
The secretary of the Treasury:

As a rule of law, powers

not expressly granted in a charter are not gran ted an<l arc
excluded, therefore if there is no affirmative power, it
might be held that they hove not the power.

Ve would like

you to Invito tho State Bank Cssbaisslonor to appear*
nr* Vexler:

I will take steps to have him appear*

The geeretary of tho Treasury:

V ill you communicate with

'ir* Vexler:

yes, * will get the information for you*


Sol Vexler

The Secretary of Agriculture:


Do you know how It ig in

Mr. foxier:

There boo boon no banking law up there until

recently, and they are now trying to pa as one, carrying with
it a Fuaron too of bank deposits, but which I think, if it
passes, will fores a great many of the state banks into the
national sy*twm*

They hare really had no regulation or

superrlslon la Ifissiesippi heretofore, and they haws had a
Tory bad situation.

The Secretary o f the Treasury:

In the figures -ou hare

submitted about state banks, you took erery dtate bank, did
Irr. wexler:

T took them a ll, and then divided it in half.

The Secretary of the Treasury:

!>o you knowhow wany

eligible state banks there are In the territory?

Did you

•xamlno shat?
Kir. Waxier:

Ho, T did not.

That It a hard thing to


The Secretary of the Treasury:

That would not be so hard;

it is only a matter of finding out what the capital is and
the population.

Mr. wexler:


*ut there might be some aho would not be


S o l s e x ie r

• l i a b l e If thoy

, $581

the capital*

The Secretary o f the Treasury:


The Initial teat

would he the capital, but if aome of then happened to ho
insolvent, of course they could not cone in*
T-r* Wexler:

I want to impress this point*

South of St*

Louie, in line from the Atlantic to the Pacific Ocean, We*
Orleans ie the la r g e at in population and the largest in the
distribution o f merohandl so, the largest and most important
port, handles the largest imports next to lew York of any

port In the United States, and th e largest exports of any
port next to Hew York; and is In every particular from every
standpoint the most Important city*

The government has

! recofmlzed it in hawing a sub-treasury here and in having an
Assay office here, and In having nearly all Its departments
of bunlneee localised hero*
The Secretary of the Treasury!

That argument would not be

affective, becau ee there are other oltlos similarly situated
which llso have sub-treasuries and assay offices and seorot
service agencies, and so on*
Hr* Wexler:


that is t n e , but thoss government

offices would not bo there if they wars nst cities of some


Sol Wexler

The Secretary of the Treasury;

I know of ices that are not

of i^o r ta n c e , where some o f the* are,
Wr. Wexler:

They will probably be abolished la time, or

they eheuld not hare been there in the beginning.

But ao

one will con tend it should not be at Wew Orleans.

We are

getting a great deal of geld througi Hew Orleane frem Centx*
America, end it ie increasing, and the importance of this
beiness which we spent £300,000,000 to control

must not be

Hew Orleans Is the place which the government

oupftt to look to for the development of this business.


ought to be the great depot for the wares o f the wozid, and
it ia certainly coming —
The Secretary of the Treasuor:

Bat if the reserve bank

is not located here it would go on just the serne.
Hr. Wexler:

Wot tc the same exten|.

The Secretary c f the Treasury:
Mr. Wexler:

Absolutely the same.

Prestige gees a long way la buslnsss nowadays,

as you know gsxj well, and for a regional bank to be located
in a small city cf 30,000 or 40,000 or 50,000 people, doing
a local buslnces, whatever it may distributs, and located
within 300 or 400 or 500 miles c f Wev Orleane, end not tc
locate it at jrev Orleans, would bs just as I have eaid,

sol Wexler


just like locating it at Albany instead of Vow York, or at
Vilw&ukee instead of Chicago, or at Hannibal, Vissouri,
in stood of St. Louis,
The Secretary of the Treasury:

If that should be done,

do you think any man who is sending Fouth American ores hero
to the Assay office would refuse to do it afterwards?
Mr* Weader:


vo , but ^ think it would seriously reflect

upon wow Orleans as a city and a port and a centre, and T
think it would bo the most tremendous blow to the business
of lfew Orleans that could bo conceived of.
The secretary of the Treasury:

^.ut your business will

proceed just the same, no matter where the reserve banks arc
wr. Wexler:

y *s

, I think the geographical situation is

such that we will proceed in spite of everything.
The Secretary of the Treasury:

And we must look at this

practically as well as sentimentally.
Hr. Wexlorl

t am.

The Secretary of the Treasury:

suppose o bank were not to

bo located in Wow Orleans, where would bo the n e *


place to put one to servo this territory?
wr. Wexler:

so far as Wew Orleans is concerned, Wow York.


8ol Wexler


The Secretary o f the Treasury:

. > 35$*

I know, but that I s net

practicable, because you cannot attach Yew Orleans to 1 ew


^ut T am spoking of practical things new* of course,

here is St. touts that is contiguous, and hare is Memphis
that would be aontiguous, and here are a let of ambitious
Texas cities9 and here is Kansas City and all these places
are asking for reserve banka; and here is louisville and

Which of all these cities that are within an

available radius would you say would be your first choice9
if wow Orleans were not chosen*
vr* Wexler!

of course, T cannot conceive of Hew Orleans

not being chosen and I cannot conceive of our being tied to
Houston or Veaphis or to Birmingham or Atlanta*

St. Touia,

of course, would he probably the next point*
The Secretary o f the Treasury:

You think that would be

Mr* Wexler:

That would be serai-respectable, but T cannot

conceive of our doinf? business with 8t. touia, at a distance
ef IB or 19 hours*

Chicago would be a satisfactory point

from some standpoints, and Hew York would bo our closest
point of relation.
The Secretary of the Treasury:

That is on account of the

Sol vsxl er


present bonking lawt that you say that.
vr. Vexler:

That and ths fast, as I Ho t s said, thofc ugp to

now Wew York Is tho principal markst for our foreign exchange,
hut that is disapp soring,
Tho Secretary of ths Treasury:

Is matt tr where you hare

the reserve bank, If nsraal conditions oxact ths continuancs
of that relationship, it will continue.
Mr, vert, or:


Tho Secretary of ths Treasury!

So ths location of tho

roservs bank is not roing to affect that,
Mr, Vexler:

rm% what ve need here is this, we need a

Jregional .bank, and the svnagoveat o f that regional bonk has
got to be as good and broad and big in *ew Orleans as it has
to be in Vev York, because the complexity of our trans­
actions here compares to that of Yew York and no other city
in this country that I know of.

I do not exoept St, leuis

sr Chicago, and the banks of St, Louis and Chiosgo hare not
the slif&tsst ceneeptien of the complex nature of the
buslnsss ve do here and they ore os u n fm ilia r with It as
the bankers in Memphis er Atlanta,
The Secretory of the Treasury!

But the answer to that is

that if it is located here Vev Orleans is nst ts provide


Sal wexler


nil the dir ctor*.
Wr* Wexler:

I underBvard.

leot you want to prerlde for

this country the bualnesa of the we at coaat.

You fool that

the construction o f the Panama Canal la a grant thing for
the bualneas of tho country.



We hare tho city to da the

V* hare to accapt their bllla inatead of thair


being accepted by London, and we have to promote to a great



aanae the buaineea of that country*
The Secretary of the Treasury:
The Secretary of Agriculture:

?he banka hare to do that.
Vo hare not rl a it ad any

elty yet which haa not » d e the aame argument, ^
from Beaton
to T<oa Aneelea.
•»rr. Wexler:

Admitting that, they are bound to make it ,

but hore we are right at their door.

We are today

We have the bueineaa

in our own bank handling many

a c c o u n t* with thaaa people*

The Secretary of the Treaaury:

lut that la goinp to

continue, whether a Reaerre Bank la located here or net«
That la dona between the laeal banka and thaaa eountriee,
and wuat of naaeaalty continue.
Hr. Wexler:

wut the facility for delgg it on a large

aaala muat come through the reaerre bank,w beeauee wa will


SoX wexler


reaeH our limit very quickly.

The secretary o f the Treasury:



to a question

of re-discount.
’n r. Wexler:


Tho Secretary o f tho Treasury*

i f the Begienal Sank is

accessible, you oan still do that business rery effectively,
and the question is to have it accessible and so it can
effectively handle the business; those are the paramount
considerations, are they not.
Hr. whaler:

The se are the paramount considerations, but

we can assemble here in the ra&naaaaant, of a bank of this kind
in the territory we have given, men familiar with the various
branches of business which are done here, and we can make
here just what this b ill is aimed at9 a great centre, and
take away from the preeent three centres, Chicago, St. Louis
and Wew York, that which rightfully belongs here.

That is

what you can do by the establisltment of such a bank here.
Of course you can say

you can do that in Houston or Atlanta,

and it i s true, you could do it , but a pert stands in a
different relation with the trade of the interior and exterior
that an inland city does net.
The Secretary of the Treasury:

But ths establi staaent of


Sol Waxier

tho hank is not polng to a 'f e e t that,
1ftr, Vexler:

I admit that, and I

eay wo ean do our business

just tho same, but I cannot ace any roaton why Wow Orleans
should bo tlod to a local Inland city whon oho lo doing oil
tho business they do as well as a greet many ether kinds of

Ve are the headquarters for the rallready tele*

| graph and telephone lines ond or cry thing ef that kind, and
j it is logical.
The Roeretary o f the Treasury:
vr. Vexler:

That is your opinion,


Tho Secretary e f the Treasury:

Ve are getting tho facts

tc determine thrf;,
VTn Vexler:

Vell9 that Is the point.

somebody else a chance, if you havo
Tho Secretary of the Treasury:

in a

finished with no,

Ve want te giro them a

minute, but wc want to finish with you while we

have got you there*

I want to giro

T would like to uqt before we proceed

what m have said in orery city, that the questions

ve have asked the witnesses must not be taken as indicating
any opinion or aay trend ef thought on the part ef the

ve must ask the questions in order te develop

the argument, and they have no slg n lfic »o e further than


S o l W exler


to develop tho facta.
Vr, Wexler:

Wo understand that thoroughly.

ffot ae submit

to you this blue print nap, which oho vs the distances of all
of those cities from Wat Orleans as well as the distances
to Central and South A fr ic a n ports, Cuba and Porto Rico.
The Secretary of the Treasury:


I ft

t r in i

We would like to have


Hayti and San Domingo are included.
J*r, Wexler:

You want three copies of the maps?

The 8eerotary of the Treasury:

Yes, and throe copies of

your memorandum,
(The papers wore accordingly f i l e d ,)
Wr. Waxier:

I would also like to file in connection *dth

this the report of the Wow Orleans Board of Trade, which
gives its commerce, and the resolution of the Board of Trade;
also a communication froa the Association of Commerce,
(Tho papers are as follows:)
Wew Orleans, Web. 3 t 191*.

mkttito, tebruaky 3rd,




Sol wexler


•VHER'KAS, The Reserve Bank Organisation Commission,
charged by the Oovernment with the locating of federal
Resenre Banks In the different districts ef the country, will
require conclusive Information and data in substantiation
of the claims of different cities before locating a Reserve
Bank in their localities; and,
1HKRXA3, the city of Yew Orleans is the most populous
city In the south9 the centre ef a large agricultural
district, it has business connections with the whole of the
State of Louisiana, of practically the whole state of
Mississippi, Southern portion of Arkansas, part of Alabama,
the Southeastern Texas; and,
WHKRKAS, in addition to its geographical location to
serve this section, it is the real financial centre, doing
|! a larger banking business than any other city in the southern
portion o f the country; and,
WHKftXAS, w«w Orleans is the greatest American market
for Cotton, Rice, and Sugar, end is in the centre of a
large lumber district; and,
VHKKKA8, wew Orleans is the second largest port in the
country, both in volume and valuation of imports and exports,


Sol Wexler


vith an lsport 'business ms great as that of all the ether
Bouth Atlantic and ^ulf ports combined; and,
WHfHFAS, Wew Orleans Is the only distributing point
for Coffee for the Southern and Mississippi Valley States,
ranking second to wow York only in the importation of Coffee,
and first in the importation of Tropical Fruits; and,
WHEKXAB, The w t

of Wew Orleans has inoreased its

trade with Cuba, Mexico, Porto Bice, and Central America,
five hundred per cent in the past thirteen years, there la
•rery indication that with the opening e f the Panama Canal,
a new trade era for wew Orleans will be opened up te the
west coast of tho Latln*Americas, and increase in a greater
ratio than that with the east coast, and that Wew Orleans
will surely be the gateway of ths XlsslBsippl Talley to the
Latin~Amerloas and the Orient, aa the Wiselssippl Hirer and
its great navigable tributaries will again be brought into
use for the handling o f a largo share of commerce of the
country; therefore,
BS IT RW3GLVB!D, That all of the aforementioned advan­
tages show that the City ef Wew Orleans would exert a pro*
ponderatlng influence in a Federal Reserve District such as
, it would serve, and by establishing a Regional Bank in this


Sol f « l « r


city, the Bow Orleans Board of Trade, Limited, ia firmly
convinced that tho Comal salon era would bo fully complying
with tho lntont and purpoaoa of tho now Currency Law* •

Jeff D* Hardin,

H# S# Herring,

Bow Orleans, January 14th, 1914.
Organisation Gowaittee,
federal Reaerre Board,
Washington, D. C.
Tho Vow Orleans Association of Coiaeree, composed of
or or too thousand norabers r op ro sentlng all of tho business,
financial, commercial, industrial, professional and
sclent if io Interests in this eity,

earn estly

believes that

ono of tho Regional or Todoral Banks should bo established
horo for tho following reasons:

Central location for handling domestic paper for

tho greatest number of Southern States and Cities*


Sol wexler



Central and natural frat #way for tho ffisslssippi

Valley t Central South, and Panama C»nal and La tin* American

financial importance, ‘being the South*• largest

banking city.

Industrial Importance, being the largest manu­

facturing City in the South*

Commercial importance, being the largest whole*

sale market in the South.

Shipping importance, being the largest seaport

of the South and second only to Yew York in volume and value
of exports and imports.

Metropolitan importance, being the largest City

in the South#

The present establistaent x* at Yew Orleans of

numerous ether great branches ef the Government having
Jurisdiction over the territory which would be covered by
a Regional Bank at Yew Orleans*

This combination of conditions, in conjunction

with the Panama Canal, will make Yew Orleans the great
market ef deposit for North America, and in effect, the
Federal Reserve Banki,of St. Louis



Sol Vexler

warehouse of tho Vestern Hemisphere*
Vo hare no word of dispraise for our competitors*
On the other hand we rejoice in the strength of their claims
and the splendid spirit of enterprise which is remarking the

believe, hcwever, in all sincerity that no matter

how meritorious their claims, those of Hew Orleans take

Ve believe their best interests and the best

Interests of the south and the United States will be served
by the establishment of the Southern regional Bank at lew
Ve believe that the force of natural

selection will

govern the action ef your Committee and that a Ted oral
Reserve Bank will ultimately and inevitably be located in
Vew Orleans*

Ve think that an impartial view will be taken

in this matter and that whatever City is selected, will be
wall selected*

Ve believe that Vew Orleans, the metropolis

of the south, will bs that city, and we


in all sincerity

that our representations in this remP«et will be confirmed*
Yours very truly,

V, 1* Tresevant,
General Manager*

Mr* Vexler:

I would alsc like to file the printed report

Sal Wexler


of the co rd of fuBiicilontri of tho -o0rt of How Orloono,


being tho Tourtoaath Report, from January lot to T>eeeaber

51 ot, 1910

(The i & m was filed* )
Ur* Vexler:

Also a telegram from ths City of Shreveport

a a fallows:
•Vow Orleans Clearing House Association,
Vow Orleans*
Or©up C of the Louisiana bankers Assn* at their annual
meeting held here today unanimously recommended Vow Orleans
as the Regional Reserve Dank for this district*


A* T* Kahn, Chairman, "
Also a memorandum of the distance to lew Orleans from
foreign ports and cities in ths diatrlet, and also a
transcript froa the American Review cf Reviews, being a
disinterested expression as te Vow Orleans*
The Secretary of the Treasury:
UT* Vexler:

Vas that solicited?

lo, sir, entirely unsolicited*

(The pqpcrs were accordingly filed *)
The Secretary ef the Treasury:
nr* Vexler:

Hare you any other exhibits?

* e t T think that la all T hare far the moment*

Here are seme other industrial exhibits*


S o l w * xlo r


(The paxphlet* presented were f i l e d ,)
Tfr. Wexler:

The next gentleman we here esked te appear

before you is m

*entley, who will Ho to some rlews te

expreie os to the l^ortont business of the gwrernment here.
The Secretory of the Treasury:

I do net think that lo

Ve hare a great many statistics, and thsre are

a groat many other gontlsaen to he heard.

Anything in the

nature of goremment statistics we hare alreody,
Kr, Vexler:

yt lo not in the nature of statistics, but it

is os to the gOTem^ent offices in Wew Orleans.
The Secretary o f the Treasury:

That Is one thing we know

something about, the goTernsont offices*
%fr, wexler:

T congratulate you,

^ut there will he no

objection to filin g w # Bentley's brief on tho subject?
The Secretary of the Treasury:

I was going to say, if ho

will file It , that will be better*
**r* wexler:

Are there any question* you want to ask him

•n that subject?
The Secretary of the Treasury:

I think not,

file that b rief, wo will give it attention,
to hare it filed in triplicate*

ft he will

Ve would like

yt is not that wo are

unwilling to hear those gentlemen, hut we are obliged to


Sol w«xlor


oconoraizc timo and E a r n e r they p re ten t statistical data
of that character, we prefer to have it filed in the nature
of a brief*

By the way, do you submit these cables, ?r*

Jfr* Wexler:

A number of them case, and I think they were

addressed to you, were they not?
The Secretary of tho Treasury:
'fr. Wexler:


Well, in order to get then in, I would like

to submit then with your permission.
The Secretary of tho Treasury:

We will give you permission

to submit them, providing the telegrams which wire sent to
them asking for tftese expressions of opinion arc filed with
the replies*
trr* Wexler:

We will see that that is done.

The Secretary of the Treasury:
as exhibits otherwise*

They will not be received

Will you file copies of the original

telegrams soliciting those expressions?
Hr* Wexler:

Yes, we will do that.

The Secretary ef the Treasury:

Just attach a copy of the

original cable to each one of the replies, and then wo will
receive them,

(The memorandum submitted by Mr* i«ntley is as follows:)



1 # I* B «n tley

lRAJrCHT*8 or



By L*

Ben tlqy,

Special Deputy Collector of Customs.
Oentlonan of tho Bsserve Bank Organisation Committee:
Your Chairman is quoted in the reesrd ss having atated
st one of your earliest sittings that the committee is sears
of ths csneaerclal advantages of ths leading cities of ths
country; of their location on the map, and what railroads and
terminal facilities they hare, and that it is not necesaary
ts consume tine in giving that sort of information,

it is

manifest that, as officials of tho Federal Go*emsentf you
aro also familiar in a general say with the various branches
of the government aerrlco located at Woo Orleans;


tho subject assigned to mo may be fully csvered by little
mere than a simple list of thsse branches and a mere outline
of the character and scope of thoir respective functions
and activities.

Iron tho briefest enumeration, hoesror,

must demonstrate that tho operations shlch ths gmssral
Government finds it nseessary and advantageous to conduct at
and fro* this city play no small part in substantiating ths
olalm of Wew Orleans to bo sslsotod as ths sits and domicile


L# X* B en tle y


of ono of tho reserve banka to bo established under the new
banking and currency a^stem*
V«w Orleans is tho headquarters port of the twentieth
customs district, comprising all of Louisiana and part of
Mississippi , haring jurisdiction or er Morgan City as a port
of entry, and over Vicksburg, Baton Rouge and Calcasieu Pass
as customs stations*

There arc approximately 300 customs

employes in tho several branches of the customs eenrlee of
tho districtf and their various lines of duty need not be
recounted to this committee*
calendar year

1913 ,

The collections for the

mostly from duties on Imports, aggre­

gated orer $ 12 , 000, 000, haring doubled In the past ten years*
The exports hare grown in equal ratio with the liqports, and
in their coa&lned value this city took rank next to New York
in tho statistical records for tho year*

In point of

customs revenues Ifew Orleans stood as the fifth port ef the
country in

1912 f

and is believed to have moved up into

fourth place laat year, being led only by New York, Boston
and Philadelphia*
Tho State ef Louisiana constitutes an Internal Revenue
district, with headquarters at Vow Orleans*

The collections

of this service average upwards of # 5 , 000,000 a year, and


L. K. Bentley

'5 6 0 0

thi* eua will be greatly augmented by the Income tax now In
prooeao of collection.

8, 500,000

It may be remarked In passing that

gallons of denatured alcohol were nanufactured

here last year, and that this product, which would hare paid
$ 1*10 internal revenue tax as ordinary alcohol, is entirely
exempt from that lory under the present law.
Tew better indicstions of the growing volume of a
community's population and business are to be found than the
increasing extent and revenues of its postal service.


total receipts of the Sew Orleans post office In the year
1900 were $490,253; In 1905 *h« total was $730,318; in 1910,
$ 1 ,0 2 4,7 56 , and in 1913, $ 1 , 256, 575.
deposits to date are $112,274.

The postal savings

There are


employes in

the post of flee proper, and all the rural mail carriers In
Louisiana, besides the
of the Ballway


employes of the Twelfth Division

ail Service, receive their compensation from

the Postmaster of this city, acting as disbursing agent for
the Department.

The Railway -ail Service division just

mentioned comprises Louisiana, Mississippi, and parts of
Alabama and Tennessee, with headquarters In tow Orleans.
Ours Is an sxchange post office f*r Porto Rico, Mexico, all



* Bentity


the Central American countries, and for tho countries of
both the east and west coasts of South America*

The Customs

Bureau sainted nod in the post office here handles the
dutiable rail for Louisiana, Mississippi and Teams,
There are two branches of the United States
Kwffinecrs* service located in this city.

One has Juris­

diction over tho Teurth Wisslssippl Hirer Improvement Die*
trlct 9 extending frvn Warrent on, V ise ,, nine miles below
Vicksburg, to the head of the passes near the mouth of tho
rlrer, a distance of 453 miles; while the other has superrision and control of the lmprerement of the passes or
outlets of the Xlssiosippl Hirer, and of tho harbors, lochs,
and interior stresses of Louisiana and portions of western
Texas and eastern Kiselssippl*

The cost of tho operations

conductod and supervised by these two offices aggregates
stroral million dollars annually*
The national sub-treasury at Wew Orleans rocelrod for
tho fiscal yoar

1910 165, 111,196

saws year #57»5 49|0*7*

and disbursed during the

These figures w ill show an increase

of about tsn per cent for tho past yoar, the receipts
running orer #70 , 000,000 and tho disburseaonts orer

The balances os hand in the raults of the

T. 1* P*ntley


sub-treasury rung* from |25,000,000 to #40,000,000.
There are eight Assay offices located throu hout the
United States, and the one at t*ew Orleans, occupying the
fin e property known as the United States Mint, has upwards
of # 22, 500,000 in silver dollars and &old bullion in Its

About #1,000,000 in *told bullion was received last

year, practically all from Central American countrles9 where
the development and growth of the mining industry Is sure to
result In a largo increaee of the movement of bullion to
this port henceforth.

Congress has under consideration a

plan to reduce the number of Assay offices to three, to be
i| located at Hew York, Seattle and Bow Orleans*

This city is

a logical point for such an office^ as it Is for a regional
reserve bank.
Jackson Barracks, on the left bank of the Mississippi
l iver i n

in the lower suburbs of Yew Orleans, is a

beautiful and wall-ordered military reservation whore
several companies of troops are regularly stationed.
Acrosethe river from Jackson Barracks is the extensive
and finely-equipped new United States Paval Station, which
is expected to be put into full commission under the wise
and judicious polley of the present administration o f tho


Hary Department*


*. Bentley


The esc end-largest fleeting dry dock in

the world le o part of the station's equipment, and the
biggest war ship e of tho American Wary can be readily
accowftodated in it*
___ _____________ . ~
... . ..
A short distai co below the Waral Reserration Is ths
new United states Immigration Station, one of the best plants
li of Its kind to be found anywhere*

This 1 s ths headquarters

li of District No, 8 , of tho Immigration Berries, which inoludes


Louisiana, Mississippi, Arkansas and Tennsssee*


Commissioner of Immigration located here has jurisdiction
ewer tho subports of Pascagoula, ftilfpert and Memphis, where
! immigration officials ars also stationed*

it Is tho policy

cf tho wederal Government to encourage tho diworslsn o f as
groat a proportion of tho tide of immigration as practlsabls
from Wew York and tho othor eaetem ports ts the southern
ports of tho country, and a hoary Increase of the immigration
jwork hero is regarded as inevitable*
The !)«pet Quartermaster's office, U*S*A«, at Wew
Orleans handles army sabsistsneo matters in Louisiana,
Ifieslsslppl, lower Alabama, Vestsm Florida and sastsra
j Texas, and has superrlslon orer all Wat ional Cemeteries la
tho south*

Tho Depot Quartermaster also has ofearge of the


L , E* Bentley


purchasing agency here for the Isthmian Canal Commission and
the Panama Railroad Company, which sends out large <3tsantitlcs
of fresh vegetables, lumber and other surpll es to the Canal

The one regiment of regular troops now in the Zone

will be augmanted to six or eight regiments when the Panama
Canal is completed and traffic through it begins, and the
quantity of supplies that must be forwarded there frost this
country and port will then be correspondingly increased*
The United States Marine Hospital at New Orleans Is an
admirably conducted, high grade institution, occupying a
beautiful site on the river front in the upper part ef the
city, near Audubon Park*

patients are received here frsa

as far west as Galveston, as far north as Vicksburg,

from Gulfport and other points on the Mississippi Gulf Coast,
and, of course, from both American and foreign vessels entering the port of lew Orleans*

In addition to the Hospital

thsre is an office for the treatment of emergency and minor
cases in the Custom House with an Assistant Surgeon of the
Public Health and 'Marine Hospital Service in charge.


extensive and efficient Quarantine Service la maintained at
Quarantine, La* , near the head of the lllsslsslppi River
passes, by means of which protection is afforded the country

L* Hi Isntloy

j6 0 5

from infectious and contagious d lim g st that might otherwise
bo intro uced through this

reat channel of co^nmunioe t&on

with other land a and people*
the headquarters office of the Slghth Llghthou ee
District la loeated at Hew Orleans and. has Jurisdiction orer
all naintenancc, construction, supply and repair work in
connection with the lighthouses in the territory extending
from Coder Key s, Florida, to the Bio nrande River*
There U alao located here a district Branch Hydrographic Office| the Jurladictlon and operations of whieh
extend from

r Vest to the eastern Texas border, Havana and

Xeesagea giving Information relative to wrecka,

derelicts, etc* t are tranamitted dally from this office
through the fine Radio Station at the Vow Orleans Haval
Reservation, and this same sodium enables the local hydrographic officer te keep in touch with ivory vessel traversing
the Oulf of Mexico which carries wireless equipment,
vow Orleans la he ad quart era for tho Radio Inspector
in charge of the Fifth Radio Tnspeatien District, comprising
tho States of Alabama, Mississippi, Loulalana, Texaa,
Tennessee, Arkanaas, Oklahoma and Vow Mexico, end the work
of thia officer la constantly increasing la velume and


L. K. Bentley


it io a part of his duty te eoe that vessels

subject to tho requirements of the navigation lavs apper­
taining to wireless telegraphic communication are equipped
vith proper and send eable apparatus before departing from

ort in tho district.
This city is also headquarters of ths Tenth Super*

vising District of Steam Vessels, ths jurisdiction of which
extends from Cepe Sable at the seuthsrn extrsmity ef ’Florida
to the rnouth of tho Rio orand e River, and includes Porto

In addition to the Supervising and subordinate

inspectors stationed at Xev Orleans, there aro inspectors
loos tod at San Juan, Apalachicola, Mobile and Galveston.
The Vev Orleans branch of the United States Vsathor
Bureau ssrvss a district embracing Louisiana, Arkansas,
Oklahoma and Texas, and has charge of ths cooperation betveea
the United States and vexioan veathor services.

The daily

bulletins collsctod by and sent out from ths headquarters
of A co both by vire and in printed form include veather
conditions and forecasts for the district and the stages
and fluctuations of the Mississippi Rivsr and all of its

The United States Court of Appeals for the Fifth





Circuit, comprising tho States of Louisiana, Mississippi,
Georgia, Florida and Texas, and tho United States District
|| Court for the pastern District of Louisiana hare their headquarters In New Orleans, and the clerks of both tribunals
live here*

The Circuit Court meets at Atlanta on the first

Monday of October, at Vontffomary on *&e third Monday of the
same month, at Tort Worth on the first Monday ef November,
and sits at Hew Orleans usually from the third Monday ef
November to the end of v^y following,
The Secretary ef the Tenth Civil service District,
embracing Louisiana and Texas, has his headquarters and
i residence in New Orleans.
The Department of Agriculture maintains a Pure Pood
Laboratory at Wew Orleans for the examination of all food
articles Imported or entering into interstate commerce in
the territory from pensaccla to H
the north,

Paso and to Memphis on

*ew Orleans ranks sixth among United States

ports in the volume end value of its food imports.


the same Department local inspection of animals, tropical
plants, potatoes, etc*, is maintained with a view ef pro. • 4'
venting the Introduction ef diseases cr pests which may
injuriously affeet the country's live stock and agricultural

K* B <
hj tX (Qr


pm duets.
Hecogni* lnrt the groat and growing importance of Ho•
Orleans as a commercial centre, tho Department of Commerc 0
has recently established here a branch office of its Bureau
of Foreign and Domestic Commerce, In charge of a commercial
a&ent oho so duty is to distribute arsons tho business people
j of M s territory tho information gathered by the Bureau from
American consuls and its agm ts who travel abroad, and to
report to the Department on local conditions*

Tho district

to bo thus f'erred from tho Bow Orleans braneh extends from
tho cast coast of Tlorlda to tho Cooley fountains and to St*
Louis on tho north*

only three such branch offices havo been

establishsd — tho first at Vow York, tho eecend at Boo
Orleans, and tho third at Chicago*

an* more is in contam­

ple t ion, to bo located at San rranclsco.
It will suffice to refer merely by name to tho
regaining Federal officials and servi ees looated in Bov
Orleans, such as tho Borerue cutter Service, the Army and
Wary Recruiting Stations, tho Dnltod States Attorney and his
Assistant, tho United States Commissioners

nd Marshal;

tho Speeial Agents of tho Oustows, Internal Rerenue and
Secret services and of tho Department of JTuetloo; tho


I.. S. ?«ntloy


Special T&aminers of the Bureau of Pension*; the Sup arintendeat of Construction of Public Buildings, under whose
supervision s magnificent new Post Office and Court House
Building is nearly completion, the Custodies of the Custom
House, Wint end other Government properties, etc#
Taking all these breaches of the general rorermient• s
operations together, and considering in connection therewith
the geographical location of Wew Orleans as the metro oils
of the Southern States and the nearest pert tc the Panama
Canal end the countries of the Western Hemisphere to the
south of us, it would scorn that the location of a reserve
hank in this city is too plain and logical a proceeding to
require further d r u n strati on or argument.
W . Waxier:

Will >eu hear Mr. W. B# Thompson, who was

for a number of years the President of our Cotton Wxchaage,
and who has been identified with the Pert facilities?
The Secretary of the Treasury:

Yes, wc will hear from

j! MT. Thompson.

The Secretary ef Agriculture:

Give us your aame, occu­

pation aad address.



— ---- -






W. B. Thompson

!fr« Thompson:

William B. Tftesip&on, Con&nls&ioner of Public

Utilities of the City of Wow Orleans*
The Secretary of Agriculture:

!sr. Thompson, you know the

pro bias we ere considering?
!&% Thompson:

Yes, VT. Secretary.

The Secretary of A*ri culture:

We should he very glad to

hare any light from you which you cm giro us.
«r. Thompson:


T will say by way of introduction, vr.
according to the

p r o g r a m

arranged, the ?ren wal presentation of this

that we had
subject was to

hare b*«n made as it has been nade by ifr. Weader, and to a
number ef others the duty was assigned of presenting par*
phases o f the subject.


To me has been assigned the

discussion of the pert facilities of Tfew Orleans.
In discussing the port fac ilities of lew Orleans in
connection with the claias of that city for designsticn as one
of the Federal jReserrs Cities under the Federal Reserve Act.
consideration must be given not only to the existing equip­
ment available for the present great recfuironents of aaport
and l/rrpert tra ffic, but aleo to the fundamental principles
of tho organisation of these fa c ilitie s , as these principles

affect the i essiblllties of expansion thereof to


wj—mini i

W. B* Thompson


the future greater dcmndi of conraerce and trade*
I take it that the purpose of the ncvernment is
apportioning the sevmral reserve districts, and the object
of the Organisation Committee in designating the locus of
! eaeh of the reeenro banks therein, is to so adjust the new
system that it will best serre the business of the country
j as a whole*

In this view, therefore, the osalifications of

the several contending cities should be considered not only
•jwith reference to the totel volume of business transacted
: therein an A thereabouts, >>ut also with regard to the relation
in which such olties atand towards national development
and international trade*
The seaports of the country are the clearing housas
for worldwide trade*

They are more*

They are important

factors in the development of domestic production and
industry, and in the expansion of commerce with foreign

This i s true beesusa these sea ports are the gate*

; ways through which the teeming productivity from within must
ij discharge its surplus into the groat world mar* at beyond,
and because they arc the gateways through which the creative
energy of the othor nations must send its surplus output for
profitable sale and exchange*

These sea ports aro not only


W. 3 . Thompson

J 611


the ^tew ays, ’but the toll gateways of commerce, because 1b
tho processes of exportation, importation, trans-shipment
ond distribution, so;r.e toll of eapense and delay must of
necesalty bo leriod upon traffic and trade,

Tho amount and

extent of this toll are consideration • of paramount im ertonce.

Tho port which offero tho maximum of facility at the

minimum of cost places tho producers and merchants within
and behind it in tho moot advantageous competitive position
with regard both to tho aale of their products abroad and
tho purchase of foreign commodities at home.

Tho extent to

which tho American exporter can compete with or undersell
hi a rivals in foreign markets depends to s largo extent upon !
tho cost of placing his products upon sach markets; and the
prioe at whioh domestic consumption shall secure Its
foreign supplies is materially affected by tho costs of
importation and distribution.

Hence tho extent, completeness

and availability of port terminal fac ilities and the oest
at vhich the same are supplied, are items of import®Co not
only to tho pert oity itself but to tho entire territory
tributary thereto; and hence the consideration ef these
elements becomes a matter ef material lmpertmice in the



W* B. Thomson


problem of adjusting the ^orernment • s great plan of currency
reform to tho needs and the deaindi of tho country's common
As you hare been already advised and as statistics will
declare, Mew Orleans is in point of total esqpsrt and import
traffic the second largest port in the United States*


requires no gift of proftaocy to foresee that a tremendous
expansion in the relume of this commerce is imminent*


asid sted logical rision will demonstrate the rerity of this

Situated near the mouth of the Mississippi Hirer

where the groat eaters ars discharged through deep, safe
channels into the Gulf, possessed of a harbor which for
security, adaptability and extent is unsurpassed, hacked by
the prolific Missiraiippi Valley, wherein is produced


of the raw material output of the n tion, geographically
and topegraphioally so located that it is ths gateway
through which the traffic of the vast territory between the
Allegheny and the Hooky Mountains may slip almost by
gravitation to the Southern seas, and directly connected,
as it will be by the Tethmian Canal, with the trade of
South America, of the islands of the Pacific, and of the
Asiatic countries, Mew Orleans is destined te be, if not the

V. B* Thomp eon


greats at aea part In tha world, aa nome of our more
enthusiastic partisans declare, at least one ef the greatest,
and a part which will materially contribute te the pro fe r it y
of the American nation and te the supremacy of American
In order that these present and prospective demands cf
coaraerce may he met, it is necessary that adequate terminal,
docking and trans-shipping facilities shall be provided*
In point of present ability to handle its great and rapidly
growing export and Import tonnage, the Vow Orleans equipment
is inferior to none*

In point of adaptability to indefinite

expansion and unrestricted encouragement of a broader
commerce, the facilities ef Uew Orleans are distinctly
superior to any*

This is not a modest claim, but it is made

advisedly and with deliberation*

Tt le approved both by the

philosophy of pert terminal development and by the mature
Judgscnt of expert authority*

the basis of this broad claim

is the significant fact that the water front of Wew Orleans
remains unconditionally in the public, and — except to a
fractional extent, which exception exists only under the
sufferance ef the people — the fac ilities ef the port are
administered exclusively by the public through the instru­


¥* B* Thom son

mentality of state and municipal beards*

J 6l 4

In respect to this

vital prerequisite to a free commerce, Use Orleans (with
one possible exception, to wit, San *rancisoe) stands
unique and alone among the port cities of the United States*
I f there be one conspicuous, salient, serious and
almost Insurmountable obstacle in the way of the unrestricted
growth of our pert cities and the progressive development of
ths commerce V a t must pass the re* through, it lies in ths
faet that the water front of all the principal ports —
with the occsption o f Hew Orleans, and to an extent — San
Francisco, is held within the constrictive frasp of private
ownership or control*

All of our principal ports, except as

stated, have bartered away their priceless possession for
ths mere temporary favor of tho transportatien agencies*
From tfains to Oregon, with the oxeeptlons noted, the commer*
olal water front of America is held in fee or lease by
private transportation corporations or systems*

yt iB

unnecessary ts state that this ownership and these


leges are utilised by such grantees primarily and often

for their own profit and net for the advantage

of the lmprsvidont former owners of the earns*

A private



V. R# Thomson


i transportation enterprise or system eeree little fer the
business prosperity of its port city so long es its rivals
are barred from co?npetition and its profits *nd power

The pheee of the port terminal problem which is

today absorbing the attention of those interested and
enlisting the best thought and effort of the port authorities
and experts, is the question as to the means whereby the
water front may be redeemed from private domination for
private profit, and restored to public ownership and
! governmental administration for the cerjson rood.

This is

the vital problem which we claim Wew Orleans has already
Termerly the wharves and docks of lew Orleans were
opmreted under lease by private individuals and corporations*
The results of this system of administration were insuffiolent

and expensive fa c ilities, and doterlorlatlon and decay

both in the condition of the property and in the shipping
business served thereby*

Some seventeen years a$e our

j people, realising the serious consequences of this unsound
policy of administration and foreseeing the vast advantage
to be derived from the operation of an essentially common
property for an essentially/good , took over the old Wharves
Federal Reserve Bank
of St. Louis



W* B. Thompson

and landings, and after overcoming many difficultly*,
lnau'Turatcd about thirteen years ago ths system of public
administration, of whioh system our present splendid
equipment, capable of earing for the second largest export
and impart business In the United States, is the fruition.
In the place of a U n it e d area of primitive wooden wharree,
open and wholly unprotected from the elements, we hare now
some five miles of cemrsodlous docks of the most substantial
construction, and protected, for the much greater part, by
ate el sheds of the beet approvad fabrication and design;
and Instead of excessive charges for meagre and /a d equate
service, there is new levied not one cent against the freight
handled ever these commodious wharves, and only a minimum
charge aeeeesed against the ships which occupy the same*
Under the fonaer regime the important detail ef
terminal ewitehing waa operated by the eeveral private rail­
road 11 nee whioh had

seourod track privileges on the water


fha several railroads operating on their own par-

ticular switch track units were net Interested in the move­
ment ef freight originating on or destined to any other line
than their own, and each ef eaid railroade levied its eeparate
i f c n y switching charge on all ears of ether lines

W# B. Thompson


switched upon its tracks*


Tho results of such conditions

were iHeritably that oxeosslro burdens, both in tho matt er
of dolaor and cost9 voro put upon tho movement of tho general
freight traffic of tho port, and shippers were In coneo—
quence to a groat extent forced into the wholly uneconomic
alternative of draying*

Some fifteen years ago the people

of Vow Orleans began a campaign which had for its object
tho operation o f a terminal switching system by tho

About 4 x years ape this movement acquired

concrete reality by the inauguration o f such a system by
the city to be administered through the instrumentality of a
board ealled tho Public lelt Railroad Commission of the City
of Hew Orleans*

In place of an unsatisfactory9 unorganised

and dlacrlmlnatory switching service, tho business of the
port now enjoys tho use of a comprehensive public utility
operated in direct connection with all avenues of trans­
portation and administered, not in the interest of any
particular transportation line or lln e s9 but in the interest
of business facility and for the common commercial good;
and instead of excessive and often prohibitive charges for
bad service, the public admin 1st rat ion system provides
expeditious movement and good service at a cost abnormally


W. B* Thompson



The wharves and doeks ef the pert of lew Orleans ae
well ae the river hanks and the adjacent land called the
*batture"t Which is dedicated tc public use9 are under the
administrative Jurisdiction cf an agent of the State ef
Louisiana, known ae the Board of Consmissloners of the Fort
of Wew Orleans*

The jurisdiction of this board covers hath

sides ef the river and embraces 41 miles of water front
available for utilisation as the needs ef shipping aay

only a small fraction of this frontage Is subject

tc private privilege and even this/ privilege is net held In
fee, but, by the terms of the grant, aay at the will e f the
grantor be reclaimed upon the basis of proper compensation
for improvements const ucted*

At the present time the

public dock ay etma cosqirlses five miles ef comm odious
wharves with a floor area ef 2,264,571 square feet, of whioh
wharves upwards ef


is constructed ef creeseted material*

Upwards ef three and one*half miles ef the wharves are
covered by complete steel sheds*

The wharves are served by

nearly three miles of paved vehicle readways and approaches*
The members ef the Beard may serve without financial

Wo charge Whatever i s wade for the use ef these

¥. B. Thomp son


|| facilities against the shipmsnts passing throurh.

Ths tell

in this r aspect is assessed against the ships fer dockage,
and are extremely reasonable

as shewn by exhibit ettaehed

I; hereto*
Daring the year 1913 the number of vessels arriving
at the pert of ^ew Orleans was 213*,of agress tonnage ef
I 6 #073fB69 tons.

Steamboats ts the number of



dluring said year exclusive of luggers and gasoline launches
tngaged in the oyster, fish and vegetable trade, numbering
during the period some 23*&*

The net earnings ef the Board

during the period, after paying the expenses of operation
and the interest on # 3 , 500,000 of outstanding bonds, was
Serving the publle wharves and a large number of
private industrial enterprises, as well as connecting with
all rsAlroad lines entering the port, the Public Belt Railroat
furnishes an unique and striking example of the successful
application of the governmental function to the satis­
faction of urgent general business needs.

This railroad is

a switching utility owned exeluslvsly by the City of ^ew
Orleans and operated by the municipality through a civic



V* B* Thomp son


board known as the Public Belt Railroad Commission, under
express constitutional Inhibition that tho administration
i thereof nruet always bs separate and distinct from that of
any railroad entering the City of few Orleans.

As presently

developed the Public Belt Railroad has approximately fifty
silles of tracks, including main lines snd service adjuncts.
; Ultimately the Belt w ill encircls the city.

At present the

operations of the utility are confined to the active water
front snd contiguous territory, but the projection of the
lines to th e rear of the city, intersection and tapping
sparsely peopled localities particularly eligible for
j factory sites snd Industrial witerprises, is not only
imminent but one Important stretch of such extension is
actually In process of construction,

the Belt Railroad has

Interchange connections with all trunk lines entering the
city and can readily establish such connections with all

lines t h *

may hereafter enter,

Tt exclusively

serves the

public wharves, thus placing all railroads and shippers
upon the basis of comien,non~dl8crV?&lnatlng access to the
•hipping front.

This access is available net only to the

rail lines presently operating at the pert, b«t to all

' 8

V# H« Thompson

56 21

prospective lin es, which are by these facilities inri ted te
use this pert, and are thereby relieved ef the burden sons
! and often times prohibitory necessity of gaining such access
under terms imposed by roads already established,

A similar

service Is offered to the ocesn carriers with the result that
the smallest craft, as vail as the greatest line of steamers,
is placed. In direct connection vith the rail lint of its own

The same coapprehensive opportunity is supplied

to a ll industrial establishments locsted on the Belt system
by connecting the sams

vith every avenue

of transportation,

| rail and vat er, preaent and prospective, thus placing all
such enterprises in the best possible position not only in
the Items of cost, convenience and expedition, but also in
respect to the competitive sotlvltles of ths said transportation agencies.
The switching charge of the Public Belt Railroad is
$2*00 per car fla t, covering the caovvsent of the leaded car
and the return ef the vapty ear, or vice versa.
is in Instances so***

This charge

AA- ^-1


less than vas enacted under the

fonser system of suecesslvs awltch movaments by the several
private railroad lines, and is believed te be by long odds

W. B. Thompson


the most economical service for similar movement to bo found
anywhere In America*

Tho Belt Railroad ^rstsm as presently

dOTolopod — including main lino tracks, Interchange tracks,
wharf switche s , public delivery tracks and industry spurs,
together with roundhouse, m chine shops, locomotive equipmsrt, etc* , — represents an investment of appro jdmately
$650,000 of public funds*

Of this amount approximately

$050,000 has been supplied out of tho City s alimony, tho
rem ining #500,000 being the proceeds of a sale of city
bonds Issued for Bait JRailroad purposes.

Ths city has con­

stitutional authority for the Issuance of additional bonds
to ths extent of $ 1 , 700, 000, with the avails cf whioh it is
intended to complete tho system around the city.

«*he Belt

Bail road is rsqui^sd to maintain itself, to pay ths interest
on outstanding bonds and to provide for payment of ths
principal of ths same according to the terms of the issus.
During ths year 1913 the utility handled 1/6,920 loaded and
empty cars which covered 75*6*7 revenue movements, from
which, after ths payment of operating, and maintenance

expenses and the Interest on the #500,000
outstanding bsnds,9
yielded a net revenue of #15t989»B5.

The bus ins ss ef the

utility has shown a steady and rapid growth from year to


V* B« Thomson


year both In respnot to tho volume handled and tho returns
therefrom, thus demonetrating not only the entire feasibility
of a publicly owned and operated switching railroad but


the vital advantage thereof to bath the commercial arid

industrial divisions of trade and to the ccmxrunity at large.
The success of these essays in governmental control
and administration o f port facilities has encouraged the
authorities te tJre steps towards a materiel awpli float ion
of the present system*

The people of the State have by

amendment to the constitution given the Board of Commi as loners
of the ^ortt the authority te construct and operate a
system of warehousss in conjunction with the existing

This adjunwt will make the public port terminal

plant fundamentally txx complete.

Under the said authority

the 3* art has already taken the prellmiary steps towards
an 1 sat anoe of bonde9 from the avails of which tho system
in tuesMen will be constructed.

There is every assuran ce

that the bonds w ill be sold without difficulty and that the
actual work of construction will be be#ra» in the very near

The warehousing plana are eeaprohenelve and will not

only add to the eapaelty and efficiency of the dock system
by relieving the latter of the possibilities of congestion
Federal Reserve Bank of St. Louis

by the accumulation of freight awaiting ehlpment and





distribution, but should materielly increase ths business
handled through tho port by providing adequate and inexpensive
facilities for assembling and dietributlng cargos and
Although the public warehouse adjunct to the pert
system is not yet in actual existence, yet its ls$ort«nce is
so great, its significance so far-reaching, Its consummation
so imminent and its logical promise so reassuring that I
feel justified in claiming a snail share of the time of the
Committee in calling attrition to the very considerable
impetus which thie development will £ive te the City's pro­
gress and growth.

is the purpose of the *oard of Commiesloners to

Inaugurate the mrehouse w stem by ths construct ion of
mammoth storage and shipping facilities for cotton*


utilising the great advantages and economies of public con­
trol and operation, It is an ell but gemonetrated fact that
the oost of handling and carrying cotton at the port will be
reduced to an astonishing minimum, and that ths negotiable
value of the commodity held on such storage will be greatly
cmha no ed.

By ehieh means it Is confidently expected that a

resolution will be effected in the prevailing methods of



V* B* Therapson

marfc etlng cotton, to the largo advantage befeh of the market
of Mew Orleans end of tho country producing the great
commodity In question*
Tt Is net zqy purpose to fatigue the Committee by any
extended dissertation upon the cotton marketing pro bleu,
but I take It that In the discussion ef a question relating
to Amerle&i finance, It will not be out of place to direct
some attention to the needs of one ef the principal sources
of Amerloan wealth*
The ralue of the American cotton crop Is approximately
one billion dollars*

This large Item Is the annual con-

tributlon of the Southern cotton faraer to the wealth o f the
nation out of his lnTemfcmsnt of mon^r, property and tell*
A difference of one cent per pound In tho price of the crop
moans a total dlffsrsncs of approximately $75,000,000 per

I am convinced that at least this smount, If not Tory

much more, Is Isst each year by ths producers of eotton
through Ineconomic methods of <narkstlng*

VIthin four or

five months tho tm rm r* sell ths supplies which keep tho
m Ills running throughout the twelve months of the year*
Tho result of this uneconomic procedure Is that the price
realised by the producer Is not tho maximum prise fixed by


V* X# Thompson


competition between buyers, but rather the minimum prise
fixed by cesqpotition between sellers*

After the current

demands ef eon sumption are satisfied the surplus of supply,
if offered, mist bs sold on a lower basis.

The maximum priee

would bo realised if the crop were marketed gradually
throughout the year as demand calls for supplies, and net
precipitately during a limited period when consumption is

And yet the crop is largely mrketod upon the

latter plan.

Xastxjcxkxxxx The blame for tho uneconomic method

| rests not so much upon tho producer as ig>on conditions over
Which he has no control.

Primarily the fenser needs the

funds in order that he may pay his debts maturing at the
harvesting season, snd these funds he cannot borrow except
on expensive terms; and in tho second plaoe, even should ho
! bo so fortunats as to be free of debt, tho cost and burdens
of carrying his product are m great that ho can not as a

businsss proposition well afford to do so.

The cause of

tho uneconomic condition complained of is obvious.


is no market in America offering facilities which make the
holding and equitable distribution of tho crop profitably

In ether words, under the warehousing conditions

that e?d at in this country, tho cost of carrying cotton Is
Federal Reserve Bank
of St. Louis

*♦ ?.* Thompson



too great and tho difficulty of financing holdings too
esnslderable to encourage tho ordorly course of sskricetlng

Unfortunately for us, these conditions do not

prerall abroad.
About five-eighths of our crop is rsquired for
foreign consumption.

This proportion is purchased prao-

tlcally during the limited period of excessive offerings
aforesaid, and hurried as fast as railroad trains and
stem ships can carry it across the seas to foreign concen­
tration points such as Liverpool, Bremen and Havre.


these dijrarsfrt depots the supplies sre distributed to the
mills gradually and in order, to the profit of the foreign
merchants, foreign bankers, foreign Insurance c o lo n ie s ,
foreign laborers and all collateral lines.

To m phnBizt this

complaint T have only to isive a few figures showing the
stocks oarrled in the three aforementioned foreign markets
as compared with the stoeks hsld At all ths Amorlcan ports
about tho middle of April last.

The comparison is made ss of

ths time mentioned because by that date tho active marketing
season in this country was overt

W# B* Thorap son



1,220,000 bales

Stocks at Liverpool
Stocks at Bremen

471,000 bales*

Stocks at Karro

__ i*JL>o2.o.JfeAafr

Total for tho three ports

2,032,000 bales*

Stocks a t all American ports

680,000 bales*

Thus it will be soon that at the time mentioned Liverpool
alone carried nearly twice as much cotton as was held at all
the American ports combined, and that the stocks of ths three
principal foreign ports were almost three times as large as
the combined holdings ef every American port from Boston to
T think that the fact that there are no groat American
distributing markets for American cotton i s one of tho most
serious eoonomio misfortunes of the times.

Vo must have

such markets, but we cannot produce then by tho more wishing,
nor yet by resolutions, nor even by legislative decree*


must create ths conditions from which such markets will be
logically sequent*

Ve ’tust provide facilities which will

enable the American producer to carry his cotton profitably
While It awaits demands, which will permit the American
merchant to accumulate supplies for orderly distribution, and
which will encourage tho foreign merchant to carry his stocks

¥. B* Thompson

In this country instead of abroad*


Wo must undersell tho

foreign competitor in the item of facilities and over*bid
him in tho natter of indueeaento*

This is exactly tho

condition which the Slat e of Louisiana and its Board of
Port Commissioners propose to cr eat o through tho inatrumentality of tho cotton warehouse project now lmm inent.
Tho public control and administration o f the facilities
in question, in conjunction with the doik ond switching
facilities under tho ssune ownership and operation, wiXX make
this consummation not only possible but entlroXy feasible.
Bo it remembered that in order to bring about the desired
conditions it is not enough to aereXy reduce tho cost • f ths
fsclXitlos to tho user, tho expense must bo minimised,


is not onougfc to mereXy improve conditions, they must be

under tho prlnclpXo of public ownership

and administration, involving- as It does ths use of public
lands and exemption froa taxation, and carrying roXeaso froa
tho necessity of earning dividends for/ stockholders,
and investing tho entorprlss with undoubted ssXvency and
authority, suppXem«ated by tho application o f money saving
and Xabor saving machinery and methods, tho warehouse systea,


¥. B. Thomson


operated In connection with tho other said facilities
adjunctive thereto, will inevitably, in eo far as logical
deduction and experience can demonstrate, achieve the
required efficiency, economy and probity.
Let me say one last word In particular reference to
the financial phase of tho proposed cot tan warehousing
ay stem.

I have observed heretofore that the difficulty of

financing tho cotton crop te the end that it m ight be
properly Marketed, constituted one of tho main causes
contributing to the objectionable status.

This difficulty

does net proceed from any doubt as to the value of cotton
as collateral, nor, in normal times, dees it exist because
of a lack of money necessary for tho purposs, but is tho
direct result of uncertainty as to the value ef tho docu­
ments which stand for cotton in hypothecation, and want of
confidence in the same.

Cot ten carried on sterage in this

country is housed in plants scattered throughout the cotton

Those warehouses may be more or less responsible, but

the probity thereof is not known outside of tho particular
community in which they are located.

The receipts or

collaterals of ownership issued by such warehouses have,
therefore, very limited currency.

In order that cotton may


W. B« Thomp son


be accumulated In quantityv funds for financing ths same must
be plentiful and readily available; end In order that this
condition may prevail, It is prerequisite that the documents
evidencing the ownership and custody of the eomaedity must be
of unquestioned and broadly recognised solvency.

This pre­

requisite Is definitely supplied by the proposed state-oened
and operated cotton warehouse*

The instrumentality which

will administer the same has been authorised by consti­
tutional provision to is^ue negotiable receipts for commod­
ities held by it in custody, and these receipts, by reason
of the governmental sponsorship thereof, will not only be
widely current, but will by their authority and probity
attract 4hd protect investment*

All of which, I need not add,

emphasiaes the necessity for increased available banking
opportunities and Indicates what we bell ere to be a mo sit
commendable subject for the purview e f the constructive
financial policy of the government.
Thus do ve outline the fac ilities ef the port in
respect both to actual achleveaeat and potential growth*
Already a great port in itself, its Uspertance rests not
alone upon the magnitude of its own current commerce, but
also upon the in disen sible relationship It bears towards


K. J# Olenny

36 52

the grant, prolific section of the continent dependent
thereon for a profitable outlet te the saarkets of the world.
Already equipped with unique and efficient faoilltiee9 it it
vitalized by the germ of

progressive development.


confidence, therefore, and with respect, we srtnxlt the claims
of ths port of Wew Orleans.

Tho Secretary of Agriculture:

Vill you at* to your n&m e f

reaidence and occupation?
Ifr. Glenny:

J. Glmmy, Wew Orleans, President of

Hew Orleans Cotton Bxchange.
Tho Secretary of Agriculture:

We find wt can usually read

these exhibits in about one-third of ths time we can have
than read to us,

«id if ;o u will just emphasise and point

out the esssntlal fasts, snd emph&slst the things that aro
In your mind, it will expedite matters.
Mr. 'Uennyi

T have endeavored to do that in this brief,

and it i s only four pagts long.
The Secretary o f the Treasury:
yr, C-lenny:

Just road It thsn.

Ths cotton business of the section tributary

to Wew Orleans, more than any other branch of Industry, feels


S. J . Olenny


the need of a Federal jjeserve r^nk; on tho othor hand, tho
Federal Reserve lank9 if located in Sew Orleans, will derive
greater benefit from cotton than if located la tho interior
or at any othor port, and will in turn offer greater
facilities te a ll classes o f cotton i&erehants and producer**
Tho Secretary of tho Treasury:

Omit that, and give us the

facto about tho cotton business*
The Secretary of Agriculture:

We will wspply the argument

if you will give us tho facts.
Hr* C-lenny:

I hare avoided statistics*

The Secretary of the Treasury!

We want tho facts about

tho cotton business handled in How Orleans*
The Secretary of Agriculture:

Wo want to know tho nuaber

of bales and its value and how it is financed and all that
sort of Afcti information*
Hr. 31 tony:

Well, the volume of oetton tributary to Yew

Orleans is in tho neighborhood of 9 ,000,000 bales, according
to the crop report of


Tho Secretary of Agriculture!

What we want is what is

handled hero in Sew Orleans and how it is financed*
Wr9 Glcnny:

Hero in Vow Orleans ws export about 1,700,000

bales of cotton*

jt is true that Galveston exports in tho

I . J . <len n y



neighborhood of 3,000,000 bales ef eotton, hut He* Orleans
handle8 in foreign exchange ef the cotton that passes through
Texas and other points, about $100,000,000 ef foreign

That is as nearly as I could arrive at it.

Tho Secretary of Agricultures

How do you got those

nr0 0 lenny:

From talking to the bankers hero and making

an estimate, and I think it is a little under rather than
orer Vie a noun t.
The Secretary of Agriculture:

Cannot the bankers give us

the axact amount*
Hr. wexler:

I ha to siren it

to you, taken from all the

The Secretary of Agriculture:
tho estimate w .
HT. Vexler:

Ho* does that compare olth

ftlonny makes?

T gave you the total amount of tho exchange

handled hero and not tho amount handled from tho State of
Texas only.
wr, ilenny:

T am not giring that, hut 1 say most of it

comes from Texas.
fr. Wexler:
Yr. nlenny:

OIt o vr. J'cAdoo the amount of cotton handled.
The amsunt o f cotton handled through IIev


B» J* aienny



Orleans it about l 970Cf000 bales*
The Secretary of tho Treasury:

What do jou moan by

through Vow Orleans*
Ifr. nienny:

Through tho port as a pert*

The Secretary of tho Treasur :
hero and financed hare?

Hsw much is handled right

Is the cotton passing through

financed here?


A groat deal of it i s 9 but th at is a thing

that T o ries Tory ouch according to the crop.

You could not

/rive an accurate f i*ure*
The Secretary o f the Treasury:

You could give it to us

this ye*r9 could you not?
MT* Glermy:

*por instsnco9 this year it was 1009000 bales

more than last year*
The Secretary of the Treasury:
JAr. Glenny:

What was it last yosr?

There wero l f700#000 bales passing through

lew Orleans.
The Secretary of Agriculture:

is not of much value to

us unless wo have tho faets*
Tho Secretary of tho Treasury:

Szact^ figures arc what we

want| if wo can got then«
mr# Glenny:

t did not got up tho statisties9 because tho



1* J . Gl«nny

figures ve rely upon are the government statistics*
The Secretary of the Treasury:
supply us vith that data*


Suppose, w * Wexler, you

course, ve want the cotton

business which is handled and financed here, Which gives us
an idea of the exactions upon the financial resources of
this community*
tfr* Vexler:

Ve v ill furnish that*

The Secretary of the Treasury:

Then if you vill file that

as a brief, Hr* ftlainy, ve will be #lad to have it in the
wr, Olenny:

You vant simply a statement of the amount of

cotton handled through Wew Orleans, its value and hew it is
The Secretary of the Treasury:

Ve would rather have the

amount of cotton that is actually handlsd here and the
burdca of vhlch rest s upon Wew Orleans, for two or three
years, If you please, asd then in addition to that you aay
i give us collaterally what passes through aad is incidentally
dealt with here, aid to vhat extent it is dealt vith*


aay file your atat eaent.
(Ths statement vas filed and is as follcva:)

The cotton business of the section tributary to Vev



-- --


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

E. J, alm ny

— --- n


Orleans more than any other branch of industry, fools tho
need of a federal peserve Bank; on tho other hand, the
| federal Reserve Bank, if located in Ve# Orleans, will derive
greater benefit from cotton than if locate* in the Interior
or at any other port and will in turn offer greater
facilities to all classes of cotton merchants and producers.
A federal Reserve Bank in Hem Orleans will be store
advantageously situated to perform its functions to the
South control territory than if It were located in a more
western, eastern, or northern city for the following reasons:
Vow Orleans is pre-eminently the largest banking centre
of the entire Southern Division o f cities, its bank clearings
in 1912 amounting to 1^,051,615,000, its nearest competitor
being Houston, Texas, with 4895,665,000.

yts i 00*tlen on

tho visslsslppl gives it peculiar advantages for export on d
inport business and sloe for business originating in the
interior, Whleh must bs held somewhere awaiting export.


a matter of fast, Vow Orleans is the banking centre of tho
south and today though working under disadvantages, furnishes
the money with which o large part of tho cotton crop is
financed, irrespective of whether it moves through this or
through any othsr southern port, end with a federal Reserve



S. J. Gim ny

Bank, it would be the centre through which

11 v&atly


foreign exchange business weuld pees a large part of which
now is being fsrc ed through lew York#
In the States east, west and north o f lew Orleans,
territory geographically contiguous ts lew Orleans as an
export centre, something over 9,000,000 bales of cotton are
produced which represent a value of # 500,0 0,000*

Of these

9 ,0 0 0,0 0 0 over Bfy finds its way to foreign countries,
entailing the financing annually of over $400,000,000 ef
cotton bills of exchange, probably the meet liquid and such
sourrht bills in the world*

It sdght therefore be argued

j| that with the proper financial facilities the poosibllltiss
of lew Orleans and the territory naturally contiguous
thereto would become enormous, and not only cotton but all
agricultural and other exports would receive their quota of
benefit and this section would gradually become more and
more independent ef the large money centres*
Cotton b ills of exchange passing through lew Orleans,
even under present conditions, are steadily increasing and
at present probably amount to #100,000,000 on cot ten which

does not pass through lew Orleans as a port*


These bills

of exchange, under the present intern of financing, anst




J. c i * n y

36 59

eventually find their way to Vev York and thence te the
accepting hank*

A federal Reserve ’Rank would obviate the

necessity ef this delay and extra expense and would at the
same time largely increase the business ehich would be
poseible under the changed conditions.
Vew Orleans does not rest its d a t a for a Pederal
Reserve Bsnk only upon its geographical position to make
such a bank a success, but because In the public ownership
of its docks and Belt Railroad and In the contemplated
building of a large public or state earned cot ten warehouse,
Vew Orleans has demonstrated that its cltlsens have shown
that confldcnos in publle ownership, which is necessary to
the success of any publicly owned and controlled institution.
It is true that vith one or tvo exceptions the publle ovnershlp of export and Import faoillties of other ports amounts
to almost an inpsosiblllty; It is also squally true that
ths cltlsens of Vev Orleans have alvays realised that in
ths public control of these facilities lies the only safe
moans of eliminating private control and therefore private
discrimination against any one Interest or eommodlty and
the establishment here of a pederal Reserve Bank v i l l , there­

nore readily appeal te ths people of this section and


S. J* O le n y


in so ap ealing inure to the development of the Reserve
An item of interest in connectlen with the Wew Orleans
public ownership plans, is the determination o f the wrtrtrv
state to erect a state owned and controlled system of ware*
houses for all classes of merchandise and agricultural
products, prominent among whioh is the cotton warehouse,
with all the latest modem and mechanical appliances, which
is to serve not only this port but the entire cotton producing section adjacent to Hew Orleans and thereby it is
hoped to make this seetlon tho greatest storehouse for
cotton in tho world.

The advantages of such a warehouse,

situated at tidewater and within twenty days of the most
distant consuming markets o f the world, cannot be over­
estimated and merchant and producer alike will share in the
benefits end independence which such a warehouse will aflferd.
Vlth a federal Reserve Bank at Hand, tho development of tho
eherlahed idea ef the south controlling its cotton will be
very nearly a realisation, because such a warehouse with
charges reduced to a minimum

and because It is close to the

producer, will furnish the farmer a safe, cheap, and con­
venient storehouse for eotton until he Is ready to convert

K. J. ^lenny


It into cash; It w ill, because of its accessibility to cay
and all of the consuming markets, offer inducements to tho
alddlesum to hold cotton hero Instead of in Liverpool,
Bremen and Havre, until the mills are ready to buy*

Tt w ill,

therefore, be at once epparent that the necessity for In­
creased financial facilities will be Immediate and the
Federal Reserve Bank at a place of re-disoount erill be of
inestlnabls service te the entire people.
The advantages to the Beserve Bank in being close to
such a eyetea of warehouses will not be far to seek since
the officers of the Reserve Bank will hare first hand
information as to the value and existence of the commodity
upon which its rediscounts are based.
Cotton is essentially a cash agricultural product
and is beyond question ths most liquid of all bankable
conraodit is s.

It is also one of the greatest assets of this

country and so far as ths south is concerned, is its greatest
and issst dependable crop and vpcn it depends the prosperity
of a larpe area of the United States*

These are the direct

benefite which cetten is responsible for, but its financial
influence extends far beyond the southern etates as upon
it rests the balance of trade, the annual expert value


IS* J* G lsnnjr

exc«eding the balance of trade In our favor*



value of the eotton crop le in excess of $1,000,000,000 of
which more than

ie grown in the dtatss adjacent te Wew

Of the eotton grown in tho western and southern bolt,
a very large proportion finds its way te fsreign consuming
markete while in the eastern belt, the rerwrss i s true,
sines the greater part of tho growth of

ths eaetem states

goes into southern and northern sills consumption and since
the Ted oral Reserve Bank * s province is to buy and sell
foreign bills of exchange, end to re-dleeount notes and
drafts secured by agricultural products, its situation as to
accessibility would be of supreme importance*
All of which is respectfully submitted*
Ths Secretary of ths Treasury*
scr* Wexler:

Who is ths next speaker?

Mr* Sanders, who is agent of the Leyland and

other steamship lines*

The Secretary of the Treasury:


Will you stats your name,

residence and sccupation*
VT* Sanders:

Matthew J, Sanders, WtsaasHip Manager,


«T* Zander*


Mew Orleans*
The Secretary ef the Treasury!
MT. Sand ere:

Of what line?

There are a do sen lines, Frederick Toy land

& Company — say the International V erean tile Marine.
going to give a very brief historic document*

I am

This is shot,

hut I do not suppose you will have time to even read that.
The Secretary of the Treasury*

We will have time to

examine these things in the record, and ouch things as we
can examine in that way, we do not oare to have read, because
it is a waste of time; but if you *111 point out now the
salient points, you may do so.
Mr. Sanders:

My duty was to give >ou the trade of Hew

Orleans, find I found that it wae loposaible te give you any
|! evidence of the relative value of Wew Orleans as a port in
the country* s commerce without a few figures ehlch are
contained in this, and a dhert argument which goes back to
before the civil war*

7 take It that In coniddering your

banking fas 11 it iss the volume of trade of the pert and its
relative importance to the country has a distinct bearing*
The secretary ef the Treasury:

tt has, and we are glad

to have that in eempaet form and summatisod*
Mr* saaders:

We find that ftr the five yars ending June


X» / •

30 th,




that Is Immediately before the Civil War, the

value ef Sew Orleans as a port was almost identical with that
of Wew York in the matter of th e value of its exports.


instance! the volume of the trade done through ¥ew York was
30.95 per cent, and through ^ew Orleans, 28. 3$ per cent.
The Secretary of the Treasury:

We are hound to deal w i th

modem conditions.
Ur. Banders:


We then show a degression and retrogression

years before there was any improvement, following tho

conditions resulting from the Civil War and the building of
the railroads west, and so on.
Wew Orleans was founded as a pert because it was on
the Mississippi River.

That is ths reason the city was

bui&t, and Its trade, with the building of tho railroads
east and west, the river trade disappeared entirely, and
It is practically a thing o f no importance now.
The point of my argument is this:

Vow Orleans since

1898, since the south has begun really te revive, shews a
steady increase in its business.

Tt is new in volume, on

June 30th, 1912, the second city of the United States in
exports and imports.
The Secretary of the Treasury:

ffavs yon the figures?

X. J. Sander*


j*. sender a:


I have the?5 hart*

The Secretary of tho Trcasuryt

just rood thorn for oay

fiTO years ago tnd last year*
Hr* ganders:

Last year X havo not got, for tho government

reports art not filed*
The Secretary of the Treasury:

T •nean the last year you

MT. Sanders:

I have the six great ports, and I -vant to

say that ths suthorltlos admit that there are three great
ports in this country, naturally, Wew York, Hew Orleans and
San Francisco,

The commercial authorities generally admit

that those ars tho throe naturally great ports.

I hare the

statistics here for tho six ports andthe percentage of the

The figures for June 50th, 1912 show total e^o rts

and isports of Hew York, as has always heen the case, very
vastly greater th<n any othor port sines ths war.

The total

of imports and exports for Waw Yorfc was #1,795|GOO,0OO;
for Wew Orleans, second, #2.24,000,000; lostsn third,
#198,000,000; Philadelphia fourth #1^4,000,000; Baltimore
fifth #118,000,000, and San wranciseo sixth, $106,000,000*
Ths figures vary a little, one way or the other*
hulk of our exports is cotton*




• J* Raider®

The Secretary of the Treasury:

Hew much of that Is expert

and hew nueh is imrort, have you thatt
Mr* Bandera:

Y es, I have that*

The Secretary of the ^rea^ury:
Mr. Sanders:
Tuns 5 H h # 191
$75 f0 ^9 t000.

?or Hew Orleans*

^or Wew Orleans, for the ft seal year ending

#149,160,000 and imparts

The greatest lnereaee ftew Orleans has had in

its trade has besn in imports.
The Secretary of the Treasury:
wr* Sanders:

what was it in

I have not those figures*

yo u wanted such details*


T did not think

I thought you wanted it briefly*

T can give it to you for 1903*

T made mine very brief

because I Vnow you would want it so.
The $<s*retary o f the Treasury:

You referred to the growth

o f the p o r t, and *e wanted to see what it has been.

fcr* Senders:

I have it since I 898, since it began to grew.

The Secretary of ths Treasury:

Ve will take it for that

Ifr* Sanders:

Here are the figures —

The Secretary ef the Treasury:




Tsfce 1907, now.

* » exports of $ 170 , 000,000 and


V. J. Sanders


Imports $46,000,000.
The Secretary ef the Treasury:

#170 , 000,000 in 190?, and

^179*°°0»000f I belieri* you said, in
Jtr. Sanders:


So, it is erm less in 1912*

It was

♦149,000,000, ths difference being largely in ths Talus of
Ths Secretary of the Treasury:


Ten years age what was it?

Tn 1902 the 'experts were #134,000,000 and

ths imports #23,000,000.
The Secretary of ths Treasury:

Hew do you accoiint for

the decline?
'dr. Sanders*

Tt is not a decline really.

The Secretary of the Treasury:
deellna from


MT. Senders:


We, I am speaking of ths


it is Tory largely the Talue of cotton,

the largest commodity we handle, ehieh ranges in price
Ths S oretary of the Treasury:

Do you know what the price

was in these two years?
Mr. Sanders:

Vo, sir, I hare not pmt that.

Tho Secretary of Agriculture:

What was tho number of


K. J . Sanders

Hr. Sander*:


I Hava not gone Into these particulars*

Thoss can all he Hven, if you went them.
The Secretary of the Treasury:

You might file a little

additional statement.
Hr# Sanders*

You would like the number ef hales?

Ths Secretary of the Treasury:

Yes, and if thsre is my

reason ths number of bales has declined, perhaps that is due
tc Galveston*
Ur. Wexlor:

Tt is due to the boll weevil in this par­

ticular section, where the crop has fallal off*
use* te grow



bales, and now grows 139,000 approxl-

mat ely*
Mr. Glenny:

The crop before the bell weevil in Louisiana

was over 1,000,000 bales, and immediately after it went down
to 250,000.
The Secretary of Agriculture:

What Is ysur estimate this

-MT. *E0iders!
Yr. rlenny:

Aad new it will gradually increase, as they

ars overcoming the boll weevil.
The secretary ef the Treasury:

I f you will get thsss

facts together and just file thsa as as exhibit, ws should
Federal Reserve Bank
of *St.
* - Louis
n r rMiiifMfr*narfir r~i






_______ .

.... .


M# J . Sanders



like to hfcvi th ® .
Hr* Sand or 0*
ll this,


"*he only argument I want to make is

thst notwithstanding wo have lost tho immense river

trado which came down here, booauec there were no railroads,
we are growing rapidly, as the figures «how.
The Facretary of the Treaeury 2

la the rlvar trade in*

or easing?
nr» S*u dera:

The rirer trade now, my point is, oannet

posribly be avoided.

The rallroada hare killed the river,

or competition fair or unfair has killed the river.


river has now navigable channels for at least 1000 miles all
tho y ar round, given >.y the government at great expense,
ji Ths old style of river craft ha a abaolutely gone, and the
new a.yle 1 a just coming into effeet, and the government la
i evolving a now barge system, and by s ay ftem In connection
with the government on gineers and privats enterprise there
has been evolved a very remarkable craft vfhich is plying
in this vicinity.
The Secretary o f ths Treasury!

Bo there is a revival of

river traffic now?
Mr. Panders:

Unquestionably, it is on ths verge, and

we are getting out of tho destruction whioh followed tho

M* Jm Sander#


railroad building east and west.


And that traffic added to

our othor traffic, agr point is it lo lupoooiblo for Hew
Orleans to aio id taking its natural place geographically*
We are the second port, because of tho valley —
The Secretary of Agriculture:

Have you given the 1 tarns

of that proportion and increase?

'Sr9 Banders:

Yes, sir, tho argument is here entirely*

The Secretary of Agriculture:

Is it argument or have you

given facts showing what that consists of.
Hr. Sanders:

flo, I have not ^one into that.

I can give

you the actual facta in regard to tho river craft which are
boing built and their capacity.

?or instance, I can toll

you, astounding as it may bo to you as a bank man, there
aro a number of craft recently built tfhioh carry 1000 tons
1000 milts for |1 8 .0 0 , the cost of fuel, and are doing it
every day.

The obsolete system of the river craft does not

begin te compare .

Those craft can carry the traffic on the

waterways that tha river hat already got at one tenth the
price of rail haul.
The Secretary ef Agriculture:

How aany aro there?

tfr. Sanders:

a dosen.

Tkere ere about

The Secretary of the Treetury:

Thay are only river craft?

1C* J# Sand era

Mr* Banders:

36 51

They srs only rirer craft.

The Secretary of the Treasury:

They do not ply on tho

v&tsrs of ths Gulf?
Mr, Renders:

As s matter of fact they are carrying coal

from Alabama, coming around the edge of th e Gulf, and carry­
ing general merchandise back,

^ut I only mention that as

the commencement of a new style of water craft which la bound
toforce tho uss of our rirer, and to that mist be added tho
traffic we are already getting by rail*

*ew Orleans baing

now the second port in ralues, ten yaars from now with this
sddsd river traffic whldi can be brought hore for one quarter
tho cost it can possibly be handled by ra il,

Is bound to bo

added and make us far and away and probably to tho same
extent, in the same r slat ion we ware before the war*
The Secretary of the Treasury:

tf you will supply that

data9 and f il e your statement*
¥r* Sanders:

I will with pleasure.

(The sta tea rot is as follows:)
It is laposslbls to preporly consider the ralue of ths
port of Hew Orleans in the foreign co~meree of the country
at large, without, at loaot briefly, alluding to the unusual

H. J* Handers



and special condition** which havo intimately and seriously
effected its trade*
It was inevitable that one of ths most i^nportant psrts
on the Continent, should be located upon the hanks and near
ths «#uth of the Mississippi Hirer, which, with its great
tributaries, drains the major portion of the continent.
This rast system of waterways afforded, previous te the
advent of the railroads, by far the most convenient and
sxtenslvs means of locomotion and transportation on ths
Before tho Civil War, Wew Orleans was nst only ths
second port in ths United States, but a close second In its
export trade to the leading port of tho country, Sew York.
The relative foreign commerce of the princlp&l ports of ths
country, previous to the outbreak of the Civil War, is sho«n
by ths following tables, which ftlvs the value ef the
average yearly ceswerce for five ysars ending June JOth,



X* S&nders



Avge* yearly
Wew York

far cent

ATge. yearly

»*r cent









6 , 059,011

1 .83






A ,



lew Orleans





San TTaneisoa

10 , 808,085


9 , 227,622


Fhila delphia

lew York * s percentage of tho total export trade of the
country during this period, averaged 30*95; Wow Orleans

The next largest port being the port of Baltimore

with a percentage of
In inqports, the relations were very different, that of
Wew York being then, as now, far in advance of any othor
The destruction of ceamercc throughout the south
restating from tho War and from the unsettled and thoroughly
unsatisfactory political conditions obtaining for some
fifteen years thereafter, was of course snnifested in the
reduced trade of all southern parts; but no port suffered
<iuite as anteh as Bew Orleans.



U J* bandar*

Thla very period of aerloua dapraaaioin is tho south
was marked by extraordinary development of railroad building.
Thla «aa mainly across tho cant Inant oast and vast,

it was

accompanied and followed by a re?mr>able immigration whioh
sattlad on the Graat prairies of ths northwest and middle
west, m d rery rapidly developed the agricultural and other
reaources of that great sactlon e f ths country.
*hs activity both in railroad building and immigration,
later tended to the Missouri Hirer and the southwest.


railroad dsrelopment rapidly changed trade routes, and the
traffic which had prerlously used the uncertain and irregular
highways of

ths Mississippi Hirer and its tributaries, vas

carried by the far more exponsire, but wore reliable railroad routes to the eastern seaboard.
This change of trade routes, together with the long
continued dspraaslon in ths whole south, seriously affsetsd
ths premier part of tho south which had, up to the War,
almost equalled Wow York in the ralue of its exports.
Ths ralue of esqporta from vew Orleans in I 860 was
greater than in any of ths following years until I 890; ths
arsrage for ths five years ending June



I 898 was as

M. J. Sander#


Pive ye arc ended June 3°th, 1896.

»«r. cent total

*459*&U »892











Hew Orleans





lev York

I8an vranoisco

Hew Orleans had fallen from a very close second to
Hew York, to a Tory had fourth.
Notwithstanding tho fact that tho value of tho river
commerce steadily decreased until it finally disappeared,
the foreign m mmorco of Vow Orleans has sinee I 890 continued
to expand, and tho figures of the same six ports previously
referred to for tho twelve months ending June jpth,
are as follows:


* ■



J. Sander*

Wew York

36 56





#1 , 793, 690,123


69, 692, 17*

129, 293,016

198, 985,187



85, 038,185

154 , 107,915



26, 438,400


149, 160,910



San vrancleoc!> 49,2 *9 ,754


108, 465,205

Wew Orleans

This shews Dew Orleans again the second part in ths
country in the value of her total foreign commerce.


most noticeable development in this statement# is the
enormous increase in the imports at Vow Orleans 9 their value
being nearly four times that of the ported previous to the
War and over five times greater than the period ending


The port of Wew Orleans extends for some fifteen miles
on both banks of the Mississippi river, and the available
harbor in the Mississippi river Is unlimited, as the river
for some 200 miles from its mouth, has a minimum depth at
all times of fifty feet.

Practically all the river

frontage within the Parish ef Orleans is owned and operated
by the State without any poesibllity that this priceless,
natural facility will ever be monopolised or controlled by


«T. Panders


private o nership.
The extensive system of whsrvssf sheds and other port

I facilities

have boon constructed rod are administered by a

! Board appointed by the State authorities, and the charges
levlsd upon shipping for their uss are H a lted by law to
such as is necessary for ttislr maintenance*
Tho Belt Railroad which forms ths link between tho Trunk
Railroads and ths wharves and many manufactories, and othor
II commercial enterprises, is also publicly owned and is co li­
tre lied and operated by a Board elected by the various
commercial exchanges and members named by the oity government#

Both theSo essential adjuncts of a Port are entirely

freecf private ownership or control*
Over Xfcs ton years ago tho Federal Government recog!| nizing tho pre-eminent Importance to tho country at large
of the. port at the mouth of tho Mississippi River, adopted,
and authorised the expenditure of some six million dollars
for ths purpose of building a second navigable channel from
tho main river to the ssa, so as ts prevent any possibility
of accident In one channel, blockading the commerce of the

This second channel is now praetlsall.


>1* J* Sandora



through tho southwest Pass at tho mouth of tho river, and Is
to be of s minlwuro width of 1000 foet with a minimum dopth of
35 feot, at all stages o f tho river or tide*

Thi s will givo

a control depth of seme f o r t y feetf and ensures that the
1largest ocean craft in tho world can reach tho wharves of the
port of We* Orleans*
Tho federal Gov ©mm ont # in other words, has recognised
ji definitely and practically, that there nust be coomeroial
facilities at tho port of Wew Orleans, the equal to that of
any other great port in the country*
Ocean tonnage frequenting the port of Bow Orleans,
shows a continuous and rapid increase;
the gross tonnage for
that for


being 4 ,6 3 * , 217 ions



an increase of over 1 9£*
Vo estimate of the futuro value to the commerce of
the country at largo, of tho Port of How Orleans can bo
properly undertaken without giving consideration to tho
value of tho Mississippi River and its tributarlea aa a
eon* ere la 1 highway*
The Mississippi Blver and its tributaries, some tec

miles In extent, like all rivers, have variable


>'♦ J. Sanders


stages of water which are governed by the rainfall,

Tn their

natural state and without improvement, the navigable
channels for commerce were exceedingly variable and unreliably
and this uncertainty, giving short or long periods of
availability for commerce, necessarily defeated any effort
for real economy of transportation.
Before the great development of railroads, following
the close of the Civil War, the rivers provided the only
practicable commercial highway to the seaboard, and regard­
less of their expense and delay, were of necessity utilised.
Struggling against increasing odds, riv<sr craft
continued its in effic ien t intermittent and unreliable
service with uneconomical and utterly inadw^uats craft,
but were inevitably eventually displaced by ths more regular,
though mors ejp ensivs service of the railroads; in many cases
undoubtedly, they were dispossessed by grossly unfair
methods of eonqpeti tion.


During the past thirty Jtsars, hewer**, the federal
Government has made enormous expenditures for the improve*
ment of ths navigable channels of the Mississippi river,
and aviny of its tributaries, so that there exists today a
permanent, all year round channel in the Mississippi Biver


M* J* Sunders

as far north



St* Louis, or or one thousand miles, and many

of ths tributaries ars also being rapidly and permanently
improved and are new available for the r;ost economical form
of transportation known to man*
The government has also appointed a Special ISeard for
the purpose of developing the most suitable water craft
for the transportation of traffic upon the rivers, and
private enterprise has in recent years evolved remarkably
efficient and economical river carriers.
Tt is now beyond doubt that within a few years, by
means of tho 1m roved and permanent channels and the vast
improvement in marine architecture, the river will again
come into its own and there will be ultimately developed a
traffic infinitely greater than erer before known.
Those Immense and rapidly growing sections of our

country In ths Mississippi Valley, the middle Vest and even
in tho northwest, being seriously handicapped in respect to
foreign trade by reason of their long distance from the
ssaboard, must receive the assistance of the most economical
form of transportation to the sea before they can successfully
compete for foreign trade*

All this development on the

rivers whieh is needed and Is surely coming, must of


M* J . Sander#


necessity centre its foreign trsde st the rlv«- terminus,
ths port of Kew Orleans*
In addition to its prime advantage in regard to river
traffic, Wew Orleans by its central location on ths Gulf,
commands the foreign trade, by equality of railroad rates,
of an infinitely larger scctlon, than any othsr port on the
Gulf or South Atlantic*
Tt competes on an equality of rates in a large section
of T om * and the whole of Oklahoma, with tho ports of 'lie
Vest, and throughout Louisiana, Arkansas and a large portion
of Klsslssippl and Alabama, on a parity with the ports to
ths sastward, but no part combines the equality which Vew
Orleans has with all thsse states*
The natural physical advantages of Wew Orlean s and the
Mississippi Fiver are unrivalled by any port in the country*
Ths ownership and control of the banks of the river, are
for over preserved to, and available by, the people at large*
Tho ossraerelal disabilities of the past fifty years, together
with ths drt*d of pestilence, sre behindtr>, and the destiny
of Vow Orleans as ons of tjis thrss sssentlally great ports
of our country, aad as tks great port of export, entry and


M. J. Bandore
C. H. £111 g


j distribution to tho Mississippi Valley and the immense
territory in the south an d middle *est,can bo delayed only
by the errors of humanity.
The Seerotary of tho Treasury:

Will you state your name,

residence and occupation.


cr* wfor’£ H. E llisf Manager of tho United Fruit

The Secretary ef Agriculture:

What is the nature of this

Hr. Sills:

They handle the tropical fruit trade from

Central America and outward cargo «s to Central America of
miscellaneous merchandise from the United States.
The Secretary o f Agriculture:

What terri tory do you


In the United States?
Tfir. n i l s :

We eormr the eitlre territory of the United

States through the ports of ‘Boston, low York, Philadelphia,
Baltimore, Charleston, Mobile, Wew Orleaad and dalyeston.
Our largest port Is *ew Orleans.

I presume you went the figures on the importation of


0. H. m i s


the tropical fruit trade from Latin America?
Th# Secretary of the Treasury:

T see It la brief.

You way proceed with your
You m y incorporate It In

the record*

ft Is only throe pages.

Ths subject which has been assigned me la connection
with the hearings before your Committee, relative to the
establishing of Reserve Banks throughout eipht or more
districts9 net exceeding twelve9 of the United States, is
that of the Importance of this

section of the country as a

Tropical Pruit Port.
While I appreciate the fact that you have means at
your command in Washington to obtain, in a general way, the
total exports and imports of ths City of Pew Orleans, in
dollars and cents, yet it Is not segregated in such a maimer
as to enable you to appreciate the Importance of this section
of the country and its relations to the Central American
countries in respect to tropical fru it, ehlch cam rises the
principal article ef export from those countries to this
ssetlon of the country.
practically the entire importation of tropical fruits
from British Honduras end ths Republics of Guatemala, Spanish
Federal Reserve Bank of St. Louis

Honduras, Plearagua, Costa Rica and Panama ars


C. H* 33.11 s


brought into tho United States through tho City of Wow
Orleans, and, from there, distribute* throughout all of the
states west of ths Mississippi Hirer, also oast of tho
Mississippi Biver ss far as a lino drswn from tho City of
Columbus, Ohio, south through the states of Kentucky and
Tennessee, following longitude 6$, to tho northern boundary
of Scutli Carolina, and thence In a southeasterly direction
to Savannah, Georgia.
A Ted oral Reserve Bank established in the City of Vow
Orleans would, from a tropical fruit standpoint, not only
serve to handle business from such industry throughout tho
statss of Osorgla, Alabama, Mississippi, Itonlolana, Texas,
Kansas and Tennessee, but would also serve te Handle such
business ss might appertain to all ths iJttln American
countries extending from Mexioo oouth to the Republics of
Panama and Colombia*

This would also include tho Island of

Cuba, from which point, lsrgo «fuantlties of pineapples and
othsr tropical fruits of a miscellaneous character arc
received through this section of the country every year*
The frequent steamship ssrvies between the Tropical
Truit Ports and ths City of Vew Orleans not only renders
It sxtrv&ely desirable but profitable for tho bankers and


c. h. m il


|business men ef Central America te conduct practically all
! of their banking and commercial business through the City of
Sew Orleans, and this is becoming mere pronounced from year
te year*

The banks ef the City of few Orleans are in a

position te serve as a Clearing Mouse fer the Central
| American countries, and a pederal Reserve Bank established
in the City of Ifev Orleans would attract mere business from
the Latin American countries, which, it may be said, is now
j| handled in foreign countries*
It would seem te me that the location of a Poderal
Reserve Bank in the City of Hew Orleans would be as
mandatory and essential


on the part of the United States

i! Government as the establishment of one in the City of Sew
i York, Inasmuch as It would


the w t lr c Oulf States,

Latin America and a portion ef the Vest Indies, in the same
manner as wew York will serve a portion of the Atlantic
States and the West Indies*
I have not had the opportunity to look over the
proposed distribution of the districts, or the number it is
I desired to establish, but, from nsy viewpoint as a business
man in commercial l i f e , and 20 years experience with the
Latin American trade and the tropical fruit trade with Latin


c. h. m i s


America. I should regard It as being one of the greatest
| calamities that could befall us if a B *nk was not established
at a point where, in sy Judment, it could best serve the
tropical fruit %n tercets,
I might say that the total value of these imports for
, the year 1913 was about as follows:

Banana Imortatlons

3 . 500. 000.00

Cocoanut Importation*
Importations of Oranges and

1.5 0 0 .0 0 0 .0 0

other tflsccllanoous fruits

#21, 000, 000.00

The Secretary of Agriculture:

What was it for 1910?


| would like a little comparison to show growth, in I 910 and
jj 1907, five year periods*

^11 is:

T cm

Can you give ue that?

give you in


I should say about

| 15 , 000,000 as a total, and now it is $ 21, 000, 000*

ft has

| increased more rapidly than any line of industry which is
imported thr ^ugh tho part of Hew Orleans*
The Secretary of Agriculture:

And it is new increasing

rapidly each year?
Ifir, Kills*

very rapidly*

The Secretary of Agriculture:

What do your exports a * cunt


C. H. m i l


te for the earns tine.
Mr* ^LlleS

I hare not the experts.

Another gentlesuu)

hae been assigned that topic*
The Secretary of Agriculture:

X mean on yowr particular

Hr. Kllle:

He haethat alec*

T aerely dealt with the

Importation froa Latin Aaerioan countries through this pert.
The f?.eeretary of Agriculture:

Where do you finance your

MT# Ellis:

We finance most of then right here in the City

ef WewOrleans.
The Secretary of Agriculture:

To what extent in relume or

magnitude are these transactions?
Mr* *11 la:

About whet is

stated here, from #21,000,000

to # 30, 000, 000.
The Secretary of Agriculture:



can you handle all ef

that in Wee Orleans?
Mr. m i l s :

We handle all ef that in Wee Orleans.

The Secretary o f Agriculture:

Do you here any difficulty

about it?
Hr. Sills:

1 e, ire hare no difficulty here about it,

except when ether lines ef Industry are moving, we hare to


c. K. m i l


appeal to Uew York for fund a.

This is all imported here

and shipped out in cars throughout the southern and western
states, aggregating sons 30,000 ears a year, and all ef that
business Is finaneed here.

It requires an enormous amount

of tonnage te handle this produ ct.
supplies in this pert, and th ^
their supplier

They purchase all their

get their coal here and all

all their men ef course have their wages paid

here, which requires a large *nount of money to handle, and
it requires a large amount of money te handle the leading
and discharging ef these vessels.
The Secretary of Agriculture:

Thank you, that is all.

If you can supply that comparative data, yeu rmy do sc.
30% Kills:

I can.

The Secretary ef the Treasury:

You may state your name,

residence and occupation?
1?r. Penick:

V. S. Penlek, President ef Peniek & Ford,

Limited| and they are engaged in the c l a s s e s and sugar

I have prepared a very shert brief, and I thought

I oould read it to yeu about as quickly as I could tell you
gentlemen what it alludes to.
Federal Reserve Bank of B
St. Louis

. ..


-. >■

--- ---^




y &9

w, g. Penick

The Secretary of tho Treasury:
VT* Penick:

You may proceed*

Hew Orleans occupies tho second place in the

sugar trado in the United States, following Vow York and
taking preaoden ce over Philadelphia, San Francisco and
A statement furnished by :<r, D, D* Colcock, Secretary
of the Louisiana 8ugar and Rice Exchange, a hirrh authority
upon such subjects, states thst Hew Orleans handles ninety
per cent of the Louisiana Sugar produced on plantations

in good years to something like


long tons;

and in addition te this 378,000 leng tons of foreign sugar
arelm orted and refined, making a total of



Of molasses and syrups, domestic and foreign, the
same authority states Vow Orleans handles 273,000 long tons,
from these figures, it will bo seen that Hew Orleans

is the Clearing Reuse for conservatively sixty-five million
dollars annually of sugar, and fifty million dollars In
molasses, or a total of one hundred and fifteen million
dollars, both of which produets are distributed throughout
the United States; but especial attention is called to the
fact that tho Southern States, particularly Texas, Arkansas,
Louisiana, Mississippi, Alabama and Georgia rely almost


J. S# P e n ick


entirely upon Vew Orloono for thsir supply of sugar and
tn financing the raising, manufacture and distribution
of thcoo products, there lo a tremendous amount of money
required, running into the millions, nearly all of whicli is
furnishsd hy the Hew Orleans banks#
It is hardly necessary to attempt a prediction as to
| the effect of tho removal of the sugar tariff two years
hence, but the history of the sugar Industry in this state
has shown it hae sufficient stamina to survive the severest
shocks and that It has wonderful powers of recuperation.
I put that in there because I did n ot know but what
you "Ofetlemen might think it would go out, but we do not
think it will.
In the last fifty years, the prise has fallen several
times ts a very low figure, thought to be less than the cost
of production, but ty ths use of improved methods of
agrieulturs and the advent of the lm»nnBe modem sugar
factory, vacuum pans, tripls effects and bagasse burners
(the letter enabling the manufacturer to use cane after the
juice has been extracted from it In plaoe of expensive
fu e ls ), tho planter has been enabled ts make sugars profitably

W. 8, Psnick


at a very much lower price for hie prodact, end, therefore,
it le confidently hoped that still further improvements and
the constantly increasing con esi^tion of sugar throughout
the world will enable the Louisiana sugar planter to con*
tinue to produce this valuable crop; hut cron if the industry
suffers severely, there will still regain many of the
larger centrals on the plantations of Louisiana, which w ill
undoubtedly turn their attention to making refined sugar,
and in addition to these, Hew Orleans will still have three
refineries, one of which is said to be the largest in the
world, importing, refining and distributing alone marly
four hundred thousand tons annually through Yew Orleans,
and she will also continue to produce, insert and distribute
ever increasing quantities of molasses for domestic use*

this it will be seen she will under any con*

ditlons remain one of the largest and most important cities
engaged in the sugar and molasses trade In the United States,
requiring immense sums of money for financing the manufacture
and distribution of these products*
Vow I should like to add te this that Vet Orleans
furnishes Texas with between #10,000,000
of sugars and m classes every year*

<nd $12,000,000

Texas relies very

W. S# P«mick



largely upon Hew Orleans for its supplies ef sugars and
The Secretary of Agriculture:

Do you hare any trouble in

financing these operations?
jrr* Panicle:

Wo, we hare had no trouble whatever that t

know of*
The Secretary of Agriculture:

You my ; ou do that

exclusively locally?
Hr* Penick:

You mean finance all these transactions?

The Secretary of Agriculture:
Mr. Penick:


The Aaterlo n Sugar defining Company has a very

large plant here and it supplies no doubtt some of that money
from wow York*

What proportion of it, I have no way of

knowing, but the money to make the crop in Louisiana here,
the money fer refining and distributing and selling, is
furnished from New Orleans*

Tor instance, in say own bualnoss

the laoney is furnished exclusively for the buying of these
supplies, many of which ws have te carry for eight and ten
months, aid they are distributed throughout Texas and ths
entire south, and tho ttalted States, and that money is all
furnished hers practically*
The Secretary of tho Treasury:

When is the extreme or

W. S. Vmiek


# 73

sea sonfid deaan d for money for the sugar crop?
Hr* Penick:

In November and December*
Ths Secretary of the Treasury: Tt comes along right after

Tfr* Penick:

J ight sfter cotton, yes,

The Secretary of the Treasury:
Mr. Penick:


Does it overlap at all?

Yost I should say it does*

The deaand for

handling and gathering these crops begins the latter part of
October, and of course cotton that has not been mrketed* it
is probably at its height.
The Secretary of the Treasury:
Hr. Penick:

In the sugar and molasses trade?

The Secretary of the Treasury:
wr. Penick:

When does the desiand cease?


I should say along in January or February.

The Secretary of the Treasury*

What are the sugar

refineries hers?
nr* Penick:
The American, Henderson and Cogsrcrell*>
The Secretary of tho Treasury: Aro they independent
ref in eri os?
ftr* Penick:

Y0S| sir*

The Secretary sf the Treasury:
vr. Penick:

All competitive?

All Independent of each other*

W* *3. Penick


The Secretary of

the Treasury?

That le what I mean, and

they ore cosgjotitiwe?
>*r. *onlck:

They are competitive, yes.

The Secretary of the Treasury:
finance their requirements here?

Bo the other refinsriea
The American, of course,

finance# a large part of their requirements in Sew York, but
how about the ethers?
Mr* pcnick:

So far as T know, they finance their require*

men t s here*
The Secretary ef the Treasury*
Mr* penick:


Are they locally owned?

Than we hare a refinery, the Flannery

Refinery, aid I presine they get some of their *>soney hera
and some elsewhere*

Then we have the reserves or centrals,

and as I hare mentioned in this brief, a good many are
turning their attention to the refining of sugar, antf hen
this crap gives out here, they will also start inserting
sugar fra * the West India Telands, probably, and thei if
this Industry ware to be exterminated, this 500,000 tons of
j sugar that Louisiana Jtindk Mas been producing, will hare to
be furnished through Wew Orleans, the most of it, through
these centrals that will be conrerted into refineries.
Ths Secretary of the Treasury:

Are those centrals

W# s# Penick



adrant*goou«ly jlnced for refining purpose**

Vr. ’Peniek:

very, T sho Id say*

The Secretary of the Treaoary:

Kara they water navigation

Mr* penick:

ye s,


of them*

I should say the? were

extranely well placed*
The Secretary of the Treasury:

Thank you*

STATEMailT 0? X. T. 0E0R8E.
The Secretary ef the Treasury:

You may state your naae,

residence and occupation,
?ir, George K* T* George; I am Chairmn of the Executive
Corait toe o f the Seaboard Refining Company*
While Tfew Orleans does not erush as much cotton seed
as in fom or years, owing to the inroads made by the boll
weevil and the building of numerous country mills, it is
becoming oach year more and mere important as a manufacturing
and exporting centre for the cot tan seed products turned
out by the


oil mills, located in the cotton producing

states, for outranking all other points in this regard*


Orleans holds the same relative position in cotton seed oil


S. T* George

56 76



as does Cfhica?o In grain*

Vew Orleane, this season, will not crueh aore than
25,000 tone cottonseed, tho producte from which are valued
at, say, #800, 000. 00, yet it will handle, freei the interior
points the following —
And I nay say

there are 120 mills in Texas, and I

think *ew Orleans draws products from <nr«ry one of those and
perhaps handles mors than do all tho manufacturer* ef Texas
Tho Secretary of the Treasury:
1sr. George:

Is that for export?

various purposes, export and domestic.

Cotton seed oil:

Principally from Texas, Arkansas,

Louisiana, Mississippi, Alabama and Georgia, 600,000 barrels,
requiring, say,


t&**k cars of


barrels capacity each,

for transporting it, at an average price of 40 casts per
gallon, the ralue aggregating #12,000,000.00.
After this oil 1s refined here, it sects with world*
wide demand, much of It being exported direct frem Hew
Orleans to the leading foreign ports, the chief of which are:
Rotterdam, Marseilles, Hasfcurg, Antwerp and Lirerpeol, the
balance is used locally and elsewhere in thi s country,

I would like to aay there that tho largest consisting


X. T. Oeorgt


point in thi a country is Chicago, tho packers using perhaps
one-half of tho total output for tho conversion into d e c *
margarine, butterlne and lard compound, and ao Chicago will
no doubt have a reaerre bank,

they will handle tho largest

part of i t 9 but outside of Chicago T think Hew Orleans comas
About 200,000 barrels cottonseed e ll, or, say,
# 4,0 00 ,00 0 ,00 worth, each year, are converted into lard
cornpound by the Vow Orleans factories alette.
Cottonseed Cake and Meal:

Fully 150,000 tons of

<p ttonseed coke end meal, requiring, say,


cars to

transport it te New Orleans are handled here each season for
export, from tho territory above named, principally from
Texas, valued at an averag* price of #30. >0 per ton, say
# 4,5 00,000 .00.

About one-half this quantity comes here as

loose cake and is ground by looal concerns and put up in
100 lb. begs for domestic mid foreign consumption.
In oddities, fully 25,000 tens ef cottonseed meal are
brought to Wew Orleans annually from interior points for
local sale te dairymen fer feeding

purposes, and te

fertiliser factories tor mixing with other aanenlates. Talus
say #6JO,ooo,00.


B* T. George

Cottonseed hulls:


About 2500 carload**, say, 57,500

tons Cottonseed Hulls are brought into Hew Orleans annually
from interior points for sale to dairyman and others; value,
say $ 500, 000* 00.
Cottonseed Linters?

About |>0,000 bales of cottonseed

Lint©ra are shipped into Hew Orleans for export annually,
from interior points; value, say $ 750 , 000. 00*
About 50,000 tons Cottonseed Cake and Veal are exported
from Savannah, Oa. , Mobile, Ala. and Psnsacola, F l a ., by
Hew Orleans concerns, value, say $ 1 , 500, 000. 00, the exchange
for whioh is sold by then to How Orleans banks on receipt
of foreign bills-lading.
And yet only #800,000 worth is produced here annually.
Cottonseed Soap Stock:

Trom the refining of crude

cottonseed o il , about 100,000 barrels of raw soap stock,
testing between *0,

and $ ($ fatty acid and valued at about

II $500,000*00 is turned out by the Hew Orleans refiners each

This product Is either boiled down into an article

testing alvut


fatty as id and shipped to various points

in this and foreign countries for soap-naking, or utilised
in the raw stats by Hew Orleans or dosftstic manufacturers
elsewhere for like purpose*



2. T. <3eorge

36 79

Proa the foregoing, it will be seen that the ralue
of cottonseed products, exclusive cf the refined cottonseed
oil used for lard compound, and the by-products of soap
stock, manufactured and concentrated at Wew Orleans each
year, amounts tc round figures to Tw<*nty million fire hundred

thousand dollars (^ 20, 500, 000* 00).
The 890 crude cottonseed oil mills represent an invest­

ment close to $100,000,000.00.

During the months of

Septeafber, October, vorember and December each season, about
four million tens of eottonseed, worth say $100,000,00 0.00,
are sold for crushing orer a much longer period, hence
during said months, the mills generally exhaust their local
credit, and are compelled tc discount fcur and six months
notes in the money centres of the country.


products aro inrarlably sold for cash, and meet with actire
demand each month of the year, both at heae and abroad,
making the paper, as a whole, safe and desirable.
A Resenre Bank hers would be cf great baaefit to at
least m x fire hundred (500) crude Cottonseed ell mills,
contiguous to Vew Orleans, besides lecal refiners and
Th« Pa«retory of tho Treasury:

Haw about tho finanelng



2 * T. r*eorge

of these requirement a, do you hare any difficulty in getting
tho accommodation needed hero?
yr. George:

Wo get a large proportion o f our accoamodat*

ions hero, and after that we discount our four and six months
notes through —
Ths Secretary of the Treasury:
Ifr. George:


Through Wow York and Boston.

The Secretary of the Treasury:
£r. George:

Through not# brokers?

Y «s, sir, this year largely through Boston.

The Secretary of tho Treasury:

What sort of paper do you

&r. George:

Wo generally giro our own paper with the

endorsement of two of the officers of ths company.
Ths Secretary of Agriculture:

What percentage should you

say you hare to discount?
ifr. George:

K«re or else*hero?

The Secretary o f the Treasury:
Hr* George:

Outside of Vow Orleans?

Some seasons more and soms seasons loss,


instance, ths price of cottonseed oil varies from tho size
of the crop, from 25 conts up to b5 cents a gallon.


ysar I should ssy about 5$ per cent has been discounted in
ths sast.


S. T. Oesrge


The Secretary of Agriculture:

Was that because you could

not get it here?
Kr. George:

I suppose we could henre gotten it here, but

the banks were carrying large loans here on cotton and eugar,
and without pressing it at a l l , wc went east; but we gener­
ally giro the local banks the prefereace.
The Secretary of Agriculture:

Bo ycu hare te discount

each year?
Hr. Oeerge:


sir, some seasons wc do not, according to

the price.
The Secretary of the Treasury:

You do not sell your paper

with b ills of lading attached, as a rule?
Kr. George:

v©, as ws ship out the goods to foreL gn

markets snd te this country we draw at sight bills of lading
attached, and deposit thoss in the Hew Orleans banks for
The Secretary of the Treasury:

lut where you sell the

sterchants on time you carry It yourself.
Ur. George:

it is a strange business.

capacity, it is all cash.

With #100,000,000

Ws pay cash for the product and

sell fer cash.
The Secretary of the Treasury:

So you draw against the


B. Y.


ralus of ths product?
Mr. fieorge:

Yes, sir.

Tho Secretary of ths Treasury:

And you find s ready sale

for your pap or everywhere?
Mr. George*

Yes, sir.

Tha Secretary of tho Treasury:

But whan you discount in

tho cast you do it on the company's own credit?
Vr* George:

Y*sf sir, with the endoramont of taro official!:

\nr* Wexler:

And it is the same way hare.

Mr. George:



The Secretary of the Treasury:

You stably sell for cash

and draw at sight aralnst the hill of lading and discount
your own notes?
!ir. GeorgsJ


The only reason we do that is that ths

buslnsss is done in froa four to six months, not ths product*
ion, and yet we have ts carry these prefects fsr disposition
during the entire twelve months*
The Secretary of the Treasury!

-wr. Wexler, who is your

next witness.

MT. Wexler:


Tt is about luncheon tine*


J. T>* Hardin


Tho Secretary of the "reasury:

Haro you seme witnesses

here upon the manufacturing phases?
Ur® Vexler:

Yoaf sir,


Hardin will Just say a word

on tho gr si n business of tftepert.
STATiraT OF J. %


The Secretary of the Treasury:


Will you give your name,

address and occupation*
V r. Hardin:


Mrdin, President of the Hew Orleans

Board of Trade®
IQr plea is our inability to get finances to finance
tho grain that goes through this portf and iay brief is T*ry
short, and I can hasten through it*
To me has been assigned tho task of submitting to you
a brief eorerlng the question of tho importance of the City
of Hew Orleans es a grain, prevision, end produce market,
and I welcome the opportunity of presenting some facts,
particularly in connection with the grain trade, pointing
out the dlsadrantages which wo are laboring under, despite
tho efforts that hare been

asid e,

and that ere being made,

to regain for lew Orleans its supremacy as a grain mem
exporting port*


J. ». Hardin


You gentlemen are aware of the commercial advantages of
the City of Hew Orleans, of Its transportation facilities,
etc., u

so it i s not my purpose to encumber you with a mass

of figures or detail argument, but to bring to your attention,

far as Grain is concerned, the benefit that would accrue

by the establishment of a Regional Bank at Hew Orleans.


is not only a local question, but it is one that is closely
related to districts in which the granaries and the feed
a p p lie s of the * id die west are located.
That Hew Orleans is the natural gateway for the grain
and food supplies of ths Mississippi Valley, has long been
Again speaking as to grain, the signs ef the tiass
bespeak for Hew Orleans the return of a laree portion of
the grain trade, for, with the large crop of wheat that is
*eing raised in this country, and changes in conditions
brought about through the t a r iff, shippers are anxious to
raoTe their grain through this port if they can do their
naan cing at this end.
The publicly operated elevators, and the supervising
and weighing of grain by an efficient departsMnt of a

rcial organisation, as is in effect at Hew Orleans, is



J . n. H ardin

| recognised by all chipper* as the nost perfect In the
The Secretary of the Tree,cury:

How many elevator* have

Mr. Hardins


The Secretary of the Treasury:

Have you given their

yr# Hardin:

T will furnish you with the capacity.


think it is elose on to 6,000,000 bushels.
The grain elevator* arc owned by the railroads and
operated as public houses#
The Vew Orleans ?oard of Trade has complete charge
and control of the weigjlng and inspecting cf every bushel
that goes into, and that is taken out of these elemtors.
The certificates Is aued by the Hoard cf Trade are a guarantee
against the bushels in store, as well as ths weight of the
grain, affording protection to both the shipper and the
| buyer, aad all that is needed is ample financial facilities
to attract the sh orter so that He can have h is papers
handled at thi s mid.
In 1899 oar elevators handled 40,017,000 bushels ef

3. T>. H ard in



The secretary of the Treasury*
Kr. Hardin:

What kind of grain1?

Wheat fend corn and so?ne little oats*



for tho following five years, averaged 30 000,000 bushel#
per yoar, exporting


32 000,000


bushels in 1903

So difficulty woe experienced in securing from the
j; Wow Orleans bonks and financial concerns, all the money
| required to handle this large relume of business, no dis*
|i tlnotlon being xnade between local or related shippers.


•I reliable flra with good groin collateral was afforded aaple
financial ^ocom^odatlon.
As a result of this policy lor*e

$ i » t i t i e s of unsold

I grain were asaesabled here, creating a broad market, attracti lng not only buyers from }lew York, but largely extending
our direct European connect ions, and at the sas* tine
attracting tonnage to this port, giving us an unvarying
plentiful supply, with equitable and stable rates, to every
| port in Europe.

OraIn being dead weight, it became neces­

sary to draw from tho Intorior, lighter cargo, to properly

these steamers, thus largely extending the sphere of

our influence*

Tho movement bqgan to dwindle about 1904>*

The banks

of this city, in addition to financing rice, sugar, eotton,

J* It. Hardin



found a call for their funds In exploiting new local enter­
prise* end real estate, and withdrew practically all support
from local grain shippers,
Tho Secretary of the Treasury:

When wae that?

ftr« Hardin:

This resulted in immediately

Thio was in 1904,

shutting off shipments by all smaller shippers, said
effectively stopping shipments from Oklahoma, Kansas, and
Yebrarfca direct, the result being that in 1904 we handled
only 11,000,000 bushels as against 52,000,000 bushels of
grain tho previous year.
The Seoretary of the Treasury:

Tt was due solely to that

Vr. Hardin:

Yes, sir*

Ths Secretary of the Treasury:
vr* Hardin:

Yes, sir.

You could not finance it?

The grain business from 190J

to 1912 was confined to very few firms who used Wew Orleans
simply as a clearing port, mm banking being done,onlythe
physical cost of handling was left as profits in this city,
Ihnsm 1906 up to


our grain export business steadily |

decreased, the average during this five year period amount­
ing to about 7,600,000 butfiels a year*


J* 3* Hard In


The western shipper, finding It impossible te finance
his grain in this city, consigned te conpetitiYe p orts or
shipped to Interior markets where it was distributed,
ultimately reaching the European markets through the Atlantic
or Lake gateways, but stripped of much of the profit which
;! would hare accrued to the producer had it been possible
to reach the consumer by the natural and direct medium of
the Gulf.
The imperative necessity, both for Vew Orleans and the
great wheat producing sections of Oklahoma, Kansas, and
febraSka,w is the establishment of banks which will meet the
requirements o f this trade, and enable the producer to
market his crop where he can realise the highest price,
and secure the most advantageous vehicle for the transaction
of his buslnsss.
The shippers of these sections prefer our market, an d
tho only reason they have not given us the lio n 's share,
has been the financial difficulties.

Pew ef these inland

grain centres, like Oklahoma City, Wtehita, Leavenworth,
etc., have sufficient banking capital te do aore than care
for current movement; therefore, sonnet afford te carry
stocks at the ports.


jl 0

J. T>. Hardin


A glance at th$ nap ahovs conclusively that lew Orleans
In the loftioal market for the grains of the southwest, the
KcvefiGnt In this direction meeting with the least resistance,
while the elimination of the middi e nan and the expenses of
interior manipulation leaves to the producer the maximum of
value, and tends to the enrichment of the country.
Thu Importance of the immediate establishment of
financial facilities is intensified by the fact that the
! wheat crop of »he sections previously mentioned sires promise
of the heaviest yields cn record, and as the condition of the
Argentine crop now coming on the m rk e t , is unsatisfactory,
and the quantity ouch ehort of previous years, the


i| for American No. 2 Hard Winter Wheat is likely to be very
|| ursront after the opening of spring, and unless these ship­
ments can be handled through this port, it will be very
disadvantageous t* the shippers, as they oust know what they
can do before the ^ovacent begins, and what financial aid
they can look for.
These considerations appear to us of sufficient urgency
and importance to seriously engage tho attention of your
Honorable Commission upon whom devolves the duty of supplying
the sinsws of commer**

J, ])• Hardin



In connection with Wow Orlean a as a pro due • and
provision market, our trade runs up into tho millions of

There is a time for about two months in the year

when the country looks to Hew Orleans and the lamediats
surrounding territory, for most of its produce.

Again, the

provision line is not only local, but one that has a relation*
ship to other directs*
In conclusion, I beg to submit a brief statement of
| receipts of grain, provisions?, and produce at low Orleans
for the year 1913» amounting to a valuation of
$131 y328,401*00, all of which must bo financed in this city,
showing conclusively the urgent necessity of a Federal
Reserve Bank to take care of tho district that Sew Orleans
|j would naturally serve*
The Secretary of the Treasury*

was not the development

of Galveston as a port had much to do with the dwindling of
!j lew Orleans as a port?
vr. Hardin:

To some extent.

Tho Secretary of the Treasury:

Because tho testimony over

there was that there had been a very large development
through Houston to Galveston*
The Secretary of Agriculture:
Federal Reserve Bank ofiiSt. Louis

Are you advocating thlo


J. D* Hardin



district for a reserve bank?
<r. Hardin:

T am

advocating wew Orleans as the city for

a reserve bank*
The Secretary of Agriculture:

¥hat you want Is more

credit f a d l i t i a s ?
Hr. Hardin:

Yes, sir.

The Secretary of Agriculture*

^111 this district give it

to you?
Ur0 Hardin:

with a bank in this city?

The Secretary of Agriculture:
#r® Hardin:


The Secretary of Agriculture:
Mr* Hardin:
and hare then


Tn what way?

Tt will enable us to take our bills of lading ]
financed right here and it will attract

shipments to this port and will invite the people In the far
west to send their grain* here.
The Secretary of Agriculture:
•r Independent financially?

Is this district dependent

You are stating that it has not

been able to take cars of you*




Yssg sir*

Ths Secretary sf Agriculture:
in ths future?

How Is it £olng to do it


J. D. Hardin

¥r* Hardin:


W« will be enabled te take our bill a of

lading to the banka and hare thoa financed then and get the
money *id —
The Secretary of Agriculture:

how are the banka going to

get any more money than they have?

Theae billa of la d in g aro the moat attract*

lve document a that could bo put up, aa far aa an investment
la concasned, and if ve can take them —
Tha Secretary of the Treasury:

You think the resaurces of

a reserve bank will enable theae men ber banks to extend
larger credits?
•?r* Hardin:

yes, sir.

The Secretary of the Treasury:

Would ^eu not get that

facility,, whether the bank happened to be in the City of
Vew Orleans or some other accessible pslnt?
¥r. Hardin:

I would not want to admit that,

Ifir# Wexler:

He does not care where he gats it, so he

gets ft*
Mr* Hardin:


*«» «ir*

Ths Secretary of the Treasury:

You are net no concerned

about /retting that credit out of Wsw Orleans or st* Louis
or Ves'phls, so long as ysu get it*

/. ®. Hardin


Mr. Hardin:


1 feel with the tank her* we would he the

centra and the attract!™ point in tho south* and with a
good piece of paper wo could always soil it,


Tho secretary of tho Treasury:

You would hare to sell it

fir at to your local bank.
Sir. Hardin:

Wo feel that, and ths banks would assist all

they can, but there l o a limit to their assistance.
The Secretary of tho rreasury:

Your argument does not

touch the main question as to ihether Wew Orleans has
paramount advantages or if there are dominant reasons why
that, as against any other city in the district, should be
tho headquarters of the Regional Bank,
The Secretary of Agriculture:

Or whether a bank made up

as swguested w ill be strong enough to take care of all these j
requirement s*
IErf Hardin:

There is


per cent of our grain financed

outside of tho city, and as business men wo would be largely
|j interested in having It financed here.
The Secretary of the Treasury:
grain business in



*r , Hardin I

In 1912?

What eas tho value of the

or 1913, the latest year you have



jr. B. Hardin

The Seer©tary o f the Treasury!


Yaw gave it to us for the

preceding year, hut Is It shoving any increase*
rrr. Hardin:

3o# rtrt In the last five years it shows a

The Secretary of the Treasury:
«r* Hardin:

A continuing decrease?


Tho Secretary of Af7ricultur et

Yen explained that on tho

theory that you could not get the credit here*
Mr* ttardin:

Yest eirt we could not m k * this fcig con­

centration here in our elevators*
Tho Secretary of the Treasury:

You think that is the

only reason 9 it i s not because of the freight rates*
nr, Kardin:

T mm reliably informed hy the hi^gest shippers

to this port that if we could finance their hills of lading
here we could do *n enormous business*
The Secretary of the Treasury:

Why can you not finance

Hr* Kardin:

t Ho

rceney i« not here,

Tho Secretary ef tho Treasury:

That is usually considered

the host form of collateral*
Kr* Kardin:

Wo hove so many other demands hers and there

are so many linos here that have the same demands that we



J# H* Kardln

Or. Sexier!

T et ae explain that from the bank standpoint.

The Secretary o f the Treasury:
1 r* *fexler!


yes, I would like to know*

The practice has besn for a shipper in

Hutchinson, Kansas, for instance, who sold his grain fOr
export, and he wants to route it through this port, he
reco'mises the advantage of this port and the proposition
comes to the bank in this way; he appoints some local


down here to receive his bills of laling for hia and then
this local agent proposes to bring these over to the bank
and have the bank take up the draft and allow the grain to
gs into ths elevator, and th ® to be shipped out, and wh«t
they require i s the service of a bank to take these drafts
up and carry this
ths elevator*

stuff during ths period the grain is in

These concerns do no other banking business

here whatsoever*

ft is simply an accommodation to ths

ooneem in Hutchinson, Kansas, to relieve its local bank
entirely and put the burden upon the Hew Orleans bank to
handle it until it gets out o f the country*

These propo-

sltions coos ts us v|ulte frecently and we have said to
them if, as a grain shipper, you wish to do business with
our bank end ws can handle the foreign exchange arising from
it , ws ars entirely able ts do it, but we do not propose to

J. D. Hardin


be made



convenience of and take these document# up and let

the foral n

exchange be handled through the east or seas

other point.
Then again m hare had another difficulty —
The Secretary of the Treasury:

Why would not they

naturally handle the foreign exchange

made here a a they do

the other?


There is not any particularly



and in many instances they hare done i t t and In m ny in­
stances a *ood many concern# are doing their business
locally; but there are a good a « y

anall shipper a , where it

has net been put up to the bank# here in a satisfactory
banking chape.

And them there has been another difficulty

which will be corrected, I think, at our next session of
the Legislature, and that i# under the operation of our
pledge law we hare to identify the goads pledged and after
the grain get a into the elerfater and is mixed, we cannot
identify the particular grain upon which we hare a lien, and
therefore eur pledge has net been cong>lete heretofore and
until we can hare some special prevision by which banka
can secure themselves without haring the identity of the
grain maintained, the business will be more or less unsafe.


«T• 5# HftPdlR


But I f the business comes to us in s good banking m y ve
can handle any acount of business which comes hero,

7?ut wo

get lets of propositions that we do not consider good basking
and there is no reason for us to de9 for the convenience of
seme one cl se9 and those we do not do.
The Secretary of the treasury:

You think tfae chief reason

for the banks not m king advances against this grain Is the
faulty law that does net secure you,
Mr, Wexler:

The faulty law and the fact that the propo­

sitions have, in many instances itiere they have been turned
down, not come to us in the right way,
have been ^pointed here who were


Very often agents
a month clerksf who

handle these documents9 whioh we were required to surrender
upon trust until it was put In the mrehousss.

^ut so far

as handling any legitimate amount of business that comes to
tho pert9 that is a proper banking transaction, there is no

*1 ether

wo got a Regional Bank or do not, because

we ha to always managed to handle the business of this pert
and will again*

TSut with the frowth of the port9 unquest­

ionably these additional facilities to be ffcmished by tho
reserve banks are necessary*

Secretary of tho Treasury?

do you aeceunt for



j the decline?
fr* Vexler*


0. Hardin

Your lav was Just the same, about pledges?
Yes, at the time wo had th^se big shipments

wo had throo or four Tory large cargo concern*; Bosenbaum
was one9 and they rented one or two of these sleTators and
they loaded a great deal of this grain from this port, and
I they financed their own business*

Th«y got into some trouble.

1 think they failed or suspended, and gave up these el era tors
ihere, and the business went down subsequent to that.


was really the reason.
The Secretary of the Treasury:

You may proceed, nr.Hardin*

Hare you any othor facts there which you care to »Abait?
Mr* Hardin:

T*q 9 sir, except that we hare the promise of

one of the largest wheat yields that this country has ewar
had before.
The 8eeretary of the Treasury:

Veil, that Is good, but I

do not lenow that you could relate that specifically to this
Kr. Hardin:

I aa certainly glad to hear Hr. Vexler say

he is in line to finance it, because it has been qy impress­
ion from the grain gentlemen who hare discussed this with ao,
that there was some little disability on those lines.
would not for a moment want to protest anything that Hr*




J. D. Hardin

Wexler has said on thi s lino, tot hi* impression of it and
mine do Tory a little bit.
as they oan on that line,

The banks, T adnit, pro as far
and T apflaud it, but ray —

The Secrotary of Agriculture:

To it your impression that

tho demand i s too heavy?
lir* Hardin:

Uo, my impression is with our proper b ill*

of lading and things of that kind, we hare not be<® able to
got tho accommodation on the grain businoos that m are
really entitled to,

T hare been reliably informed, not only

by ono but by a number of gentlemen on those linos,
Tho Secretary of tho Treasury:

We will take a recess now

until 2100 otolook*

thereupon, at 1 :00 o’ clock ?• M, , a recess was taken
until 2:00 o*clock ?, M,


2, !• Harral.





A r rm Hsctss,

p. x,


The Secretary o f Agriculture:

You may state your name,

residence and occupation*
'?r. narral:

E* R, Harralf coffee commission m reliant,

Hew Orleans,
The Secretary of Agriculture:

Will you giro us the volume

of your trade?
Hr* Harral:

The imports of coffee to Wew Orleans amount

to about 2,000,000 bags a year, which is about one-third of
the coffee imported into the Ufcited States, with a value of
$55,000,000 to | * 0 #000,000 a year and perhaps # 50, 000,000
In rare occasions.
The Secretary o f Agriculture:
nr* Harral:

And the distribution?

The coffee 1 s di stributed throughout the

United States west of the Alleghenies and even on the
Atlantic seaboard south of Baltimore* so it is just the
northeastern portion o f the country east of the Alleghenies
which ws do not reach.
The Secretary of Agriculture:
vr, Harral:

wrom Wew York.

Hire you competition?


S. B. Harral


The Secretary of Agriculture:
vr* Harral:


Well, some coffee le coming through San

yranclsco, hut that mounts te afcout 2j0,000 hags a year
against our 2,000,000.
The Secretary of Agriculture:

noes that relate itself to

this problem in a financial way?
Wr. trarral:

Tt does in thi s way:

?he shippers of coffee

from Brasil do not recognise American hankers; they draw
on London on letters of credit, m d the documents aro sent
to thoir a rents in *?ow Orleans and the agents deliver these
documents to the importer upon his demand or agreemnt to
pay at the time of maturity of the


day drafts, and he

then begins to accumulate money in the How Orleans banks
for remittance at maturity.

Therefore it has a bearing on

tho g o oral banking situation in that it furnishes a demand
for foreign bills to offset the bills sold here against
cotton and grain.
The Secretary of Agriculture:

What volume o f your

business do you handle through the Vew Orleans banks?
urr. Harrai:

Veil, as nearly all of it as anything could

There may bo some that does not go that m y f but tho

agents are all h r o and tho documents are sent hero and



%. B* Harr a X

delivered to the importers by thea, andthey expect those
funds to be reaitted through them, and therefore the money Is
jjaccumulat ed here for that purpose; and naturally those
reaittatoes are coming froa all oyer the United States olear
to the Pacific Coast

ff\d on the Pacific Coast m d up to the

:iCanadian line and vest ef the Allegheny Mountains.
The Secretary of Agricultures

Doe a that iapose a burden

on these banks?
Mr. Harral:

£o, sir, it doee not,

Tho Secretary o f tho Treasury:
to pay for


ft i s an asset*

Because they do not hare

days and in the meantime you hare an oppor*

|tunity to get money frosi the rest of the country to meet
!ithose drafts at maturity,
Mr* Harral:


long after those


The coffee, of course, frequently stays
day drafts are aatured, as the settle*

aents hare been made, and then it is necessary, of course,
for the Hew Orleans banks to finanoo this coffee by isaking
j! loans against it , and in that regard,

of course, it takes a

good deal of bonking capital to handle that business properly*
Tho Secretary o f Agriculture:
Mr* Harral*

It should involve a groat deal aero than it

; does at present*

What would that involve?

Tho stock in wev Orleen s, on account of


s. B. Harral


probably the small banking capltal her®, that is, «e should
hare more, amounts to about a quarter of a million bags to


bags of coffee*

The Secretary of the Treasury;
Ur •


What is tho ralue of that?

I should aay about H , 000,000 as an a r c r a ^ .

But I call your attention to $ie fact that i f it is en­
larged as a financial centre, such as this bank would give us
and what we would like to hare, it would enable them to
carry such a stock as is carried in the largo European ports,

a couple of million bags.

The Secretary o f the Treasury!

Would that be carried for

specula tire purposes?
Mr. rrarral*


A large stock of coffee enables ths

roasters throughout the country to aekorery careful select ions of Just thtt character of coffee they want in their

Tt 1 s rary important te them to hare a large

stock to select from.
The Secretary of Agriculture:

Considering the amount you

do carry, are you able to get that financed here, these
1«r. Harral:

I think that the position 1 s just this, that

business is as large as they can finance, but with m ore

JU » . Harral



f i n * ci&l facilities it would probably ezpund Tory largely*
The Secretary of tho Treasury:

The point lo this, lo the

business you do horo financed lore, or la any of it financed
from tho outside, tho 2$0,000 to


bags you carry

VT. Harral:


Wiould oay that la all practically financed

A groat *»art of it la financed under theae letters

of ersdlt, but tho maturitlee, X think, are In a very largo
i measure met right hero at Hew Orleans by hanking arrange­
ments h are*
The Secretary of the Treasury:

You mowi after tho ware­

housing of the coffee the financing is done horo?
!r* Harral:

Yes, sir.

Tho Secretary of tho Treasury:

Is there amy difficulty

in getting the requisite funds, as a rule?
Hr. Horrai:

I do not think the banks would turn a m n

down, but that is Indicated by the rate of interest which
Tho Secretary of tho Treasury:
Ur. Harral:

What is it?

I should think wo should have a lower rate of

interest perhaps, to induce that business to expand.
Tho Secretary of tho Treasury:

What do you have to pay


*• *• Harral


nowt about*
Ur. Harral:

V eil, I w?> net interested in that feature of

i t t as I am selling the seeds for shipment from Brazil here,
but T would say that tho prevailing rate now m s about six
to serren per cent,

that is gilt edged*

The Secretary of the Treasury:

That sounds southern to me*

I h ire lived in the ®uth myself and know the rates*


hare no difficulty then, at those rates, in getting the
amount of capital or financing required frora the banks to
take care of 2 $ 0 9000 to 300,000 bags*
vr* Tf&rrai:

I imagine that they let money out at six to

seven per cent and then can get the money at a lower rate in
some other largo centre, and in that way as long as a man
can afford to pay those rates he can probably got more money.
There is ons thing about the coffee business.

Tn tho

days of sailing ships, when m ail cargoes came in, coffee
was imported at every port from Boston do mi to the Kexiean
border, and as the cargoes increased in slss, that business
has centred in the leading ports*

And perfcap s there is no

bettor barometer of the standing of tho ports of this
country than the coffee business* It has centered in Vow
Federal Reserve Bank of
St. Louis




K# S. H&rral

! York as the

eat port of tho Atlantic, and Wow Orleans as

the great port of tho Gulf, and San fcranei seo, tho groat
port o f ths Pacific*
Tho Secretary of tho Treasury*

to any of it handled in

Ur* Harral:

Not a hag is handled in Calves ton or Mobile.

|| And to show what a barometer tho coffoe bus ins ss ia, there
is not a bag handled at any port of the country south of
I Vow York.

Philadelphia, Baltimore and all thoee ports which

used to do it have had to yield to Wow York, and the business
has gone there.

And so all the ports on the Gulf have had

to yield to lew Orleans on the coffee bus ins ss.
The Secretary of Agriculture:

Do you think the lade of

credit fa c ilities prevsnts the expansion of this business?
Mr. Harral J

I think with better financial conditions it

would expand the business, yes, sir.

The Feoretary of Agriculture:

I think there i s room

Have you any exhibit whieh

you desire to file?
Hr. Harral:

I hare just a brief here*

(The paper was filed accordingly, and is as follows:)
Ths following brief argmnent, omitting statistical


K, B, Harral

370 7

tables, it submitted in the belief that

whet le herein

stated concerning coffee, is largely true of tho financial
operations involved in the settlement of the credits created
by the lapertatlon of tho various ether articles which make
Wew Orleans second only to Hew York ao a foreign exchange
In the doys of calling ships, cargoes of a few thousand
bags of coffee were imported through Boston, wew York,
Philadelphia, Baltimore, Savannah, Paaeaeola, Mobile, Hew
Orleans, Galveston, and othor ports,

Tho Increase in slae

of cargoes has centered tho importation of coffee at Hew
York as tho groat port on the Herfch Atlantic, How Orleans,
tho groat port on the Gulf of Mexico,
tho great port on the pacific.

and Baa ^ranclsco,

Ho truer indication of the

commanding position of those porto eould be found thwi


fact that the oof fee trade has coiqplotoly deserted all othor
American ports and 1 s now conf laed to them.
The imports of coffee through How Orleans amount to

2, 000,000

bags each year, varying in value from

$ 29, 000,000 to |40,000,000 and constituting about one third
of tho total

imports of coffee to tho United States?


coffee is distributed throughout tho United States, excepting



IE# £• tferral

the l*orth Atlantic Seaboard east of the Alleghenies*
The shipper of coffee from Brasil at


days sight

on London bankers, and the documents are mailed to Itew
Orleans agents of the London bankers*

These agents deliver

the documents to the importers of the ©off00 upon their
paymentt or agreement to pay, in time to meet the anturity
of drafts In London,

Therefore, throughout tho year, money

is being remitted to Wew Orleans from all p&sts of tho United
States vost of the Alleghenies to be invested in bills on
London In settlement for coffee*
Tho large domestic and foreign exchange transactions
involved, indicate tho national scope of How Orleans banking,
and, in connection with the fact that How Orleans imports
of all kinds for distribution throughout the Mississippi
Valley, aro greater than the combined imports ef all the
other Atlantic and Gulf ports south of Philadelphia, and
of tho enormous prospective financial operation s with Central
America and Ve^leo, whose United states mail passes through
lew Orleans, nakes low Orleans the ideal situation for tho
development of tho true purposes of a Regional Bank to
serve the commercial, manufacturing, and farming industries
of that

vast southern, Middle Western, and Southwestern


I . £. Karral


country, of which only artificial barrier# can hold back,
and then only for a brief time, tho volume of business which
aust com* to her a* tho gateway ef tho nr eat Valley.
The Secretary of Agriculture:

Haro you any ether point

!j you wi*h to enjphasise?
Mr* Harral:

Only this, that t have had occasion to loo k

into etherimports, and I think coffee 1* a Tory fair san^ls
ef all the other inserts, which yeu will net lee are larger
to Wew Orleans than they are to the combined ports south of
Philadelphia* and that coffee is not the only article of
Import that is financed in London on letters ef credit.
Practically a ll'th s business of the world is done that wayf
and they are brought here and distributed, and I would my
the laperts ars distributed all orer the Talley and the west
snd oaks wow Orleans banking rather national in its scope in
that way.

The Secretary of the Treasury:

You aay stats your na&s,

residence and occupation.
Mr* Stern:

Edgar B. Stars, cotton factor, lehm an. Stem

* Cowpany.



S. B. Stem


The Secretary of tho Treasury*

Will you stato briefly

and summarise *hat you have In your brief, and file it as an
Kr. stem :

I will do that.

The only statistics available

on the manufactures are those of the United States Census
for 1910 bearing on the yoar


Those are the only

reliable statistics, so X cannot rriTO later than that year*
In that yoar Hew Orleans was the second city in manufacturing
south of tshe Ohio Firorf bein'? second only to Louls*ll<i,
and being more than # 30 , 000,000 ahead of its nearest compstitor*

To read to you several of the cities, Louisville

♦101f000,000, trow Orleans #78,000,000; Richmond #47,000,000;
Atlanta #33,000,000; Memphis #30,000,000; lashrllle
j #29*000,000; Dallas #26,000,000; Birmingham # 24,000,000,
and Houston 123,000f000,
Tho Secretary of the Treasury:
Mr* stems



Tho Secretary of tho Treasury:
raluo now, fire years ago.
Mr. stems

That was in 1909?

That does not hare much

Hawo you nothing more recent?

I am reliably informed there is nothing

reliably gathered later than that.

Anything that is gathered
is simply estimated and is a guess*
The eensty* takes the



2. B. Btern

jaanufacturing etnius every five years, and I will try to
bring out that we believe we are grawing at the same rate.
The Secretary of tho Treasury:

ot e our os, Blroinjrhas and

some of those other cities have grown enormously in the laot
five years.

well, you nay proceed with your argument, so

for as Vew Orleans is concerned.
’!r. ‘'tern:

Coraporin? those figures, *ew Orleans is

342 per cent greater than Houston —
The Secretary of Agriculture:

Aside froa that, what aro

the lines of mnufacture you have here?
Mr. stern:

The classes of manufacture?

The Secretary of the Treasury:
it .

*te m :

Give us m outline.


In that particular I wmt to make the point

that we do not depend on any particular line as being an
enormous percentage of our total.
Tho Secretary of tho Treasury:
Vr. Stem :

Tt lo a varied line?


Tho Secretary of tho Treasury:

Road a list of them, if

you havo it.
tfr. stern:

I will say first of all that what the census

classes as "all other Industrios, *neaely miscellaneous,

up 60 per cent o f our total,

aad the other loading

X, B. Ptem


ones are bags, othor than paper, as the census calls it ,
that is, burlap, #5* 352, 000; rice, Gleaning and pell thing,
# 5125, 000; lumber and timber products # 3 *867, 000; capper,
j; tin, sheet Iren product* $ 2, 500, 000, and the others are
smaller, but the miscellaneous Industries are $47,000,000
out of a total of

$781000, 000,

I want to make the point here that the American Sugar
Refining Company's plant 1 s no t Included In this total.


' was tjovcd a few feet outside of the city limits Just before


and that plant has a total product of from

$ 27 , 000,000

to $40,000,000 a year; and if that were added to Hew Orleans,
Hew Xsxk Orleans would be higher oven than Louisville,
The Secretary ef the Treasury:

Wow what ether lines of

manufacture are there, what other classes ef material, for
Instance, are manufactured here?
Mr. wtem :

T will read the 11 *t:

lags other than paper,

bread and bakery product a; canning and preserving; carriages,
wagons and materials; car a, shop construction, steam roads;
clothing, men's, including shirts; confootlonery; cooperage
and wooden goods; copper, tin, sheet iron products; foundry
and machine shop products; loo, manufactured; leather goods;

and timber products; medicines and drugtf preparations;

j printing and publishing; rice, cleaning and polishing; ship
and boat building; and they did not class separately
tobacco, cigars and cigarettes.

That I happen to know is a

total of # 6,0 00,000, but the census included those in
miscellaneous industries.
The Secretary of the Treasury:

Are your industries

growing, arc these Increasing in volume and also in number?
wr. Stem :

I can ftlve you the figures from I 899 to


In th e first fire years —
The Secretary of the Treasury:


Just give us 1904 as against

and wo will see what you have done.

Per a five year

period let us sse the increase.
'flr* Stem :

The actual census figure there is a decrease,

because in those five years that sugar refinery was moved
out of the city, which had been counted in 1994, Qfrid moved
out in


and taking almost their minimum product,

# 50, 000, 000, it would be $108, 000,000 in
well, I have not tho




against —

I can give it to you

this way, that tho Increase in the first five years of the
decade was 41 par cent, and in the second five years, if ws
would hare token that sugar refinery, would have been a
little ev«r 100 per cent, so that the growth would have been
Federal Reserve Bank of.A



E. B. Stern

a little o t©*



per cent.

flow I have the figures for the State of Louisiana as
well a a vew Orleans?
The Secretary of the Treasury:


9 that

stated in j*ur

Kr. St era:


The Secretary of the Treasury:

Just file it.

Just give,

the total and you m y file that.
Mr. Stern:

It is at the rery top of all the southern

states in the capital invested in manufacture*.
The Secretary of the Treasury:

Giwe the total* for the

Mr* St era:

In capital invested Louisiana heads tho list

with # 221, 000, 000.
The Secretary of the Treasury:

This is the census figure

yr. Stern:


north Carolina $217,000,000; Texas

$216,000,000; Virginia #216,000,000; Georgia 1202,000,000;
and in ths volume of ths product Louislana is

second only

to Texas, with Texas #272,000,000 and Louisiana #223,000,000.


I merely want to make the point, if I m y , that ths
points out that in making up that column of capital


S, B. Stern


Invested, the Instructions to the census taker were to take
not only the capital owned but borrowed on the last &*& of
the year, so I take it that Is a fairer Index of the use by
the manufacturers of ths banks than the total product is,
j! and in that column Louisiana heads the whole list of southern
st a tea.
(The statement submitted by Hr* Stern is filed,


is as follow*:)
In presenting certain facts and observations upon ths
manufactures of New Orleans and the country tributary to it %
I do not purpose to a t t e s t to prove that How Orleans and
j its environs is the greatest manufacturing

centre of the

United States, for *ich would be sanlfestly impossible,
ji However, I am not shirking

00mpari soils

with the older and

larger centres of manufacture from a mere fear of comparison.
T venture to assume in this discussion that at least one of
the banks under the new reserve

4? ctem

Is te be situated in

the south, and that the purpose in conducting this Inquiry
|| is to find what centre is best adapted to servo the largest
volume of banking needs to the greatest advantage,

ft U

for this reason that I consider It proper to make my com­
parisons of the manufactures of the Vow Orleans district


E. B. Stern


with the manufacture* of the territory nearest Southern
cities that are cosseting with Hew Orleans for the honor of
your selection.
Other members of our Committee have boon selected


point out the large, and ws believe, convincingly superior
advantages of Hew Orleans as a banking centre for the
products of the soil and for the operations of transportation
and commerce.

The importance of this city and seetion in

these fields is probably much more generally known and
recognized than in the field of man ufacture; and yet the
figures which T shall present to you will disclose the fact
that here is an additional field in which the flew Orleans
territory is of first iflQ>ortance in the south, and should
be an additional argument for the needs of large banking
facilities at this centre, at the same time indicating the
great amount of wealth being created and distributed each
year by the steady factory pay roll,
Tlrst, to considsr the faotorles that are located
entirely within the city limits of Hew Orleans.

This city

of age and tradition is often thought of by those who are
really not familiar with it, as a slow, easy-going eld place*
far removed from the hum and bustle of factory Ilfs .



X. B. Stem


offhand Impression ia g l v m a startling contradiction by
reference to the figures of ths last
based on the operations of the year


States Census,

which disclo ssd the

fact that with the exception of Louisville, Hew Orleans is
by far the greatest factory city south of ths Ohio Fiver,
and so far ahead of its nearest competitor as to hardly
admit of comparison*


Ths United States Censu 3 report for

shows the val ue of the manufactured products in that

ysar of $ 78 , 794,0005 more than $30,000,000 ahead of its
nearest competitor, Richmond; and more than twice as large
as the next city in the South Atlantic er Gulf States,
namely, Atlanta, with #33,000,000*

A comparison of ths

value of the manufacturing output cf the leading Southern
cities, taken from the Census of 1910, is as follows:



Vow Orleans









29 6 50.000






E. B.

Durham, if. C.



25, 271,000


23 , 015,000


16 , 036,000

San Antonio,



6 , 951,000


6, 106,000

Mont gomery,




The comparison of Hew Orleans with three of its leading
competitors for the reaerre bank, namely; Atlanta, Dallas
and Houston, shows that the manufacturers of Dew Orleans
were only #4,218,000 less than those three cities combined,
namely: &7 % 7 9 **0 0 0 against $83,012,000.

Or ag*ln, if wo

compare the total o f the three competitive cities of Houston,
Birmingham and 'feraphis we find Hew Orleans actually greater
than the total o f these three, namely; lyQiT^fOOO against
Tn individual comparisons lew Orleans is 342£ greater
than Houston, 326> greater than Birmingham, 29^*, greater
than Balias, 260^> greater than Memphis and 238£ greater
than Atlanta.

When we cams to examine the figures of manufactures



X» B« Stern

In the State of Louisiana we find arrain a very strong show­
ing for what is often considered primarily an agricultural

Think ing


manufactures in the s>uth one is likely

to call up, first of all to mindf the textile industries of
the Carolines, or the steel industry of Alabama; but an
s nomination of the statistics shews that Louisiana far
surpassss these states and is second in the south only to
the state of Texas in the value of her manufactured product,
the census figures giving the following comparisons




Louis iana

225 949.000

Kentucky t




Tennes see,

202 ,863,000
180 ,217,000


145. 962.000

South Carolina,

115 . 236.000

north Carolina,

216 656.000


80. 555.000

Arkan sas,

74 . 916.000


72 . 890.000


K* S* Stern


The*® figuree arc baaed on the value ef the predict,
but this item la affected to a considerable extent by the
i fluctuation a

In the price of the commodities manuf actured,

and a more valuable £uide to the importance of the state from
! the point of view of the present Inquiry as to the effect of
manufactures on hanking conditions, would be the figures
given in the last census as to “Capital invested in manu­
facturing enterprises**

T make this point in spite of the

| statement by the Census bureau that the figures under this
heading are so defective as to indicate only general con­
ditions, for the reason that the instructions on the schedule
of the census takers for securing “Capital Invceted“, were
as follows:
“The answer should show ths total amount of capital
both owned and borrowed on the last day of the business
year reported"*
This item, therefore, #111 Indicate mere accurately
the use ef banks by ths manufacturer; and based on this
classification, Louisiana takes rank at the very top 0f the
eouthern states In manufactures, with a total capital of
$221,816,000 and the ether states following in this order:


£• B* S t e m


| 22l , 816,000

Berth Carolina,

217, 185,000


216, 876,000




202, 778,000

South Carolina,

173 , 2^,000


173 , 180,000


172 , 779,000


167 , 924,000


72 , 393,000


70 , 174,000


62 , 291,000

I hare confined myself to cornp ^rinf our d ty and state
with other southern citisa and states, without trying to
block out and compare larger areas of territory that might
be brought into the province of a reserve bunk located in
any one of these cd ties, as I hare felt that this allotment
of territory is entirely a matter for you gentlemen to

I merely point out that tho foregoing figures

clearly indicate that whatever territory might bo thought of
for any one city, that Hew Orleans and Louisiana from ths
point of rlew of raanufactures start off with an initial



x* b . ste m


at home over any other competitive southern city

or stite 9 and I ask you to consider this in connection with
our leadership in ether forms of commerce and industry*


have furthermore confined aycoif thus far entirely to a
statement of present conditions, drawn from the most
authoritative soures9 as I understan d that you are Interested
!j fundamentally in facts and not in supposition,

Kow*?rer9 as

the Regional F.ank is foug ded not merely to f i l l present
needs, hut to take care of the future, it would seem
pertinent to look briefly into the prospects for a contin­
uation of the present manufacturing development,
▼e feel that we have every reason to beltere that Hew
Orleans and Louisiana will continue not only to hold their
present places of leadership In this fie ld , but to rar* idly
increase their present rate of progress*
from 1899 to


In the decade

the capital invested in manufactures in

Louisiana Increased more than 100^, from $100,875,000 to
#22L98l6,0 0 0, and the value of the manufactured output, from
♦ l H f3 9 % 0 0 0 to #223f9*9tOOO.

Tfcs value of the products

of the Wew Orleans factorles increased in the five years,
from I 899 to 1904, 41* 7£*

During ths next five years the

plant ef the American Sugar Refining Company was rsmeved


K# B. Stern


to a point Just outside of the city limits, and this ono
factory represented an output of over # 50, 000,000 per annum,
sind yet the total for Hew Orleans decreased only 3*2^*


it had been k opt within the city and counted in the census
the total figures for Hew Orleans for


would have been

about $108,000,000 as against #57,446,000 in 19*>9«


shows that the development of other industries had made a
handsome increase in the decade*

As this p}ant is located

just outside the boundaries of the city it Is in reality
still practically a factory of the City of Wew Orleans*
The prospects for a continuation ef the prosperity of
the Wew Orleans manufactures is increased by the fact that
these factories are not confined te any particular industryf
but are thoroughly diversified, as is indicated by the table
below, showing that 6O0l of the entire factory product Is
classed a* "all other industries*, by the census, indicating
miscellaneous factories of all kinds,
(gee Table attached* )
It will thus be seen that the natural advantages for
manufacturing in Wew Orleans havs been for some time
attracting the attention e f manufacturers*

The centre of

population has been drifting westward with a southward


1» 8. Stem



yt is now drifting southward, and with a drift

of this population to tho cities and acres of the south, tho
market coaes closer to How Orleans, 6

of tho raw materials

of the country are found in the X lsslssippl Valley; and Few
Orleans i s at the nouth of the ifisdssippl River, and the
gateway to the Vall^r,with a down grads haul; 11 trunk
raUtroads connect it direct with How York, Chicago, S t .I^u is,
Cleveland, Cincinnati, Kansas City, St. ?aul, Minneapolis,
Dallas, San ^rancisce, etc. f not to speak of it being
directly at tho *aouth of the greatest system of rivers in
tho world.

Hew Orleans 1 s the second largest port in tho

United States, and d i r c t l y in lino for tho benefit of 3ie
comneroo soon to novo through tho Panama Canal.


urers of the country are rapidly coming to sse that i f they
are to reap the benefits of the trade opened by ths Canal,
and defeat the competition o f the European manufacturers,
who have long controlled this I,atln»Ameriean trade, that they
must avoid

tho double long haul of raw naterlals and

manufactured products In ths interior, and looate themselves
at the ports nearest the Canal.

These statements are made, not merely on faith, but as



B. St era


the result of widespread correspondence with thousands of
manufacturers in the United States in the last six months,
through the Hew Orleans Association of Commerce, and In a
campaign conducted only over a few months four new factories
here already V a n definitely located in the city, with many
others at present negotiating for a removal from older
W W O B r t 03? LOUIS %

The Secretary of Agriculture:



may state your name,

residence and occupation.
vr# Ooldstein:

Louis S. Goldstein, of Louis Goldstein

Sons & Company, $08 Canal street, wew Orleans.
The Secretary o f Agriculture:
Mr. Ooldstein:

Jobber and exporter.

The Secretary of Agriculture!
Mr. Ooldstein:

In what linef

general line of raanufactur es.

The Secretary of Agriculture!
Mr. Ooldftteln:

That is your business?

You speak for what trade?

I speak as to the relations of Latin-

America, Spanish and South and Central America.
The Secretary of the Treasury:

Can you £ive us the totals


t. $• ^olril stein

vr. Goldsteins

The totals of the experts from the United

States to Latin-America were 1 ^ 6 ,1 4 1 ,6 5 1 In 19*2*
were the lest available figures*


The tot ad import s were

#425,037,208, asking vn a/?gregate of trade ef #719,178,859*
As coagpared with the totals of 1905, it shewed a grwwth —
The Secretary of the Treasury:

Wow what part had Wew

Orleans in that business?
vr. Ooldstein:

I want to say first the totals

of the
United States, to show the proportion that wow Orleans/of
that trade.
The secretary of the Treasury:
Hr. Goldstein:

Very well.

The totals of 1905, exports were

♦159 , 156,657 and Import. * 302, 266, 595, sating a total of
#461,423,250, showing an inoreaso of approximately
cent in ejperts and 39 P
inoreaso in trade of


86 per

cent in imports, or a total

per cent within seven years*


cellared with those totals, the inoreaso of the North
Atlantic ports of Philadelphia,
sent s 33 por cent slnco


Baltimore and Boston, repre­

and showed an aggregate of

♦57 , 557,705 —

The Secretary o f the Treasury:
come to V«w Orleans.

Omit that new end Just
■'y --/V. *- >
What part had she in that trade?


S. Gold Rtein

10% Goldstein:


r€W Orleans showed m

per cent in imports, and


Incr«a«e of 147

per cent in escorts, or a total

increase ef 122 per cent.
The Secretary of the Treasury:

what eaa the volume of

her bualneas?
ttr. Goldstein:

#61,905,744 in import*, and #18,408,449

in shorts*
The Secretary of the Treaaury:
1tr# Goldstein:

0* about #80,000,000 as compared with —

The Secretary of Agricultures
WTm Goldstein:


A little over one-tenth.

About 11 par cent,

The Secretary of the Treasury:
VTm ^©ldatcini

A total ef what?

*ith Latin-America?

That isexclualve of ^erte Rico.

Tho secretary of the Treasury:

Hew i s all that buainoaa

financed here?
ijr, Goldstein:

Tu»t before coming to that, Mr# Secretary,

the percentage of Vow Orleans trade with Porto Hico la 21
per cent.
Vow nr* Harral haa eapla ined tho question of the
iKparta, aa to the financing of thea, and the exports aro
principally financed right here in Vow Orleans, tho groat
bulk ef then.

It might be of interest to a*/ that by


I,. S. Holfltoln


consultation o f the United *ruit Conqp m y 9 e record, 75 Per
cent o f tho tonnage originated in ITew Orleans as going to
those countries oat of this port.
The Secretary of tho Treasury:

Do you have say difficulty

in financing those export* here?
>!r. Goldstein:
of development,

practically none,

Tt 1 s just a question

with the present siae of the trade wc are

. able to flnanca it rtty will.

Of eotirs®, In contov>latlon

of this now system, wo will ho able necessarily to increase
that trade considerably by having these re-discount
facilities through the member bank %
The Secretary of the Treasury:

You mean the trade has

been restrictodin volume heretofore by lack of credits?
fir* Goldstein:

Partly that and partly through lack of

transportation facilities which merely await the completion
of the Canal, because we have not touched South America at
a ll, that i s to sty comparatively.

We have recently sstab-

lisfeed —
The Secretary o f the Treasury:

you mem western South

I£r« Ooldstein:

Westem South America and only recently

there has been a dependable sailing between Wew Orleans


T , S. ^oldst«ln


and the *ast coast, Brasil and the Argentine JRepublic.
The Secretary of Agriculture:

Mow frequently are the

•ailin?: c now?
~?r. Goldstein:

T think about once a month#

Mr. Trozcrant:

pegular sailings once a nienth.

The Seoretary e f the Treasury5

And business you think has

I shown sn increase since I 909?
Kr. Goldstein:

122 per cent since I 905.

The Secretary of the Treasury*

You think it has increased


Vr. Goldstein:


The Secretary of the Treasury:

other figures we hawe had

hare shown a decrease in certain lines*

*How is it with this




Take the case of Galveston, it has do-

I; or eased *9 per cent since I 905 as compered with our increase.
The Secretary of the Treasury:
'nr. Goldstein:

You mean with T,atin*


T think that 1 s due to their depen*
\ *

deney upon the vex lean trade, which of course under present
conditions has decreased.

Tht Secretary of the Treasury:

Suppose you file that


L. S. Goldstein


b rie f, ^r. Soldstein.
(The paper was filed and is ae follows:)

shall bo isy endeavor to trespass as little as

possible upon the time o f the Committee with superfluous
statistics and patent facts, and t «hall/*try to confine
myself te essentials in presenting, en an econosiie rather
than a partisan basis, the matter relating to trade between
Latin America and the United States as justifying the
establishment of a Tederal Resenre Bank at Wew Orleans.
The statistics used are taken frem "Cenmeree afed
Variation of the United States'1, and "Statistical Abstract
of the United States" of the Bureau of foreign and domestic
Commerce, on file with the Wew Orleans branch office of ttia
Bureau of Foreign and Ttomestic Commerce.
In thaabsence of the conflate figures ef 1913, the
figures ef


must suffice ta indicate the large extant of

trade between Latin America and the United states.
The tetal
y s.
exports from the United States to Latin America were
$ 2 9 6 ,1 4 1 ,6 $ 1 .00, and the tetal imparts to the United States
#423,037#208.00, making an aggregate ef trade of

Te illustrata the growth of this trade

within a brief space of time it may be well te consider aa a



comparison the totals of


r . O o ld ste in


exports being? $ 159 *15^ , 657. 001

and inports #;,02,266,$93*00, aggregating #461,423*250.00,
shoving an increase of approximately 86j£ in ejqports and
59> in imports of a total increase in trade of 5&> within
sevm years,
wew Yorfc by virtue ef its particular financial and
;• transportation fa c ilities, has been favored with the largest


share of thi s business, Its total export and import trade
with tatin America in 1912 being $470,506,542*00, &nd its
increase in trade 6J^ in seven years.

The other North

Atlantic ports of Philadelphia, Baltimore and Boston hare a
combined trade of #57* 557 *705* 00 representing an increase
of 33$ eince 1905*

As representative of the Pacific Coast

| trade may be cited San I rancieco with a total of
413*244,181,00, an Increase of 24^ in the same period,


is in the south, however, that the really noteworthy develop*
went has taken pi see.

Tn spite o f the fact that the Latin

American trade of Galveston deer eased

in seven ytars

because of the conditions existing in Mexico, tho total Latin
Americas co m ere e of Oalveston, New Orleans, Mobile and
Tampa in 1912 was #106,240,555,00, an Increase of about 80,:
over 1905*

Of this amount # 61,903,744,00 in imports and

t. s*> Goldstein


$18,408,449*00 in


‘sports went through the port of Sew

Orleans — an increase in seven years of 147$ in imports,


in ejports, or a total Increase in ratin American

commerce of 1 2 ^ as c o lo red with an increase of

5 6


the entire country in the same period.
Althoup*h the commerce of Porte Rico is not technically
classed as Latin America, it may not he amiss to mention
that the transactions of Ifew Orleans with that territory
amount to

116, 677, 385* 00,

representing about 21/i of the

entire trade of the United States with Porto Rico.
This showing is all the more remarkable when it is
remembered that heretofore Sew Orleans* transportation
facilities hare been confined to Central America, Mexico and
Cuba, there hawing been practically no repular sailings to
and from the larger South American countries*

This dis*

advantage has recently been overcome to a large extent by
the establidiment of a dependable service between flow Orleans
and ^rasll and tho Argentine, and several lines will ply
regularly between lew Orleans and the Vest Coast of South
America when the Panama Canal is opened to traffic*
The creation at Mew Orleans of factories and dis­
tributing plants serving Latin American trade, the ostab*


T- s. Ooldatein


jliskaent of branch offices by large export comm lesion
houses, the large investments for terminal facilities by tho
!j great transcontinental railroad*, and the designation of Sew
|Orleans by th* Oovemma^ a* one of the four branches of
!; tho Bureau of foreign and Domestic Commerce, are concrete
Il evidences of the recognition of the importance of Wew Orleans
as a point of origin for the Latin American trade.
Its relation to remoter sections of the country
squally as important.


Being the outlet of the Fississippi

jiValley where is produced about


of the raw material used

in manufactures, it is certain to stimulate the agricultural


! and mineral interest* of that region.

As the natural gateway

I of the Ohio Valley and its tributsries it offers service to
! the manufacturers of that section who are seeking Latin
j American market*.

Tt aay be illuminating, in thi* regard,

j ts quote in part a statement appearing in the official organ
of the Cincinnati chamber of Commerce — *T^o natural gateway
I for Cincinnati and the entire Ohio Valley for Latin America
is B«« Orleans.

A glance at the map shows that Bow Orleans

| is so much nearer to the Panama Canal that we cannot afford
I not to givs this shipping point mors consi dsration thaa has

dons heretofore#

The railroads interest* have a move*


U S . O o ldstein


ment under way by which I w

Orleans will he pat on exactly

tho same basis as Wew York.

In some instances it will be

•ren a little cheaper to use the Wew Orleans route.


bills ef lading are and will be Issued to all points in
Latin America; in fact9 to all points in tho worldy via new
Orleans, and tho rsilroads in connection with the steamship
lines will guarantee prompt tranaportation,

As far as points

{reached ria the Panama Canal are con corned, a decidedly
quicker dispatch than could erer be afforded by eastern
ports is assured, *

Thi s commentary is equally applicable

to all the territory traversed by tho eleven trunk lines
terminating at tfew Orleans.
We take it that tho extension o f cur foreign cosrmqrce,
jlespecially with our Latin American neighbors, is well within
the purview of the federal Reserve Act.

The prorlslons for

foreign branches snd connections, the plan for the elimi­
nation of unnecessarily large gold reserves, with the con­
sequent reduction of interest charges, and mere stable ratea
of exchange, will be of the most Material assistance to the
exporters of the United States in competing with other

nations for the Latin American trade.

In recognition of its commanding position for this


1« 3« S I eiqb

vital trade struggle, if for no other reason, we aubiait that
New Orleans should be designated as the headquarters for a
reserve bank.

Its advantageous proximity to Latin America;

its large share of, and significant increase in tho trade;
its standing as a market fer foreign exchange; its important
relation to contiguous and rensote sections of the country,
and its locational advantage for serving with equal facility
the Texas, $u lf, South Atlantic and *'i sei saippi regions,
concerned with Tatin American markets, constitute, we
believe, inpreseir© economic reasons why Hew Orleans diould
be selected as one ef the agencies to fu lfill the purposes
of the federal Reserve r^ystesu
8 T A T S ^ T OT tBOV C* 6TJ49X,

The Secretary e f the Treasury:

You may state your name,

residence and occupation.
Hr. Simon:

Loon C. Simon, of Kohn, Veil k Company*

The Secretary of the Treasury:
%r* Simon!

What do you represent?

I represent and am to ^ e a k of the wholes‘«lo

and manufacturing trade of Hew Orleans*

low, gentlemen,

Hr* Houston made a particular point about establishing a

Rcpi onal

Bank with reference ta tho tueotlon of trade, and


X. C.


S io o n

1 believe what I have to aay and what you may nak mo vill
havo a larre bearing on what he ha* in mind.
I havo prepared a very brief paper consisting of only
a page and a half, and I will ask you to listen to that,
because it will take only a short time, and then I will bo
glad to answer any questions you wish to ask mo.
The Secretary of the Treasury:
Mr. Simon:

You may proceed*

Tn determining upon tho location for a

Regional Bank in a territory you will naturally dosiro to
know the relative import® ce of the wholesale and manufacture
ing markets in that territory.

To help you make your

deoision in regard to a Kegional Bank point in the wuth
T have tried to obtain some official statistics pertaining
to tho wholesale and manufacturing trade of the various
markets of ttie south.

However, I havo learned, as you have

or will havo learned, that no reliable figures aro available,
and no official figures whatever can be obtained from tho
municipal, state or national governments.
Just because these figures aro not available I should
judge you would be desirous of knowing in a general way the
relative siss of the sorer %1 markets centewplated 4s
regional bank centres, and tho extent of territory they



L* C« rircon


In this connection, I do not think that it can be

|j asriously

disputed t h * Hew Orleans is by far the largest

wholesale and manufacturing market in all the territory
south of a line drawn duo eaat an d wo at rijtfit below St.Louia,
from the Atlantic to the pacific Ocean*

If any question be

raised as to thi a fact, the United States Bureau of Toroign
and Domestic Commerce could probably supply you wilh general
I!information which would doubtless prove conclusive*
jrnay know, thi a Bure«

Aa you

in recently placing branehea through­

out the country, established one in Hew Orleana next to one
in Hew York*

Thia demon at rate a tho importance in which Hew

Orleana i a held by the Department of Commerce officlala*
Though statistics of the wholeaalo distribution of the
Tarioua marketo are not available, manufacturing atati at ice
are, and I subjoin, therefore, the figures showing the
annual production o f manufactured art i d e a by the leading
aouthern citiea , taken from the lateat United Statea census.
ijAnd of eourao thaaa are the only figures available.
the others aro guesswork.


**r. Stem gavo those figures,

but I wish to point out that Hew Orleans manufactures about
twice as much as Pichmond, about two and a quarter times
what Atlanta does, and manufactures about two and throe


I** C* Simon


quarters times what ]f«9 h U doe a.
The Secretary of the Treaeury:
Air. Sinon:

You meant it did in


It did in 1909, and there are no figures

] available, hut there is no question in my mind ae an oh server
who he* watched it,

that Hew Orleans has made fully a smuch

progress if not mor«f than those other cities, hut you want
The Secretary of the Treasury:

That is merely an express­

ion of opinion*
Mr. nimon:

That io merely an egression of opinion,

therefore I am only #riving the last facts which are avail­

It manufactures more than three times as *such as

Birmingham, and twice as much as ^eaphis.

Those are United

States census figures, and I say as my personal opinion vs
have more than maintained that percentage.
The Secretary of the Treasury!

You do net mean to say

that with respect to Birmingham?
Ur, Simon: ^es, I do, surely.
The Secretary of ttie Treasury!' Because the manufacture
of stsel and iron production alone In Birmingham has in­
creased enormously in the last five years*'
Mr* Slmonr

I want to call your attention to the fact


X* c* Simon


that in TSirmin^ham a large part of the manufacturing is
outside of the city limits, which constitutes theae figures,
and it 1 s confined, aa you know, to practically two products,
steel and th

production of coal*

In Hew Orleans, Just like

in all these cities, we hare manufacturers all around the
city outside the city limits, across the riwer at Oretna,
and all these cottonseed products about which Hr# George
told you, and oil products entirely outside the city H a l t s ,
and they are growing by leaps and bounds, as Mr* Gf*orge held
out to you, and I think we hare held our own and in comparison
we have grown*

I think all tho facts will bear that out,

and they can be had from the Department of Commerce and
jt i s vi« i i known that, gen <srally speaking, the


of the wholesale trade of a market is largely in proportion
to that market's factory production*

However, the proper*

tion of the wholesale trade to the factory production ia
even greater in Hew Orleans than usual, beceuae lew Orleans
was a commanding wholesale m rket long before it manufactured
to any degree*

I f figures were available, therefor*, I as

sure they would show that the relative siae of Hew Orleans
as a wholeaale market te other soafehern cities is m m



I»* C* Simon

greater than a s an industrial contra*

He sides, ths territory

covered by Wow Orleans is beyond question

of much greater

extent than that of any other southern city*

And I think

that is a fact which is of importance in yowr investigation*
The Secretary of the Treasury:

That is a fact we want

yr* Simon:

All ri/?ht.

I have something after I have

finished this, which will he^p demonstrate that*
The Secretary of tho Treasury:

If the rest of your paper

is an ejp resslon of opinion, you might come to the thing you
intend to show and give u6 those facts.
vr. Simon:

As I stated, I presumed you wanted an expression

of opinion about ths wholesale trade on these various

because ths fl/rurss aro not available*

Wow to give

you an idea o f the extent of territory covered, I have
brought over maps of tho states in my particular business,
showing Just what tsrritory is covered*
The Secretary of the Treasury:
ifr. Simon:

y t

us ste tho naps*

of course, T cannot deliver those to you and

submit them for the files*
Ths secretary of Agriculture:
l!r* Simon:

What 1 s your business?

Wholesale hats, which as you know, is a lino


X,. C. Simon

like dry poods and shoes*


Now these are taken from my file s ,

which I brought orer at lunch time*

Here ia a map of the

State of Louisiana (indicating)*
These various colored
tacks point out the various potjbotx in Which we do business
in those towns, whether by druat~er or catalogue order or
just in what fashipn we do the business.

But share you

see these pins is w h r e my firm does business and did
business; the two different colors represeifct whether it was
last season or this season.
The Secretary of the Treasury:
vr. Simon;

Which 1 s which, now?

The grsen tacks show tho business dene during

jj this present season, and the b a d tacks shew the business
done In the past season, and the marked marks show a season
and a half ago.
The Secretary of Agriculture?

What percentage of your

business do you do in Louisiana?
lCr. Simon:

I could not very well estimate that, but you

will get a pretty *ood idea when you see these various
st ateo.
The Secretary of the Treasury:
HT. Simon:

Here is riesissippl.

The Secretary of the Treasury:

Let us see the others now.

These tacks represent

L* C* Simon


| three and one-half seasons?
Mr# Fimon:

These tacks represent three and one-half

season st yes, sir; just about two and a half years; there
|is a season and

a half each year*

You will notice the

! green predominates, that is the present system*
Here is the State of Alabama,

You will notice that

particular northern region i s not as well cowered as the
southern, and you will find aome houses do more business in
the northern part of Alabama, but this is peculiar to ay
Here is the State of Georgia*

I want to state ws also

ido buslnsss in South Carolina, but it is So small in comparison that I d id not think it necessary to bring that map

l ower*

But I only want to state that we do buslnsssto

ths Atlantic Ocean on that line*
Here Is

t the

State o f Texas divided into two parts*

Here is the eastern part, where ths population is; it is
pretty well crowded, you will see, and ws do a considerable
Ths Secretary of the Treasury:
Houston, Dallas and Tort Worth?

Do you do any buslnsss in



T* c. Slaon

¥r* Simon X Oh, yes*

well, not so much particularly In

my line around Dallas and Fort Worth, but a tremendous lot
!in Houston,

7or example, I guess my house does more business

around Houston than all the houses in Houston put together#
Here Is the sxtrane western part around the Browns­
ville country and ^few M exico , and h«re is Florida and this
is Arkansas*

These arc taken from sy files*

The Secretary of Agriculture!

Te this typical of the

wholesale business or does it go further?
i£r* fiason:

The wholesale business as understood by whole­

sale is typical,

r>f oourse, some lines do a particularly

stronger business in some territories as agsdnst our line,
When you take the great steeple products, such as hare been
mentioned to you, like sugar, coffee and rice, of course
Wew Orleans is a predominating influence tbro ghout the
ce untry.
The Secretary of the Treasury:

could you later give us

the percentages ef business in these different
Mr, Simon:


I could estimate it , if it would be of value,

and forward it to you.

Will you allow me to make one

statement, which T think will shod some light on the
subject and be of interest here*

You want to establish a


Xw 6* S in n

Regional Bazik In ths south



likely, and I want to point

out particularly this fact, 'because T am in the jobbing
business an d under*tand it pretty well.

You take a city

like Dallas or Atlanta, contending cities for the Re#£ onal

There is no doubt —

The Secretary of Agriculture!
MT* Simon:

There are still others*

I just take those for example*

mentioning any particular town*

I am net

Th*jr undoubtedly hare the

bulk of the business in the territory adjacent to those
cities, like Houston has with the territory surrounding

How in territory adjacent to Dallas, Dallas Is

supreme, and in the territory adjacent to Houston, Houston
is supreme, just like San Antonio is supreme in Its par*
ticular territory.

X imagine it i s the same on the other

side, AtXanta and Birmingham
they are supreme in*

haws their territories that

Put when you establish a regional bank

you wish ts get a market in the particular territory «hleh
most thoroughly covers all that territory*

You stated

Dallas and Houston and ?ort Worth had m ade a claim for
Louis iana and that wmxk they were hospitable enough to
Include us*
The Secretary of Agriculture:

Aad so has St. Louis*


L. C. Bimon

Mr. Bimen:


And so has St. Louie.

I hart no doubt that

Dallas and tho rest of the Texas cities do comparatively
little business in Louisiana whereas $ew Orleans dominates
the Louisiana territory and does a tremendously large business
in T^xas, in fact probably as much as any of these other

The fact I want to bring out is that Hew Orleans

Is without question, from anybody you would look to as an
impartial authority on the question, the largest distributor
of merchandise in the southern states*

T do not believe,

and X will be honest, that it distributes any more roods in
the southern states than St. Louie, but I do not think there
is any doubt — I mean in the territory adjacent — and
above a ll, it 1 s located in the southern states adjacent to
the centre which it wishes to supply with a Regional ?ank.
The Secretary of the Treasury:

What percentage of the

Jobbing business in hats in the country do you suppose is
done by Wow Orleans?
wr* Simon:

In the United states?

The Secretary of the Treasury:
Vr. pimon:


That would be a very difficult thing to answer

offhand, because I imagine you would want something


I* C* ?iraon


The Secretary of the Treasury:
you not?

You can supply that , can

Trlre ue some idea of the business done in lev

Orleans in that line and what relation it haa to the entire
Jr. pi-aon:

X think I can, and probably if you will permit,

T will try to get you info rm t ion pertaining to other lines*
The Secretary ef t&e Treasury:

We would like to hare thatf

and if you will get it, send it to Washington*
sir. rioon:

yt will he an estimate*

The Secretary of the Treasury:

Yes. yf w

could get one

of these naps showing those different lines and the fear ef
Hew Orleans1 influence in the wholesale and distributing w y ,
we should like to hav e it.
Mr* Wexler:

We will hare that for you very shortly. There

is one other line, and that is the lumber business.


j! Palmer is here, T bell ere, and he will Just give you the
statistics briefly without going through the quite voluminous
document he has there, because the time is getting very short.

X** Palm er



'Hie Secretary of the Treasury:

You may at*te your name,

residence -md occupation.
Vt » Palmer:

L. Palmer, export editor, lumber Trade
I do no t intend to read this brief. My purpoee

T think will be served practically by sis^ly filin g it lbr
the consideration of *he committee.
The Secretary of the Treasury:

I f you please.



tho volume of business here and hoar it is financed here.
!?r. Palmer:

The idea of thi* brief le to show not so

much the Importance of flew Orleans from a lumber standpoint
as the importance of the territory in which it is situated
end whieh 1s tributary to it.
The Fecretary of Agriculture:

I ait familiar with that.

I have lived in it.
PTm Palmer:

I presume so.

The Secretary of Agricultures

jt you will just give us

facts so far as they bear on Hew Orleans — T am thoroughly
familiar with the lumber situation in this
10r. Palmer:

T presume so, and in fact — T do not pretend

that Wew Orleans is a lumber market*



'<•*;' r


■ i,

L* Falser


The Secretary of Agriculture:

Tf your paper is g*seral

it will not aerr* us at this tiao.
Mr. ‘Palmer:

The lumber business is a sttmufaeturlng

business, and of course that is scattered over the territory.
In fact the onl;y thing I hare specially on Ucw Orleans in
that respect i s tho exports.
The Secretary of the Treasury:

Ciwe us that.

That will

be of ralue.
-nr* Palmer:

Ifew Orleans is undoubtedly the largest lumber

cap orting point in the United States*

Taking arerything

together, its only rivals are the othor ports situated on
the Gulf.

I have here an exhibit showing the @aq>orts, which

gives the total values in 1915 cfflclally ef experts
classified by the bureau of no mioree and Labor as wood
manufactures, $20,208,697*
The Koeretaiy o f the Treasury:
Mr. Palmer:

That Is exports*

^ew I have given the

figures also for other points on the Gulf Including Savannah*
Tn othor words my brief covers every state which could
possibly bo included in the district served by a bank at Vow
Orleans* but I hare not included ?ort Arthurf because f did
.. t . ’r‘ •**'




aot have the figures when I made it up.

Since then I have



X* Palm er

received the figures and they tHiOce Port Arthur exports for
lost year approximately e<|aal to £av»inah and Galveston
together, so that you could leave Savannah eut and put Port
Arthur In and It would make more than this exhibit shows.
The Secretary of the Treasury;

What do you say the total

of Wew Stack Orleans exports injt In lumber?
vr# Palmer:


The Secretary of Uie Treasury: per annum?
Mr. Palmer:

Last year.

The Secretary of tho Treasury:
yr. Palmer:



The Secretary of tho Treasury:
vr. Palmer:


vow is that finaneed here?

Well, of course the hardwood business moves

to a considerable extent from interior firms, and I presume,
while I am not familiar really with the financial trans­
actions in any kind of detail, they are undoubtedly financed
to a considerable extent at the Interior points.
especially true as to hardwoods, but T

That is

judge that approxi­

mately one-half ef the hardwood exports which are included
in this statement under the head of

all other boards,

deals, rlanks, joists, scantling, Yellow pine, is handled
by wow Orleans firms.

L, P*lmer

The Secretary of th e Treasury:


What proportion is that

of the total of *20,000,000?
Mr, Palmer:

Th* all othor is 16*578,916, and T Judge • •

Tho Bee rotary of
Mr, Palmer:

-ho Treasury:

About 40 por cent.

About half or nearly half of that is h an died

by Mow Orleans firms*

So that if you would take out

$4 ,0 0 0 ,00 0 , it loaros about $16 , 000,000 handled, rot at
Vow Orleans — well, it could bo largely handled in Hew
Orleans, to that amount*
How as to tho other ports on tho Gulf, their shipments
aro largely pitch pine, which i ^produced in the immediate
ricinity, and which is largely financed locally,
Tho Secretary of tho Treasury:

Will you file that,

yr, Palmer:

t simply want to call attention to the last

e£ihit, as to what 1 • to follow the lumbsr industry in this
(The paper was filed , and is as follows:)
Regarded simply as one element of the financial
interests to bo serrsd by a Regional Bank in Hew Orleans,
ths lumber industry is one of more than ordinary importance,


L* Palmer


not only because of its own magnitude, but because of tho
relative importance of tho Industry in Louisiana and nearby
states ascocspared with other states*

This is Illustrated

by the data herewith presented, which havo been amdo to cover
all the states deemed probable to be included in the district
to be served by a Regional Bank in lew Orleans; and while
total figures and percentages are given for all these states,
tho detailed figures for each state will enable other com­
binations to be formed covering a more restricted territory
if desired*

Wo great detail has been attOnpted in those

data, it being presumed that the Commlarten has other and
more reliable sources of information from which to secure
such detslls as It may desire; but they aro largely official,
and It lo believed sufficient for tho purpose, which is to
serro merely as a basis for tho points desired to be illus­
Exhibit no* 1 gives approximately the capital employed
in tho lumber Industry, in the three branches of manufactur­
ing, wholesale and retailing, in the seven states named,
Louisiana, ttlsslesippi, Arkansas, Texas, Alabama, Georgia
and Vlorlda, amounting to $448,491,000 representing 7,723
concerns* TO the nature of things, this i s only aa approxl


L . P alm er


mat Ion, but it is believed to bo conservative and tho actual
value of the holdings is naturally considerably in excess
of the capitalisation stated*

Special mention need only

no made of the figures for Louisiana, its small number of
co3$anies and the high capitalisation suggesting tho large
scale on which lumbering operations are carried on in tho
state in which How Orleans is situated*
Exhibit #e« Z also illustrates this same condition,
and tho further fact that the industry in this state is
largely a saw milling proposition, which is what this
eohibit covers*

Tt shows that Louisiana, which is second

only to tho state of Wbihington in amount

of lumber produced,

and a larger producer than it in proportion to area, is
also practically the centre of the most important lumber
producing section o f the country, tho production of these
seven states being approximately one-third that of the
entire United States; and points logically to Hew Orleans
as an Important financial centre from a lumber standpoint.
Exhibit lo. 3 is ef the same character, but of wider
scope, going beyond the primary manufacturing of lumber, or
saw milling, and including operations Which are of greater
relative importance in other states.

While the figures in

I. Tmlnar



this « h io i t do not fciro tho industry tho same relative
importance as ths os of Sxhihit 2

, they nevertheless


support the sane conclusion.
Kxhibit Wo. 4 relates specially ts exports of forest
products from the ports in the territory covered by the
other exhibits*


stf& ed, this exhibit is incomplete, not

including tho Port Arthur district, and Including only
Pensacola of the ^ o r id a district, that being its most
; important lumber port, snd figures therefrom, as well as
Talues at all ports except ^ew Orlesti s being approximate#
Ths figures are sufficient, however, to show the cessaanding
iaportanoof the Gulf and South Atlantis coast la the
escort lumber trade*

^or instance, leaving out the item

"Miscellaneous”, ths ab orts from the fir s ports named
during ths last calendar year wers slightly asr* than half
of thsss for ths fiscal year from ths sntirs eountry; and
the addition e f th e figures from the mlsAng^ports would make
this proposition {rood for the calendar year, allowing for
possibls excess in the tstal e f the calendar year over ths
fiscal year#

While hardwood exports come from a side

territory, and aro financed to a considerable extent in the
interior, the othor items named aro in tho main financed


X* P alm ar


locally »t tho ports, or at least in tho territory adjacent
thereto, and aro therefore an important element in banking
Xxhibit Ho. 5* while to some extent representing tbs
consumption feature of the wood Industry, as distinguished
from that of production, is also in a great measure to be
regarded as an addition to the latter, including asit does
handles, apokos, ears, wagons and agricultural implement
material, e t c ., which are not Included in the statistics of
lumbar production*

It is not claimed that the consumption

of wood is of importance in these states in co^arison with
the large manufacturing states of the country, but those
figures are not without ralue as illustrating the magnitude
of the wood Industry as a whole*

6 , illustrates as to Louisiana a situation

which 1 s typical of all the lumber states of the south, and
presents a situation important to bo eeneldered In the
permanent location of a regional bank*

The other exhib its

relate to tho present condition of the lumbar industry,
suggesting tho large attendant traffic in machinery, rail­
road equipment, commissary supplies, etc*, which after a few
years aay be logically eaqpested to decrease in volume, aad


It Palmer


to a less degree in financial import cnee*

Thio ejfcUft,

however, relates to the industries wMch are to fellow, and
which are now in their infancy.

The movement fbr the

utilisation of waste accumulating in tho manufacture of
lumber is gaining ground, end is inevitably destined to
create a very large and Issportant industry, with its wo at
attractive field in the larpe lumber producing territory
of Louisiana and neighboring states; while the development of
cut-over lands and putting them in agriculture is receiving
more and more attention*

This will require not merely the

conduct of business already in operation, but the inaugurat­
ion of new enterprises and the investment of largs amounts
of capital, calling for an extended use of credits and dis­
co unts; while the replacement of the forest s by farms and
towns will *?ive rise to much more extended and varied
financial operations than at present, and increase largely
the need of adequate banking facilities*

STATXtfKUT OT CAPITAL employed in the Lumber Industry
in the Southern States tributary to



naturally dependent on Vow Orleans as a banking centre

L. Pelaer



are the states of Louisiana, Arkansas, Miesi^airipi, Texas,
Alabama, Florida and -aorgia*

Ths lumber business of

these states I s a s important feature*

jt is divided lnts

three branches, aanuf act taring, wholesaling and retailing*
Lumbermso are all heavy borrowers#
The tetal c o i t a l Interested in the lumber business in
ths states named is #448,491,000.

There sre 7*725 concerns.

The capitalisation does not represent the maximum investment*
Tho following table gives the totals by states.


figures are obtained from credit rating books, supplemented
by personal knowledge.



100, 065,^00


Ifissl Dslppl


1 ,U 0


62 ,068,500


121 992,000





n e r ld a








Louisl<si a




D e ttlla will

fu m l,h «d I f desired.


L. P<*l*er



NO. 3

LUMBEB PRODUCTION in Southern States as Na&sd, during 1309,
tfjd during 19 IL.
(Production and vaiud* for 1909 taken fro* reports of
Bureau of tho Csnsus.

Production for 1913, froa sm s source,

c'jnd Value8 arrived at by use of tho saae average valuoo for

eaeh State * • In 1909).


M Ft.


Average ProducValue tion
M Ft.


3 ,5 5 1 ,9 1 5 | 5 0 ,5 3 9 ,0 9 4 $1 4 .3 3

3 ,6 7 6 ,2 1 1 1 5 5 ,1 5 8 ,4 8 3

2 ,5 7 3 ,6 6 9

3 6 ,3 3 2 ,5 1 3


3 ,3 6 1 ,3 9 8

Arkansas 3, 111, 300

3 1 ,8 3 9 ,2 8 3


1 ,8 3 1 ,6 U

3 7 ,4 7 3 ,9 1 0


3 ,0 9 9 ,1 3 0

3 5 ,7 4 7 ,3 1 3

IS. ^6

1 ,8 0 8 ,3 0 1

3 3 ,3 3 0 ,9 8 4


1 ,6 9 1 ,0 0 1

3 3 ,9 3 6 ,6 2 7

1 4 .1 6

1 ,3 7 8 ,1 5 1



1 ,3 4 3 ,3 4 9

1 4 ,6 5 0 ,5 4 1

13.74 94 1,39 1


1 .3 0 1 .7 3 4 1 4 .6 9 6 .4 1 3



14 .15 1 .0 6 7 .5 3 5

1 1 ,9 9 3 ,0 4 7
1 5 .1 0 5 .4 7 9

1 4 ,5 7 0 ,0 0 1 $£ 04,490,105 1 3 ,3 6 * ,0 6 8 $ 1 6 6 ,1 3 8 ,3 5 8

3 3 .7 3

3 9 .8?

Total Uni­
ted States,
4 4 .5 0 9 ,7 6 1 1 6 8 4 ,4 7 a ,656

3 5 ,5 6 1 ,7 3 ?

3 4 .6 3

3 1 .3 5

15.37 3 3 ,1 5 6 ,4 1 4 (6 0 1 .6 6 4 ,8 2 3



L. falser

The above figures include lumber, lath and shin^lee,
the two latter being reduced to equivalents cl board feet.
There ie ef course a large a&cunt of other fereat produote
gotten out, ©uch a* piling, pole a, staves, heading, etc.,
staplete details of which by states and values le not avail­

Tiis five states named produce 17.51 percent of all

the slack staves, and 4S.S2 percent of the tight staves man­
ufactured in the country; -aid eh lie the values are not
stated in the statistics, their proportion of value of tight
staves le probably acre than that cf number, as they produce
practically all the rough etaves exported, which are of high

,.lIB IB I3LJK k-A .
Mississippi, Arkansas, Alabama, Texas, Georgia and Florida.
The following figures taken from the report cf the 13th
census present in a different fora statistics covering the
lumber producing industry in the above named statee,


on a somewhat wider basis tsan the mere sawing cf lumber
from the log.

The figures Include logging operatione, ordi­

nary sawmills (Exes;:t small custom &llls eawing for local


L. P a tte r

consumption), planing Kills, and establishments snga^ed in
the manufacture cf tsooden packing boxes.

As the value cf the

product cf one operation often represents that of the mater­
ial for a subsequent one, there ie more or less duplication
in the column headed "Value of Product*, which does not exist
as te um ber cf employes and value added by manufacture•





| 63 637,©13

| 39,681, 716


33, 397

42, 793,644










A1 abasia

23, 409





£.4, 632,093










Being percent of 36.75
Total for
United States







available) frcs Ports in Georgia, Florida, Alabama, Mississ­,
Federal Reserve Bank of St. Louis

Louisiana and Texas during 1913.

L . Palmer


(Figures of K««r O r i e l s art official and complete for
all items included in statistics of Bureau of Foreign and
Domestic Commerce under head cf Wood and its Manufactures*
Those fcr Savannah, Mobile and Galveston are official, but
incomplete, including under "Miscellaneous* only shingles,
shocks, headings aad miscellaneous luaber.

Figures for

Pensacola are unofficial for last half of year, being com­
piled froa» private shipping news reports.

Figures for other

ports in the Florida district, and for the Port Arthur dis­
trict, not no* available.)
Quantities of Logs, Timber, Boards, Deals, Planks,
Joists and Scantling are in thousand feet; railroad ties
and staves, numbers.




5 ,7 8 *

161, v>66


41,016 % 1,477,893






Boards,Deals, PI anas.
low Pine,













All other

Railroad ties


L. P a l* er










660. 220





1 .S 6 5 ,335







5 , 47S





Boards, Jo i eta,
etc. Yellow pine 162,£41

















All ether
Railroad ties



Total Value





| 6 , 325,206









Bcaiua,Juisls, etc. Yellow pins







All other
Railroad Ties










Miacel laneous

65U, 34w

Tct~ 1 V^liie



(Values for Kew Orleans are efficial, being taken from
collector1® report®.

For ether ports, values are arrived at

on fcseio cf average values of similar iteas in total exports
of country for calendar year erding June 30, 1913).
Total experts froa Bee Grleaas, Mobile, Psns&ccla, Galveeton dud Savannah, for 1913, compared with those ires, entire
country in calendar year, ending Juiie 30, 1 13.


6*, 693 % 2,038,655



1 7 3 ,5 U

# 4 ,2 2 3 ,4 0 *



6,lb 4,603


Yellow pine





All other

*3 7 ,1 62




Bailroad Ties





4 6 ,5 2 9 ,5 9 1

5 ,4 6 4 ,6 4 3

8 9 ,0 0 5 ,6 2 4

7 ,3 2 5 ,5 3 5



Total Value
Federal Reserve Bank of St. Louis


|1 1 5 ,704,771



L. Palter

Being disappointed ir. getting totals cf the country
for the calendar year, it is necessary tc uee for a compari­
son those cf the fiscal year, which the completed figured
fcr the calendar year * i l l probably she* to be so^ewh^t
less tn<-ri the latter.

In connection *ith the specific

bearing ox the»e statistics on the bunding question,


should be noted that the great bulk of the timber, yellow
pine boards e t c ., and etavas, are handled by firte located
on the Gulf,

sid in the case of staves,

largely centered in Sew Orleans,
Kents being therefore,

tat business is

the financing of the ship-

tc a special extent, a locaa. s.atter.

tries in irOuisi;,na,

Tex^s, Arkansas, M ississippi, Alabama. and

Florida in lfc*l£.
(Taken from Eeports on Wood-Using Industries compiled by
the Forest Service of th« United States).
Amount Used— Feet



Average Cost
Total Cost
per ii Feet F. 0, B.Factory


$ 1 1 .f4




10,144, 325


11.4 »

15, £ 59, 1G9


L. Palmer


Exhibit B-. 5 (Cont'd)
Amount Dadd— Feet

Average Coat
par M Feet

Totax Coat
F.O. B.Factory







I S .24





6,46 4 ,6 6 3

H E ig m

^- §


Louisiana ia the second largest lumber producing state
in Union, the annual value of the product beirg in exceae of

Including by-products, the annual value exceeds
The state has standing timber to the asiount of

ISO billion feet, valued at 1600*000,000.

It has also

nearly 4 ,0 0 0 ,0 0 0 acree of cut-over l*nd, 60 percent of which
is well suited for agriculture.

To properly develop these

cut-over lands the state needs industries whioh will utilise
the (Billions of corda of material no* left on thee,.

For this

is required dietiilatlcn, pulp and ethyl alcohol plants. These!
jlante will clear the land at no ccet, and produce a bi&
revenue froii> their operations.

To firance these plants rural

credits are suggested, the basis of credit being land for
agricultural purposes.

A loan of 30 percent on the actual

land value will be ample to firance all industrieo for develop­


L. Palmer

ing the

out-over lands.


Thera i© available sufficient raw

material to sustain all by-rroduct Industries cn a large scale
for over a hundred years.
The development of all these industries w ill result in
a great impetus to the agricultural development ef Louis­
iana and the ether Southern States, v.hioh is ec much needed.
It w ill alec result in increased trade with Central and
South America, a most desir: ale feature.

Louisiana needs

population and money, cr its equivalent, credit to develop
her v^ttt resources.

A regional bank is desired to render

this service to the beot advantage.


J. L. Taylor

The Secretary of Agriculture:
from « few of thO0 Utside bank ere.


Now tro »r« to hear briefly

vr« Taylor of Mobi lo.

The Secretory of the Treasury:

V ill you st *te your name,

residence and occupation?
Mr* Taylor:

J. I.. Taylor, Secretary Mobile Clearing


Assoc iation*
The Secretary of the Treasury:

Do ywi oome with m y

authority to speak fmr th* Clearing House, W .
Mr. Taylor:



The Secretary of the Treasury:

Just read your resolution

or credentials, please*
^*r. Taylor:

^.©bile, Ala. f February 2, 1914.

At a meeting o f the Mobile Clearing House Association
held this day, all members being present, the following
resolution was adopted:

'As Hobile is not an applicant for

a Regional bank, the Mobile Clearing House Association
unanimously endorses Vow Orleans as tho logical place for
a Regional bank for this

aeotion, and Secretary J. I . Taylor

is h«*eby delegated to represent this Association at tho
hearing in Mew Orleans on Tebruary 11 tn and 12th and east


J* X* Taylor

5 7 6 9 -6 -

our support in favor of Vet Orleans*.
«T* L# Taylor,
iTob lie Cl oaring House Assoc lotion* ■
Tho Secretary of Agricultural

ho »

many b&nJto aro in tho

Cl taring Kou so?
Hr* Taylor;


Tho Secretary of Agriculture:
&r. Taylor;

State or national or b® th?

state -md national; two national and throo

sta to*
Tho Sscretary of Agriculture:

Bo you know about tho

state banka in your state, tfiethcr they are eligible under
th« Act?
Mr* Taylor 1

Whether they are eligible —

The Secretary of Agriculture*

To come into thie system

and oubecrlbe for stock*
Mr. Taylort

Well, X think they are.

One in our city

baa already expressed a desire to con* in, the City Bank
* Treat company*
Tho Secretary of Agriculture!

To what

extent aro your

relations at present with Mow Orleans?
Mr* Taylor:

Our relations

with Wow Orleans are very

J# T,# Taylor



We do a groat d'sal of business with low Orleans, and

Hew Orleans

does a great deal of business with Mobile,

busineBe la identical, except ae to volume.


The Vew Orleans

volume of business is a great deal larger than llobile, of
oourse, but the character of the business i s the same,
lnsports and exports, cotton, lumber and
The Secretary of Agriculture:

a nu fact urea.

wh«re do jrtur banks carry

their reserves?
Mr, Taylor:

Well, I think they carry them principally

In WewYork; but I dare say eosae of them carry them in Uew
Orleans and Louisville.
The Secretary of Agricultures

Bo >ou know how they are

Mr# Taylors

T do net know just how they are distributed,

but I think principally in flew York.
The Secretary of Agriculture:

Could you send us the

wr» Taylor:

T could do that, yes,

The Secretary of the Treasury:
wr* ?aylori

Hr. Taylor:

Ts yours a national bank?

The bank that I represent?

The Secretary of the Treasury*


i ■„■

* o t sir, it Is a state bank.


J. X* Taylor

The Secretary of the Treasury:


©id the Mobile Clearing

House conrider tho district that *as to be forstd hero?
Mr* Taylor:

y e^


Their idea of an id sal district

would ha composed of the states bordering on the ^ulf.
The Secretary of the Treasury!
Mr. Taylors

Which, for in Stanca?

^or instance, Florida, Alabama,

T.ouisianu and Texas*


That being the ease, Wow Orleans

would be just about centrally located,

new Orleans has

always be on the financial centre of that district, and I
dare say always will be.
The Secretary of the Treasury:

What would you say, do

you think it is the financial centre for instance, for
Birmingham's financial operational
^r. Taylor:

Wall, Birmingham perhapa would be on the

edge,<Mf the outskirts.

I was about to say that I think Sew

Orleans is the financial cant re to the extant as far north
as Memphis and as far east aa Scontgomary and I do not know
what city in Texas as far west, but I dare say some parts
of Texas*
The Secretary a f the Treasury:

Would you think Mont-

fernery ought to bo related to i?aw Orleans?
Mr. Taylor:

t could not m n war that

$iestion so much for


J. I* Taylor

'Ton ornery.

I do not know tho nature of

H r business*

But T am very certain How Orleans exchange possibly passes
In Kont*»mery at par.
The Secretary of the Treasury:

^hat would you say if

Tyrobilo and southern Alabama were not attached to lew Orleans,
What would be your second choice as a city for a reserve
Jr. Taylor:

If How Orleans was not in that region, cur

second choice, if Sew Orleans was not in the region, would
be Birmingham.

Birmingham is one of the mo efc la octant

citics in our state, therefore *The Secretary of the Treasury:

I f It was not Birmingham,

What would you say?
'£r. Taylor:

I f it was not Birmingham, and was not new

Orleans, I think Atlanta would be tho next point*
The secretary of Agriculture:

ifhat would be your impress*

ion as to tho advisability of including Georgia and Florida

III a district with Wew Orleans as the location?

Does that

trade normally relate to this city?
Nr. Taylor:

I do not think — now I cannot speak

authentically on that, but I do net think that Ooergia's
trade does relate tc Hew Orleans like the other d ates do.


J. L , Taylor

The Secretary cf the Treasury:


Take Jacksonville, Florida,

and all the east coast, do you think that relates to Vew
Mr* Taylor:

The east coast does not, but the cities

bordering on the Gulf in Florida, Alabama, Mississippi,
Louisiana and Texas*
The Secretary of the Treasury:
Mr* Taylor:

Do ;/eu think Tawpa dees?

Yes, T think it does.

I think so, inasmuch

as all the 6ulf Coast cities business Is identical, that Is ,
it i s insert and export principally, and Hew Orleans being
the largest and most centrally located city, the backing
business naturally gravitates towards Mew Orleans on account
of their ability to handle large affairs*

They hare large

banks here now9 and the business naturslly gravitates
towards the largest city, which Is in the centre of the
The Secretary of the Treasury:

With what city under the

existing system do you have most of your banking exchanges?
Hr* Taylor:



The Secretary of the Treasury:

I am speaking in the

Mr* Taylor:

Ysu are speaking in this



X. L. Taylor

Th# Secretary of the Treasury:


He, e f the country at

large, as it stands today, with what city do you do most of
your hanking business today?
Hrm T^rlor:

With Wew York#

The secretary of the Treasury:

And that is duo to what

reason, because of the necessity f or haring How York
Hr# Taylor:

y «*»

that is the only reason.

As the whole

country does, they keep their money in Hew York ^dien they
hare money, and look to Hew York principally when th<y need
The Secretary of Agricultural

What would be the second

eity at present with which you do ths most business?
Mr. Taylor:

T think Chicago would come next.

Tho Secretary of Agriculture:

You will get the facts

for us from the Clearing House?
Mr. Taylor:


How What point was it you wsnt?


will make a noto of it*
Tho Seoretary of tho Treasury:

whore they keep their

reserves under the present system, in what c itie s, and how
distributed between them.
The Secretary of Agriculture:

And tho p ere outages.


E. H» PurcsXl.

Mr. Taylor:



The Secretary o f Agriculture;
gTAlE nm? 0^ E. %

*hat i s a ll, thank you.

Tho Secretary of the Treasury:

state your name tn fu ll,

your residence and occupation.
¥r. Purcell:

2* H. Purcell, Greenwood, M iss.; cashier

of the First National Eank.
The Secretary of Agriculture:

Do you represent any asso«

ciati on?
vr. Purcell:

#o, sir, X de not.

The Secretary of Agriculture:
Vr0 Purcell:

just your own bank?

Just my own bank.

The Secretary of Agriculture:

now many banks are there

in greenwood?
vr. Purcell:

There are s ix in greenwood.

The Secretary of Agriculture:

Can you speak in any

author 1 tat It s sense for the others?
Wr. Purcell:

I can sp sak for four.

The Secretary of Apiculture:
Hr. Purcell:


sir, definitely*

tho matt or with the other two.

I have not discussed

$* M* Purcell

The Secretary of Agriculture:
Mr* Purcell:


what sort of 'bank* aro they?

one l e a national bank and the others are

state banks*
The 8*cretary of Agriculture:

$1to their names for the

sake of the record.
Mr, "Purcell:

The ?irst national Bank, the greenwood

Sarinrce lank, Bank of Cor&asrce and the Delta lank*
The Secretary of Agriculture?
Mr# pur cell:

What are your preferences?

Our preference is Wew Orleans*

The Secretary of Agriculture:

*h®re do you

the volume

ef business at present?
>*r. Purcell:

We do moro business in Wew Orleans than with

any point in thesouth.
The Secretary of Agriculture:
l£r* Puroell:

well, out of the south*

New York, of course*

The larger volume of

our business i s with Wew York*
Tho Saerotary of Agriculture:
, inr* Purcell:

The next is Wew Orleans*

The Secretary of Agriculture:
r* Purcell!

Larger than any other city*

yes, sir*

The Reoretary of Agriculture:
say with Wew Orleans?

And the next*

What percentage should you

S. X* Purcell

*£r. Purcell*


I would eap 35 per c«nt»

perhaps I would

reduce that a little bit, 25 per cent.
The Secretary ef the Treasury:

What percentage with ^*ew

Mr. Purcell:

'nrohalsCly 40 per cent*

The Secretary of the Treasury:

Where dees the other 35

per cent go?
Hr. Pureell:

T* is scattered between Memphis and Boston-*

ve handle a great deal of eotton in our town and we hare
already received 135tOOQ hales, and a pood deal of that
(roes east; and the reet of our business is largely local9
in northern Mississippi.
The Secretary of Agriculture:

Are you in a borrowing

cc immunity?
*'T. Purcell:

Yes, sir.

The Secretary of Agriculture:

What is your judgment of

th is district which has born® suggested, it is normally
independent or depen&nt,

*nr. Puroell:

fhat includes M ississip p i Alabama —

The Secretary of Agriculture:
HTt Purcell:

I think It is dependent.

The Secretary of the Treasury:

Georgia and Florid*.

You think that i s a good


S. K. Pure all


wr* Purcell:

y«% sir, t do,

Tho S^cr etary of Agricultural

To hart it dependent

no nanny t

0ht no,T do not think tt i s a good arranse-

nant to have it dependent, hut I think it would he inde­
The Secretary of Agriculture!

T thourht you said it was

1fr. Purcell:

T think it is#

T$t raa see if I understand

your <guestlen.
The Secretary of Agriculture:

Ts it a borrowing or

lending community?
tfr# Purcell8


* o a borrowing.

The Secretary of Agricult«re:
wr. Purcell:

Then It I s dependant.


The Secretary of Agriculture!


30 u

think that I s a

good sort ef district to lay out?
*0% Purcell!

tfo, * doubt that, of course, you should have

acme landing community in there to equalise,
The Secretary of Agriculture:



Bo you think an east and

west di strict auch as that is would be better than a north

57 T9

and south district?
Hr* Purcell:

x ahotild think you would hare to go pretty

far north to find any landing costmmity.

You would hare to

go up a a far as Illinois*
The Secretary of Agriculture:

If you had it to do, at you

see it, which way would you atari to lay it out% which would
bo better for the south and your section?
Mr. Purcell:

I think Alabama, Mississippi, Louisiana,

Texas and Arkansas with ifewOrleans as a regional point,
eould probably be about the best district we could get*
The Secretary of Agriculture:
so far as we hare gat an

Now Texas and


re salon, asks to «o north and

suppose we had to cut them out*

Mr. Purcell:

Then I would po further east and get into

The Secretary of Agriculture:

Georgia is a very heavy

borrowing state, is it not?
Mr* Purcell:

T do not think Georgia i s a largerborrower

than Mississippi and Louisiana*
Tho Secretary of Agriculture:

But it is a large borrowing

j state.


probably so, but I am not familiar with it.


K. 'U Pure #11

The Secretary of t h « T r « w r y :

Assuming it I s a borrowing

st ate, then what would you dof
Mr. Purcell:

Gentlemen # I do not know.

This is a matt or

I have not given sufficient thought, and I as not capable
of passing an opinion*
The Secretary of Agriculture:

What we aro trying to get

at is whether this is — you see one of ths theories of tho
law in this matter ts districting the country is that thsy
shall be normally independent, if possible, whether it would
bo better for any siren community to bo in a district which
would bo normally Independent, and whether therefore wo can
lay out such d i strict*.
*rr. Purcell:


The Secretary of Agriculture:

f\t course, we have got to

determine all those questions, but wo want to get all the
views we can.
10% Purcoll:

I do not believe you can find a territory in

tho south that would be independent.
The Secretary of the Treasury:

£et us just assists that

you had Missouri and Arkansas and Mississippi and a part of
Vest T&tnessoe and Louisiana, and a part of Texas in a


r -

district; would that give you mors of a self-contained




X , P u r c e ll


community than this or not,
?fr. Purcell:

I do not think so.

T do not know anythin*?

about Missouri, how big a borrower she is, but I set under
the impression that those other states ere borrowers almost
in the ease proportion as tfiesissirpi « d perhaps more so,
some of then*
The Secretary of Agriculture!

Your first preference is

Hew Orleans?
&r. Purcall:



The Secretary of Agriculture:
Mr. Purcell:

t& o

second would be ’'enphis.

The Secretary of the Treasury:
Mr, Pureoli:

And whioh i s your second?

And your third?

The third would be St. Louis.

The Secretary e f the Treasury!

That ia all, thank you.


The Secretary of the Treasury!

Will you state your name,

residence and occupation.
Hr, Broach:

Walker Broach, Meridian, Mis#.; Vice-

President, Pirst National Bank.
Tho Secretary ef the Treasury:

Do yeu represent any ef



V. B roach

the other banks?
Hr. Broach:

I represents* 01 ©Bring House, vr# Secretary.

The Secretary of the Treasury:

Harve yeu any credentials

with you?
Mr. Broach:

T h*v© delivered th«a to VSr# Pool, of the

Hibernia lank, and he will file them.

I represent the

Meridian Clearing House and also I brought a resolution
. from the Secretary of the Meridian Board ef Trade and Cotton
The Secretary of the Treasury:

Will yeu produce those

and f i l e then as exhibits?
¥r. Broach:


(vhe papers were filed and are as follows:)
Whereas the Congress of the United states had
authorised the establis>mnt ef Regional or Reserve Banks
in various important cities of the United states for the
purpose of facilitating commence abd industry, and,
Whereas the establishaent of such a bank te serve the
Central south and Lower Mississippi Valley and to facilitate
financial tran motions both doaestie and foreign should bo



W. Broach

located at a point not only territorially accessible but
where sudi would provide for the broadest needs, and,
Whereas the City of Ksw Orleans, aclaROwied^d the
metropolis of the *outh and one of tho w o r ld s great ports
of commerce, is in every way adapted to serve these needs
in their most coraprehsnsive meaning, therefore,
ASSOCIATION, of Xeridian, Mississippi, go on record as
favoring the establishment of such ?e-f& onal Bank at ths
I City of Vew Orleans, and endorse the petition of the vew
Orleans Association of Commerce to the Organisation Comlttee
of the federal „eserve T?oard, Washington, B* C* , having this
matter in charge*
Be it further Besolved that copies of this resolution
bo sent to the above Committee, to Secretary of
Treasury 1to* 0*


eAdoo and Secretary of Agriculture Houston,

aad to tho members of the United States Senate and House
of Representatives from this State9 urging their favorable
| action thereon; to the newspapers of this city and to the
Vew Orleans Aanciation o f Coawerco*


Paul Brown,




A tt os t:
Jas. T, Crowe,
Man ager.
This the 10th day of February. 1914.

He® lution l&idorslng Dew Orleans

for Location of yederal Reaerre Bank.
WHBR^JtS tha Congress of ths United States Has authorised the estati la ment of Regional or Reserro Banks in
various important cities of ths United Statesfor tho purpose
of facilitating commerce and industry, and,
WHEREAS ths establishssot of such a bank to serre the
____ _



,_____ _______

Central South and Lower Mississippi Valley and to facilitate
financial transactions both Domestic and Foreign should be
located at a point not only territorially accessible but
where such would p m ride for tho broadest needs, and,
VHZRKA.S the City of Vow Orleans, acknowledged the
Metropolis of the South and ono of ths world1s great ports
of commerce, is in orery way adapted te serre these
in their most comprehensive meaning, therefore,

11 IT RESOLVED, that ths



W. T?ro*cti


M i s S. ,

go on record a i favoring tho establishment of ouch Regional
Bank at tho City of flow Orleans, and endorse tho petition of
the Vow Orleans Association of Commerce to the Organ i scat ion
Coiarnittee o f the federal reserve Board, Washington, %

C. ,

having this matter in charge#
Bo it further Resolved thsfc copies of this resolution
be sent to the above Tomtit tee, to Secretary of the Treasury
W>ru 0. McAdoe and Secretary of Agriculture 2. ?« Houston,
and t» tho men&ers of the United States Senate and House
cf Representatives from this State, urging their favorable
action thereon; to the newspapers c f this City and to tho
Wew Orleans Association of Commerce.
Gee. m i l a t ,
B* Ooodman,
Asst. Secretary.
This 6th day of February, 1914.


W. Broach


The Secretary of the Treasury:


rnmiy banks hare you


many national banka?

in Msridiaas?
wr0 Broach:


The Secretary o f She Treasury:

ytm broach:


The Sscrstary of tho Treasury:

What is yeur view on thie


Mr# Broach:

X only know the views of ths four incor­

porated banks ^hich are members of the Clearing House.


hare one unincorporated hank which is not a aecaber of tho
Clearing House.

The four banka were unanimous in cap ressing

Wew Orleans as thoir choice.
The Secretary cf tho Treasury:

Do they also approve this

territory which has been laid out by Wow Orleans as a
regional district?
Hr* Broach:

I hare no; aeon tho territory: X cannot

spe4c as to that.
The Secretary of the Treasury:

You are only concerned in

the city i«iare the tenk shall be located?
*r. broach:


The Secretary of the Treasury:

Do you net think the


¥. Broach


district is mors important than that?
Mr. Broach:

y «%

rlr, but T aa not prepared to across

an opinion, that is all.
The Secretary of the Treasury:

You are not prepared on

Mr* Breach:


The Secretary of the Treasury:

Be* to Hew Orleans what

will be your choice?
Ifr. broach:

Well, our institution in an storing the card

that the depart’sent sent out, expressed Wew Orleans ss first
choice, and gars Hew York as second and St. Xrouis as third,
I tellers.
The Secretary:

Of course, It would be manifestly im*

possible to put you in Bsw York, so • •
MT. Broach*

Yes, but in answering this card we frankly

stated we only had first choice for Hew Orleans, end the
rest was lBunaterlal.
The Secretary of the Treasury:

tt becomes quite tutorial

If Bow Orleans should not bs selected.

Bow in that event,

and of course, assuming some point to which you would be
naturally attached, what would you s«y would bs your second



W. Broach

Mr • Broach*

Well, Birmingham *ould bo our territory,

and Just offhand, T should think per tonally that perhaps
Birmingham could serre as veil, as to tho shipment of
currency In an d out.
Tho Secretary of the Treasury*

But there is a more impor­

tant consideration than that, is there not?
‘^r. Broach:

Yes, there is apt to be a taore important

consideration than that.
The secretary of the Treasury:

The strength and resources

of the bank itself, which would enable you to get re­
discounts and other facilities*

Do you think Birmingham

would be the best point for a bank, haring in mind the
provisions for such facilities?
vr* Broach:

Well, I had not given that any thought.

The Secretary of the Treasury:

That is a ll, thank you*


The Secretary of Agriculture!

'o l e a s e

state your name,

residence snd occupation*
1- >

Sffr. Stirling!

J* 1* Stirling, Jackson, Miss*; president

of the First National Bank of Jackson*

Jm "B* S t ir lin g .


The Secretary ef Agriculture:


Do you represent any asso­

ciation there?
?fr. Stirling:

I am a member of th« Clearing Fouse,


case down so hurriedly that I did not hare a chance to got
the statement of the Clearing Housev but I know their
sentiments, andean f*le the authorisation here, which t
will do*
The Secretary of Agri culture:
?%r* Stirling:

*Xy g in the clearing House#

Tho Secretary of Agriculture:
Hr* Sitling!

State or national?

Three national and twe state*

The Secretary of Agriculture:
Hr* Stirling:

How raany banks are there*

What are their wldies?

Their wishes are unanimously for Kew Orleans*

The Secretary of Agriculture:

They Have considered tho

matter of the district?
vr, Stirling:

Well no, I think not,

I do not think they

havo gone into that particularly.
The Seoretary of Agruculture:

What would ho your judgment

as to tho way In which the district ought to he laid out*
*r. Stirling:

T should think it ought to embrace part

of Florida, Alabama, Mississippi, Louisiana, part of Texas
sad part

of Arkansas*

J* B. Stirling

The Secretary pf Agriculture:


Have you con older ed thio

question from the point of view of the question asked the
othor witnesses as to whether you could got a more indepen­
dent district by laying it out in some other way*
Mr, Stirling:

I do not think so;in the south they are all
on the same basis, and jtiu borrowers in the A H in mofi ng
the crop*
The Secretary of Agricultures

oppose you took one running

up Into the central states?
Mr* Stirlings

Well, I think that would be Inconvenient to

| us and would practloally do us no good*

Our business is

with Wew Orleans and flow York and Chicago and further north*
We have very little business with St. Louis*

The great

volume of our business is with Hew Orleans*
The Secretary of the Treasury:

tf you had a Regional

Bank somewhere else and a branch at Wew Orleans, you could
probably got all the facilities you require, could you not?
Wr* Stirlings

Of course, a brahch might facilitate some,

but naturally, to do business with a regional bank, we would
prefer to h w e the original bank here Instead of a branch*
The See rotary of Agricultures

What would bo ;• our second


J* B* Stirling

Mr* Stirling:
not think*


We would net have any second choice, T do

I do not think St* Louie would be available*


would just ae soon hare a regional bank in *ew York pretty
near ae to have it in St. Louie.

I will say

in answer to

your question addressed to Mr* Vexler this morning, that tho
Mississippi banks will be able to take stock in the regional
Tho Secretary of Agriculture:
Mr. Stirling:

The stato

Yes, sir*

The Secretary of the Treasury:
nr* Stirling:


They are authorized by law?

The provision of the law just passed is

that stats banks cannot own stock in any other banks doing
business In Mississippi oxoopt regional banks*

That is

almost the exact language of It , and I presume it will bo
construed that they will be pemitted to take stock in
regional banks, although tho language I s * little bit
ob sours.

The Secretary of the Treasury:

State your name, reel*

denoo and occupation*
Mr* Tlournoy:
1 St.
, Louis•
Federal Reserve Bank of


J. J* Tloumey, Cashier, virst National



V s'.




!| G


*. nourney


B«&k at Canton, ¥ l«i*f and President of tho Mississippi
Bankers Association*
The Secretary of tho Treasury!

Boo# that association

comprise all of the national and state “banks*
nr* TlournoyS

* ot all of than.

I think all the national

but not all the state banks*
The Secretary o f the Treasury:

Are you authorised to

represent the association here?
Sir* Flournoy:

Ho# slr,w$ hare not had a convention A nce

this m tter came up*
The Secretary of tke Treasury:

You are speaking individ­

Kr* Flournoy:

I am speaking individually, and after

consulting a very large *>aJority of the ambers of the State
Bank arc Association.
The Secretary of the Treaiwry:

What are your views on

this subject?
Kr# ^o urro y :

We naturally prefer Sew Orleans.

The fleer etary of the Treasury:

You want to bo attached to

Wew orleana?
Mr. Flournoy:



The Secretary af the Treasury:

Hava you considered tho



J . 7. Tleurnoy

district itself?
'■r* ^lonraey:

Yss, air, somewhat*

The Secretary of tho Treasury:

What do you think of the

distrl ot ?
Mr* Flournoy:

The district as laid out here?

The Secretary of tho Treasury:
Hr* Tloumoy:


The only thing I would suggeil would he to

take in no re of Tennessee.
The Secretary of the Treasury:

You have net consulted

Tennessee about that, feare you?
Ur. MoumoyJ

*?o, sir*

That is what T thought about it.

The Secretary of the Treasury:

I was wondering if your

thoughts were based upon any sort of conference or contact
with m y of the Tennessee people,
Wr» Tleuraoy:


sir, most ejsphstically no.

The Secretary o f the Treasury:

You seev we have the

President e f the Tennessee bankers As®elation here, and
we will let hin talk ah cut Tennessee later.
#r. Plcumey:

Yes, sir; I think it would he swefc better*

The Secretary of the Treasury:
Mr* m»urnoy:

wew York*

What would be year second





Th * Secretary ef the Treasury*


I am speaking of practical

*cr. Flouracy:

I aa speaking from practical experience.

The Secretary of the Treasury:

You are speaking fre * the

artificial standpoint and weare trying to restore normality,
and cf course «e are required to divide the co^mtry into
districts «hich are composite, arid naturally we could not

take in Wew York.

Where would he vour second choice if Wew

Orleans tfiouldnot ha the headquarters for a hank?
Ur* Flournoy:

Tf a rational hank i s to be astahlished in

the south, I do not see any other logical point than Wew

We would hate to float our Indebtedness by haring

to float aero as the visaisaippl £iv«r and go to Texas, and
we would hate to draw —
Tlie Secretary of the Treasury:

Texas hates to float hers

over to How Orleans, and there you are.
Hr* Jlouraoy:

We are perfectly willing to let Texas &>

is Denvert if she wants to*
Ths gesretary of the Treasury:
district i f you took Texas out?

What would happen to this
Shs aeons to be furnishing

the volume of the resources*
Vr* Flournoy:

Wot i f you come up further into the t erri-


Jr. 7. Flournoy


tory and take In more of Tennessee and
Tho Secretary of tho Treasury:

a o r r .e

of Arkanaaa*

That would not help you

Tory a uch*
Hr# ]?louraoy:

But would it not give ua auffici oat capital

to form a regional bank, i f we extended theee line a a little
further north and weat?
The Secretary of tho Treaaury*

T doubt that wary much

from my recollect 1 n of tho tipurm*

ro^ersr, I f you had

to cut out Texaa, aa you hare auggeeted, and auppoae Georgia
la omitted and thediatriet ha a to be extended then northward,
Where would you prefer to hare the reaerwt bank i f Hew
Orleans should not be selected; what would ba normally the
boat thing to dot
Hr, Flournoy:

Are you working on the baaia of eight or

twelve banka?
The Secretary of the Treasury:

T aa working on the baaia

(if eight banka, aa thi apian i a laid out with reference to
Mr* Flournoy:

Then I should think you would hare to came

I'urthor north, if you cut out Oeorgla and Texaa.
The Secretary of the Treaaury:

How aaaming that you

i« n « farther north, what would be your aecond choice?


J. r. Tlournoy

tr. yieuraoy:


I oppose we would have to come to <?t.Louie*

It would not bo a matter of what we would choose, hut what
we would have to take*
The Secretary of the Treasury:

But that would he normally

the next beet thing to do, if you had to fo further north,
you think?
Mr. Flournoy:

I f you cut out Seorgia, yes*

The Secretary of Agriculture:

I f Georgia were included,

you would talcs Atlanta?
Kr. Jloumoyi

T «ould take Atlanta itf preference to St.

Hfy reaeon is , we figure the volume of business that

comes south , ate ut — well, eur sxe>jenge items, there are
1 0/l6th 8, to bo accurate, in the last 12 months, which comes
to Hew Orleans of the business from our town, and about
6/l6ths that goes north and east, and in the cotton movement
there i s over two-thirds which comes through Wow Orleans and
about one-third that goes to ths Carolines and eastern mills;
j' J
and the cotton crop is the principal crop and settle and
grain ate ut th o am s thing.
The Secretary of the Treasury:

ts there anybody else horo

from Mississippi who hai^iot been heard?

Tf they desire to



• Flournoy

file briefs, we w ill receive thorn*
nr* Wexler:

Do you want to hoar from anybody also in


We have same here from Hattiesburg,

The secretary of the Treasury:

V e H 9 their affiliations

are naturally with Hew Orleans, we understand that; but they
can file briefs and we will be glad to reoeiTS them,
Ve will now hear from iouisrille*
Mr. Wexler:

There is a gentleman from Florida here, Mr*

Castle, of Be Fun laic gpringrs, yio rida,

who has come a

lo«$ wqr to present hlsrlew s to you.
The Secretary of Agriculture*
need any argument as tc that.
select Hew Orleans.

I should not think we would
Ve will assume that he would

He can file his argument In the riiape

of a brief.
Mr* Oscar yinley:

I f it please the Committee, Louisville

has selected MT* John W* Barr, J r ., president of the Fidelity
& Columbia Trust 8o?ip fifty, to lead off in the present* t& on
for Xoulsrllle*
ntkTKnwi op joks j * bapjr, jr .

The Secretary of 1he Treasury:

»*r. Barr, will you state

your name, residence and occupation,for tho record*
Federal Reserve Bank of
■St. Louis



X# !♦ Barr

mr« B&rr:


John W. Barr, JY*, 'Louis'fi lie , K y ,; President

of the Fid oil ty k Coluiibia Trust Sornpany*
Tho Heoretary of tho Treasury:

Euro you prepared a m*> of

j a district here?

**r. Sarr:

Wo teste, Mr. Secretary,

Wo desire to support

our contention for tho location o f a regional bank In Troutsvllle upon faots alone, and upon tho requirements of tho
now Currency Bill*
As vo understand, the first retirement i s that convonlence should he considered, tho second Is,

the customary

courss of trade, the third 1s that it should have sufficient
banking capital; and probably the fourth, which is net a
requirement, but an incident to it, and we think equally
important, is the ability to take care of tho finances of
tho particular region.
It is very difficult, indeed, gentlemen, to lay off
a section that will bo agreeable to oraryone.

We wish to
state to you that those lines whioh are drawn arc/n&eessarlly

must bo subjedt to change*
they are elastic#

I f T may use the expression,

Wo think under the Aot that tho rej&on

laid out, marked *o* 5, would moot all the rc<gulrem«ts
ji with the bank located in Louisville*


It W. Barr



(The ssap was accordingly filed* )
Mr* Barr:

l ew first the facts, and we will only give you

facts, bearinp on ths question cf finance

As you knew,

you hare heard tha& in this section of the country the
tendency of trade and 'business and intercourse between the
cities and the state is north and south*
seme other sections, east and west.

yt i s not like in

Our railroad facilities

are such that with the exception of Tlorida, which is a
p enlnsula, and therefore is isolated, and we cannot change

the a&ography of the country, we are within striking dis­
tance of within IB hours of every city and town embraced in
Begion Ho* 3*

As you know, the checks, notes and b ills are

taken out in the afternoon after three o'clock and prodded
they can be received in the correspondent bank by the follow*
in# morning, which is IS hours, that is all that is neces­
The region as laid out hsre is a natural one, bounded
by tho H 1 ssisslppi JRiver and the Ohio Kiver, the Allegheny
Mountains and the Gulf*

We are not trespassing, as you

will note, upon tho domain, as It were, or upon the privi­
leges of Sew Orleans*
fte* 6 , t believe it is*

We think that they afcould go into
T h * r territory necessarily must


J* w. Barr

be changed from their

y I gwb


to our tfews, or from our Tiew#

to their wiews in order to meet those requirementa.
Xew thin plat show* that, and wo will call this tho
geographical map, and hero is our boundary indicated by the
dotted linos.

These are tho lines of cossnunle&tlon, indi­

cating tho time required to deliwer the malls.

Hew Orleans

of course, is 24 hours, hut that is In an entirely different

Our territory, therefore, «sabraee% in order thatj

it may ho distinctly understood, southern Indiana, Just
south of Indianapolis, the sta&e of Kentucky, the at at* of
Tennessee, northern Mississippi, the entire state ef Alabama,
Georgia and £*lerida, and as swm by this map, it le within • •
The Secretary of the Treasury:

Do ;jgu include Cincinnati?

l!r* *Barr: T?e, we have put Cincinnati north of the Ohio
trer, #i«ere it belongs, Mr. Secretary.
The Secretary of the Treasury:


see you hare it on the

asp, and there was a little confusion as to whether it was
in the territory or Just outside*
?tr* «arr5

They want to get in our territory, but we think

they belong cn the other side.

So you will see frcai this,

as a matter of convenience, our accessibility to all cf ttie
cities and towns eiadbraced within this region, and that la


«T. W. Barr

the first pre-requisite, as we understand i t # under the Act*
Sew in the second place, and X have heard you gentlemen
and hare had a little trepidation, *hen yeu are going to ask
a U these questions about the course of trade -- we want to
show you the vadt volume ef business whteh is dene.

is right up te date,



Tn the matter ef revenuef the

city of T^euisville has taken in,largely from tebaceo and
whiskey collections, #13,800,000, which i s the third in the
United states, a very important matter, and when we get down
to the amount of revenue which is derived frea the State of
Kentucky, it Is #55,000,000, and all of that money —
The Secretary of Agriculture:

that is that?


$ 5 5 0 0 0 9000 is the amount ef Internal Revenue

receipts, probably the third in the Union.

Now T will go

late that course of trade in those particulars, tobacco and
whiskey, in a few moments.

The stock of whiskey in bond in

1913 in the United States was $274,000,000,

Whether with

credit er dl eared it to ourselves, we had #163,000,000 of
The Secretary ef the Treasury!

You da not ask u s to

express an opinlen on that?

il f t \J


J. W* Barr

ir* Barrs

Kot at all*


As you know, we aro dividedon that

proposition ourselves*
Senator Tones!
Ir. Barr:

Tt la being kopt in the warehouses.

yes, we have it ri^fct thore for use, Senator*

rto the result le, wo havo ever half of the whiskey productIon in the United States*
receive# $l.lo.

On cven? gallon tho soverament

*ow In addition to that, you must remember

the coot tc raanufacture comet Is thore and the storage, and
it is In there for ssany years*
How briefly stating this, because I am coming back to
It in a moment, we refer to the tobacco trade*

Tho estimated

production, and this is very accurate, and we give the
authority on the subject —
The Secretary of tho Treasury:

Is that coaapany an

authority on the subject, Dunnington & Co/npany?
nr. Barr:

Tt 1 s tho best we could arrive at.

Tho S*crotary of tho Treasury:

I moan they are rooognl *ed

ir* Barr:

They aro indeed; they *ro buyers for so?ae of

ths foreign nations.

Tho total estimated production of

tobacco grown in the United States was 9 53f000,000 pounds,

valued at #122,000,000*

Tho total amount financed through


J . ¥* J a r r

Louisville was


3d«7X5»000 poundaf 41 per e m t in Toluote and

32 per cent in Talue of tho whole crop of the United States,
a Tory remarkable statement.

fhese estimates are Tory

Wew vo ha t o lata riTlng the entire output of tho world,
and tho amount of tobacco financed through Louisville la
one~elghth, not of Kentuoky, not of tho United States, but
of tho entire world*
I want to go back and explain why the financing of
these Taut Bus* of money, first in whiskey and second in
tobacco, is peeullar to our city.

In the first place,

whiskey lo produced usually from eons, that Is In our st<*te.
Tho money has to bo furnished with which to buy tho corn,
Subsequently the w hi&ey Is made.

That whiskey is then

deposited In government warehouses*

Persons buy that from

California to Xalno — even Maine*

The result of that Is

that In itainii these ether states the persons, the banks
aad the f Inane lore are not willing to finance that; they
do not knew the value of the whiskey, they do not know the
outage, they do not know the cooperage; so that from Callfern la throughout the west aad In the north and In the south
the City of louisville, of necessity, has to furnish the


J. » . Barr


money to carry that whiskey until tho tax is paid, to carry
that whiskey until tho owners desire to take it out of bond ,
So that we aro not only taking care of local matters, but
are taking are and helping the entire country so far as the
whiskey trade is concerned.

I could say more, but I know

you just want te get the salient facts#
With regard to tobacco , it is necessary, and no one
understands that fact like we do, the financing of these two
orops, as they are peculiar — in the first place it is
necessary to advance the money on the growing crop.


that, When the crop is put into the warehouses, further
m onay has to bo advanced on it,

Then the tobacco is sold

to the local dealers or to foreign nations, Trance, Switzer­
land, Belgium, Bngloid, nearly every nation in ths world


buys tobaceo from us • •
Vr. Finley:
nr, Barr:

And Italy I s a large buyer*
And Italy*

The Secretary of Agriculture:
Mr, -narr:

Wh&t p ere ant age i s that?

I do not know*

Senator James:

Of the dark tobacco, a great ssijority is

09 or ted,

Vr. Barr:

Yes, it nearly all goes abroad, of tho dark

J* W, Barr




So that Is peculiar to our tf-ate, and thoro is no-

where else there tho financing of It lo
with us.


understood as

I f wo should not finance It or bo In a position to

finance It in the futuro as we hare in the past, the tobacco
trade would suffer tremendously.
Tho Secretary of Agriculture!
of that point,
3tr. Barr:

You heard our discussion

th e knowledge of the paper, of tho crop?

y « s.

Tho Secretary of Agriculture!

You realise that I s a matter

not fbr local decision.
Mr. Barr!

T julte recognise that.

The secretary of Agriculture:
II people

<0 uld

Mr. Barr!

Ter Instance, the southern

charge you with not knowing cotton.
That is true.

The Secretary of Agriculture!

So it I s not a local matter,

It Is a matter for the whole district, wkkteror it aay be*
Ur. Barr!

Y e^

provided right there, as to cotton, wo

take it that Bov Orleans or Houston or some point, or some
of the southern cities who are familiar with It would handle

of course, we hare very little transactions *lth then —

The JUcretary of Agriculture!

I Just wanted to remind you

of the fact that these who direct this regional bank will



J. W. Barr

be drawn from th*s entire district*
K r. Herr:


« s.

The Secretary c f the Treasury:

And th at through the

knowledge that the directors of the entire district hare,

together with the knowledge which will he supplied



by the directors of the branch bank, the organisation le
supposed to be capable of dealing off c c t i T o l y with any
problem which m y be presented from any part of the dletrict.
¥r* Barr:


Sow our other l a r g e volume of business

consists ef grain ef various
$ 1 7 ,0 0 0 ,0 0 0 ,


That amounts to

and of lire stock, which is tremendous,

f a ,400,000 in head and $21,000,000 in value.

This is the production o f tobacco.

Here Is the

manufactured tobacco * $ 1 7 »000, 000 , and 1 1 3 ,0 0 0 ,0 0 0 of
receipts, and these are tho shipments.

The value of the

entire manufactured products In our community is $101,000,000.
The Secretary of the Treasury:
MT. Barr:

Louisville alone, you moan? j

Alone, which is, T may say, double that of any

ether city wlthia this Region *o. 3 * * laid out.
The Reeretary of Agriculture:

Can you give any facts

showing the growth o f your manufactures?


We will do that,

of course, you maet recognise

J* V. Barr


there t m a great many things that

we could not anticipate,

but to repeat again, whatever you desire we will furnish*
The Secretary of the Treasury:

Before you leave this, you

have outlined a tremendous product which has to be financed
and cared for, and X

understand you to say that ie all

financed from Louisville*
*T* Barr:

very largely, not altogether.

The Secretary of the Treasury:

To what extent is it

financed —
The Secretary of Agriculture*

before we go into that

question, can you give us the statistics of the proposed
Mr* Bar^:

Ve are coming to that.

That follows on another

The Secretary of the Treasury;

I wanted to get an idea

before wc leave this, and X think we can relate it better
if j»e take it up now, to what extent i s it financed by
Louisville banks?
Mr* Barr:

T would say at least 80 per cent of it,

probably mere*
The Secretary o f the Treasury!
 the Louisville

vow do you do it?

banks, they hare a total


capitalisation of


7. W. Barr


$5t*95»QOO paid in, for tha national banka, vith a aurplua
of ♦2f730#000; t>mt la about $8,000,000.
Hr# Barr:

Yaa, but we hare a great mny stats banka*

The 8ecrotary of tho Treasury:

I understand, m i I am

coming to that, but X am taking the national banka first,
because wo hare that data* and T will aak you to aupply tho
yr. Barr:

Ve will*

Aa you understand, all ef theee

things do not oomo at one time*
Tho Secretary of the Treasury:

I understand that*


the aggregate of these financial transactions ia rery groat*
icr. Barr:

They are, indeed*

Tho Secretary of the Treasury:

What we would like to get

ia oone idea aa to how that ia handled, which might bo put
in the record at thie point*
Hr* Harr:

wow with regard to tho tobacco fir s t , the

buyers for the foreign markets borrow tho money from the
banks temporarily,


soon as they hare gotten tho —

Tho Secretary of tho Treasury:

Sorrow from the Louisrlllo




So soon as they hare gotten the tobaoco

ready for shipment, they pay off tho banks, aa it were, by


' V '• '


J* ▼* Barr


drawing a draft on Xondon, Paris or wherever it m y bo*
Tho Secretary of tho Treasury:

How long a period aro tho

banks carrying the tobacco before tho final or liquidating
draft is presented?
Mr. Barr:

How long would that bet Tfflr* Finlay?

Mr. Finley:

It waries very much.

mowed by the first of Febrmary,

The tobaoco is usually

I think nearly all the

tobaoco raised last season hao been mowed now, except
possibly in ths Owensboro distrlett and that is just about
finishing up*
Tho Secretary of the Treasury:
*^r. winltgr:

when does it begin?

begin lending at tho time the crop io

The {Secretary of tho Treauury:
a farmer*

When is that?

I m not

Tho Secretary hero iof but t am not.

Mr* Finley:

April and Way.

The Secretary of th* t r *» « r y i

That is quit* a long

Hr. Finley:
Mr. Barr:

And thooe go along until it is marketed.
But just part of it is advanced from time to

That amount of money is not advanced all at one time.


J* W* Barr

otherwlaa we could not finance It*
Tho Seoretary of the Treasury:

As te these other matters,

all this good liquor you have in storage, that has te ho
carrlcd along*
*5% Barr:

irow is that done?

Well, that is done in this way.

After the

anount of money has heen received to buy the corn end make
the whiskey end the warehouse receipts have been issued on
it and pledged to the hanks, from that point it Is easier*
The Secretary of the Treasury:

But up to that time, during

the period of production*
MT* Barr:

During the period of production it covers a

period of several months, aid it is usual to sell the crop
of whiskey, so soon as the whiskey is produced, you are paid
for it.

Do I make that clear?

The Secretary of the Treasury:
'fir* Barr:

Well, not exactly*

I will go into it a little more definitely,

Tho Socretary of the Treasury:

You hsrer^ot to finance the

crop which is used to make the whiskey?
Mr* Barr:

Well, that is paid eaah*

So soon aa the

whiskey la made, then tho whiric^r is sold to California or
Maine or any other State, and thqr give their c«omorclal


J. V# B err


paper for it, as e rule, and that is the way theee warehouse
reoelpte are taken up.
The Secretary of the TraaeuryJ
of that which la not e^lained*

Of oourse9 there I s a lot
I suppose we cssi paae it

for the preaent and let you go along,
Mr* Barr:

Yea, we are going to file a brief on that,

becauae aa I aald, T could not an awer orrery question necaasarlly*
Senator Janea2

You might explain to the Secretary about

the wareheuae receipt a*
The Seoretary of the Treasury:
warehouee reoelpte,

T underatand about the

Vhat I an driving at la this, you ha we

to flnanceyour crop before you make the whiskey,
Mr, Sherley:

Tn that cennoctien it ought to be aald that

the coot of neklng a gallon of whlakay la in the 20 cents,


oenta, whereas your tax la )1«10, nearly fire tinea

aa great, so that the ralue of the whl&ey when you take it
eut of bend la rery much greater than the original coat ef
nsnufacturo, due to the trsnondoua tax, and the financing
of the crop to make the whlakay ia less ef a proposition in
dollars and eents than what la lnrolre* afterwards by rlrtus
of paying the por eminent tax on that.


J . V, Barr

Th* Secretary of the Treasury:


t asosed that in the

question, because after you gat the finished produet in bond

it is single enough.
Senator .Tames:

of course, they only pay ths tax as they

take it out.
The Secretary of the Treasury:

I understand, but to vshat

extent ire you required to finance the crop Itself before you
convert it into whisker?

After you convert it into ehiakey

1 know it is a very much slimier proposition.
The Secretary of Agriculture:
Tho Secretary o f the Treasury:

Thou it is liquid.
Because then, as the

Secretary says, it is a very liquid transaction.
Mr* Barr:

You mu at recognise there is a very large amount

of private capital which poos into tho financing of the crop.
Ths Secretary of the Treasury:

Yes, I understand, but I

want to find out to what extent a load is pat upon the
Louisville banka for this entire operation.

You have

tobacco and whiskey?
tfr. larr:


fortunately for m

they come on one after

tho athor, they da not come on as a peak load.
Tho Secretary of the Treasury: Tt is a rotary convertor.
*r. Barr:


Coming to the figures upon the banking

J. W. Barr


capital and aurplut and dopoaita within thaaa region*

you asked alaut the capital and aurpluo.

rt ia

t779»OOOt and the surplus la this amount (Indicating).
The Secretary e f the Treasury:
!'r. Barr:

That la state and national?

Yes, sir, and deposits of #521000,000, which is

#20,000,000 over any city

looated within the same region,

and of course that naans that tho cepital and surplus each
are larger.

*h m

it comas to the clearings, our clearings

are greater than any others, #715 , 000, 000, and in that
#715 , 000,000 we Include only tho clearings of the city; not
like some other cities, which includs country accounts.


we did oura would run conaiderably more than #800,000,000.
So that that" auat always bo borne In mind in comparing that
sum to ths othor cities.
So you will sea th«q/thls proposed region $ 0.


Louisville is first in population, in olearings, cpital
and surplus andflrst in deposits, and therefore/shows that
financially it la the strongest.

As shown you by a previous

statanttit, which 1 s not comparative at all, but I had to
make a bare statasent of feet, we were the largest in the
amount ef manufactured products.

simply for the purpose o f com*


X. V. Barr


pari son, showing the estimatsd amount —
Ths Secretary of

the Treasury:

Yes, ws set that*

Wow the

Federal Bank capital would bs $5,140,000 based upon what?
T mean the national banking cipltal alone?
Mr. Barr:

The national bsnk capital alone, that Is , not

region Bo. 3t but that is leaving out fraatuck;/ and sub­
stituting for Kentucky Worth and South Carolina.
Bo, 3 i« shown hors.


That is wh* you want?

The Secretary of the Treasury!

Yes, we want Region lo. 3,

What tho relative strength of the different units would be.
Mr. Barr:

Tho average Fedorsl deposits for this region

which wo have spoken of is $16,638,000, lsss the amount
required for reserves, wsuld bring it down to $10,813,000.
Tho S'*retary of the Treasury: Those ars the receivers that
the t ank would h.l<lT
vr. Barr:

Yes, that is correct.

Tho Secretary of ths Trsasury:

Setting aside the 35 psr

cent for ressrvss, you would havo available for loans

Ur. Barr:


• • would haws in addition to that the

capital which would come out of this dl strict sn ths six
psr cent.

J. W# Barr


The Secretary o f the Treasury*
Itr* Barr:

Where le the capital?


The Secretary of the Treasury:

Is that composed of national

bank oapital alone?
Pr* BarrJ

Alone, and I aey say we have Just had introduced

in the Kentucky Legislature an enabling act which will
permit state banks and trust companies to Join the Federal
Reserve s*tsn.
Tho Secretary of tho Treasury:
Vr. Barr:
for i t , yes*

Is that likely to pass?

We have the sanction of the Bank ing Comml salonor
Up to the present time we have not be<m able

to do that, and thought it was proper to have it done.
Therefore the total funds which would be available would be
•1 7 ,3 2 8 ,0 0 0 .
The Secretary of ths Treasury:
the banks.

As the loaning power of

How from past statistics the averags amount of re*

discounts and b il l s payable would bo $ 15 , 000,000 in that
di strict.
The Secretary of th e 7ssasury:
Wr. Barrl

At the peak?

At tho peak.

The Secretary of tho Treasury:

That deesnot take into

consideration indirect re-discounts?



J. V* Barr

Mr. Barr 2

Ho, it do ©snot.

The Secretary of the Treasury:
MT. Barr:





TM ala for the average.

Tho average in

the above tables were compiled from the fiv e reports made by
the national banks to tho Comptroller of tho Currency during
tho year


Tho Secretary of tho Treasury:

What was shown by the

last eall of the Comptroller?
Mr. Barr:

Me have a table showing that.

The Secretary of the Treasury:

Of re-discount s.


course that information has not been called for so specifi­
cally as recently.
?*r. Barr:

The re-discounto and bills payable on tho same

dates, the fir«t coll was $ 15 , 000, 000, $10 , 000, 000,
$14,000,000 , $20,000,000, $18,000,000.
Tho Secretary of tho Treasury:
MT. Barr:

This is for



Tho Secretary of tho Treasury:

That is October 21st,

1915 (indicating).
Mr* Barr:

yeo. tfow then wo havo a table here taking those

same calls, end it would shew that at the first call we had
a surplus reserve of $ 3 , 500,000 and the next ono wo had a


J . ¥ # B a rr


surplus roserre of practically #6,1)00,000, and at the next
call wc had a surplus reserve of a little over $ 2 ,0 0 0 ,0 0 0 f
and at the next call wc had

$5 ,000 ,000.

The Secretary of the Treasury:
nr. Barr:

A deficit*

The Secretary of Agriculture:
Mr. BarrJ




That is August?

And at this time it was rory close to

Vow by oosparing t>u& with other southern

territories you will find we hare a curplue far oftcner than
any of the others.

Ttor instance, here is this southeast mm

territory —
The Secretary of Agriculture:

Do I understand that is for

the region you propose?
Hr. Barr:

That is for the region we propose.

And wo lay

this before you to show that we hare the ability to care for
tho discounts through tho entire period.
The Secretary of the Treasury:

The trouble about all

these statistics, vr. Barr, i s that of course the rediscounts which appear in the Cobj>troll or • s statement do not
reflect at all accurately tho borrwwing, tho dea*nd of the
Mr. Barr:

That is true, but —


J. W. Barr

The Secretary of the Treasury:

How tho question is , how

much in excess of tho oral la hi o resources of this reserve
bank that demand is likely to be under a normal condition,
which in fact encourages

re- discounting

instead of discourag­

ing it, as heretofore*
^ir« Barrt


Then wo are led into mere cojacture. We

have to use the bost data that we can, as shown by ths
The Secretary of Agriculture;

Can we get some intimate

For Instance, in Port Worth the ether day

this question was brought up, and one of the gtntlemen said
that the banks of *fcrt Worth took care of 20 per cent of
their annual oo tton operations, abo^t # 50, 000, 000, and that
they handlsd the remainder indirectly,
The Secretary of the Treasury:


per cent of it.

Of course, this Committee

could got at that data I f we would take time and exercise
the power we Have of issuing subpoenas compelling witnesses
to come and testify, because by that method we could find
out what tho indirect discounting ef thess various banks was
at a glvsn time.

Wo could also compel the state banks *id

trust companies to give us similar information, but that


J . » . Barr


would be ft very tedious process and would take a long time.
But It Is a Tory Important question and ve would like to get
as muoh lijrht on it as ve poseibly can*

I do not think

this reflects actual conditions by any means.

T do not mean

your district In particulary but all districts*
Mr* yinleys

We can speak pretty accurately as to Louis­

T do not knov so much abut the other cities in the


I think there are very few indirect loans made

from Louisville*
Mr. Barr:

Very fev.

We take care of our own demands.

The Secretary ef the Treasury:

Again, another question*

which arlsss in oonnootlon with these re-discounts is this:
Ws have had testimony from many of the national bankers who
have sold that when they have gotten down to their reserves,
in making loans, no matter what tho dessutd was from legitimate
business, that they either stopped masking loans where they
did not re-dlscount, or strengthened their reserves by
contracting oredits*
Mr* Barr:


Tho Secretary of the treasury:

irsw again, tho thing that

ve aro bound to learn as far as ve can, and I knov it I s
difficult to got it , is ths real demands from legltlnato
Federal Reserve Bank of St. Louis


I . V. 1 err

Hr# *arr:


Ye* wc can do that*

The Secretary of the Treasury*

You may do that and file

it as an exhibit.
ttr. Barr:

Vhat ve wanted to Imrress upon you la this,

that our banking capital and banking deposit a and our ability
to take oare of the legitimate buaineoe and the business of
such a vast character and variety is such that it does not
all cono at once, that it would strengthen tremendously
this region to hare Louisville an d Kentucky located within
l t 9 Region Bo*


Bow T think we have mdeavored to show you pentlemen
▼cry briefly, because I know there are othera to follow,
fir st, that as a natter of wo meet the require­
ment si and secondly, the customary course of trade is
altogether north and south, ths course of trade Is between
Kentucky and tho south, It 1 s not with tho east.

Of course

there is a groat deal of f inanolng and sending money to Bow
York n d a ll that, but tho oour so of trade i s from the Ohio
River south. There would be a lose fluctuation tm. money
was needed by locating the bank hero than at any other place.
Vo think for all of those reasons that this Region Bo.

3 lo

tho proper one, subject of course, to probably minor changes.


X. ». B w r


business wider conditions which would encourage legit in*ts
business tran sac ti on a rather than discourage thers* the ext cmt j
of that dacnand has an important beaming upon the determination
of theae district a and the location of the banka.
Ur* Berr:

Yea, that la quite true*

All that we could aay

la thla, that in the past, experience has shown ua that we
were able to take care of the requirements of that ooramunlty,
and a a shoun by theae gansr&l figures which y eu have properly
said are not entirely accurate, nor are they satisfactory,
they ahow our ability to take oare in the oaln for all the
requirements of this section, and it makes it —
The Secretary of the Treasury:

But could you not get and

give us later a statement Showing ths actual re-discounts
s f tho banks, state and national, in Louisville?
Hr* Barr:


The Secretary of the Treasury:
vr. Barr:

At a given period?

Certainly ws can do that*

The Secretary of the Treasury:

Ter instance, you can

taka it as ef the date of the latest eall of the Comptroller,
Octobsr 21st, 1915*


it not ths period of ths year whan you have your

maximum demands?

That would fairly reflect ths con­

J . » . Harr


ts designate as the proper district, and Louisville would be
located within It*
The Secretary of Agriculture:

I was Just going to ask: If

you Hare anything to show that that is true of the trade of
AlaHaaa and Georgia?

We haro only this, that we will hare to get

statistics from the Board ef Trade showing the volume of
business which goes into those states*

We have net them

here, T will say.
Mr. Jinley:
Hr. Barrs

Those are Just gmoral statistics.
These are Just general*

We could not do it

like we could if you were in Louisville.

If you were in

Louisville we could call then right here to explain these
suit tors to you.

Bow ve have made inquiry and sent out a

number of letters arising for first, second and third choice
in all this region, and in every stats embrased vlthin this
region, after their own loeal pride wti satisfied, and ve
have boon the second or third oho ice, and in tho vhole ve are
tho first ehoiee, so far as the replies have been received
by us, and vs vill fils that and nake it an exhibit in
detail with our statement.
Bow 1 do not knew that there is anything nsrs to say,


J. V. Barr


unless ysu gsntlsmen want to/ask ms aorae questions*
The Secretary of


You say you sent out 1 otters

of Inquiry?
nr. Barr:


Ths Secretary of Agriculture*
ir . Barr*

Throughout this district?

Throughout this district*

Ths Secretary of Agriculture:

Hare you copies of the

Mr. Barr*


The secretary of Agriculture:
nr* Barr:

Yes, wc will file those*

The Secretary of Agriculture:
Hr. Barr:

And will you file those?


3 any

did you hear from?

Vo sent out approximately 5000 and wc heard from

about 1400 of them*

Mr• Sherley:

X suggest that you show that compilation

and explain it.
¥T. Barr:
as it goes:

It was not in very good form.

Here Is as far

Jteplles received from approximately 4000

letters — I thought it was 5>000 — mailed to banks in these
states, Indiana, Kentucky, Tennessee, Mississippi, and so
ftrth, requesting first and second choice for location of
regional bank, Louisville was first choice in 444,



J. ▼. Barr


choice so an 4 so, or first, seoond and third oho loo in 853*
Tho Secretary of Agriculture:

You do not £lve the states

thoro exp re» ing a choice; it i o n ot arranged that way,
vr. Barr:

^o, but we have it and it can be tabulated

very easily.
The Secretary of Agriculture:
Wr* Barr:

It is very desirable.

Ye shall be pleased to furnish it*

The Secretary of Agriculture:

You will filo those replies

with the reporter?
Hr. Barr:


Tho Secretary of the Treasury:

Have you any additional

*fr. Barr:


The Secretary of the Treasury:

Pile this in triplicate,

vr. Barr:

I take it you would prefer it in a smaller form.

Tho Secretary of tho Treasury:
The Seorotary of Agriculture:

vef that i s all right.
As to tho Information about

tho distribution of trade and tho movement of trade to and
from this

^motion, you do not need to hare tho witnesses in
Vo get our best lnpresslons from the maps showing

tho percentages.


J. V* Barr




we shall have our Board of Trade propart

I them.
Tht Secretary o f Agriculture:
an d it stays vith us*

Wt get it more brielLy*

Ve would be very

Lad to hare your

largo distributing houses prepare separate naps and prepare
a composite wap, or your Ch&iber of Semmeree*
Hr. Barr:

We have a number of erfilbits showing such
letters sent out by large —qrtaywsaJmhpuses and sthers9
which we would like to file with you*
The secretary of Agriculture:

Hare you filed any figures

to show the reserves kept by the banks in this district with
Ltui sriUe?
Hr. Barr:

We have not9 but we will do that*

As stated*

we want you to bear in wind there were a great many points
of Information you desire which of course we oeuld not
The Bee rotary of Agriculture:

Where does Louisville keep

her reserves?

Ur. warr:

Vew York and Chicago primarily.

The Secretary of Agriculture:

You can pire us the percent*

ages of the various cities in which iftie keeps them?
Hr. Barr:
Federal Reserve Bank

y «* i

very read a y .

___ ._______ ._____ i_________ ..


J. W. Barr

The Secretary of Agriculture:


Suppeee it were not poadLb*

to accede to Louisvills's request, what would be Louisville's
first choice?
vr. Barr:

Sentlnentallyt and listening to what Secretary

! 1-cAdoo said, t would hare to say practically, but senti*
sun tally wc would prefer Vow York, and practically we would
prefer Chicago.
The Secretary of Agriculture*

What would be your second

Mr. Barr:

Well, we had Louisville first choloo, Sew York

second choice and Chlcage third choice,

Wc did not go any

We canvassed that in the Clearing House, and b ^ond

that, of course, T should net like te speak.
The Secretary of tho Treasury:
Mr. Barr:

Howabout St. Louis?

Well, we do keep some sastll reserves there,


but our trads relationship with St, Louis is nst very close.
The Secretary of Agriculture:
Jfr. Barr:

You go north or east?


The Secretary of Agriculture:

What about other oltlss ts

ths east, aleveltfid and Pittsburgh?
Mr. larrl
sate at a ll.

Our trads relationship with them is nst intiWorth o f the Ohio River it is not intimate.


J* w. B&rr

Th# Sac rotary of th© Treasury:

Bo Wellington or Baltimore

appeal to you?
Mr. Barr:

Tho amounts vary ao to those.

Wo have com*

paratively no trado relation chip with them.
Tho Secretary of Agriculture:
in your territory*
Mr. BarrS

You hare included Atlanta

What about Atlanta?

Wo thought this, that if Atlanta waa Tory

ambitious, that you gen tlomon would probatly extend the
number of regional barf?s and put it in the Atlantic Coast

Wo d id net oonsider it seriously in ours.

Tho Secretary of Agrloulture:

tho next question.

I suked that in order to

You say tho movement of trade and

bus ins ss for Louisville is east or north.
vr. Barr:

So, T e*r it 1 s north and south*

The floorotary of Agricultures
vr. *arr:

From toulsville?


The Secretary o f Agriculture:

You Indicated a preference

for Wow York or Chicago?
Wr* Barr:


The Secretary of Agriculture:

Has Atlanta any special

toudi with you?
Mr* Barr:

Wo, no very direct touch.

-- --

---- -------- ----------- -------------------------- _ ------




V. Barr

Th# Secretary of Agriculture:


Do you not think she would,

resent that suggestion, If the did not hare a bank and wmted
to go east oomewhere?
nr# Barr:

In order to satisfy Atlanta, we would put her

along *4th the Coast dt *tes and not in this region.
The Secretary of Agriculture:

But you hare included it in

this district.
nr. Barr:

But you are asking what we would do with

if she were not satisfied.

The Secretary of Agriculture:

I jurt wanted to hring that

point out, if Atlanta would not feel as much violence would
he dene her to attach her to Bow Orleans or Louisrille, as
i f you were attached to St. Louie*
Vlr* Barr:

Bet in as great respect*

It is the metropolis

of tho region, and our manufacturers are far in excess of
theirs, and cur financial resources aro far greater than
hors, *id we think it is an entirely different proposition*
The Secretary of Agriculture:

And Cincinnati yeu do act

oven consider?
Mr* Barr:

Bo, we consider that Cincinnati will be with

Cleveland or ?itt*>urgh or some of those ether cities.
The Secretary e f tho Treasury:


yeu eliminated Georgia


I , * . Jarr


and florid* frem this district, the custcsary courts® cf
business of Florida is not with Louisville, clearly.
Kr. Barr:

lot at all*

Tt is really with low York#

Tho S«crotary of Agriculture:

And Octergi* lo clearlythe

samo vty , and East Tenntsetv is Tory largely the sa/no way,
is it not?
Mr* Barr:

i o t I think not.

Tho See rotary of tho Treasury:

East T^nessee doe 9 not


very ouch to Louisville, does it?
Ur. Barr:

very considerably, yos, sir.

our relationship

has \>€«m growing very materially in that direction.


frankly —
The Secretary of the Treasury*.

Tf you omit Georgia and

Florida from this di strict, have you calculated what would
be left in the way of banking capital?
Hr. p.arr:

Yes, that wouM reduce it from # 6,500,000 to

# 5,000,000 based simply on the national stoc banks.
Tho Secretary of Agriculture:

Would it uoaken or strengthen

tho district f

nr* Barrs

If t h v were eliminated?

The Secretary of Agriculture:
Mr. Barr:


Well, T rather think it would strengthen it.

J. V. B a rr


Th® Secretary of Agricultures


it might strengthen them,

you think, to bo attached to Kentucky?
HS*. BarrS

yos, T do indeed, beeauoe they are borrower*

and wo are more lenders.
Tho Secretary of tho Treasury:

In laying out this district

for tho entire country hero, t presume you hare done this
arbitrarily without refcmnce to any specific or known
?ir. BarrS

necessarily, to a certain extsant it must be

that way, Ur* Secretary*
The Secretary of tho TreaeuryS

is It year Judgment thet

there oujrht to bo only eight districts in the country?
Mr. BarrS

Vo hare rather been of tho growing impression

that It would bo a larger number, there is such a desire for
these banks and tho country is growing so rapidly, I take
it thoro should bo 10 or 12.
Tho Secretary of the Troasurys

V eil, aside from the

Irr* BarrS

V eil, from the needs*

The Boorotary of the Troasurys
-------- -—

And looking *t tho matter
— »- *«-- - —

- «f


J# W. Barr


what do you think should ho the raexlmum number of theee
hanks at the outsat?
Mr# Barr:

I originally was not for either twelve or eight

hanks, but the law being as it is, I am inclined to the
opinion it would be better to have a larger number of banks,
the maximum number.
The Secretary of tho Treasury:

You gentlemen are getting

thoroughly converted to the wetter#
Vr. Barr:

The bill has been so changed that it has grown

greatly in favor#
The Secretary of the Treasury:

You are going to fumitfi

us with a statement of the reserves kept by the banks in
this territory with Louisville?
%r# Barr:

We w ill, yes, sir#

The Secretary o f the Treasury:

And yeu will show the

number of banks by states which keep reserves in Louisville?
Mr# Barr:



The Secretary of Agriculture:
tfr# Barr:

And their choices by states?


The Secretary of the Treasury:


thsir choices by

states#ndt What interest do you pay on reserve balances in
Federal ReserveBBank
of St. Louis

- — ___ _...................................



W. Barr

Mr. Barr:


Two p «r cent.

The Secretary of the Treasury:

What de you do about check

r* Barr:

Well, the Clearing ^ouse gerem i that.


certain states the collection is at par and in certain others
there is a charge made for it*
The Secretary of tho Treasury:

Ts ths effect of the

practice tc aake tho collection of checks practically free
at Leuisrille?
vr. Barr:


has not been so*

Tho Secretary of the Treasury:
mrr. Barr:

But in the large majority

Ho, the State of Tennessee is free, but further

south it lsnot«
The Secretary of the Treasury:

You heard the questions

we addressed to the flow Orleans Clearing House this moming
about the definition of commercial paper and about the
Clearing Houss functions that those banks are to exercise?
Mr. Barr:


The Secretary of the Treasury:

I should be glad if you

would o» ns id or that we hare addressed the same questions to
Louisville Clearing House, and the reporter will furnish



J , t , Barr
R« ¥* T0;f)t t*

you vith

co p ies


o f those questions, ana we should bo ?lad to

have your views on that subject at tho earliest practicable
moment, say by tho first of March, If you v ill send them to
Kr* *arrt
Mr* Finley:

Tho next Is ^Tr* Richard W* Knott, Editor of

the Louisville Bren lug Post*

The Secretary of the Treaeury:

Will you state your naae,

||residence and occupation*
Mr* Knott:

Fichard W* Knott, Louisville, Ky*; Iditor of

the Louisville Evening Post*
The statistical facts and tho goo graphical facts in so
far as they relate to Leuisvllle are embodied in vr* Barr's
statement and in these statistics*

The $testlon you asked

gees te the heart of the ehole movement, what is going te be
the effect ef changed relations, 4iat is to be normal under
the new bill*

You speke, and we all know, that the present

conditions are not normal, they are abnormal, due to a
oertain premium offered by the latlonal Banking Act for the

e f the loanable cqpltal of this whole soetlon


R. W. ICnott

of th® country in the east.


And it was that condition that

gave rise to the demands for a now M i l , for a reorganisation
of our currency system.
Ifew there is but one motive back ef this, there is but
one purpose, and that is the decentralization both of
capital and credit.
Now what is going to fellow thi s nee system?
statistics relate to commerce as it is today,


Tt shows what

tho channels of commerce are; it shews through what ports
the products of this country seek foreign lands; it shows
through what ohannels the interstate co rmeree flows.


there is no man who can toll you what changes are going to
take place with a radical alteration not only in the currency
system but in the spirit back of tho financial system. Vo
man could foretell, when the railroads were built, what
transformation s would take place.

He one knew when steam

was applied tc the rivers what changes were to take place.
Ve cannot toll what tho future holds, except as you follow
ths history of the past, except as you follow the development
of commerce from small things to groat things, from local
conssorce to interstate commerce and from interstate commerce
into national commerce.

Vow that is the history and wo have



*• K nott

to study that History to determine *hat ths futuro i s to be,
and than we will bo far wrong*
Tn so far as Xoui srillo is concerned, tho question
which you hare a rirht to ask is concerning this groat
aggregation o f capitsl , this groat movement of the different
products, is it temporary, is it adventitious, ia it the
creation of a for year® or la it tho normal condition of
trade and commerce in this basin?

I f so, then you will
Haro some foundation upon which to build^V distribution of
these centres of capital and crsdlt.
ftow, Mr, Chairman and gentlemen of the Cabinet, the
people all ovsr this country, not only represented by the
bankers and their depositors, but all interest* in ths
• untry, all industrial and sp e c ia lly all agricultural
Interests, are looking for the beneflcient offset of this
radical alteration ef our banking system*

In my Judgment

there has been much anticipation that can never be realised;
and yet there is no doubt in my Judgaent that the effect of
the distribution of ths credit where credit is most needed
is ts fellow almost 4xyalignment that you omke, and after
business has adjusted itself to tho now conditions, then and
not until then are the promoters of this now system to be

R* W, K n ott


It It JO years since the gre* wen of that dap created
the national banking ^rsiesa, and now ',h e great men of thia
day have cre&teu this system, and tho only thing necessary,
the chief thing i s that you make as few alterations in the
normal conditions, as few alterations in the channels of
* « is possible,

We hero had, and the strees of

shows wc have, a remarkable .confidence

throughout all this country in tho system of banking as it


that confidence we want tc transfer to the now

astern, and you «ant it.

On that confidence you must build*

Wc have had many changes in the past twelve months*

I m

not talking simply on tables of statistics; there are other
facts besides statistics, und if we confine ourselves solely
to ctatlsties, we are apt to blunder into many sen error*

3 ut,

Mr, Chairman, we have had so rnny statistics, we newspaper
man, we have had to study the statistics of the ta r iff, in
order that wc might interpret It and bring te the public
att«itien end the public conscience the argument sbelng


by tho leaders in this now march cf Industrial freedom; and
following the tariff the Benocratlc editors have had tc
take up again the statistics concerning your banking business.


ft. w. Knatt

flow It is idth us ss it i s with you*


There is guch e thing

ss indigestion frem statistical matter, as we all knew.


it i s tliapart of the statesmen, when they discuss legis*
latien, and the part ef admini strut ire officers when they
apply legislation, and the part of the preen when th€y
interpret legislation, to get all the Information possible
and a ll the rtatlstlcs possible and get frem these statistics
your osn Judgment and your own opinion, and we rarely unload
them upon the public at large.
Hew if this past history of commerce in this country
carries any lesson, let us get at it.

There are certain

things Isglslation oan do and oertain things It cannot do.
You here to build all these sots, tariff acts and financial
acts, upon fundamental laws and conditions.

And one of

the fundamental laws o f the present situation is this, that
there lie s a great basin between the Ohio and the flulf,
between the mountains and the rivers, that is homogeneous,
and It is att diversified agriculture, and thereforeof
diversified oommmnee; and slways in the very hsart of tlmt
territory there were the influences ef two olties from the
beginning, the City ef X*ulsvllle at the Falls of the Ohio,
and the City of Vew Orleans on the Gulf.

The flrst^commeree


H, ¥# Knott


ef tho west followed tho line down tho riror into tho Gulf,
aad history points to tho os two cities,

From that time,

there has been one revolution after another,

Tho revolution

under which the flat boat woe superseded by th e steamboatf
just 100 years a.*o; under which the railroad succeeded tho
riror traffic; under which war destroyed all commerce tnd


after the

industry was rebuilt,

war under which that commerce end
?ut through all of those rerelutions,

through all of those changes, 1-oulsrllle and the influences
of Xrouisrllle, her commercial, financial and industrial
influences, were poured right through this basin*

t* was

Louiarille just before the war which built the Louisrille k
Be shrills Railroad, and after the war It m s about all that
was loft for transportation about which to gather the
scattered elements of tho other linos.
from tho beginning,

And it has b ow so

Louisrille is more interested in this

thing that we may hare a success than that we may hare a
regional bank*

?fit can be demonstrated historically, if

it can bo demonstrated statistically that Louisrille Is not
entitled to this position, that Louisville cannot moot tho
dorian dam do upon it, then by all moans discard Louisrille
and readjust your bmp in accordance with the aound judgment


R. f« Knott


of tho officers appointed by law to administer this.


have not come to you pleading for any special privileges*
We trust the day of special privileges is past with the
passing of the old system.

But we do M ae urging upon you,

not merely that the past justifies us in what we present,
but that there is


great work to be done.

will net refer to th e coast line nor to the west,

but there is a greet

m ric to be done in thi s valley scooped

out by the forces of nature Itself.

ITot only have we to

develop commerce and industry, not only have we to take care
of the credit of this great people, but throughout this
territory there must come a new agriculture as well as a new
It is true.

We are told there Is a great meat shortage, and
How are you going to supply It?

from foreign nations?

By importation

By the development of new sources of

meat traffic here at home.

And there is no part of the

cd untry which will contribute more to that than the
agricultural region in the territory we have described, for
there is no where in tho werld so large a territory of rich
agricultural land awaiting only the credit that those land
owners aro entitled to and have

never yet received.


cannot build up th o live stock Interests of these states

R. W, Knott



of Kentucky, Tennessee, Jfississip i and Louisiana without

We hare got to improve the grade of the stock and

we haTO got to market the stock, and we ha re go t to feed the
There was introduced in Congress only a short time
ago a b ill to prohibit the farmer from selling calves one
year old.

Why do they sell them?

Because they have not

the capital and the credit to carry them through the second
feeding season.
Vow there is a great m ik to be done throughout this
section by the Agricultural Department, as well as by the
Treasury Department,


doing a great work, but it is

teaching a kind of agriculture that needs more money and
mere credit.

*here 1 s no disputing the chemieal fact, there

is no disputing the argument for a new agriculture.


Secretary, you know when all your plans and arguments

have been laid before the tfrmers of this territory they ask
where is the money to come from.

low, sir, they expect the

money to come frem these great cities, freed frem the
abnormal conditions of the past


years, and released from

that influence that has drained the country that needed
the money to enrioh the cities whleh needed it not.



&• V, Knott

Vow I do not attempt to projihecy, aid moat editors

have that failing; I do not attempt to projpthecy erm
political events, hut I know that there are going to he
changes greater following two events of the past year than
the generation that knew the war felt*

Those two events

are this new system of currency, and there is no use of
denying the relation — there are two laws today that hare
a logical union, and you cannot separate them — the new
conditions to he brought about will he brought about ty
the revenue tariff and the regional reserve bank system;
the next is the opening of the Panama Canal*

wow that is

going to produce greater changes than any of us can imagine.
Ve know that the unanticipated changes of the Suez Canal
were greater than those foreseen by its progenitors, and one
was the destruction o f the commercial sailing fleets of the

Two millions of tonnage of the sailing ships were

destroyed practically as efficient agents of coosrce, This
opening of this canal is goin g to change the agricultures
of every Gulf state; it is going to change the tides of
commerce; and the effect of that must not be only fo r e s a w ,
but you must proride for it, not by your eight regional
banks, nor your twelre; you cannot decentralize the oapltal

R. W. Knott


of this country and put it whore it is most needed by limit­
ing the number of regional banks to eight or twelve; and that
Is indicated In the Act itself,

that you can readjust these

divisions, and as the great western einplre builds up, as
Texas really develops to a commanding position in finance,
Texas will want and will have
The Secretary of the treasury:

a regional bank.

Is It your view, $r. Knott,

that there should be eight of these banks at the beginning,
or more?
i£r. Knott:


The Secretary of tho Treasury:

You think we should have

the maximum?
XT* Knott:

twelve, yes,


The Secretary of the Treasury:
Hr* Knott:

And upon what theory?

Upon the theory that the purpose of this Act

Is to decent'alise tho congested capital in the east and
distribute it throughout the country to meet the varied needs
of a whole continent.
The Secretary cf the Treasury:

Veil, that decentralization

is inevitable, even If the minimum number should be estab11 riled*

Of course, tho law gives discretion to the Committee

R. V, Knott



to make the number not less than eight nor more than twelve,
low as an economic problem,at the momsit, i s it your view
we should start with the maximum number rather thai the
minimum or an intermediate number.
MT. Knott •

T think it ought to be twelve, Mr. Secretary,

as a mere matter of efficiency, in order to make your
capital efficient, in order to make your credit sound —
The Secretary of the Treasury:

Of course, the point

there is this, whether or not you would getthe same effect­
ive use of credit with twelve weaker units than eight stronger

That is one phase of the problem that has to be

considered, of course.
Mr. Knott:

i,et us consider it, Mr. Secretary.

You are

basing all your calculations here upon the existing national
bank zy stem -The Secretary of the Treasury:

lot at all, you are mis­


Mr. Knott:

I mean your figures.

The Secretary of the Treasury:

lo , we take them for what

they are worth.
Mr. Knott:

I mean When you ask what are the resources of
i *
this district lo. 3, you say that Includes so much capital

B. W. Fnott



and resources —*
The Secretary of Agrlcultur«:
Hr* ^nott:

J?imply &s a minimum.

"*ut you «t»rt In *d th that basis.

How if this

law 1 s to bo successful, and T do not moto s transitory
and ephemeral success, I moan if this now law is to do for


years to cone what tho old law did, you are going largely

to abolish the state banks,certainly throughout the west
and couth; and therefore X think you ou^ht to start out
with as large a circle of influence txwm. Which the effect
of credit and capital will be fixed, as possible.

And T

boll ere with that division, starting in there, it will be
not leng before the world lts«&f will realize the benefit
of that, system and the continuation ef that policy*
not be mistaken, gentlemen.

ret us

The original movement for the

reform of the currency oame from men, and

there are many of

then honest in their conviction, who believed in a central

^ut I cannot bellCTO that those men kadi a complete
view of w *at ,he continent was*
X do net s e t / * * * the
experience of tho pa at and the preeent conditions, one bstfk

uld possibly do the work which la expected from a system

of credit and banking.
The Secretary ef Agriculture:

That is the view we took


of It in Washington, that we needed more tfcarj one*
Mr* Knott:

*?©w there i® very little difference betweaa

one and throe, because it would riv® you the three centres*
The Secretary of Agriculture:
Hr* Knott:

I agree with you on that*

And there would be ne dissipation, and there

is rery littls difference between one and seven er one and

Whan you come to eight, it is possible to distribute,

but you need twelve in order to me&t the reasonable requests
of the people.
One thing more aba ut Louisville and T will relieve your

T.ouisville is really the one point for an interior

You are going to distributs nest of these along the

coast, along the lake region and aleng the Pacific, and one
certainly on tho Gulf.

Itew St. Louis is not an interior

city —
The secretary of Agriculture:

Mr. Knott, that is an

assumption, of course.
*r . Knott:


I an only speaking my own aind, sir;

I an only apeaking from the statistical standpoint, backed
up by the histsry of the industrial developaent.

wsw we are

building this systen of eurratncy, we are offering to this
people a now basis sf credit; we are saying even now to the


B. W. K n o tt



farmers thst your property is a basis of credit, **nd you
are entitled to more jaoney then you have been getting.


|i there wss a tine ehen the commerce largely of this basin
ended at the Gulf.

It does not end there %ny sere} we go

to Cube and Porto Xiico end the Penes* Cental, with your

credit agencies end your commerce, end then i f annexetion
follows commares we c&n take

cere of the annexation.

How, Mr. Secretary, I %ei obliged to you.
The Secretary o f the Treeeury:

Senator Ja*nee, you want

to be heard, I believe?
Senator Janes;

lfr. Sheri ey will

present some facts.


The secretary of the Treeeury:
occupation so well, I


Vr. Sherley, I kno f your

ill not eek you,

I have been you

before in regard to appropriations.
Hr. Sherley:

Yea, and with the desire te relieve the

strain on that appropriation,

m want to help you out by

giving you a proper regional eltus.

I only want to suggest


baeic things.

First, as has already been intimated


the purpose of thie law was to decentralise capital,

end it was to make the financial lines follow trade lines,


S. Shirley.


which i i 6 natural economic situation, instead of h soring
them arbitrarily following

legal lines*

Under the require­

ment or the deposit in reserve cities, we h w e eten money
go across instead of along trade lines, with

a correspond!rg

accumulation of money in the East, end with a situation
unique among nations, whereby a discount rate for a specu­
lative transaction was lower then that for a legitimate trade

Mow, it was to gat away from that,

ment, that Congress passed this law.

in my judg­

And the ro^&on that

it did not agree to the central bank, I think,

was with the

idea of Baking certain that it would decentralise*
Ho man can serve in the House of Representatives *nd
no man can travel over America without learning that there
are certain divisions

of Asserica which arise whenever any­

body thinks of the country on the whole.
ftnglfcnd of necessity as one section.
Pacific Slope as one.

You think of Mow

You think o f the

You think of the Western Mountain

section and you think of the Horth and you think of necessity
of the South, and then of the great Southwest.

Vow, that is

because of many reaeona, eome of them largely geographical
and sosmi cf them climatic} but they are actual living facta,
 and no

scheme can ever be worked out, in my judgnent, that

p jb

3 . Shtrlay


will be worth anythin.'* that does not recomizc those facto,
because they constitute the Very life o f the nation*
states and countries hare
recognize them.


habits, and you hare got to

You can lay off a

new boulevard,

a# we

have tried to do in Washington and make the traffic go

the Kail, and yet people continue tc go

■While House to the Capitol along

from *fae

Pennsylvania Avenue, be­

cause the habit of the city is that way*

Sow, there are

certain habits o f trade, and it is because we believe those
habits of trade

and the geographical division o f America

make Louisville a proper center for a Regional Bank, that
wc are here urging her cause,
Ve here got, of course, the natural pride that every
man has in his city, but we are not putting it on the baole
©imply of our partiality for Louisville.

The Ohio Elver

was the great waterway prior to railways, and than tho
Mississippi, and there has been from the beginning of this
government a trade from the South up Sorth, and Louisville
has been the northern most southern city.

Zt is distinctly

a Southern City, Southern in its association with Che world,
in its trade contacts.

Cincinnati, our near neighbor, so

nsar that a casual lack at the


would seem to put 1A in


8 , Sherley


tvc same class with Louisville, is yet ss distinctly &
northern city ss Louisville is distinctly & southern city.
You may *ey thst thst is an arbitrary thine:, but it 1 b &
fact, and no «as Who kaovs the cities hut an si recognise it.
We bolleve thst 1 1 is essential thst the South* speaking of
the South

proper, should have at least two Regional i*anks.

I f it Is te have two, it wrould eeem to foliow almost ae a
matter of course that the city that, vith the exception of
Vev Orleans, is the greatest city in the South, should "be
the 8 1 ius of one of those.

The eapltal, as has already

been set out, is sufficient to take care of the territory
that <?s have outlined,

Florida is the extreme, and part of

Oeorgla mi;;ht come up and beeome tributary

to a bank

situated at Baltimore, i f one was established there, but
all of this other country which «e have indicated and
Southern Indiana belongs naturally by virtue of trade, to
Loui srllle.
Bow, we are mot only able to take care of it because
of the total

eap It all nation that a bank would have there,

but ve are able to take care of it for another reason,


would get rid of the financial peaks that would fall upon
many banks and would be able to use our money during a
Federal Reserve Bank ofgreater
St. Louis

portion of the year than many other cosasuni tie*.


S. Sherley

because the time

/hen the demand on tobacco and whisk* comes,

and those ere the two bis? laovejients of money requirements in

ere times distinct from whet would come from

the more southern part o f the section where the cotton
demand would come, end as shown by the figures,

here been

able alleys to take cere o f the situation, and we therefore
believe that that fact should be considered, and not an attempt made to take

ventucky and force it into an unnatural

alliance which v/ill be ls/t*l *>ut cannot possibly be a
natural one.

Our trade is not with Pittsburgh,

Cleveland, with Cincinnati.

3&ose belonged



north middle section of the eastern part of the continent,
But Kentucky ie essentially southern, and it has always

do not want to undertake to repeat what has been

said here about the figures, but there is no bastion as to
our ability to create a bank of sufficient else, one that
will run anywhere from five to six or seven millions of
capital, and take care of the

deals of that entire sec­

tion and not thrust ue upon other places.
tow, you asked several times s*bout first and second
choice and

that eort of thing.

At la it a « M suggested,


and it

S . Sheriay


urged that any objection


we might hare to At*

lanta she ai<xht h-.-ve in an equal degree to ue.
If she

to be our eiac, but it is


that ths sssss objection of
in aonoy

That is true,

h ardly


a city half the sis* and



a b o u t

ha If

*nd resources should hare the sa»e cosgtlalni

because it is tied tc the larger city

as that the larger

city should bo tied to the snaller.
The secretary of the Treasury:

It is a question of the

district aore largely then anything else; I mean that i s the
fundamental question.

How, on that &mae point,

Texas which objects very strenuously to heln/:

here is

attached tc

soau? other part of a district whldh is much smaller In capital­
isation than the capitalisation of the banks in Texas.


that where you hare the brguaent in one case which you pre­
sent, wc hare the reverse of it in saofeer
Hr. Sherley:



am not responsible for the other

fellow9s argument, but I aubait —
The Secretary of the Treasury:
Hr. ste rley:

puxxled by

But ihe committee is,

this conflict of views.

That may be, but X <m trying to straighten

you cut in this suggestion, that the cases are not parallel
between any c f the cities which were suggested for Louigrille


8 . Sherl«y

tc lie tied to ae it would be



them to be* tied te Louisville,

because Louisville la the dosin&nt city end that dominance
has been earned by her size,
by her manufacturing

by her financial strength*

resources end by her ability tc do, and

it Is not a matter of pride,
tbs secretary o f ths Treasury:

is i t dominant, though, with

respect to Georgia and Florida, for instance, in the matter
o f trade influence?
Mr. She rleyj


Ths secretary of the Treasury:

booking to the nonaality and

the preservation of normal conditions of trade and commerce
In the district, in which respect the Act is mandatoxy upon
us, as you are well at/are?
Mr. She rley*

Wot at all, but if your premise is that

Osorgi* and Kentucky shall be tied together —
The Secretary o f the Treasury:
Mr. Sherley:

BO —

well, assuming they are in a Regional Bank,

then there are many mots reasons why Georgia should be tied
to Kentucky than Kentucky to Georgia, simply because ths
strength of Atlanta is »o much

le ss than the strength of

How, I grant you that in my jud&aent this part

of Florida, particularly ths Atlantic Coast slds belongs up

and doss not belong in this part of ths country,


8 . Sherley


Mid there may be part of Georgia that that is true of, but
all of this territory which has been suggested 'belongs
historically and geographically and by financial and trade
laws, by the

Tery flo# of cooaodltlea

todagr to Louisville,

aa the dominant -nd strongest financial center within it ,
and that is ahat we desire to present here.
How, there has been somethin- said about the marketing
of whisky, and I would like, as Mr, Barr did not
very fully, to


into it

Wr. fladdes or someone of these bankers

here explain to you gentlemen Just what occurs and how it
saves the piling up of amounts carried by virtue ef the

carried in bond.

The secretary o f the Treasury;

we will have him do that

vs wanted to hear from you and senator James

so you could got away i f you desired to.
Hr. Sherley;

Unless you have seme questions, I hare

about expressed cay views.

X want to eay I think there ou^ht

to be twelve regions Instead of eight.
We cao&e here and
come on the theory that/only eight we are still en­
titled to one, but I think the

reason you are going to have

twelve is for the very reason that under!ay the writing of this
law, end that is to make certain of keeping capital at home


S. Sherley


to perform the functions there among the people who created
it rather

than carrying it into certain center®; and there

is no reaeon for

el{*ht &s against twelve that will not apply

for six ae against ei'^ht, and if you carry the process out,
then you are driven to the lo ic of the man who argued in
favor of a central hank because of its strength and mobility
of the funds which would there he gathered.
The Secretary of the Treasury*

The law gives the committee

discretion to select from eight to twelve districts, in order

meet the conditions as

Ifr. She rley:

they may determine.

But I want to state that I believe twelve

would meet the situation in America better than eight, and

have tied

all of them up, whether eight or twelve,

through your Reserve Board.

While it is true, when you get

into this country, you find a good deal of difficulty to get
capital enough to make a large sized Regional Bank, you take
all this country in hero ( indicating) and you can only got
about $2,500,000, while when you come into

this country

the making of only a few Reserve Banks serves to bring about
the smse abuse we are striving to get away from, and that is
making a district which is by naturs

dependent and sub­

servient to some other district, and that has been ths con


S. She rley

dition for half e century past* it has bees subservient by
law rather than by nature to the financial center* of the
Of Kentucky.
^enstor jwaes:

X shall not take up your iim^.

it io always understood

r>f ccuree,

when you make a rentuckian ait

dovm, you handicap him to that extent, and I could see at
onco tho purpose of tho Board afcen
was required to keep his seat*

I saw that each man

It has about the same _

offset on a irsntueklan as tying his arms ?Aien he starts to
make a speech.


But as to the masher of basks, personally I prefer the
larger number on the theory that It will serve
fashion the country.

in better

But I would be willing to cosqpromiso

on say nuaber that would give Louisville one of the Regional
Vow tho truth of it is that Louisville* without under­
taking. to dep scats in any way any other city in the South*
is the chlsf city of ths South* I t has boon in manufacturing*
and i s alJBOBt as large in

inhabitants, and dhen you take


o. v . jr«se»

into consideration that Jeffersonville and Hew Albany are
Just across tho river and connected by easy access, Louisville
is as great in the point of inhabitants as Hew Orleans.


course, it is greater in manufacturing than Sew Orleans.
have got the


greatest \agon ^orke in the world Uiere; they

hare got one of the four largest
tabli jftmente in the world.
market in the eorld.


manufacturing es»

It is the largest loo ee tobacco

It pays in more revenue to run this

government than ell of the South besides or combined.
With that state of the case,
regional bank, it appears to me

i f the South is to have a
that you are are irresisfe­

driven to the city of Louisville.

Louisville, as Mr.

Sherloy has otated, is naturally southern.
in the t'sct that m are

almost as such

quite so, as Wississippl or Louisiana.

We take pride

southern i f not
The tendency of

the trade is with the South and has fclwaya been with the
How, as to the thought which has been suggested here
about a branch bank, that a branch bank would perhaps
some cities as well as tho Regional Bank.



the fellow

who tekes that view of it , I men willing for him to have the
branch bank, but Z think there is as much difference between



bank s»nd


& R eg io n a l

f a l l o w who h a s g o t


h is


a c rib



com in the field,



3665 3L



where ho


ie between


the f o l l o w


has got to go



Louisrille producesone half of the whisky in the

Row, U ha® been stated here that Louisville alone

pays into the treasury kbout

twenty million dollars s year.

The whole state of Kentucky, taken together, pays in right
close to $40,000,000 a year,
ment, which, of course,
helps defray

for the purpose of ths govern­

must be interested in it, because it

its expenses, and it has btsn made legitimate

by law, and the placing of this Regional ^ank there, of
course, would facilitate that business in a great degree,




b u sin e ss,

w h ich



a revenue p a y in g

e n tire


one third of the/tobacco in the United States

is produced in our state and financed through the city of

Tht* city of Louisville has first and last

about ten railroads and branch railroads that serve differ­
ent parts of the country.


It has connection with Indiana, and with

other parts e f the
ban routes or lines.

It has the river facility

states of Kentucky and Ohio

by interuxv

Fros the standpoint of convenience





there is no city in the South that approaches Louisville in
that respect.

And fo r the purpose of getting in quick a©d

immediate connection with the

parts which arc to he served

by this district ahicb hie been laid off here —
The Secretary of Agriculture:

You apeak of the Middle

Senator Jaraes:

Yesy of the Middle South s®d that part of

Indiana Which is Included in this district.
The Secretary ef Agriculture:

May I interrupt jk»u a

minute, Senator?
Senator ja&es:


The Seeretary of Agriculture:
relation to this district, do you
better arrangement than an
Senator Jesses:
naturally run

Asids from Louisville*s
conceive that to be a

east and west district?

Yes, I think so, because the trade has

that miy.

The Secretary of the Treasury:
file with the Cem&ittee


Are you gentlemen going to

composite map or any map showing

the sphere ef Louieville's trade influence in these states?
Senator James:

Oh, yes, that will be dons by a brief all

along that lino,

X Just came along so that i f there was anything that

p jb

O. F . Jaeaea.


nirht be said thst wso not said X would suggest it, 'but it

all been so &dairably end splendidly covered thst Z

think ssy further statement from as upon

this line would s

trespass upon the patienee of you gentlemen.

I asi sure ths

brief trill be filed shoving all these facts to be sustained, and
in thst view of it j do not see any other way, i f ths
South is to hsve a regional p,ank, to escape giving it to
And originally, is the creation of these eirht Regional
Banks the thought

was tw© to the South, two te the West,

two tfc ths central States, and two to the Bast,
originally the idea,

That was

personally, I suppose ths secretary

remembers I was for twelve banks on the theory that it rauld
be better for ths ahols country than eight, but even


it down to the minimum, when you give two to the South 1 do
no t ass any o ther way on earth than fo r one of than to come to

of course, I will not enter into any fight be­

tween Wew Orleans and Atlanta, as to tfhieh gets ths other
one (laughter).
The Secretary 0f ths Treasury:

The Committee will adjourn

nos until ten o*clock tomorrow morning.
Whereupon, at S P .M .,


the hearing was adjouxned to

12, 1914, at 10 o1clock A. V m


Hew Oris line, Leu, February X2, 1914.
Wte pursuant to adjournment %t 10:00 A. M.

Parties r>s before*

The Sssretary of the Treasury:

Gentlemen, coiuts to order

Who Is next to speak for Louisrille?

Hr. Finley:

Wr, Tort, of Clarkerille, Tennessee, in the

Bsrk Tobacco District, is to be our next speaker.
The Secretary of the Treasury;

Wo heard Wr. Port once be­


¥r. Fort:


I «n President of ths northern Bank o f Ten­

nessee, Clarksville, Tennessee,

X want to <ys on record,

gentlenen, as be in/* entirely consistent in this u t t e r ,


sm bs


in Hew Orleans as

louisrille first *nd St. Louis sscond,



was in St, Louis,

Tou understand that,

of course.
Ths Secretary of ths Treasury:


Hare yew anythin?- to

add in addition to the testimony you hare heretofore gircn?
Wr, Port:
ths Clarkerille

I told you in St, Louie that X represented
bankers, but X did not hare thie paper then.

S. Fort.

This is Just a rssolution endorsing Louisville first snd
St. Louis second.

Shall X read it or fils it?

Ths Secretory of -he Treasury:
Mr. Fort:

Yes, you may read it.

■Clarksville, tsnneseee, February e>, 1*15.

•At a nee tin; o f the Clarksville bankers of Clarks­
ville, Tennessee, held today, the folic-?ing resolution
was passed:■It is hereby resolved that Louisville, Kentucky is
our flret choice as a location for a regional bank.


large tobtccc business of this section renders it very neces­
sary that *e should be threwn in daily contact «iih » com­
munity that is f azaili sr with the transactlone of s&i&e.
■We also believe that the banking bueiness of Tennessee
could better be ecrved by s regional bank in Louisville,
K y .,

than at any other point.

We favor St. Louis, K o .t as

second choice.

Northern Bsifc of Tennessss,
Sterling Fort, Pt.
Pi xst national Bank,
By Vesley Drane, F t .
Clarksville National Bank


S . Port



First Trust « Sarin^s B&nkg
Southern Trust CosQ>'&nyr
3y C. I , B&iluyr Cashier.
Security Trust Company,
Hy Geo. Fort, Prest.»


S. Fort.

Tho secretary of Agriculture:


How mamy banks hare you

l*r. Fort:

There are six banks there, feurxvgular


cial banks and two trust companies*
The Secretary of Agriculture:
The secretary of the Treasury:

Hare you any tihiar to add?
Mr* Fort testified at

St. Louis, as you «ill remember.
M r.


W ell,

our principal reason

ville is stated in that resolution.


wanting Louis­

It is the tobacco

section, and Louisrille is the largest tobacco

j the

w o rld

i s the




characters of tobacoo,

B trie tly


m arket


and Clarkerille

to b a c c o m a r k e t ,

a n d we



been —

The Secretary of the Treasury:

That resolution i s upon

ths theory that a Regional Bank placed elsewhere would not
gire you the same degree of facility that the Louisrille
bank would, is it not*
Mr. Fort:

Yes, sir.

Ths Secretary ef ths Treasury:

And that is again upon

the theory that the Regional Bank dlrectoxs, i f it was located
in Louisrille, would know sto~c about the conditions than i f
it was located in Nashville or some other place?


S . ?orfc.

Kr. Port:



The secretary o f the Treasury:

Well, o f course, you kno*

that that assumption Is not accurate?
¥r. Port:

Veil, not st Sashville.

Ths Secretary o f ths Treasury:
Mr, Port:

Well, St. Louie.

Well, I think the Louisville bankers,

«ho hare

handled the tobacco business all their lives, would know
mors about it

than St. Louis.

The Secretary of

the Treasury:

They ^ould not have all

the direotors ; you would hare representation on the board
; wherever i t *?as located;

and then suppose

you had a branch

at Louisville, you would have more directors on the director

than i f the Regional Beak itself were located there.

Vr. Port:

X think Senator J«xes hit ths nail on the head

when hs said as between a branch and a parent bank, i f the
other fellow feels that way, we »re willing for his to hare
the branch.
The Secretary of the Treasury:

We are not talking about the

feeling so much as about the faet*
Ths Secretary of Agricultures
¥r. Port:


Tour trade mostly goes to

¥ . Prs*ne

stAsnrai? oi- w:srjnr m m ..
The s e c re ta ry o f the Treasury*

W il l you state your ntmer

and oc cup at ion?

M r . D ra n e :

Vealey B r a n e , P r e s id e n t o f the F i r s t w stion al

^ank o f C l a r k s v i l l e ,

T en n essee.

the Treasury:

The S ec r eta ry o f

Can you add any thing to

|| *h a t has b e e n said "by Mr. Port?
Mr* B r% n e :
|| a fe w f a c t s ,

I have reduced to w r it in g in

& l»u t one page

i f you would l e t ae read i t *

The S ec r eta ry o f

the T rea su ry :

V r* Dir line: Concerning

Y e s , >ou s a y proceed*

the tws main p o in t s i n determ ining

s u it a b l e lo c a t io n f o r a P e d e r a l Reserve B an k,

a c c e s s i b il i t y

o f c i t y i t s e l f and the t e r r it o r y to be serv e d , L o u i s r i l l e ,
our o p in io n ,

f i l l a requirement a



*d » ir a b iy .

Xt i a the teiwinue or c r o s s in g p o in t o f alaoat a ll
i^o rtant

trunk l in e

n o rth and a o u th .

s e q u en ce,


r a ilr o a d s e x t e n d in g s a s t and w e s t , and

Xts in teru rb an

i n Buosy d ir e c t io n s ,


tra ctio n l i n e s now r a d ia t in g

are b a in £ r a p id ly e x te n d e d .

As a con­

the f a c i l i t i e s fo r p asasnger &nd express trana■

ortatlon are unsurpassed by those of any c it y in the

Xt has i # i g been the f i n a n c i a l cen ter fo r the

aanufacturinr, mining, mercantllia^ a g r ic u l t u r a l ,
Federal Reserve Bank of
St. Louis

and com er-

indue trie a in Kentucky, I n d i a n a , Tennessee and ^est

W, n r (019

V irg in ia .

has been

th is

j] I t




The c a p i t a l i s a t i o n o f tho b a n k s

is & e$>1s to ta k e the required s t o c k t e o r ­

territo ry
s R e g io n a l

B azik,

C la rk sv ille ,



at L o u i s v i l l e ,


those states.

logical place for hankers to re din count their


whenever n e c e s s a r y ,

g a n ise


banks h?»7e been for many years correspond­


fo r financial Institutions through




lo cated

i n one


to m a r k e t

the l a r g e s t

th is


certain ly be b e tte r
than at


j q u ired ,

an d f r e q u e n t l y ' a l l y

j stap le

a r e m ad e


w h ic h In v o l v e s m ore



th is

o f L o u isv ille

th e c o m b in e d

the wo rid j


do llars

tran sac tio n s

the a i d


any c ih er p o i n t ,

se c tio n s

c r o p m any m i l l l o n e


c ap ital




o f our local


o t h e r words

t h e c o m b in e d


th e

cap ital

d o m e s tic

fr o m o u r l o c a l i t y ,

c o u n trie s.


«e e n e



c ity


and i n



to b a c c o

to E u r o p e

p rim a ry


day o f t e n


In stitu tio n ,


to thie9 a large

ad d itio n

n a tio n a l

th e l a r g e s t

a s in ^L e

surp lus

R ian u fac tu rere o f

p o r t i o n o f o u r crop

tio n,

d e p o sits

an d o t h e r

in te rn a tio n a l


fo reign

markst s i n ths


V . Brane

world, and In times of financial
ready money to mere thi* crop.


stringency would suffer for
Louisrille itself being the

largest tobacco market, its bankers understand the business
and hare always aided the Clarksville banks in handling the
tobscco crop,
While I do not claim any superior knowledge on ths
subject, I am familiar with ths banking: business in our st*te9
and hsre ssrrtd as President of ths Tennessee Bankers1
Association, and X be 11 ere X know the wishes of a large num­
ber of the bankers of our state; and X feel confident that
the location of s Federal Beserre Bazik at Louisville,
would not only be acceptable and satisfactory to them, but
Is desired no re than one at any other point.



W. Drawte.

The $e#retery o f Agricul ture:

Are }ou sp2&kin;~ in that

stateaent for cities like Weehville, Ch&tianocga, Knoxville
end ?'e®phi8?
S r . Brene:

I aa speakinr for the country,

The Keshville

Clearing House, ee I understand it, h«*ve endorsed Cincin­
nati , but I do not knew, they ere not In the field theaselves, but they decided on Cincinnati.

I ui epe^cing for

the cities euch ee Springfield, Bob*rtson County —
Tho Secretary o f the Treasury:

Ani the sraall towns coa-

tiguous to your district?
* r . Drenes


Of course, I could sot epeelt for the

oitlee, but the country district* of Tennes&e*.
The Secretary of :Jle Treseury:

How far here you eanvaesed

uhcm, end Whet particular cities do you feel authorised to
apeak for outside of Clark evil le?
Mr. Drenej

Well, just in general talks with the beaks end

the bueiness interests of Springfield i they ere n*ar our
The Secretery o f the Tressury:
%fr. Tirana:

How bi^ s town is that?

Springfield is four or five thousand people,

sod they hen die considerable tobacco.
what action they are going to take.

But I do no t know just
ffeshvUle nirjit coerce

p Jb2

W, Brane.
U 66

The secret*ry of ufce Treasury:
go wi th Fashville, ni
# r, Dr*ne:

Well, they mi ffct voluntarily

they not?

I could not tell about thst.

But we arc the

largest primary dark tobacco market in the count iy.
The Secretary of the Treasury:

Yes, we ha<re heard these

facte submitted before,
Mr. Brane:

I expose

fifty or eixty million pound® of

tobacco s year probably, I do not knew Juet how much.
The secretary of the Treeeury:

That ie all, thank you,


The Secretary ef ths Treasury:

You reside at Hopkins*

Wr, Long:


The Secretary o f the Treasury:

You testified before at

St, Louis, did you not?
Hr, Lons:

Yes, sir.

The Secretary o f the Treasury:
*dd to

this question?

Hr» Long:

I here Just one item which seems to have been

overlooked by thess gentlemen,

Kaye you *aytfcln£ new to

and it is a statement in re­

¥ . Brane


gard te the lanense aaount of coal h&ndled in eur section,
and Louisville, of course, is ths headquarters.

There is s

little section between Hopkinsville end

Henderson about

do ailes there andperhaps about as long,


square o f 30 miles,
amount of coal.
every year.

about a

and this section is handling an immense

It takes millions o f dollars to handle that

A fev of the nines were combined the other day

with a capital of $7 ,00 0 ,000.
The Secretary of ths Treasury:

Have you any statistics

bearing upon that industry in a concrsts fosa that you can
Mr. jong:


I can furnish thsm.

The Secretary of ths Treasury:
and forward it as an exhibit
¥r. Long:

Suppose you prepare it

to your testimony?

I *111 bs glad to do it .

That is all I hare to



Ths secretary of the Treasury:


You may state your n*aae,

rcsidnca and occupation.
Wr. ftwin:

Bari S. nwin j President, Second

Rational Bank,

Albany, Indiana, and formerly president of the Indiana


* • 8 * Rwla*


3 anker* Association.
The fiecrutary of the Treasury:
vr, G**in:

I represent primarily

and Jeffersonville,

Whet do you represent?
the banks o f Hew Albany

the Immediate territory

contiguous to

Louisville, ond the Sew Albany Ohsaber of Co&merca*
The Secretary of the Treasury:

Yon here credentials, I

Mr, Gwin;


The Seeretsry of the Treasury:

W i n you submit them?

| Just read the resolution,
Wr. owin:


it resolved by the Chsaber of

Cojameroe of the City o f Hew Albany, Indians.


organization favor# the location of a Federal Reserve Bat&
in the Cit>* of Louisvikle and pledges ths hearty support of
ita members to that end,
"Thst it is our belief that it would be of material
j| advantage ts the comercial in crests o f Southern Indiana*
"In suppsrt of this contention ws submit that 80 per
cent of the output cf our factories is sold in the South,
The chief industries of this csnsunity consist s f ths
manufacture c f Furniture, veneers, hardwood flooring and
o ther wood-working

lines, fertiliser, leather, stoves,


B . S. Gwin


b^r iron and the rehandling of oil kinds of grain destined
for southern points,
•The trend of these products is toward and through
Louisville, Kentucky.

To place this section in the terri­

tory served by a Federal Reserve Bank located in any other
city *ould be a serious inconvenience and turn o u r finan­
cial operations against their natural course^


S . C » in .


Houm .

have no fo ia a l r e so lu tio n o f whe Mew A lb *n j c le a r in g

I «o u ld l i k e to



p r iv ileg e o f f i l i n g

such r e s o lu tio n l a t e r .
The secre ta ry ef

the T rea su ry :

Yon do c l a i s

to represent

the Obearin# House?
M r. Quin:

Yes, b ut the actio n

in d iv id u a l banks in d is c u s s io n ,

has Just been

m erely by

and no t as the r e s u lt o f a

The secretory o f Agriculture:

Whet is the population of

Hew Albany?
Hr. Owin:


The secretory of the Treasury:
Sir. (jwinj

%out 13,000.

And of Jeffersonville?

It is a few miles east of us.

The secretary of the Treasury:

wow, you say present the

esse froa your standpoint, Mr. $*in«
V i. a«lB]

Hr. Secretary,

of the thou^it thst is in


if X



proper conception

Kinds of the Organisation Cota-

mittoe with regard to the establietoent




Banks, they arc taking into consideration first the
ience, second, the natural course of trade, and


th ird


territory that will furnish the required capitalisation.
Upon that theory* I feel that the division o f the stats of

P Jb6



l?o rt.

Indian* south of Indianapolis would fit la very well and
logically to tho section outlined by the cosmlttee from
F irst,
trend o f

in tho suit t o r of c o n v e n i e n c e , i t i t

cojsmerce fr o m S o u t h e r n I n d i a n a ,

. sented in that see ion
This would furnish



tow ards

tien o f tho federal Beeerve Bank,


Southern Indiana national banks &rera$*

The capital repre*

national banks lo

about £ 1 ,2 5 0 ,0 0 0

The estimated deposits of

tho n a t u r a l

^ 2 0 ,0 0 0 ,0 0 0 ,


c a p lta liz*-

total deposits


about #7 5 , 0 0 0 , 0 0 0 ,

Federal Reserve Bank would


about ( -,000,000 froai this section.
The point that I would like particularly
is that thise section of Indiana,



at no time of the year is

borrowing community, with the exception,




Individual cases under special clrcissstances ; but generally
|| speaking it is a lending community always,
Kowt the difficulty has seemed


ber in outline a

southern territory , o r a territory which will




j-Southern States, to overcome this natural difficulty, that
South is a borrowing cocsaunity rather that a lending

I believe that ths placing of this part o f


In d ia n a

with Louisville, which can be done without distuifeing





2 . 3 , G^ia

natural course of trade, would help to level the load, ao It
The secretary of Agriculture:

To what extent do you think

; you ct*n epe&k for tho banker® in that section outside of Sew
yr. Owin:

of course, euuhori tatively

for none, but know­

ing the sentiments and general ideas od the bankers of
southern Indiana, I think for a v^ry large percentage of

A few cities that are closer situated to sone of the

other points that Bi*#it be considered for a Regional Bank
would possibly prefer another point first.
The Secretaiy o f the Treasury:

We are interested in the

division, in the line you would draw south of Indianapolis.
Can you give us the line by county boundaries as you lay it
Ur. c-win:

I f I had s map —>

The Secretary o f the Treasury:

H»ve you toy &ap tfhich

Just the exact position of the line?

Mr, Gwln:

Bo, except I could take the &ap of the state of

and draw the lin e.

The lin e, of course, is not a

fixed line.
The Secretary of ths Treasury:

9s, but

wc would hare tc


2 . S. fjwin

get s*n c x M t ides of that line.


i f you will prepare


a map by county lines and send it to the Consolttee at Vwhington to be node an exhibit invour testimony, we would
like to here it .
senator jmnee:

I suppose you speak of the line

there by the IiOuisvllle
Ifr. f?win:




Senator yames:


And I think they have the counties in

eet out there.


of the Treasury:

They are not indicated on

any map which has been presented to us.
T-r. Finley: In that map submitted by Kr. nsrr yesterday,

they are submitted.
Hr. nerr*

we hare the line indicated with every county

11 named.
Hr. Gwln:

There are about 30 counties, are there not?

Mr. ^arr:


Ifr. Finlay:

Tare you the last President of the Indiana

State T^ai&ers Association, and have yon not pretty aocurate
knowledge of the wishes of thoae people?
Hr. coin:

I have an acquaintance throu^out the stats.

The Secretary of ths Treasury:

You were formerly president


B. S. Gwin


of the Indiana Bankers Association?
Wv* c 4 » .



Ths Secretary of ths Treasury:

^are yet* recently made aay

effort to ascertain the views of the 'bankers and business
men in thsse 50 counties you are proposing to attach to this
Hr. Qwin:

So systematic effort,

I think that should be

done, and it could be*
The secretary of ths Treasury:

Do you know anything about

ths drift of trade from Florida and Oeorgia to Louis T i l l s

this section?

irr# **win:

I fcnow with reference to all those states per­

haps with the exception of Florida.

I do not believe the

natural trend of business is to and from Florida*
Ths secretary of the Treasury:
Ifr* Gwln;

Wow about Georgia?

We handle in our bank a great many hundreds

o f thousands of dollars of

grain drafts through the state

o f Georgia*
The Secret sry o f ths Treasury:

I am speaking about the

general drift s f trade and commerce in Georgia?

Would it

be towards Louie vill e or some other point generally?
Mr. awin:

Well, with the exception ef the eastern part s f


£* S# r.wln


the eastern pert of Georgia, I thinkt yes*
The secretory of the Treasury:
Ifr* nwin:


•he Secretory of the Treasury:

Horth Cn$o rgi&, you think?

^ot comprising Atlanta or

would you take thee e in?

Hr* <jwin:

Bo, in dividing the state in ay own mind X

had reference particularly to Augusta and Savannah «id that
section, which do not naturally do business with Louisville*
The Secretary of she Treasury:

Do you Include Atlanta then

in the territory sfhicfc you think should be attached to
Loui eville?
Ifr* Gwin:

It *>uld see» a logical arrangement, yes, sir*

The Secretary of the Treooury:

Suppose Louisville were

not made the headquarters for one of the Kooerve ?»anks9 what
would be your second choice?
Mr* Owin:


The Secretary of the Treooury:
ness to Chicago from that
wr. owin:

quarter isore than to St* Louis?

Yoe, sir*

The S*oretary of the Treasury:
Hr* n win:

Is the drift of your busi­

Oh, yeo*


Tor instance, I do not suppose there

is a bank in our city which carries any deposit in St*

X. S.



The secretary of Agriculture:
Tfr. (twin*

How about Cincinnati?

do sosa« 'business in Cincinnati* as a natter

of convenience; not &s 6 reserve center, except, of course,
the southeastern pr*rt of Indiana, Greensburg
very close to Cincinnati* very

and points

like carry the majority of

their reserves there*
The Seeretary e f the Treasury:

What are your relations

with Indianepolis?
Hr. G**in:

Conaercially, ?ou have refereace to, of course?

The Secretary of the Treasury:
Hr. ^win:


The business of Indianapolis is v^ry largely

local throughout the state of Indiana.
The Seeretary of the Treasury:

Tto you carry reserves in


yr. fjwin:

A email portion of our rserres, yesf sir.

The secret sty of the Treasury:

How isuch do you carry in

Hr. n*i n :

About 05 or 70 per cent.

The Seeretary o f the Treasury:

tod where do you carry the

Mr. nwin:

Indianapolis and Chicago.

The seeretary of the Treasury:

And a working balance in


38. S . Rwin

#ew Yodc only?


What percentile do you carry in Chicago aid

tfhat in Hew Yorfc?
Mr. $wing

About 15 per cent X should aay in Chicago and

ten per cent in Hew Yoxfc.
The Secretary of the Treasury:

Have you anything else to

Vr. n*fin;

Only one point with reference to the agriculture ;

Southern Indiana.

vadison, located on the river east9

is rapidly beconirif* a very important tobacco point.


is raised in that sestiog end a great deal of it is rehandled
at Vedlaen, in the vicinity of Evaieville.
^ood deal of tobb*co9*faich
vith Kentucky

There ie quite a

gives them ean^thinr in coueaon

in thst respect.

Ths secretary o f ths Treasury:

Thank you.

^ho is ths

next speaker?
Mr. Finley:

Hr. Alexander, the President o f the Phoenix

Third national Bank s f Lexiagtcn.

After he Is heard from,

I think Louisville will be willing to rest her case, of *our*s9
reserving the right to present yen vrith *ny additional in*
The #eerstary of ths Treasury:

Yss, X aay say now,

between now end ths first of Karch you nay fils
 or exhibits


any brisfs

that you chooes to vith the Consaittoe at V ash in ^


2 . S. owin.
Y . Alexander.


You will have


sixteen d&ya in which to supplement

the evidence in any way you see f it .
V r . Finley:

We will furnish any^hin^r desired.


like to know what you desire to have furnished, and we will
fum i



Ths secretary of ths Treasury:
think, give you

Well, ©ur question© heref I

a pretty /-ood ids*, er if there is tax thing

else that occurs to you, you may furnish that.
STAT23£t3?T OF

The secretory of


the Treasury:

You may state your n^cae,

residence and occupation.
Wr. Alexander:

Y . Alexander, president o f the Phoenix

Third National ^ank o f

Lexington, Kentucky.

Ths secretary of ths Treasury:

Ihafc do you represent, the

Clearing House?
Tfr. Alexander:


The Secretary of the Treasury:

Has there been a resolu­

tion adopted?
Mr. Alexander:

Ho, but there has been a meeting of the

Clearing House and 1 an authorised to speak for them.
The Secretary c f the Treasury:

You may stats your views on

th is


Y . Alexander.

p jb l4

q u estio n .

ICr. Alexander:

are very much interested in loul aville

having this bank.

of course, our Interests are very closely

interwoven there, and we hove a large tobacco market, ths
largest loose leaf market in the world, and Louisville as­


a greet deal in helping ue to finance it.


40,000,000 pounds of tobacco.

The secretary of the Agriculture:

we sell

What does thfet represent

in dollars?
Ur. Alexander*



Ths Secretary of the Treasury:

You favor the district out­

lined by Louisville, do you?
Fr. Alexander:

Yes, sir.

The Secretary of the Treasury:
problem in its entirety,

Have you considered ths

as related to this district or

only with respect to the bank being located at Txmisville?
Mr. Alexander:


The Seeretary of ths Treasury:

You are not farailiar with

the courss of trads end business ef ths district as s ahole?
Kr. Alexander:



extent I think Z *a.

The Seeretary of the Treasury:
ef <**eigia and Florida?

How about this district

Y . Alexander

p j'b l5

Wr. Alexander:


I think they would be w eU taken car® of

at Louisville.
The secretary of the Treasury:

I was speaking about the

general and normal course of business in thoae states* Does
it go to Louisville or sob& place else?
Mr. Alexander:

A great deal of it does, I think.

The Secretary of the Treasury:

You think, you do not

Mr. Alexander:

I aa not positive.

The secretary of the Treasury:

What would be your second

Wr. Alexander:


The Secretary of the Treasury:

Are your relatione with

Cincinnati aors Intimate than with Louisville?
Mr. Alexander:

Ko, they are not.

The Secretary cf ths Treasury:

Where do you keep your

Wr. Alexander:

Louisville, Cincinnati, Chicago and Hew

Y oi*.
lhs secretary of the Treasury:

What percentages in the

different places?
Hr. Alexander:



I should say we keep 60 per cent of our



Y . Alexander

The secretary of the Treasury:
Mr, Alexander:


How such in Cincinnati?

Probably lb or SO per cent, and tho

balance in Wew Yoxfc.
The Seeretary of Agriculture:


*ould be your third

Mr* Alexander:

Richraond, Virginia*

The Seeretary e f the Treasury:

That i s on account of the

tobacco business, is it?
Mr. Alexander:
Hr* Finlay:


I think

that finishes

Louisville*e case,

tfr. Secretary.
The secretary of the Treasury:

You aay file aa #a eaid

before, any additional data which yeu chooee to present*
Vow, venphis is here, I believe*

^ho represents

Hr. K. B.


We represent the IfSophie Clearing;

House Assoeiation and Business Men's Club jointly.

Vm hare

a brief and map prepared , and I think we will take very
little time.

Ve have everything in precise form and we

have asked Ifr* lfooney to

read ths brief*

Ths Secretary of the Treasury:
will hear you now*

Very well, Mr. Mooney, ws

C. P . Uooney


st&^w a n a?



p . j . mdoio,y.

The secretary of the Treasury:

Give us your full naeis,

address %nd occupation and What you represent?
Mr. Mooney:

C. P . J . Mooney, Editor.

Business !*<m, a Club o f Meiaphis,
all the

I represent the

which is a body controlling

consolidated business trades of Keaphis, and of

which ths Memphis Clearing House la a member.
The Seeretery of the Treasury:

Bs you represent ths Cleax*-

ing House Association by itsslf or only incidentally?
Mr. Mooney:

The Clearing House Association passed

resolutions and turned theae resolutions over to thie commlttee.
The secretary of the Treasury:

And .you speak for them as

Mr. Mooney:


Ths Sssrstary s f ths Trsssury:
Mr. Mooney:

Proceed, Mr. Moonsy.

Mr. Seeretary, I will try to detain you a

very few minutes.

Our ides was thst I should run throu£i

this brief hurriedly, and then the details you gentlemen
would like

to seek information about could be answered by

various ethers who are hers.

This is s synopsis of our


C. P. J . Mooney

The Secretary of the Treasury:

You may present your case,

of course, just &s you like.
Mr. Ifooney:

The city of Jftsmphis would hare had nothing

to my as to the claims of other cities in the South except
ss in the development of this information yesterday certain
statements were made which were not in line with certain
ideas ws had, and,therefore,

it will be necessary as ws go

along to take them up and answer them.
I want to state by way of beginning that Tes$>His is ths
largest cotton market in the world excluding Liverpool*
That Memphis is ths largest hardwood lumber market in the
Jnlted States.

That F*ffli>hla is the largest cottonseed

products market in ths world.
This map is drawn to scale and ths measurement a are aceuratc.

You will see that it takes in part of Kentucky,

part of V isa uri, part of Oklahoma,
ths map being

the west boundary of

the 1 0 0 th parallel; it tefces

in the states

of Arkansas, Louisiana, Mississippi» Tennessee and Alabama.
remphis is more accessible to all
gion than any other city in it .


of this re*

Memphis has 17 lines of

railway and branches that pretty well cove r this territory.
From the city of Meaphis to any part of this tsrritory yen

C .P .J . Mooney

p jb l9



mail a letter or you c&n make * trip and

tance within lose than 24 hours.

that dis­


Tho mail service is and

out o f Hemphis throu^iout this territory is /?ood.
draw a circle around Mengphie within a radius

i f you

o f three hun­

dred miles you will find it includes thirteen states.
Yfcn$*hi s is the great gateway between the Middle South­
east and the ¥iddle Southwest,

^esaphis is the

the transportation lines of this region.

eenter of

They hare drifted

there beeause of the estattLigiment of the great bridge many
years ago.

Mid that is so well shown that notwithstanding

times hare not been very good, the last year, they are con­
structing a double-track additional


bridge over

that river, at a cost for track, terminals, bridge, and so
forth, of about #6,000,000.
next year.

That bridge *111 be completed

Memphis is within easy distance of Chicago

and Washington and Wew York.
How, the braking capital and the surplus of the
national banks within this section are $174,570,000.


banking capital and surplus of ths state banks within this
ssction are $186,235,000, or a total of $562,605,000.
the national banks alone enter the
would give a capital of $10,462,200.


Reserve system, they
I f the

state banks enter



the system, It would ,7.1ve a combined capital for the Region­
al *ank of $21,756,000.
The aggregate deposits of the national banks in this
proposed region are $564,752,000 end the state banks
#551,493,000, or a total of over a million dollars in round
How, gentlemen, the supreme necessity of this region
is cotton, the aup rerne erop is cotton, and the supreme crop
of ths South is cotton, and ever since cotton has b^en
made, the money has had to bs borrowed to make i t .


| this particular region within five hours of Memphis is the
cosmercial and geographical center of the cotton region of

j; ths Unitsd States.

As you know, cotton is the great

atsbillzsr of international exohangs.
factor in bringing balances of

ths South.

gold back to the Unitsd

It brings back into the United States the rrold

that goes abroad in

Cotton is s great

trades and that is spent abroad by

Memphis is the heart of the cotton region in
It is,

as 1 said, s momenet ago, the largest

cotton market in the world, excepting Liverpool*


handles mors spot cotton, mors eotton is brsu#it to l'waphia
and sold along the boards, that i ,s cotton is thsrs sasplsd


C* P.J.Hooney

Mid sold along tho bo arda, then any othwr place In uho
United S ta W s.

This year the cotton bought and sold in

wesqphis alone has already run to
receipts, that is

700,000 bales.

Ths gross

cotton fin Mice in the territory or by

Memphis and brought to V wb®his and reshipped from there runs
300,000 bales more.

We *111 handle in Mesqphis about 1,000,000

bales c f cotton this year.
The remarkable thinr about the claim

of our sister

cities Mid so forth on cotton is that Tfex^his is the only
tom seeking s regional ^ank in the South, that is
great cotton market*


Ho cotton is handled in Louisrille,

and about 250,000 bales in we* Orleans and thirty or forty

in Atlanta^

The Georgia crop is handled in

The Secrstary of ths Treasury:

How about Galv&ston said

Mr. Mooney:

Houstdn is the funnel for Texas, but the

cotton that is gathered in Texas is

first marketed in Waco,

Waxahat chi a and all those towns and the marketing

and finacing is done there, and i t is sent down throu^s
Houston and finally to GfclTSston.
is ths cottan sold

The Houston

spots, that

on ths t*hl*s in Houston, through ths


C :P . J.'Jooney

]! Houston factors,


numbers about 150,000 or

175,000 bait** a

The Secretary of the Agriculture:
Vr. Mooney:

What about wallas?

I should say that Balias handles, I am sot

aura, but I should say that Dallas handles about 200,000
balsa a year*
The secretary of the Treaeury:

They ahowed ua down there

something like a million bales handled threu^i each of thoee
The secretary of Agriculture:
U r. Mooney:

this way.


That la true, but they get those figuresin

Memphis will ship out this year about a million

bales of cotton.

About 400,000 of that will come through*

New Orleans, and Hew Orleans will add its gross receipts*
The gacretary e f the Treasury:

You mean it passes through

Mr* Mooney:

It pasaes throu# here*

The Secretary of Agriculture:

But originates, you meas,

at Memphis?
Mr* Mooney:

'Rut originates at Femphia, yes*

The cotton

is sold is Memphis and the foreign bills are draws is lleaphis
and ths b ills o f ladis^ are iasued is we^phie and the ahipifcig


C .P . J .Mooney

arrangements are made here.

The bottoms arts already


ranged for and the eotton i© loaded on trains and sent down
hare and reloaded into the ships.

The cotton that ia har­

vested in Texas — i f you take all the claims of the Texas
cities or any other community, you will find
they recount this through cotton.

probably that

The way to got at the

thin^ —
Ths Secretary of Agriculture:
cotton as much as they pyrsetid
Mr. Vooney:

In other words they pyramid
reserves now in the banks?

Yes, yes, and sometimes Clearing House state­

There are 600,000 bales of cotton up to this minute

which have been sent into Ksaphis and

coapressed smd easiples

taken out of that and laid on the tablss in Mesphis, where
the factors sell it to ths buyers.

There are 500,000 bales

this year that have been bought in towns like
Byers burg, Greendale, Clarksville and so forth,

and stapled

there and then shipped to H^ruphis and rehandled there.
is called through cotton.
year is a million bales.


So the total from yuaphis thie
Take Balias and Houston end those

towns where ths email towns originate the cotton end send
it into Dallas, Dallas probably waybille it and banks it ,
and gets exchange on it, and then sends it down to Houston,

CtP. J.tTooney


and 1 t finally go os to Galveston.
The secretary of Agriculture:

Hr. Hooney:

And they count it over

Yea, and th&t la the ^nonaou* receipts.

you will p 60*don me, I will explain it to you


from the

morning paper —
The Secretary of Agricul fcurs:

You think that can bo

relied upon?
Hr. Fooney:



I tm prepared to make an affidavit

to the truth, as far as I know, of anythin.-' that is in this
pep or.
The secretary o f the Treasury:
Mr. Mooney:


Fcsphis paper?

It is .

The socrstary of ths treasury:
Hr. looney:

It suet he

Oh, you are the s*ditox?


The Secretary of ths Treasury:

I rather suspected you,

from this* preliminary remarks.
Hr. Mooney:

I hope I got nearer the subject than the*..

I f you will look here, Ifr. secretary, for instance it will
probably be shorn hers — here is ths Heaphls

Th*re is the net rscelpts yesterday and ths gross and

net sines September 1st.

cotton state*

cross, that is 660,000 bales.



C P* J*Kooney


is what is handled locally there on the Kemph i * tables, and
500,000 was handled &t Covinsrton, Tsrersburg aad various
points and shipped through, but scat of it financed there.
Sow, if you will look here, let me show you (indicating)*
There la Sew Orleans receipts*
at ITew orleana.

That ia

9U00 bales receipts

That means cotton gathered up in Heaqphia

and all ether places to be loaded in shipe*

Here is ths

Galveston receipts of 25,000 bales in one day.

You know

there is not a bale of cotton grown within miles of

I f you look

a little further, Ho bile and

receipts, 2,400,000, stock of 91,000.

That is

cotton gathered up in Georgia and reshipped, but mostly for

Here is Tilminr ton and Hew York and other ports.

How you see Houston aays receipts 10,000 bales.

It is

interior count, and that is 10,000 bales which wers

shipped through Houston.

It is a little boom,

boys, you

You know those figures look big*
Vow, gat ting back to cotton, Vsophis is the largest

cotton market in the wo rid excepting Liverpool,
growing market for


it is a

the reason that V emphie hss solved the

greater part of the problem of handling cotton fbr the bene­
fit of the faraer*

We have the largest warehouse for cotton


C .f . J.Mooney

in the world.

It covers m area of


160 acres, one house,

that warehouse h ae railroad terminals runnln g into it f
and it makes the handling of tho cotton itself very Inex­

It is fireproof Mid the rstesof insurance, said

so forth, are low, and that has attracted cotton this year
from Georgia to Oklahoma and points that hitherto

we had

not received much cotton from*
tf«zsphis is

a great cot ion market for another reason,

that Fezqpfcls handles all this alluvial soil cotton, and that
is called benders, and

that classes up next to Sea Island

I f ordinary middling uplands cotton is selling at

12~ l/z cents, some of that Mississippi benders cotton may

command a premium of 10 Mid some as mueh as 15 cents over

Some of i t has bees sold this year as high as

26 cents per pound*
in Ytoqphis,

The types of eotton are more numerous

end Memphis is a great cotton market, for the

reason that buyers corns there and they can fill all sorts of

The types vary, and it is a good market for the

planter, for the reason that if he has one hundred bales of
middlings and

one hundred strict middlings and ten bales of

ordinary, he can ship them to Mtnqphis and will find a market
for the -hole 210 bales, because men arc continuously




there filling out lota.
The further feet of it feeing

a great cotton market is

eho m by the fact that there ere buyers froa


Europe end England there, end the Japanese houses ere repre­
sented in tfeigphis and also the Russian and Turkish houses*
IN have not bem doing much business for the Tuxks lately,

remarkable thing about t»he territory adjacent

to ITesphis is that the cotton territory adjacent to MCBg>his
is only

one-sixth open.

This Yazoo Hiver and St. Francis

River delta, and so forth,

around which they have thrown a

levee, is probably the least open of any territory in the
Unitsd States, and i t is susceptible of a hij#ier ratio


cultivation than any other territory in ths United States,
and that territory is only one sixth open.

Sow, in this

territory Itself, last year it produced 7,000,000 bales of
cotton, and in 10 years
bales, and


m& 11

bs a demand for 50,000,000

the United States only grows it, and they will

stop growing it unless the cotton people themselves are a
little bstter financed, because they will begin to go
Africa and


This region produced 7,000,000 bales last

year in this area alone,


and is capable of producing about


C* P* J*, looney


l o ,000,000 bales.
Another thint about the cotton growi in thie territory
is this, that 56 per cent of oil the cotton sold in the
vrenphie market ie exported and goes to Europe, snd & large
percentage goes to Hew England, ^all Hiver and so on, and
the balance, the other 10 per cent over intg/ C aroling. So
it ie safe to say that 50 per cent of the cotton gro*n in
thie region, which we h&ve set aside here, ie ^jsport cotton,
because of the excellence of the type, and that cotton


self brings back tc ths United States even in thie terri­
tory itself about


of eistiflgs every year*

The cotton crop of the United States runs around
a billion dollars, and about $650,000,000 of that billion
is sold in Europe, and out of the United States*

As you

gentlemen know, cotton is a thin- that in times poet has

brought the ~old back to the

United States*


peculiar thinrr about the South is this also, in relation to

It hae barely got money anough, and hardly encu^i

to gx-ow ite ordin ry crops outside of cotton*

Cotton has

been green on credit ever since the war, and must be grown
with credit for s long time to come, and the money must be
borrowed; and the South needs all ths money all at once, and

p Jto29

C*P. J .Mooney


that Money has in the past always cose from Hew York and

Bo• ton *.nd a little of it from Philadelphia ?>nd Chicago.
The city of >*eaphis alone origin*tee nearly $S6,000,000
of foreign exchange on this eotton, and it originated last
year $56,000,000 of foreign gxehutge and $3S,000,000 of
domestic exchanre.

These asaounts ffJ#raly represent ths ex*

change thst is wrotten on the cotton thst is sold across ths
Iteaphis tatoles.
I want to com* to cottonseed for just s moment.
le the largest oottenseed market in ths Korld.


Last year

$20^000,000 of cottoftssed products «sre manufactured in

Thst seed comes to *tssphis from a region thst is

aoro wide than the

cotton fibre

comes from, because of the

adyant ages ths mills hsrs there, and we pay s little hi^isr
pries for the seed,

m d s great deal of it is crushed and

tumsd into oil there and is then and there manufactured
into soap stocks and so forth, ri^ht in ths city itself*
So ths

T alus

o f the cotton crop itself this year handled hy

Memphis will bs $80,000,000 and the wains of ths



handled by Kejraphie this year will be §20,000,000 o r a totA



Thst cottonsesd product is ussd, the oil and so forth,

in risking

s very superior brand of lard and in nksing butter,




end in making seep.
have plants there.


The Fairbanks people and all that sort
Cottonseed meal used to be shipped to

Denmark and Bngl&nd, hut ths demand for that in this country
is so great that it is not exported any more*
Memphis is the largest hardwood market in ths world*
The largest supply of limber in ths United States is located
within the ares of this proposed district.

The eenter of ths

hsrdwood lumber region is located about 150 miles south of

It is a largs yellow pine market, and the yellow

pine is mostly down in this
there (indicating).

rim here, you see, along

That is the yellow pints, and the hard­

are on the h ills in the high country in here and

orer in this basin o f the St* ?rancie and the Yazoo Rivers,
and that p&rt of Arkansas south of Helens.
are in lower Ifississippi
also in Louisiana,

The pine lumbers

and Louisiana and the cypress is

But a great deal of that is handled in

The headquarters of all


larger Southern

lumbering concerns are in Memphis, and they hm dle a great
deal of lumber out of Louisians end some Texas points.


value of the hardwood business is app oximately $20,000,000
a year*

That is not the manufactured stuff, but the first

sawing, ths rou^h lumber*

Unfortunately ws Southerr^rliaks


C* P. J* Mooney


ths cotton, %*nd the pir iron &nd the rou^i lumber and then

our friend* in the Iforth refine it and make the money, %nd
that ia why we want a bonk down here*
hsre to borrow it from them*

That is why we always

They hwre the money and we hare

The exchange originated from this
this wsy#

$30,000,000 runs In

$6,000,000 of it is foreign exchange and there

are fourteen millions of it domestic exchange, and about five
millions of that is exchange drawn against the £aat for
lumber sold in ths East, and ths rest of it is sold in ths
Korthwest, up above Chicago and around Minneapolis, and that
territory, and as far

in the northwest


the freight

rstes allow that to send ths lumber back from Washington and
Ths natural lumber markst here — and

this is ths

greatest hardwood lumber region in the world probably, and
the greatest pine region in the world, Z mean the tress
that are still standing —

this lumber business is in its

dsrelojntant, at the very beginning of it*
Vow ths question of financing cotton is one in which Z
here not the info motion that is absolutely accurate, but I
can give you a general ides sf it and some of thess export

C. P . JT. looney



bankers can enlighten you further.

As I said bafore, cot­

ton has always been a credit crop, wo have always had to
borrow the money to grow the crop.

We have borrowed the

money in the past from Hew York and Philadelphia.
can grow

A man

eotton for 6 oenta a pound, and he will have to

b<s row about 6 cents a pound to grow hla cotton, and the
Ifemphia banka in the past have bean supplying part of the
money to grow thia cotton and the Henphia factors, and they
have been borrowing the reat of it from the £ast.

You have

to spend money on cotton the year round, and you only get
the money back from it once.
roes to his factor,

In the spring the fsrraer

and makes arrangexaenta to

get furnished

and borrow money —
The Secretary of Agriculture:
Mr. Mooney:

Are you?

The Secretary of Arricultu a:
Hr. Vooney:

we are familiar with that.


All right, I will pass over that.

But I only

wanted to esiphaaise thia fact for Memphis, that yearly it
aanda out about $20,000,000 in currency to handle thia

crop, and borrowa from

twenty to thirty million

dollars a year to finance the crop in the fa ll.
The secretary of the Treasury:

Where does ahe get that


C. P . £* Mooney



reserves with

we get that money froa the
fr o m J a n u a r y

until March,

p eo p le



put aur



asd * little from Philadelphia sad some from Chieago*
The secretary of the Treasury:

Mostly from Hew York, Z

Ur* Hooney:

fcr. Snowden:

How about that, Ifr. 3no*den?
yes, more than half of it from Hew York* I

should think.
fcr. Mooney:
is a second*

That is the first borrowing, and then there
After the bill of lading is attached and ths

planter sends it to the factor, me have a system by ahich
every bale of cotton sent to Hemphis has a certificate at­
tached to it ,

and it is identified, and there is a certifi­

cate for each separata bale, and you take those certificates
and put a note against them, and got your money.


has £one into that business in the laet two or three years*
The Secretary of the Treasury:

Does St. Louis do any of

V r • Mooney:


Vot St. Louie does no ^arehoues certificate

They occasionally loan money to 1‘esphia,

their rates of interest are Tory high.


St. Louis is a


C P * J . Mooney

central reserve city.

j& W

Our money comes first from Hew Yorit*

next from Boston, some of our bankers have

old time friendly

"before-the- war relations with Philadelphia and it comes


Then in the fall of the year ^hen these

warehouse certificates come, they are all certified end
guaranteed, and it is like & whisky certificate; you can
take that and get money anywhere.


it took them

five years to make theaa understand it*
The secretary of ths Treasury:

You mean it took five years

to make a hanker understand **y thing?
¥r. ¥oeney:
even yet.

Y«®, «*nd some of thea have not understood
This system of certificates in Kei^hls went into

effect about five

years ago.

Before that the certificating

of co item was done on the word of mouth, and

the marvelous

thin? about not ton is that it is a word of mouth business, a
great deal of it.
The Secretary of Agriculture:

Th&t is ths warehouse

Mr. Booncy:

Yes, I am talking about cotton after it is in

a warehouse, after it is in a guaranteed or insured ware­
Ths Secretary of A^rleulturs:

What is ths object of that?


C .P.J.Mooney

¥r. Uooney:


we h a d

y y in the warehouse



befo re




to finance this cotton

merely on the


of the

and n a t u r a l l y the mere s t a t e m e n t o f a H e s p h i s

bank or noney broker to a llew York broker
thousand bales

w ord


cotton, whan he had

secretary of the Treasury:


that he had ten

The w arehouse





have now is evidence of it?
Hr. Mooney:


Wo now have a

warehouse receipt that

is guaranteed, end it is like a whisky receipt of a bonded
warehouse, almost,

except it is not a {government transac­

These are taken and a piece of pag>er put up against

them and it floats around.
The Secretary of ths Treasury:

The bales are all marked

and identified?
Wtm Hooney:


you os®

to ^eaphis and for every

bale of the 200,000 bales there you will find a certificate
on them.

From the time cotton gets to the market somebody

has set to carry that, maybe sixty or ninety days.



It is


think that cotton is held for speculation.

Cotton gists the market beginning, as you understand,

as you are s farmer — it begins to glut the Memphis market
about ths first cf *sy*»ber and it gluts the Texas market

p jb36




and it conce in —

The Secretary of Agriculture:

W« know about Lhat.

But I

wanted to brin^ out that point, whether ^eu held it for a
better price or for purely econoaic?*l handling

and dis­

Mr. Vooney:
and sometimes

We hold it until we can get a deaand for it,
almost regardless of price.

r»*t year we had

to let it pro very faett because these bankers will lend §50
a bale

on this cotton, and they began to squeeze them in

NewYork, and you helped to save the situation, and they
called then for payment.

There is no cotton —

Ths Secretary of the Treasury:
ed at that tiae for the
Hr. Ifooney:

??as there any reason assign­

calling of theee loans by Hew York?

Yes, it began like thie.

The philosophers of

finance began in Hew York first, the wise men, *lio wrote
theee banking lettare out, advising caution, advising con*
servatisa, and then naturally those letters came froa Hew
Y o A and Chicago

and thsse big wigs and eo forth began te

make the Memphis bankers look around and see how they were
off, and these Vesqphis bankers were all at that tiae borrow­
ers on Hew York and then it ^ot in the air, and they began to
squeeze down there and there, and we had an enoxnous stock



0 . P . J. looney


of cotton on hand. and could not aove it because the Buropean
marke t


alow because cf the Belk an war over there,

• lo t of the German brokers broke because


are great

sellers to Turkey and Arabia, and Tukkey had no money and the
(reman houses bzcke, and the foreign demand went off,
and lhat left the cotton on our heeds*

But I want tc aey,

s h e e t in g your question, I do not believe, of the


bales sf cotton handled through ffcaphis, there are 50,000
bales hel^/fcr
speculative purposes.
Wow and then
some planter will

think his cotton is worth

m o r e

than the

market offers, and he holds it until he gets a price for it
that he thinks is good.

The Secretary of Agriculture:
that some people think it is the

The reason I ask that is
function of a good credit

arrangement to facilitate production and distribution and
others think it is

a function to prevent distribution.

The secretary of the Treasury:
TJr. Hooney:


And encourage speculation.

Well —

The Secretary of Agriculture:

In other words you can get

this into the warehouse and prevent the very thing the system
is intended to proiaots.
T^e secretary o f the Treasury:

The procsss can be carried

p Jb36

G. P . Hooney


to an extreme.

# r. Wooneyj

Yes, that say be true, but the feet is, and of

course wo can only speak of things that are

and hare been,

that cotton in the ?femg>his warehouses is never held if the
farmer can sell it at a profit and ths factor css Ipay
the debts against i t .
The Secretary of Agriculture:
legitimate part

You think that this ie a

of a proper system of this condition* this

E^chinury you are describing?
H r. looney:

Yesf because it ie cheaper for the farmer,

it is cheaper for the producer\ it makes a better market
and makes the expense of handling cheaper said the intermed­
iary chargesare all cut down by it.

The system h*e been

in vogue all the time, except we improved it in m p & i s ,
because they were scattered all over the city, and we con­
solidated them into one great warehouse, and we put it on
the side of a hill and we

put the bale of cotton in at one

end and run it by gravity all over the warehouse and handle
it eheeply, and we can borrow money on the certificates.
Ths secret cry of ths Treasury:
sponsible house back of the
Hr. Mooney*


And you have your re-


Heretofore you could get money —


C. P . J * &on«y

2few York banker loaned it because he knew Hr,



or hie fether* end the ifhoXe business wee done on


But t!he country is getting so bijst thet you cannot keep ac­
quainted with one another and

do business in that way.

But I hare wandered away from the subject*
There is another matter I want to cell your attention to*
We. Houston* from

one of your a m very excellent documents*

and it will take but a second*
after you left Washington*
crop correspondents*

probably this *#as issued

Here is a weekly news letter to

from the United States Tnspertment of

Agriculturs* issued by the authority of the Secretary of
Agriculture, ^ashin-tonr p . C. January 2b th*

There is a

very interesting article in here on the fact that only 27
per cent of the tillable

land in the United

I do not know thst you saw this.

States are under
There are the

ratios o f land in the United States under cultivation by


Pi rot, there is the total acreage* next ths

possible —
The secretary of Agriculture:

I have been making speeches

on this thing a ?rood while* so you will preach my sermon* if
you do not look out.
Mr. Sooney:


ill reach the conelusioa in a minute.



C .P . J.Fooney

There is possible plowing production ?*nd there ie possible
^reiin^ production, snd than there is the waste.

I find by looking st this map that Ohio and lows are the

tho rashly cultivated states of ths United States.


every acre of land in crop in Ohio, or which is tilled, there
is available l .a of an acre.

For every acre in Iowa under

crop there is still ev&il&ble 1 .6 of an acre.

Sow this

territory here, I f you run s line from here down to there
(indicating) and then cross otc r to yew orleans, you will

an alluvial territory, which i s the richest territory

in ths world, because the land

from ell up in here has

besn coming down there for a million yeers,
as the current

dropped there

stopped, and for every acre a under cultiva­

tion in Arkansas there are 4.7
T o t every acre in ^rissisippi,

possible for plow cultivation*
there are four acres unculti­

vated that could be cultivated; and in
acres, and in Louisiana four acres.

Tennessee 3-l/2

That gees to show that

while the ratio of cultivated to uncultivated lend

in the

United States is 28 psr cent, that the ratio of cultivated
to uncultivated land in this territory is about 1*3.
function of a bank — as I understand the philosophy,

I f the
and I

an not going to dwell on phlleeophy but a second — but ths

C. P. J . Hooney



thought of the gentleman who framed this 'bunding law was
first decent realisation *>nd second the caring for the
individual or for the debtor or for the debtor region that

in debt for money but hsd


sn asset in something that it

Sow, I believe the thought of thie banking schtase

was to take care of those regions that were debtor regions*
The fact that a region la a debtor region is
the fact of ita being a wealthy region.

m ©vidncs of

We in the South

are in debt because «c have credit, and we have got credit
be causae/ have the greatest productivity —
The Secretary of Agriculture:

You will get into

tangled economics if you pursue that line.

some pretty

I think you

had better drop that.
Ifr. Uocney:

But i want to say this, the South ought to

have a regional bank for that particular




ought to have something because m h«re

been borrowing in the past end we hare got to continue to
bo rrow*
The ffccretary of Agriculture:
jects of this bill to make

You know it is one of the ob­

» self-sufficient region.


your argument is that this will not be self—sufficient.

Hr. looney:

The entire South is not self-sufficient, i f


C. P . J. Mooney


you look at It In that way, becauae it takes about #700,000,0
to finance thia cotton crop, m d it ia not down hero.
Thu Secretary of Agriculture:

Sow, do you think it ia de­

al ra'bl a to auggeat the creation of a diatrict

which would

be dependent normally?
The secretary of the *?reaaury:

Assuming that you could

create a diatrict or i f it were possible to create a dia­
trict that had a borrowing as well aa a lending

end con­

nected with it*
Mr. Mooney:

I say aa a general propoaition the South ia a

borrower, but I believe I can show that thia

district will

be about aa nearly independent ae any district could be, if
you Intend to heve *ny pegionsl Bank in the South.

But the

fact ia —
The Secretary of Agriculture :

It ia not ao much where

the bank la to be located &e the character of the diatrict.
Mr. Mooney:

Yea, I underatend.

The secretary of the Treeeury:

Th* diatrict itself ia of

supreme inportance.
Mr. Mooney:

I shall aay one er tec worda about Memphie

and come to the diatrict generally.

Fesiphia ia ihe largest

wholeaale grocery town in the South.

It has the buaineea


C. P . J . 1/ooney

of $24,000,000 * year.


Vzrzphi* is the largest or one of the

largest hoy and groin markets, and it hao $16,000,000 o
How, coming back to thot matter of tho debtor and
creditor, I do not wont to %rgue with you gentlemen in the

least, but I wont ot least to settl* my mind on this point,
Yhat do tho credit sections

need with o Regional Bank at

Sdw this reglo& i a f*e nearly self-sustaining as any

region in the South ca® be, and this region would be helped
very lit t le by having a

reserve city even in St. X*ouis.

In the East you ore thoroughly familiar with

the iron and

Along here is the iron and coal, running

Bast Tennessee and Alabama.
the year round*


?rore is the lumber which runs

Here is the cotton «hieh must be helped

tremendously in the fall of the year for about 90 days.
Here is

a great cattle, wheat and trucking region in


Trere is a great cattle and ^hest region right

in Alabsma along the Tennessee Hiver.

Here ie a rice terri-

troy —
The secretary of Agriculture:

I hr*ve been studying it for £t> years definitely.

*rr. Mooney:

w* are fsmiliar with all

Then you will agree with ate that the district


c , P , Jm V ooney


is self-sustaining.
Ths secretary of the Treasury:

<*e are quite familiar with

the nature! resources of this district,
Hr, Mooney: Yes.
Well, the natural resources we kacsr
are about as near

balanced as any o Chur in she South,

How, there is

this, %hd I aa throuj£i,


one more point about it, s*nd that is
have no desire to criticise

any competitor or anything lifce that, and we are not congest­
ing; for it, but there is no cotton htndled in Xouisville
and there are no business relations between Femphis and

There is very little business relation between

^.emphis and Atlanta and very little between Memphis and
Hew Orleans, except

as a funnel, as a port.

The Secretary of Agriculture:

Since you are presenting

this map, 1st me ask you one or two questions,

pf course,

so far as possible, having regard to that provision nf the
law that says we

ssist hawe due regard for

convenience and

the course of trade, we must also have due regard for the
convictions of the people of the various parts of the
territory as to What those/seats arc and what they deslre. I
say, having due regard for that, sc far as our information
■ofes up to date, from the testimony, Olclshoma unanimously de­
Federal Reserve Bank of St. Louis

to fro to some other place than yesphis.

p jb 4 4

C. P . J*. Mooney

YTm Mooney:



The secret airy of Agriculture:
Mr. Mooney:


And Arkansas the su^e.

I do not think — is Arkansas un&niaous?

The secretary of Agriculture:

I aay so far as

we have

testimony tc date.
Ifr. Mooney:

All right.

The secretary of Agriculture:
Mr. Mooney:

And Texas the s«sa.


The secretary of Apiculture:
end Kentucky the saae.

Mid Louisians the s«a&

^»e hsva had no indication except

from vemphis thet *ny of thie territo sj desires Ves$>kie ae
the center.
Mow, that/only applies to the first choice,
but to the second choice end the third choice with one ex­

Wow, «h*t evidence l»re you t'at Oklahoma, «ay

considerable part

of Arkansas, mexae, Louisiana or the

southern part cf Kentucky, or Alabama desire F«mphie as a
center of the district?
Mr. Mooney:

Veil, this — of course, you have the

unanimous du sires of all these regions against Memphis,
%nd we mirrht answer that h* saying that Ites^his has ths
same objection to each of theae other
The Secretary of Agriculture:

competing points —

These are not cities, but


C* P . J. Wooney


these are states.
fr* Wssneyt

In any region that you makti up there will he

some parts of that region that may, in the nature of things,
hare closer relations with citiss outside the region than
they do in it*

How as to Oklaho&rc, the Rock Island railway

and othsr lines —
The secretary of Agriculture:

just confine yourself to sy

What eridense have you that the people of these

communities desire to he attested to v@mphis?

Mr* Mooney:

I hare no evidence fro® the people, but I have

the evidence o f the physical fact

that the cotton business

is coming here
Ths Secretary of Agriculture:


phy. c *

* „ c p t %s

fv do not care for the

* . novenant of

It l -

are concerned*
?;r* ITooney:

Th&t is all as to Oklahoma*

The Secretary cf Agriculture:

You have no evidence that

the people of Oklahoma desire to he connected with Keraphisf
Hr. Sfooney:


The Secretary of Agriculture:
Mr. Mooney:


Have you any that Texas








fhe secretory of Agricultures


w r e you any that Louisiana

Mr* Mooney:


The secretary of Agriculture:

or any that Kentucky

Mr. Mooney:


The Secretary of Agriculture:

tieve yow any that tho

larger part of Ark oneaa does?
Mr. Mooney:


Mr. Snowden:

You will recall at the



o u jis



as represented by their delegates there said in

answer to

the question if they could not have St. Louis,

I believe they said Meaphis.
The Secretary of Agriculture:
fhe Secretary of the Treasury:

I do not recall that.
A few of thess preferred

Yfeuqphis, that is true.
The secretary of Agricultures

**ave you any that

Alabama does?
W . Mooney:


The secretary of Agriculture:

Have you any that Tennessee

??r. Mooney:

Yss, they will be produced here.


Cm P . J . Mooney

The secret sr.? of Agriculture;
ITr. Mooney:


Vhat part?

?/est Tennessee.

The Secretory of Agriculture:

How that ie the only section

thefc prefers Memphis?
Mr. Kooney:


And if I may follow that up for a

minute, it ia rery esay to see »hy neither Wew Orleans mr
St. Louie would give ifemphis second choice, because in this
equation they feel that ~eisphie must be eliminated from the
The secretary of Agriculture:
^-'W Ode cess st al],

we ere not ape&king about

ut the people of these states.

The secretary of the Treasury:

ted the evidence they have

given ua aa to the normal course of bualnsas in theae diffexw
ent states.

How the Act makea it mandatory upon this Oosa-

mittee, in laying out these district** to have due regard to
the convenience %nd customary course of business*

that ia

the exact len.fruege of the act.
Mr. Uooney:

Veil, this wap is based upon the normal courae

of buainesa throughout the whcle diatrict.
The Secretary of Agriculture:

In theae other eases where

cities are applying, we have had whole states asking to be
attached to a certain place.


C. P . J . lfooney

!*r. looney:



Ths Secretary of Agriculture:

Wow her# you apparently

have no request from any of thie region except West Tennessee.
TTr0 Mooney:

That is very true, end probi&ly thie city of

Memphis is s very peculiar city in a business snd in e perv
eonel wsy.

Ifaaphia is not in the center of any one state —

The Secretary of Agriculture:
other point.

r,et me follow that with one

These states not only express their desire bat

their convictions thst their trsde movements are in another

How we have to observe that a 3 a representation

made by those Who come from ths different cities.
Mr. Mooney:

We can show that there is more trade moving

from the city of >romphis thorough this territory than there
is from any other city throu^out this territory.


first proof of that will be the fact —
The Secretary c f the Treasury:

Wave you someone isho can

testify to thst?
Ifr. Mooney:


The first proof of that is that the

greatest railway tonnage in the South goes in and out of
V n p h is .


were handled last yead.0,000,000 tons ef

freight ~
The secretary of the Treasury:

That is pausing through*



C. ? . J. looney

Mr. Mooney:


Aad the greates frei^it tonnage originates

ia Ifemphis of any ot&er city la th# south.
The Secretory of Agriculture:
^ r . ?*ooney:



about the value of it?

the value of it ie probably —

it io cotton &nd lumber and those values


run pretty high.

It w i n run hi^ier in nillions than iroa s*nd steel and coal*
It li » fact that there ie more freight traffic

into the

city end out of the city than there is in any other city ia
the South,

originating hare, that it ie a market for,


do not mean a funnel through ]$^s$)his«
The secretary of the Treooury:

Have you anything additions

al to submit?
Mr, Mooney;

I only h a w this to say.

stated every thing I had
peat these

thought of.

I believe I have

So, I only want to re­

50 words, that Memphi s is th© largest cotton

market in the world except Live ip ool j it ia the largest
hardwood lumber market in the United States; it is the
largest cottonseed products market in the world —
The Secretary of Agriculture:

We have that in your brief,

and it is not necessary to repeat it.


y *»*

nage of any city

and more

and t'emphis has the largest freight ton­

in the South that comes in and goes out,

nearly dominates this territory in s business way



P .J.M o o n e y
V . H . Fyle

than doss any other one c it y in


the territo ry dominate i t

o r than does any o th er c ity o u t of the terr ito ry dominate it *
The secreta ry o f A g r ic u ltu r e :
Mr* Snowden:
speeches *

^ho ie your next witness?

i t was not our id e a to hare a s e rie s o f

Ve had an id e s i f

Kr* Mooney could interest


gentlemen you could ask fo r whatever further inform ation you
d e s ir e d ,

*n d we would try to supply i t .

Ths Secretary o f the Treasury:

x * there is some banker

from Memphis here we might hear from him*
Mr* Mooney:

Mr. Snowden is here, and Mr* K y l e .

M r. Snosden:

M r. Kyle

w il l answer any questions*

STAm s m ? OF W ILLI Ay H. K Y Lj,.

Ths secretary o f the Treasury:

You may state your naae,

re si ence and occupation*
Vr* Kyle:

William H . Kyle, hariker, Ifemphis, Tennessee*

The secretary o f ths T reasury ;
Mr* Kyle:

Vh %t hank?

Ths W ational c i t y , C a s h ie r .

That Memphis m d the territo ry it represents r e a lly
neede and ie e n t itle d

to a Regional Reserve Bank, I

no one can seriously question.
main reason.

Cotton, o f course,

is the

V . W. Kyle

The Secretary of th© Treasury:



How those observa­

tions we will h eft t© deal with ourselves*
th© facte now,
£r. Kyi©:

^?ill you give u»

sfai ch Is whet we went?

That 1© what I am trying to do.

this season we had stored




in our warehouse© in Memphis up­

wards of 265,000 bales of cotton.

The idea that the

lemphis banks are takinr care of the lo&ns necessary to
financing this enormous sum is idle talk.

As a matter of

fact laons ar© made upon it by batiks &n& individuals all over
this country *nd even in Europe.
Most of th© lenders are located in rfew York, Chicago,
Boston, St. Louis.

The fact that non-residents make these

loans increases th© expense incident thereto, *nd the farmer
pays ths M i l .

Higher rates are charged than would prevail

i f th© collators! were in aipht of the lenders.


examination of thess loans adds to the expanse.

The extra

care necessary on the part of th© lender in making "out of
town" loses adds to the expense.
In that connection X wish to say that the cotton is
stored in ?fesg>hie and the receipts ars held by a trustee in
lUpphis mi which the loans in ths North and East are bated.
The lender never sees the cotton itself, and he seldom sees
the certificate.
Federal Reserve Bank of St. Louis

That necessitates acme expense on account

W. H . K y le

the certificate.


That necessitates some expense on account

of the fact that the trustee h

to be paid and so forth.

That is, the extra care on the part of the lender in making
an out of town loan adds to the expense.
The fact that itasphis factors are such heavy borrowers,
renders it difficult for £h«s to get all the aoney they seed,
and they hare to p ^ higher rates accordingly Which is another
addition to the expense.
the fanaer.

All these costly extras fall on

p jb53

▼. H. KyXe

The Secretary of the Treasury:


Why doss that follow, that

if » bank were located ia this district at another place than
Memphis, that til these expenses would continue?
Ttr. Kyle:

Well, they would not see the cotton.

The Secretary of the Treasury:
The Secretary ©f Agriculture:

That is not necessary.
The bank does not lend on

the cotton direct.
The Secretary cf the Treasury:
lend on that cotton.

The Regional Bank does not

It lends on the paper endorsed by the

member hank.
Kr. Fyle:

They would have to extend credit hased on that.

That was the idea I was trying to convey.

I tried to make

this as brief as I could and —
The Secretary of the Treasuiy:

I sm trying to get at your

It is a wholly wrong conception of the functions of

ths Reserve Bank.

The member bank rs~discounts thia paper

and the Reserve Bank

would rely upon that endorsement and

upon ths fact that the member bank hae investigated the fact
and knew thst the cotton was there.
Mr. Fyis:

Still, at the same time it i s bad wisdom on ths

part of any bank to 1© m too much money in one locality.

Ths S e sre ta ry of the T re a su ry :

W«ll, that is aside from

¥ . H . K yla

S :J |

the point.
Hr. Fyle:


The 3*cretary of Agriculture:

Just one other question*

There seems to be- & thought running -hvou .$i ^our mind that
this community *dll become self-sufficient
is established at Vemphis.


if a Regional Bank

It does not bring any ®ox*e

capital here.
Mr* Vy%9:

It dees not brin# wry mvre eepit& bore,


we hare nearer a rotary liquidation than any other part of

the South*
The Secretaiy of ths Treasury:

You moan this district on

the «<*hole?
Mr. Kyle:


The Secretary of the Treasury:

of course, you understand j

thst the capital of this Reserve Bank is not new capital
dra'OTi froa the outside, but it is a contribution on the part
of ths baiks in the district, and in addition te that this
new bank holds a part of these reserves*

Sow it is an ad­

ditional facility but it does not increaee the available
capital of the banks of the district.
Mr. Fyle:

I beg your pardon, it —

The Secretary of Agiiculture: tion.
Federal Reserve Bank of St. Louis

It keeps some reserve.

That is, with one qualifies^

p jw »

V . H. K yl«.

The Secretary of the Treasury:


Z say yeu have ^Jje


deposits with that bank, but so far as the capital condition
ie concerned, i t does not add te that, but it sisplj


fers it te the Reserve BaxSc.
Kr* Kyis:

It gat-* s little further than that.

Per in­

stance, s factor in !'€®iphis that borrows laigeiy in the last
sad He rth, keeps large balances there in the su&ser and «e
nerer ^et the use of that in Memphis because

he has to keep

the margin rood up there to get credit next year*
The secretary of the Treasury:

That applies to a Reserve

^enk wherever it may be located, so far as the

bank is con­

I mean it would not be necessary to have it in

uremphie tc get that result, and the establishment ef a Be! serve Bank in this district is not going to interfere with
the normal relations between banks and their customers*
can continue just the same as heretofore*


It is going to es­

tablish a nsw relation between the member banks e f the dis­
trict and the Reserve Bank, but the factor may continue tc
keep balances in New York if he wante to and the member banks
msy continue, in so far as their om Interests may make it
Fr, Kyis:

I flours the factor would kesp it at home, be­


W. H. Fyle


cause with * Regional Bank we could take care of them.
The Secretary of the Treasury:

ret u© hope that they will,

hut at the same time It is not fair to assume that


mars establishment of a Reserve Bank is going to lead to
that particular result.

The Reserve Bank cannot control

ths voluntary action of the factoisor member bank© of the
district in their ordinary relations.
Ifr. Kyis:

What is probable under the circumstances is sfoat

I was speaking on.

Wow as regards to the


of trade,

you have noticed the amount of clearings we have every year.
Atlanta is ahead of us very considerably.
conservative in handling clearing©.

Memphis is very

They singly handle the

clearings, and one bank draws on another, they do not Include
in that cheeks drawn on themselves and clearings drawn from
other banks.
The Secretary of ths Treasury:

We do not attach such i»*

portance, because we know they are very largely artificial,
&ny way.

It depends on so many different conditions that m

do not attach much importance to them.
The Secretary of Agriculture:

What interest do Memphis

banka pay?
Wr. Kyles

It depends on the season.

This year we paid

H* rylQ


hir^hsr interest than ever before.
The Secretary of Agriculture:
Hr. Kyle:

on deposits, on reserves?

^Te are not a reserve city, but on deposits we

paid 2 par cent.

The idea that cotton ie held in jTe^phis

for speculative purposes ia erroneous./

Ve have now a ware-

houae on Tillich the insurance r^te ia leas than half, and it
is not fair to tastese that the cotton being held in Bei^his
is for speculative purposes.
Ths Secretary o f ths Treasury:

Yes, we have h ad all that.

What we would like to know is about the actual banking busi­
ness in Uesqphis.

Those facts already appear.

Vhere do you

kesp your ressrves now?
Mr. Kyle:

In Wew York* St. Louis, !?ew orlsces and seas in

Philadelphia and Boston.
The Secretary of ths Treasury:
Ifr. Fyls:

Any in Chicago?

Ysa, some in Chicago*

The Secretary of the Treasury:

How is it divided between

these different cities?
¥r. Kyis:

I should say the larger part is kept in Sew

York and the next in Chicago.
The Secretary of the Treasury:
Hew York, should you say?

About what percentage in

p J»B

W. H. Kyle

Mr. X^rle:


Probably 50 per cent o f the toted, out of tosn

carried with reserve fronts by Meraphie Baz&s is

carried In Eew York*
Ths Saeratazy of the Treasury:
Mr* Kyle:

And In Boston how such?

I would not eay that Boston carried over 15 per

The Secretary of the Treasury:
r* Tyle:

Mid Chicago?

And Chlcego probably 25 per cent.

The Secretary cf the Treasury:

that would leave 10 per

cent for St* Louis and other places?
Ifr* Kyle;

Yes, sir, and Wew Orleans*

The Secretary of the Treasury:

About how much in St*

Mr* Kyle:

I expect it is evenly divided*

The Secretary of ths Treasury:

About five per cent in

e?»ch, In St* Louis and Hew Orleans?
Ifr* ry le:


The Secretary of the Treasury;

Why do you keep


large reserves In Hew York?
Mr* Kyle:

We are usually able to get monay there at less

rates than ws can elsewhere*
The Seeretary of ths Treasury;


Ale© for exchmge reasons?

'Sfell, yes, most of the cotton foreign exchange



W. H . Kyle

that id financed in 1/giaphiB ia sold

throu^i brokers in Kew

Xork and results in a check on Few York by ths loce»l buyer,
?«nd that naturally turns our axch mge in that direction.
Ths Secretary of ths Treasury:

Havs you any <tata hers

showing ths banks in this territory th&t keeps balances in
ths Nttaphis banks?
Hr. Kyis:

I hers not that, but I can prepare it.

Ths Secretary of ths Treasury:

C&n you supply such a

Mr. Kyis:


Ths Secretary of ths Treasury:

Showing by states the nun**

bsr of accounts kept by othsr ban1 a in ,fesphiS?
Wr. Kyis:


Ths Sesrstary of ths Trsasury:

Mhat rate of interest do

you pay on balancss?
__________ _

Mr. Kyis:

Tw© psr cent.

Ths Sseretary of ths Trsasury:


^hat about check collections,

are they free?
Mr. Kyis:

It depends on the balances of the banks sending

them in.
The Secretary of ths Trsasury:

In Practical operation,

hoecrer, the effect is to par cheeks, is it no

p j^o

w . R . Jryi«.



w« p»r checks vrhert the balance is sufficient

to do ao.
Tho Secretary of the Treeeury:
Mr. Kyle:

I mean in effect you

par all checks, I presume.

The Secretary of the Treasury:

How nany national 'banks

are there in Men^his?
Mr. Kyle:


The Secretary of the Treasury:
Mr. Kyle:

How many state bsek

I think we hare 21.

The secretary of the Treasury:
about state banks becoming

at is the l&w of Tennessee

members of the Federal Beserve

Hr. Kyle:

I do not know.

Mr. Collins:

Our Attorney General has decided that m

He has isade a ruling that m can.

The Secretary of the Treasury:
your second choice for a

By the way,

what would be

reserve city, if Memphis should not

bs chosen?
Mr. Kyis:

Personally, I cannot speak for the entire dis­

trict —
The Secretary of the Treasury :

Yes, I mean your personal

W* H* Kyle



Mr. Kyle:


The Seeretary of the Treaeury:
nr. T^rle:

And the next?

The next would he Eew Orleans*

The Seeretary of the Tre&eury:

You do net consider St.

Louie a« dueirable?
Mr* Kyle:

*e ll, St* Louie ie & good piece* "but I figure

thie wggr, that

have got to sake these regional

or the aye tern ie not goin£ to he a success.

banks pay*

I think if #e

divide the bueineee up between St. Louie and Chicago it ^ill
no t be a hir enough hank to make: any money*
The Secretary of the Treaeury:

Your idee being, then,

if tfew Orleans were choeen, St. Louie and Chicago mi sfit be in
the same district?
Mr. 'y l e :


The Secretary of the Treaeury:

And that they would not he

in eeparete districts?
Mr. KyLe:


my idee ie that they would not he in separate

The Secretary cf the Treaeury:

In laying out thi® region

here, whet le your assumption ae tc the number c f districts
thet the country would he divided into?

p jb 5 2

Mr. Kyle:

W. H. Kyi#


Vy preference ie eight.

The Secretary of the Treeeury:

Is thie district laid out

on the assumption o f ei^it districts?
Mr. Kyle:

It is not laid out with reference to the others

at all.
The Secretary of the Treasury:
telligent! y lay out

Do you not think to in­

districts of thie country they suet here

relation to each o ther?
Ifr. Kyis:

I quite agree with you.

X wanted them to

Bake a map of Che entire Unitsd States, but the ether members
of ths coomittes did not agree with me.
The Secretary of the Treasury:

Ie this Just laid out with

the idea of laying out a district to &ivs you sufficient
cspi tel for the Reserve Bank?
Hr. Kyle:

Ho, it is covering our trsde district.

The Secretary of the Treasury:

Speaking of trade, as we

said to ¥r. Hooney, the law requires that the district shall
be laid out hsring due regard to the convebience and custom­
ary course s f business in the districts.

Row would you say

that the customary oourss of business froa all these points
is to Memphis?
Ifr. Kyis:

Mot the cue ternary points, but it is largely so


W. H. Kyle


Mid it is bound to be naturally so on account of the rail­
The secretary of the Treasury:
Ifr. Kyle:

Take the Texas cities.

Texas ie rather out by itself.

I can realise

the difficulty the coitsaittee are hsrin# is placing Texas,
or that western country.
The Secretary of the Treasury:
Hr. Tyle:

And Oklahoma?

That does a great deal of business sd th Uengihia.

The Secretary of Agriculture:

But doesit do as much as

with some other city?
^r. Kyle:
Ifr. Hooney:

I expect not.
it does mo re with ransas City

The Secretary of ths Treasury:
however, from you this morning.

and pert ffcrth.

Take the evidence we hwre,
The evidence

wehsve had

in both these places is that the customary course is not with

The territory of Texas embraced in this map has a

combined capitalisation of national bulks alone of orsr

$76 ,000,000.
Hr. Mooney:

I ./ill answer that question, if I may.

The secretary of the Treaeury:
Mr. Mooney:


This map was drawn *dth the idea that there

'*ould be a sub or b ranch bank in Mew Orleans and that Hew


V . 11. Kyle

O flusM would taka cars of Houaton, oalvaston aad that lower
Texas country through the branch.

That ie the idee in drew*

ing the mep in that way.
The Secretary cf the Treasury:

Yes, but that ie not the

pcint I had in Blind*
Wr. Mooney: Because,

unexplained, it looke absurd.

The secretary of the Treaeury:

But the territory in Texas

which ie incorporated here, has a national banking
tion alone of orer #76,000,000.


Kow the testimony c f thai

district that we get there was that the customary courses e f
business in this territory did not relate to lresg*his.
The Secretary cf Agriculture:

It has a capital 26 per

cent greater than the entire stats of Tennessee, of the
national banks alons.
The Secretory

of the Treasury:

3c eould no t this Com­

mittee be doin£ violence tc the customary courses of business,
as testified to by the people *hc ourht to know, that is ths
Texas people, i f we related than to 1*«sphis.
Mr. Mooney:

It ml^it, but when you establish aitfit

Regional Banks in ths United States, when your map is made,
you are %oinr to do Just as oeach violence

in every region

as you will do when you conelder it this way*

p 41*65

W. H. K y le

The Secretary of Agriculture:

That X a an aesus^tion.


have not tried to do it*
The Secret ary of the Treasury:, But the law imposes upon
us the duty of doinr? the minimus amount of violence*
Tlr* Mooney:

Ve have dra*n a map here which reduces it to

almost an irreducible minimum.
Ths Secretary of Agriculture:

We found only one other place

which has depended solely on its own views as to the location
of a bank*
Mr. Mooney:


The Secretary of Agriculture;

This ia the only case where

ws find no support*
?rr. Udoney:
raef I will

There is s reason for that*

ive it to you*

I f you will pardon

The clement of personality and so

forth, in businsss enters into it*

reaphis ia not a center

of any state j it ia not Tennessee and it is not a Mississippi
city or an Arkansas city*

It has mo re trade in Ark&nsas

and Ifississippi than it has in Tennessee, *nd Hemphi* itself,
not being in the oenter of the state and not being the
business center of any one state, but rather the business
center of s territory,

has always suffered becsuse of the

personal views and moves of some o f the

other cities*


p jb

in atm c e

our fr ie n d s

a n y th in g s u c h ,
in to




K yle



McDo w ell

&t H &a h v ille


l a s






a g r e e upon

e le m e n t a h l c h e n t e r *


T h e S e c r e t a r y of

I t . Snowdtm:

the T r e a s u r y :

llr . M c D o w e l l

That is

« U 1 be the

STAT$?!EM T 0 ? J .

The S e c r e ta ry o f the T rea su ry :



K yle.

w itn ess.

F . M cDOW HLt.

You s a y s t a t e your


no ne,


Ifr. M cDow ell:

and occupation?

H . M cDowell,


The S e creta ry o f the T r e a s u r y :
M r. M cDow ell:
X talk

ts ths


What i * jo u r occupation?

I M i a f &xmer, and when X a s not
fa rm e r *1 in s t it u t e s and fe r n ere*

The Sesretaxy o f the T rea su ry :


u n io n s .

You knov our problem h e r e ,

and i f you can g iv e u s any l i g h t ,


w ill b e glad to have

M r . McDowell:

Well, X h a v e ,

from a f .^ m e r * e s ta n d p o in t ,

some suggestions and i f they are n o t out o f l i n e with what
you allow —
the T re a s u ry :

Wfc would h e £lad to have


Mr. M sD o w ell:

I d e s ir e

to g iv e ex p ressio n from a f a m e r 1#

... Ill, i m f r . . . . . . .

The S e c r e ta ry ef

J . H. tfcDowell


standpoint why on® of tho Regional Banks should be located in
One of tho specid features of the currency bill ae X
understand it is to old the farmers in building up the
agricultural industry of the nation.
If I n

corroet in my conclusions, cotton being the

crop of an ixsaense territory

in which rcmphie is

the cozsaercial center 4here raorecot ton is b ought and sold
then in any othor city in

he United States, it is but

reaeonatite to assume that it will require acre money to make,
gather and market the crop g io m in this territory than is
needed to handle any other agricultural product grown in
ths South.
Unfortunately in the cotton growing sections of our


the rule and

anong labor i s the exception instead of

farmers hare to furnish food and clothing to

tenants to sake and gather the crops requiring 1 arge sums of
money for

at least ten months in the year.

How, the idea

has been presented, X kno a, that we only need money once
a year ia cur cotton region, but nine farmers out of ten
in this tsrritoiy

that raise cotton are forced to make ar­

rangements with backs and cora&ission merchants to supply

J. H. McDowell


their tenants, to moke ond pother th&t crop.
I f tho trade relotione now existing with ??eaphis
bonkers ond coani sion merchants «td tho formers

ore broken

ond formers ore forced into o new territory or city

whore their property values ond commercial s tending is unknowi it would work an injury to the formers instead of an
The Secretary of Agriculture;

This will not int rfere

with that at all.
The secretary e f tho Treasury:

Thot i s one thing wo

want te make clear, it does not interfere, not matter whether
tho bsnk is in St. Louis or Sear Orleane or M«ia.)his.
Ur. McBowsll:


the point I want to make you hare not

I see your point.

My idea is thij, i f the

existing relotions between bankers and f armere are broken
up, and ths farmers are forced to so into a new territory,
or city*

where their property values ond coisaerci A stand­

ing is unknown, it would woxk an injury tc the famers
ins teed of an aid.
Ths secretary of Agriculture:

This does not affect

Hr. KcDowell:

It does not affect that at all?




J. H. Ifcltowell


The secretaiy of Agriculture:
farmer is interested in is



Th§ only thing the

getting as strong a district

ss he can.
The Secretary of the Treasury:

Whidh ?/ill h& ve the lending

power to t * « csre of these needs as they develop.
Mr. YcDsasll:

As X understand, the lew contemplates pre­

serving the independence of the different sections of oar
country ss a reason for the establistsaent of not lass
than einht Reserve Banks.

South should haw no

To preserve the

e juilibrium

lsss than two Regional Banks,

and ons of these in Hemphis.
Sew, X heard you ask the <|u@stien
for ^saphis.

about the sentiment

Being connected with these farmers'

organisations, X sent out about tao hundred letters and in
all the replies X received from m ens the farmers — you
understand farmers are not

heard at your gatherings like

the men of the city; their condition ia such that they

g e t

there and they are not aggregated as the cities

are, and for that reson ysu do not hear from then, and with
that in view X sent out tse or three hundred letters aaad
in all thoss Is tiers X only sot one reply that was against
Weaiphis, astong the farmers.

Jm K# HcBoaell

The Secretary o f the Treasury:

Bo you want to file those

replies together with the inquiry you submitted?
Ifr* McDowell:

Some ef than are elready filed with the

Secretary of the d u b .
Vr. !’nowden:

They will he filed*

The Secretary of the Treasuiy:

Ve would like to hare filed

wi th that the circular sent out to these fam e re*
Mr* McDowell:
thoee replies*

I sent a similar letter tc all9 and X


It was largely in the institutes among the

farmers organisations and officials and members that X knew
in Tennessee and Ariesesas*
in faror of Hemphis*

X heard of Arkansas as set being

The secretary his a letter filad from

the State Ffcrmers* Union which is very strong in the state,

it says they are for Memphis*

Ths Secret try of the Treasury:

X would like to correfc one

You say the fam e re hare not heen heard from

and are mot represented.

How, we hare a farmer on thie

C e n t ttee tc represent them*
Hr* Ifc'Dowsll:

Yes, X understand, ?md we rejoice tc know

tat he hae not heard from the farmers as he has from

lawyere m d bankere end m b e f othor vocations*
yon have

Ws re all sc

a farmer there and are glad o f i t , and in my

opinion, m


J . H. McDowell


you h w e

bo n e c e ssary to




cally destroying



th is


the dem ands o f

currency » * e s u r e ,

trade relations



Bsgional Baifes

commerce in
w ith o u t

too r a d i ­


There are millions of acres of rich agricultural land
in the MeBphie tertitory undeveloped that would be put into
cultivation if c o i t a l was available at a reasonable rste
o f in teres t9 and the point made by vr* Mooney ./as that p in­
duction would not keep pace with consumption unless they
are added*

As I understand, in this bill it is


fact that

they propose to lend xaoney to farmers on five years* time*
The Secretary sf ths Treasury:

Oertain banks may lend


car tain propirtion tf their capital to faa&ers on faaa

rr. Vfc.noaell:


Ths Secretary of Agriculture:

And ths a®©uni of those

loans will depend on the strength of the district created
and its ability to lend.
VT* McDowell:

Yes, I undsrstand.

Ths Secretary of Agriculture:

Vow, i f you are ^>in

to get

a weak lending district* it is not gping tc help ths fam ers

J . ?{« lfcD ov/ell

Hr. VoBowull:

I here greet confidence ia th*

raent being behind thl •


The Secretory of Agriculture:
lending the money.
the people.


But thg government is act

This is * mobilfcstion

o f resources of

It is sot a creation of money by the g o *iB *

meat for ths uas of individuals,

I think there ere *

greet meny Misconceptions cf this low.
The Secretory of the Treooury:

Except to the extent

thot the Reserve Board may, under the conditione described
ia the b ill, advance the


Tho Secretory of Agriculturo:
bssis of existing

But thot is still upon the


The secretery of tho Treasury:

X understand i t is, in

the f o at of eligible ceemercial paper and the maintenance
of the required i*old reserve against thooe issues, but to
thst extent there *111 be s

liquifying of cosBaorcisl paper,

end under this bill tfhen the resourcesof the baak itself
ore inadequate to take core of your needs.
The secretory of Agriculture:

The only point I wont to

impress upon you in this connection is thot the formers
will be beasfltted ia proportion to the strength of the


J . H* UcDowell

¥r* McDowell;


The amount of money will depend on the

strength of th® district, I understand*
The Secretary of Agriculture;

You aay pro cued, Ifr.

Mr. McDowell:

Ae to the question of developing theee

lends, you anderetend thst.
The Secret ary of the Treeeury:


I should like to say thst

who presented thet point left out the ace t

ei&ilf leant feet, thet only 10 per cent of the f & m


cultivation are yielding full return*
Iftr* McDowell:

But you here e provision providing for fire

jteare' tise to flaxmers*
it ie not

How f asmsre in thie section, said

eo true in your terriuoxy —

The Secretary o f Agziculture:

I wee brought



the South*
The Seeretexy ef the Treeeury:

And X wee reised in the

Mr* McDowell;

It takes e greet deel of raoney to raise

cotton is the South*
The Seeretery of the Treeeury:


I have picked it

siyeelf end know ebout it*
Ifr* McDowell;

And we need this aoney ell the yeer, net


p j*

H. WcDo mil


transferring 'backward an£ forward, but all we can possibly
get legitimately will be needed in the South.
The secretary c f Agriculture;

I think i t important, ¥?r.

YcBowell, that the feimers realise that it would not be to

interest to create e debtor district, one that is

normally e borrowinr: district,

j f it can be done, you want

an independent district.
The secret sry e f the Treasury:

Ae £ar as possible you

waot a district where there ie a lendin^

power as well ac a

borrowing power.
Ifr. YcTtowcll;

Y es, x realise if we hare not got the

money we ceimo t get it .
The Secretary of Agriculture:

Tou eee this district

sisq>l^ mobilises the reserves in the district.

I f the re*

serves in any district are inadequate to meet the demand,
the diet rict would be week.
Mr. McDowell:

Is thie not the policy where they are not

strong enou<#*, for the Federal Reserve Board to supply the

The Secretory c f Agriculture:

Yes, but the law very

properly enjoins upon ue the task of organising those which
wilA be normally independent and not normally dependent.


J . H. |feBo*ell

Ifr. McDowell:


I undersgand, but I f it became neeessery —

The go«retary of the Treasury:

Yes, but our duty in the

’beginning is to sake th«n ae strong &a possible, Mid we must
use intelligence there.
Mr. McB&aell:

As you realise,

the ffeiser does not under*

stand coia&ercial matters as do the men in the cl tv, whose
business it is to deal with cosmerci&l affairs altogether,
taxd the point

that aost of our faimers that I have d is ­

cussed the jaatter with hare made is that without a Region si
Bank our people could not make the
Tho secretary of Agriculture:
Bank, no matter what is done.



You will have a -Regional
You csnnot escape it, if you

would try.
The Secretary of the Treasury:

You cannot get away from

It .
The Secretary of Agriculture:

You are bound to be In a

region which has a Regional Bank.
Ur. McDowell:

Z understand, but the farmers

are unknown

and the value ie unknown *hen you get curay from where ther y
are now established.
The secretary of Agriculture:

But do not overlook this
You have a bank in St. Louis <r >Tew origans*/the

J. H. KcDowcll



directors of that back will not be dra^a trim, that
particular locality but froa the entire district.
Hr. I'cDowell2

I understand they w ill.

the Secretary of Agriculture:

And they would be ao aore

familiar with your paper, i f the bank were h e r e ,

than if i t

were there.
I^r. McDowell:

They would hare to investigate it.

The Secretary of Agriculture:
district, and you would hare

They would be drawn froa the

representation, but then as

before you would deal with yo ur individual bank.
The Secretary of ths Treasury:

You will hwre no personal

relation to the Regional Bank,
Mr. Kc?X>well:

I understand that.

The Secretary a f the Treasury:
deposit aoney.

You could not borrow o r

It is intended to hold the reserves of the

district, and Whenever the demands o f the banks #ith


you do business are sa great that they need to get aoney
I elsewhere, they can resort to this Ressrve Bank and re-disoount
the paper which they take, and in that aay get funds


are unable now to obtain.
The Secretary o f A^xiculturs:

And the law requires that

on the Board there shall be three business men.


any business farmers there is your chance.

wow i f you

J. *?. vcVo mil

The Secretary of the Treasury:


And it requires agri­

cultural man ee well.
Ifr. MeBowsillj

one out of the three.

Have you any othor

<91ec tiene.
file Secretary of the trmmmiry:
Hr. Mooney:

9o 9

thank you.

there ere Juet two or three aexc gentlemen

tvho w il l take e minute of your tine.

Hr. Collins will about

close the s e t t e r .
The secret scry of the Treaeury:
Hr* Hollins, ee he ie well knees

I wonted to hear from
te me.

Tea m*y state

your naete and occupation for the record.
Mr. Collins:

yred Collins, Vilan, T ennessee, C aeh ier of

the Vilen Banking Coop any.

I here been in the bueineee

about 40 years, except when I see at echool.
The Secretary of the Treaeury:

Yeu ere the Preeidsnt of

the Tsnneeeee Bankere Association?


The secretary of the Treasury:

Be you represent the

Bankere Association here?
Hr. Collins:

Vo, eir, not authoritatively.

<s»red Cell inn

The Secretary of the Treaeury;


You are only speaking for

yousself «id your beck?
Ufr# Collins:

As &ri individual,

*$ie question wee suggest-

sd th at ve might get *n expression by circular from the
Beakers Association, but I took the position that the ex­
pressions of preference based purely on selfish and personal
reasons without a conception of the whole question and
without a logical

ground for that expression of opinion,

, not /or.h e*ny t&ing,


o not, think it is now.

The Secretary of the Treasury:
Ifr, Collins:
unless it is

-o9 six;

It is not v^orth much,

I do no t think my opinion*

based on reason, should appeal.

Tho secretary of ths Trsasury:

The economic facts have

rrot to be considered and studied carefully in order to reach
any intelligent conclusion on the subject.

I f you *1 1 1 ,

you may ?ive us yeur views.
Hr, Collins:

I wanted to answer one question *hich you

asked Mr* Kyle, that is how the establishment of a Reserve
Bank is zoXnz to help the resources of th is district to take
ears of the district, without borrowing soney any s o re than
is the cass at the present time.
The Secretary of the Treasury:

Ho, X did not ask that


yred Collins


Ths Secretary o f Agriculture:


We Understand it is

go inn to make certain change®.
The Secretary of the Treasury;


trying to find out froa !?r. Kyle was this,
at ttempfcia vould ®&ke a Regional Bank

What I was
why the location

serve the interests

of this district hotter than i f it were located in soase
| other city in the district*
Mr* Collins:

nf course anybody that has really given this

j subject serious thought knows that the establishment o f the
district i s ths parenouat issue, and in ths first place,
ws h a v s to have capital and in addition to that

ae hare

[j have a balanced district in point of varied resources,



Ij that ths derasndson ths district eould follow each other

The secret wry of ths Treasury:
Wr* Collins:


Would rotate*

Then the man who has a practical con-

ceptlon of the question has to have some Idea of what we
are to do with the bedance of the country*

We cannot take

all ths good territory in ths country and put it in the
il¥enphis or Vew Orleans district without considering ths
other districts*

Secretary of the Treasury:


Are you ad-


Fred Collins

dressing your remains to this
Mr* Collins:



I will confess to you that my conception

of the (juestlon wss ten divisions of the county sad not
quite this division, although the greater p**rt of this

w ss

my o*n mind.

included in the district I had napped out in
That came a little beyond Hsshville*

The Seeretary of the Treasury:

Have you s asp showing your

Mr. Collins:

Wall, it is not a very valuable exhibit, but

I did not know but what you gentltm&n would hare some
trouble in dividing the country up, and I chon fit I aould
help you all I could*
The Secretary o f Agriculture:
we want*

* f course, you have

That is right, that Is ghat
not heard the expressions

from these various sections?
Ifr* Collins:

*o, sir, I hare not, but I believe end I

think the evidence was given here yeeterday, tram the ques­
tion e you taked thece gentlemen

who appeared here and ex­

pressed preferences, ws ought not te put too nuch stress
upon what they aay about their preferances*

They are too

often founded altogether on selfish ground, without sbqr eo»ception of the problem*


yred Collin*

The Secretary of Agriculture:


Th at would probably discount

about equally orer ths country.
mr. Collins:

We had two or three very intelligent


men here yes terday *ho stated they would like to h ere Bee
York ae second choice.
to it et all.

Evidently they had given ne tliou^t

There are a whole lot of them who hw o e*-

prsssed opinions that you have not asked enough question*.
You will find out they have the sease conception of this.
The Secretary ef the Trsasury:

Perhaps it was not necea-

aery far us to have asked them.
The Secretary of Agriculture:
that ee understand i t .

We here been over i t so much

Here ie the really vital thin^ I

would like you to express your opinion about.

Bven though

! the b«&ancee and artificial accounts that are kept elsewhere were brought back to this district, would it bo in­
dependent or dependent?
Wr. Collins:

I believe it would be ae nearly so a* any

district which could be established,

haring in consider*-

tion convenience.
The secretary of Agriculture:

Bo >ou know how much ef th*

time there would be re-discout* i in^ in that district?

Ifr. Collin*:

Except in the temporary demand in handling


the cotton

yred Collin#


crop it would tafce care of itself.

The secret sry of Agriculture:

^rave you made any statistics

to show anything of that kind?
Hr. Collins:

I h*?ve been in the business 40 years siyself

ond never borrowed a dollar.
The Secret scry of the Treasury:

we are not asking Whether

you borrowed it f but we w«nt to know what

the re-discounts

or seasonal dusands and the norxaal resources© f this district
nrr. Collins:


I will tell you whst ve have got to

show thst tho resources and demands of this territory are
froa the borrowers* standpoint,

yor instance at B«w Or­

leans, here is the sugar and the ej^orts and iapo/ta —
The secretary o f Agriculture:
there are two foots.

We know thst.

You know

Thirst, the rs-dlscounts of the

bonks, and you know thst they have not considered re~
discounting very respsetable heretofore?
Mr. Collins:

wo, i t has been s discredit to thm hereto­



Ths Secretary of Agriculture;

You know that is

foolish under ths new booking system?
mr. Collins:

yes, s ir.

t»red Collins


The secret sary of Agriculture j:

you know they h&ve re­

sorted to Indirect
Vr. Collins:

re-discounting methods.


The secretary of Apriculture:

And it is essy to fret the

re-discounting figures, but it is very difficult to get the
idnlreet methods of re-discounts, end still mo re difficult
to ^et -he borrowing outside ’by the banks.

Wo??, I have

lived in different part* o f the South for 25 years, and Z
hove hesrd certain intimations of one kind and aac ther,
and I an trying to

Ret views on this.

rediscounts under a condition where

Taking the


re epee t has not been

great for it —
Irr. Collins:

Where it has been a dangerous practice, too,

under our present system.
The secretery o f Agriculture:

yes, and probably «©uld

have led to trouble.
W . Collins:- yes.
The secretary of A^riculture:

Tsking ths indirect dis­

counts and then taking the volume of borrowing outside,
can this district take care of Itself, taking those as
Hr. Collins:

I dc act believe you could hardly establish
’ "S

?red Collins


a district which would absolutely be independent, without
putting in some territory for to tho north.
fho secretary of Agriculture:

But to the extent to which

we could, i t would be preferable?
Mr. Collino:

My impression or opinion is thot os nearly

os it csn be done, with the varied resources in the territory,
the roried demend for money, the temporary seoeons in Which
these demands follow one ano ther,

i t would moke i t as nearly

independent as could be made, considering the matter of
ffcs Meretary of tho Treasury:

But oo a fundamental

here guiding this Cow ittes, is it or is

it not your

belief thot wo ehould hare as far as possible in the laying
out of these districts, regard to the
end with

joining of a borrowing

o lending end, so as to balance ~-

■>nr. Collino:

There i s no question about it at all, that

that is tho principal *hich underlie© the whole proposition,
that wo raust in so far os p esd h le establish a region which
mist balance Itself in point of borrowing and lending in tho
district, to take care of all of the
fHe secretory of tho Treasury:


The v & u e of the system to

the countxy depends upon the creation of well balanced units,



S till,

there is a point beyond whioh you

p j*

could aot go.

pred c o llin s


You could not put pknn&ylvanii* in with

Tennessee, because it it too far asay.
The Secretary of she Treasury:
Mr. Collins;

We understand that.

I know, hut I want you to sea that point.

I believe that district — I would not say i t is independent—
The secretary of the Treasury;

How can you say that,

when you eay you here not studied and are not prepared to
subni t figure® which show, as far as practicable
tain it, the extreme

to ascer*

borrowing demand e f this district in

exeees e f its availably capital and re sou ices at the time
of extreme demand?
Hr* Collins:

I hare said there would be a tea|>erary time

when we would need possibly seme assistance, but —
The Secretary e f the Treasury:

If you were laying out

thess districts today would you not seek all that data
before you made up your mind or foxned any judgment?


you not get that information i f it was possible to have it?
Wr. Collins:

Yes, sir, and still with ail that informa­

tion, Wr. Secretary, w

would hare to establish the regions

with some view to convenience.
The Secretary of the Treasury:

I understand that.

We know

yrcd Collins

The Secretary of Agriculture:


That i s our duty under the

The secretary of the Treasury:

That ie our duty under the

law, but tfhet Z seen ie this9 you cannot lay out a district
here upon a
it .


of the grounds -hat ought to determine

Ve muat have all the facte &s far m practicable to en­

able ue to do it intelligently.
holding these hearings,

That ie the reason we are

to get you gentlesum who are supposed

to know about theee things tc give us the facts9 not a few
facts hut all the facte.
a part of them.
w . Collins:

And the trouble is we only get

Ve went statistics as well as other things.
You understand they are very difficult to

get, and yon cannot fret wery much absolute —
The Seeretary of the Treaeury:

So, but we can get all

that are available.
W . Collins:


The Seeretary of the Treasury:

For insteece, you can tell

us9 ss jou are a banker of 40 ye are1 standing, end I knew you
at college and know how thoroughly you went into problems
IIwhen you had to9 Z know that if you

t*&e the time to find it 9

yon can get data from the standpoint of the saoun; of borrow

W e d Collins

Kr« Collins:


^ut I think we can take core o f thot without

any trouble.
The Secret&iy of Agriculture:
in ?ort Worth the other day

For instance, a gentiumon

came to argue Tort Worth's cose

and his argument was that the eat tie business turned over
there aaountc4 to ^30,000,000 said they had to go out of Port
Worth for 00 per sent of itt therefore they wanted a bank
there; and furthermore, that Si 00,000,000 worth of
p*per was outside of Tort Worth.


Wow that is a little hint.

Mid furthermore it did not appear in the re-discounts of the
Mr. Collins:

I know, the whole thing is to balance the

borrowing and lending relations as nearly as possible, and
that is the theory of the way to run s bank.

My idea has

been alw ays to ksep my bank, ao far as X could run i t, like
ths national City Bank.

And there was not any reason tfhy

r should not do it, i f the accounts were properly balanced.
the Secretary of Agriculture:

we want to lay out the dis­

tricts having regard not only to convtmi«*noe and course of
trade but to economic conditions.
Mr. Csllins:

And X have felt that these statistics ws

have compiled here would Indicate to ysu gentlemen dearly




Fred Collin#

that t&is district wae one which aculd, as nearly toe in*
j dependent as would be possible, coneidering the *atter of

No*, I have nevar subscribed te the theory

j that the corcsercial importance of the city where the bank
wae located was of such vary great importance or that the
particular city which you designated was of so very great
i importance.

Of course, as a country banker, located out

in ths country, convenience appeals tc &e.

Bit X suet not

oe eelfieh, 1 muot want it convenient to the other banks
Tt;e Secretary of Agriculture:

Yea, anc as a country

banker, when the pinch comes, you want to know that you havs
the resources?
Jlr. Collins:


*e havs that all covered vith that

Federal Ressrvs Boar£ in a pinch, but Just for gan^ral condi­
tions, I bslisre thie district will be se near eslf-eustain-

lng is —
Tn« Secretary of tha Tr.aaury:

Taka thia Slat riot, and

1st us assuas for the sake of the argument that everybody
here is willing to corns into this district, which is not a
fact, but I will say that hypothetically —
Mr. C o llin e :

I wi«h they were.

3?red Collins

fjeoretary of



th e


l o v f you ere lo c a t e d

n e a r W esgjhis?
j*r# C o l l i n s :


The s e c r e t a r y o f
lo cated



the T r e a s u r y *


and you hod

O rlean s,


^s*»k was

& b r e a c h i n V sm jihis y o u

vo u ld get

e x a c t l y t h e sam e f a c i l i t y , would y o u n o t ,

p ractical

q u estio n ?

d ir e c to r s

who a r e mo re l o c a l

T h i s b r e a c h up h e r e

w ill hare

the d i r e c t o r s o f



the h e a d ­

quarters ban k.
M r.


C o llin s:

The m anagers o f

the b u s i n e s s


th e b a a k w o u l d b e

t h e y do a n d

them w i t h h i e

co llateral



tc g e t h i s b u s i n e s s b e f o r e

a i t tee

th a n



The Secret ary
no t« a


£0c d





th is

en tire

th e m oney


who g e e s
w o u l d ha r e

the fin a n c e



away o f f somesfriere an d i s no t

argum ent —

th is

I beg ycur pardon,


the s i x


d ir e c to r s


i t is

the Beserrs
th at b a n k


d istric t?


secretary of

by the government.


the T r e a s u r y :


Hr, Collins:


argument in

chosen from



the f e l l o w

and i t i s

to b o r r o w

the f e l l o w


the T r e a s u r y :

A nd

t h r e e m o re



yred Collino

^ r . Collins:

yo * often do they meet?

Tho Secret&ry o f tho Treooury:
os necessary
??r. Collins;


They sieet a@ frequently

to transact tho business o f the bank.
They z&i^it not consider it necessary to have

* meeting —
The secret *ry of the Treasury:

Pardon me o rao»ent.


thot whether thot bonk was lor ated ot Memphis or Wew orleans,
it would not only know the local situation here, I mean they
would not be drown locally.
Ifr. Collins:

I understand.

The Secretary o f tho Treasury:
that a headquarters

Suppose on the ot&er hand

wore located ftt lev Orleans

and a branch

at ¥tE$)hi* and wit'n seven director* mors or less local to
that territory, with the seeu: <&uallfi cations as thoau possess-*
ed by tho he ad garters bank} i f your paper which

*ou went

to re-discount, your eligible paper under this b i l l , was
presented to that branch, is it not evident that the directors
sod ths Manager of that branch bank would hars ms re knoi&edgs
of it than the Reserve Baifc at Hew Orleans?
Ifr. Collins:

Yes, Z think your point is well taken.


ws all feel we would like to do business with the parent in­


i*red Collins

The Secret wry of Agriculture:


But it lo & bastion of

Kr* Collins:

It is eenetshat a selfish consideration.

The secretary of Agriculture:

Ae you said yourself, the

paranount question is the district,
Xr* Uooney:
It is very

Ask tha Secretary shout thst p&rent bank.


The Secretary of the Treasury:

$ f course, t*-# policy is

controlled by the Beserve ^ank end thm the Federal Beserre
Board aust prescribe the regulations end rules govern!ng the
relations between the parent bank and the branches*
Hr* Collins:

How then X just want one word shout

it is s question whethe r this branch would es­

tablish brsnchesor not —
Tha secretary of ths Treasury:

It is bound to under ths

law, i t is mandatory upon whs Reserve Bank in the district
to establish branches, and tha regulations are presribed
by ths Ksssrve Board*
Mr* Collins:

Iftiy not sstabllah it at Yes^hls, then?

Ths Secret ary of the ?rs*sury:
ant as you represent it
have a branch*

i f ifenphis is as import­

to be, I think it would be bound to

•pred Collins

Hr. collins:


We tors interested in hwin?

it convenient

because it would make it po atfl bl e for us to get money
b#*ck and forth snd to have money in our

v?ault»f snd thst

means mo t o profit and mo re profit for ths Federal Reserve
Bank* and the more conveniently it Is located, ths bsttsr for
The Seoretaxy of ilgriculUirs:

We would be glad to have

Memphis file any supplemental matter.
i*r. Snowden:

That is our casef I believe.

The Secretary of ths Treasury:

fowt we have Montgomery

We will hear from l*on tfs>me ry.

Permit ms to say

in this connection* gentlemen* ss you mro sot here yes ter*dsyt the questions which vs ask are in no sense to be con­
strued ss indie atins any opinion on our p art or any inclina­
tion of mind9 but they are to bring out ths argument.
Hr. Mooney:

Ve understand that*

Ve only hops that ths

*4*01e thing will be worked out to ths greatest benefit of
ths whole country, and ws are not selfish at all about it f
except that ws hare some very peculiar
weaphie* about this cotton buslnsss.

conditions around

J* T . Eohn


The secretary of the Treasury:

W ill you state yaur name,

residence end occupation?
ST. Xohn:

John T. irohn,

President Mont^pmery Clearing

Houae Association and President o f the Sullivan Bank &

Trust Company*
The Secretary of ths Treasury:
» .




You knov our problem?

I will only take about three

minutes, i f you will allow me to read this paper.
The Secretary of ths Treasury:

Take your time.

Ve want to

hear you fully.
Sfr. Ibhni

In asking your

honorable Committee to consider

her claim for a Regional Reserve Bank, Montgomery

takes i t

for granted that the $ulf States will be regarded asone ef
the great

subdivisions of the United Ststes.

Hon turnery has always been recognised as the logical centra
of that great subdivision, and this cossaittee begs leave to
submit a few facts and figures upon ehich that conclusion
is based.
Trade statistics and railway authorities agree that
uontgoatiry is the best distributing point in the South.

A map



T . xrohn



which accompanies thi* paper shows that a circle with
Hontgeme^ &s the center and with a radius of 400 miles
embraces Memphis, Tennessee, on the Borthwsst, Shreveport,
Louisiana on the axtrsme west; Clarksville, Tennessee, on
the north; Spartanburg, South Carolina, and savannah* Georgia,
on ths Xast$ Jacksonville end Pensacola, Florida, Mobile and
Ken orleane on the south*
Trains leaving Ifontgomery late in the af*#raoon could
reach all these points before business hours the next morning,
and would provide an overnight sch?dfcle for currency shipments
for that irsaense territory.
A region composed of ihs states of Tennessee, Georgia,
Florida* Alabama, Mississippi, and T*ouisiana would include
one eighth of ths population of ths entirs country, and would

produce nearly one half o f the cotton crop of the world and
one thizd of the corn crop of the South.
The total money value of its annual products of factor!as,
farms, forssts and mines would exceed two aad one half
billions of dollars.
Montgomery is ths heart of this wealth-reducing region, j
Alabama ranks third in ths Union in total

iron ore

P jb

J . T # *rohn


The co sX and iron tonnage of A1 abasia ie acre than two

thirds of the total tonnage of the cot -on crop of tho country.
Mobile is the cheapest cooling port in tho worid * i« the
nearest Gulf Port to the Panaeia c&nal, Cuba* Centred Aaeric o
ond South America, and is at the south of the second largest

navigable river system in tho United States,
Sfont^mery is at the head of Al&bwne* Hirer navigation,

and lies aidway between labile sod two billion tons of Iran
ore end sixty-ei^ht billion tons of coal in north Alabaiaa.
At Montgomery* a very doors

old world copit si is

harnessing for distribution thxou/feout the state one of the
most gigantic

water power proposi tions on the continent,

Montgomery should be the focus for ths capital which
must eventually

be si hand for the immense development

which will follow this hsppy arrangement by nature on one sido
of Yontgomery of these inexhaustible mineral


and oa the other side of her water transportation to ocean
tfontgonery reaches tho

Hast through ths Southern Bail*

way* hss three different trunk lines to the Atlantic


board; the Central, tho Coast Line, the Seaboard; is con­

nected with both ths Gulf of ¥*xico and

ths Mississippi

y, T , vohn


Biver by the Touiavillu & *ashvllle, th# Fo'oile at Ohio said
th# Western Ha 11 waye; is connected with th# dulf of Mexico
anf the Great take# by the Towieville 4 weshvLlle, and is in
direct and israedlate contact with every point of prominence
in this district tYirou&i the various branches of these great
systems of trunk line roads.
To emphasise the insert awje ef Montgomery m a centre
of Agricultural interest® and development the following
facte are cited:

Montgomery next to St. Louie is the

largest market for mules in the country; the 1 srgest manu­
facturer of

ceamercifl fertilizer

and the third 1 largest in the world.

in the Gulf States,
She is the third larg­

est grocery £bbing center South of the Ohio M v e r , and is
the third largest distributing point on that railroad, the
Touievillti & vrashville,

which spans the south from the Ohio

Elver to th# oulf of irexlco.
This committee believes that your final ju3gaent
will be based on nor# the possibilities of business in s
region and th# adaptability of a cit^ for centralising the
great resources of that region, than on the volume of
busin### already done in a congested ares or locality,
and therefore takes heart in presenting ¥onturnery1s cause.


J . T* **ohn


Another member of the OoEtsittee, t?r* barley, will
present in nor® detail the pr^ctic*! points in connection
with the hanking resource* and

facilities involved in con­

sidering this matter*
The secretary of the Treasury:

Wow i f Mcntr’osery mrc not

chosen no tho headquarters fo r this hank, what would he your
first choice?
Mr. Kohn:

Ths Clearing House Association* Mr, Secretary,

has acted in behalf of Atlanta as second choice*
The secretary of the Treasury:

And what is your third

Hr. Kohn:

wew Orleans third*

The secretary of the Treasury:
Mr. Kohn:

No, sir*

Have you a fourth?

of course, we could pick out a fourth

and fifth , hut we have not acted on it*
The secretary of Agriculture:

*»ow would Louisville strike

That was suggested hers yesterday*

Hr* Kohn:

Veil, there arc a number of the hankers in

wont^sary who favor Louisville, and that depend* a great
deal e f course upon ths manner in which the territory is tc
bs arranged.

As you brought out just now in ape akin


Mr* Mooney, the question of arranging a diet rid. which *>uld





have sufficient capital is important.

We thought about that,

and, of course,

adopt a region of

we would not probably

this nature proposed hers i f we tjteught that region was ss
I1 dependant upon others,

but with the o&ier Regional Banks

to assist those local b&nks, we have rather ignored that
The sseretary of Agriculture:

You ought not to igsore

that, because one of the theories of the law

is that these

should be noznally Independent.
Mr. Kohn:

well, I should not say ignors It , but m

hare lot another


outweigh i t ,

said that is

that the territoxy coxspo ~ed as it is, probably understands
the southern situation as to the crop movement and ths

!! fam in g situation snd so forth* and we would have more
expedition in handling business.
The secretary of the Treasury*

What is the no m al course

of your business at i»ntgo»ery?
¥r. Kofm*


buy * great deal of grain and nules re­

ferred to, fron Tennessee.
of stuff.

Hashville ships us a. great deal

We buy our rloe, sugar, Molasses, coffes and a

lot of hssvy groceries froa Hew Orleans, and always hare
dons so.

J* T. Kohn


The Secretary of the Treaaary:
Wr. ro>»:

now about Atlanta?

Atlanta sella us some manufactured ~oods, but

not any volume.

We selected Atlanta primarily on account

of its accessibility

and the fact thait Atlanta looks like

It waa really entitled to one of these

places, from ths

wa^ it was rrolng after it .
The Secret &ry of Agriculture:
what extent was your
Hr. Kohn:

X waa facing to ask you to

action due to pressure from Atlanta*

wot at all fro® pressure.

Ve had same very

pleaaant visitations from Louisville, wew Orleans and
The Secretary of the Treaaury:

They have all been visit­

ing, hare they?
Ur. Kohn:

And latterly

from Bi iminrcham, much to our

The Secretary of the Treaaury:

They are getting veiy

sociable, these daye, aren't they?
Ifr. Kohnj


I would answer a question you asked

there that may be of some ll*£it to you, and that ia

ao far

aa Won turnery ie concerned, «e have a great deal of indirect
borrowing in Montgomery.

The merchants borrow aa much

indirectly aa thay do directly.

They borrow in Yew York and





sell iheir paper lo 'brokers,

the largo raerchante.

Tho secretary of Agriculture:

To whet extent have you

considered the problem that we raise in this disease ion as
to the desirability of laying out districts which

&ould bs

no x&ally independent and take cere of thie volume of
direct bank rediscounts and indirect rediscounts and borrow
inge otherwise?
Ifr. Cohn:

We considered it seas, but it ?r*s hard to arrive

at conclusions.

I f i twes put up for the Clearing House

to consider, one city as against another, we could of
course consider it aoxs intelligently.
men visited us froa

Some of the gentle*

these other regions who really knee

vary little about our section,

^ f course, we have always

been doing buslnsss in Hew York and formerly in Hew Orleans.
There has been a ^ood deal dene in tfw Orleans.
The secretary of ths fr^mQMTy:

Fave you relations with

^altlnore and BlchMoitd?
1ST. Fohn:


Philadelphia has lately (tone a good deal

of business with von turnery.
The secretary o f the Treasury:

Keve you any relations

with f*t„ Louis of any consequence?
Hr. Kohn:

Ho, we use te get a great deal of our merchandise

J. T. vohn

and grain from $t# Tiouia.

^ot so Much now, but still a good

Still wo have no reciprocal

Wr. Farley;
wr. trohn:



**he basks oil keep accounts there.
Y«», they do that to keep thei r reeervea.

secretary cf tha Treasury;

Where do you carry your

Ifr. Kohn:

wo ore o state bank.

The secretary of Agriculture:

fhat is the law aa to

atate bank a?
Wr. rohn:
of our


are permitted to o m not over ten per cent

capital in the etocka of other banka.

The Secretary of the Treaaury:
Ifr. Kohn:

And that will qualify you?


The secretary ef Agriculture:

Hava you aorae exhibit a you

would like to file?
1Jr. Kohn:

Just a few facta which j will leave here.

The secretary of Agriculture:

And you will leave thia map

with ua?
Wr. Kohn:


(The papers were accordin ly file d .)
The secretary of Agriculture;

B. TA H U S Y .

State your name, residence


L . »* ymrley

and o c c u p a tio n .
**r# 1>*rley;


Parley; President ©f the Hew Farley

national Batik, t?6ntf-omery.
In presenting the cl alias of my native city, Montgomery,
Alabama, as the moat logical southern city ffer the location
of one of the 7ederal Reserve Thanks, Aether only ei^ht are
created or the maximum

number twelve, permit me to emphasize

ita geographical location as being in the very center and
by comparison more

central than any other city of seven of

the moat 1BPC ratnt of the Southern Agricultural States,

Tennessee, South

C aro lin a,

rfeor#a, Florida,

Louisiana, Mississippi and Alabama, and on this account
drawn close by its endless bands ef steel to every town and
hamlet in thess seven states, and in consequence thereof
stands peerless in its readiness to serve in conjunction
with the goverissent o f the United

States not only the

seven states named, but another still to the north, Kentucky,
and still another farther to the west, Arkansas.


•A* attached.
Vontgeraery on account o f its

*de(fuate railroad

facilities, its six trunk lines and other short lines
readies almost over nl/$it the farthermost point in each


of the seven states.


Its mail service to these points is

no less quick than its service hy express.

Exhibit *B# at­

Vow I have prepared

Exhibits A and


Exhibit B

aho.*8 the actual time and distance between each sf the re­
serve cities as shosn by that st&p as proposed, and also


of the principal points froa Hont^oaexy in the seven states,
the secretary o f Agriculture*

Will you mention those

states again?
Hr. Parley:

Tennessee, South n&rclina, Osoxgia, Florida,

Louielans, frissleslppl and Alabama.
The trunk lines entering Into ijpontgoaery are the Louis­
ville it Vsshvllle pall road froa Cincinnati tc ¥ew orlean«t
reaching intermediate points —
The secretary of the Treasury:

we are fasxlliar with the

transpo rt stlon facillties•
The Secretary of Agriculture:

we have been there a good

Many times.

ffr. Parley:


this paper is based on ths logical

geographical loeation, and these are ths connecting links. I
can omit all of that.
The Secretary of the Trea ury:

You might omit all s f that

p jb

L . 3 . Parley

and file it, because v?e know all about it .
we want are sane facts as to o th«r lines.
paper is no t long,
Ifr. Parlay: .


You See what
However, your

do ahead with it .
ths Atlantic Coast Line Hail road, ths

western terminus of which is ¥0n tsrosaery, reaches by quick
schedules the cities o f Savannah, Charleston, Columbia,
Wilmington and Richmond, and towards the South, Brunswick,
C*ojgia and Jacksonville, Florida, and covers the western
portion of the state of Florida, having its terainus at
?ss5>e, Florida, with a branch as far south ss PC it Myers,
The Seaboard Air Line Railroad by quick schedule reaches
Savannah and all intermediate Alabama *»nd Georgia points,
having fro* Savannah lines to all central and western Florida

Western Hallway o f Alabana, who ss terminus for its

main line and Selma branch is Montgomery, connects with ths
Louisville A Nashville Railroad from the South, running
through trains with faat schedules to the cities of Charlotte,
Richmandr Washington, Wow lozk, Baltimore, Philadelphia
and other saatem points, reaching intsmediate points is
Georgia and Alabama before connecting with the Sou them Hall­
Federal Reserve Bank of St. Louis


L . B# Parley


The Western Railway of Alabama also has a branch to
Selraa, Alabama, connecting there with tho Southern Hallway
and tho Louisville & Hashville Railroad, thus reaching many

other point* in Western Alabama and the etate of H i ssiaslppi.
The Mobile & Ohio Hail road, whose terminus ie Montgomery,
hoe througi trains with fast schedules to St, Louis, Missouri,

Tuscaloosa, Alaba&a, West Point and Corinihr

Flsslsslppi, and Jackson and Union 0ityr Tennessee, and other
points in the State of Tennossej/route to St. Louis,
having throur^i connection at west Point, Mississippi*
to Meridian, Mississippi and other points in Mississippi to
iroblle, Al&beraa.

Tho Central of Georgia Railway, having inmtgoaery as its
terminus, has throus£ lines to wacon, Savannah, Atlanta,
Augusta and all intervening points in Alabama

said Georgia.

These cities and all other points within ths seven
states n**sed can be reached with a few possible exceptions
owe might.
in substantiation e f the convenience of the railroad
schedules from Hontgomery, this city is the only city of
else in the .South which has no trains leaving ths city after
ten P . ¥.

The argument beinr? that mail or express matter

T,« B. Farley


from Hontgonery is always at any reasonable destination

early business hours next noruing,
Att&eh^d hereto is

exhibit marked **0° shoeing the time

that express leaves Montgomery ov«r ths various lines, &nd
ths tine it reaches the fur the moat boundary of the adjoining
At this tine there are fifty-eight pas sender, mail end
exp re ss trains in end out of Mon igdstfry per day, by *>shicJi
oonnectione to &nd from all points can be node.
The Union Passenger Station

records show that laSQ

pieces of barrage were recently h&ndlsd at the Union Station
in Wontfromery in two hours/an ordinary day, and in one south
a total of over 35*000 places of bsmirage tfers handled,

station nas opened to ths public on *#ay 6thr
sixteen years age.


1^9b9 less than

During August of that year there was

handed in and out *ud out of that station (Which does not
include freight)
there were handled

654a engines and cars} during August 1913
12,454 engines and cars, or practically

double the number.
To further prove ths point of recognises


facilities enjoyed by Hontgos^ry this city with a population

L . >1. Parley

much less th 60 either Vcmphis, Tennessse or Sew Orleans,
Louisiana, rivals these two cities

ths most important

wholesale distributing point in ths entire South*


no* as third and annually gaining on remphis for second
To substantiate this relative standimg of Montgomery
as a distributing point* it is a matter of record that on the
Louisville & K ashvill e

Trunk Lines from Cincinnati to

Hew Orleans the tonnage handled by said road ranks:
Cincinnati, firsti Louisville second, and Montgomery, Alabama,
Ths secretary of ths Treasury:
Hr. Parley:

You mean paeeing throu££?

Ho, bandied at that point.

The secretary of the Treasury:

You m a n freight originating

and terminating?
lfr. yarleyj

In and off there.

The Secretary c f the Treasury:
Hr. varley:
league record.

Bo, in and off.

You mean passing througi?
That is the business men’ s

It is a distributing point.

Be city in either e f the seven etates mentioned first
reaches a greater number of points outside cf their own
state thin does V6ntf!x>su:ryf Alabama* In the distribution of

L . B* Farley


her merchandise,


home grown &nd manufactured product*.

Should Montgomery he chosen as & point for on* of tho

Reserve Banks and the district to he served by

such bank ho as suggested, then tho national Thanks la sadd
district would contribute to tho stock of such Federal Reserve
B*ak tho sum of $5,72 6,613.00, there being 476 national
banks la tho district h&vinr an aggregate capital and
surplus of approximately $95*443,596.00.
Should ell state 'bankinr institutions in this district
Join the Federal Reserve syBtem there would >>• subscribed
approximately the



sum of §8,774,20©.00 to the capital of tho

there being


state bwking in­

in the seven states named with oa ital &nd surplus

of approximately #146 *236,815.00.
The Secretary of the Treasury:

?te many are eligible?

You cannot count them all because they axe not all eligible.
Ifr. Farley:

It may be that seme of the states have not

the lawt—
The Secretary of the Treasury:

»o, but assuming the laws

of tho state peraitted them to subscribe, how man^ of them
are eligible to subscribe?

They must have the sio&e qualifies*


T,. * . Farley


It is shiwn by the latest abstract of the report of con- *
dition of national banks as published by the Comptroller
of the Currency under date of Hovember 2D* 1913, that in the
aggregate the capital end surplus of all national banks
UM #1 ,765 ,7 05 ,2 0 5.0 0, capital #1*059,402, 90<S. 0 and surplus
# 726,502,377.00.

The capital and surplus of all national

banks in Alabama is

§16,0cl,5l}3.Q0 **fcich is a fair propor­

based on the ccssaercial develojment of whe state *hxch

is as yet in its infancy;

These figures ccn^s*re favorably

with a majority of the states of the Union.
The district to be served by %*onturnery as a Federal
Reserve Banking point consisting of seven states has over five
per cent of the v^hole capital and surplus o f all of the
national banks.
The number of state banks doinr business in Alabama is

This number based on a percentage calculation average#

as large a percentage of state banks as the average of ell
other states.
The masher of national banks in the proposed district to
| be served by Montgomery is 476 or over six per cent of those
eligible, 7509.


number of national banks doing business in Alabama





tions as the national banks, so you h&vs to elimim*te those
that ars not eligible.
Mr. Farley;

That is • matter which would hare to be

taken under consiteration, said I have not done so, but I
suppose 50 per cent of them.

: as 90 national b*nkis with a capital »nd sujv

plus of $ 1 6 ,0 o l,5^3.00 and 2&2 state banks with a capital
and suxplu* of approximately #15,443,Ooa.00.
Montgomery* Alabama* hae four national banks with a
capital and surplus of ^ 2 ,51DtOOO ( exclusive of undivided
profits), statements Jsamara 13th, 1914, and six state banking
institutions with a capital and surplus of


October 21, 1913.
National banks, ipso facto, beinsg the immediate re­
liance cf ths framers o f the Federal Reserve Act to bring
into life the Federal Reserve system ar e found in Montgomery
Alaba a exactly douUt in numba r to those operating in each
of the other three large cities in Alabama.
The clearings

of the city of Hon turnery for the year

were $26,641,228 .05, and for the year 19X3 $51,449*964.16*

making an increase in five years of $26,803,556.11, or about
eighty per cent.

Ti« B . Parley


ie 90, or nearly one fifth of the number doiar- business
at thie time in the seven states mentioned.
I take it for granted that in the selection of the
location of any Federal Reaerre B&rfc that neither the popula­
tion of the City nor the present capitalisation of ite
banks will be taken into serious consideration, and that the
eligibility of any suggested city from the standpoint of
volume of business with attendant f M i l l ties for the prompt
handling of same, will prove the main consideration* and as
ftontgcmery is in the very heart of, and, in f&ct, the hub
in the *&eel of the agricultural district, the circle of
which embraces in full the seven states naeed, it is felt
that no better selection could be reached than the s&lectloit
of this most central and progressive city, who submits


c la im as the logical point for the location of the Federal
Keserve Bank

strictly and entirely upon its own merits

and without overtures

hairing been made on the part ctf* its

bankers or cltlsens to any othsr city in the district te
which it asp ires to serve.
The Secretary o f the Treasury:

Rave you had any volun­

tary suggestions, as you made no overtures to banks in Oils
district, that tfaatgcKery ou^ht to be made the headquarters?

I,. B. Parley

^r . Parley;


Wall,we have seen eoae of our country friends

«#» they came into ifontgemery, &nd they would &ek us
were apply in
Kr. Kohn:

if we

and we would say yes.
Atlwit* says we are the ^seond choice for

The Secretary o f Agriculture:

You spoke about beinf* em­

barrassed by Bi min^has^e application*

Be you prefer

Atlanta to Birmingham?
Mr. Kohn:

of course we would be for our hose stave, but

Binain/rham did not come to ue until the o sh«rs

h*d, and

hed declared our choice.

The secretary of the Treasury:

Wr. Farley, «*hat is the

second choice of Montgomery?
Wr. Parley:
second choice.

Our Clearing House hae passed on Atlanta for
r»f eoureef we

all hare etate pride, but

Atlssita ie on the main trunk lines to ¥ew York, and i t is
The Secretary of the Treasury:
Wr. Kajley:

What is your third choice?

Wew Orleans.

The Secretary of the Treaaury:

Whet do you think about

Wr. Parley:

Well, I really think that Louisville is a

X . B. parley

lit t le bit to© far away.


The nature of tho busine&s la that

district ie so dissimilar to ours that I really do not
think it

foulc! be good*

The Secretory of Agrlculfcure:

Aro there not scme advantages

In that?
Hr. Parley:

Indirectly, y«s, but you see they require the

money about the ease time os we do, and it would not be an
advantage in that say* and I do not think —
Tho Secretary of Agriculture:

Is not their tobacco and

liquor crops handled at a different season than your cotton
Hr. Ttartey:





b u t now


d o v e ta ils


in to


no t

hove a

it used to be September to



throuffc ths yosr.

The Secretary of Agriculture:
Vr. parley:

it .

Tell, you always did.

Ho rs or loss, but not to the extent m have

for ths last four or five years.
whisky erop is of


How, Louisville's

all ths ysar round m d ths tobacco

is in ths winter and qpring.
Thi Secretary of ths Treasury:
gomsry now here financial

To wh t extent does Mont*

el at ions with the rest 4 f thoa

Take Knox vill s, Tennessee, and Ifashv&ls,



B. Parley


Irr. verlsy:

V* only h a w reciprocal accounts there for

setter e f collection.

You mean with the b sties?

The secretary cf the Treasury:


The custosary course

c f buslnessls not frtm Hashvilla and Tnoxrille to laontgoesery.
V r . parley:


get a great deal of flo r fro* Washvilla.

The Secretary of the Treasury:

Take Georgia and South

Caroline points, do they focus on Hon goaery?
Vr. parley:

ve do s great deal ef business with thee,

hut naturally we do not buy a great deal in Georgia.
Ths 5s ore tary of Agriculture:

All the evidence we had


Washing ton, where we h*d the hearing for the people from
South Carolina was thst they desired to he attacte d to the
north o f the*.
HT. Parley:

Veil, they ere so near the metropolis up

The Secretary of Agriculture:

They were not sssking

Wew Yo ik.
The Secretary o f the Treasury#

They wanted to be

i th

Richmond or Daltimore or Washington.
Ths Scoretory of Agricul tore:
of tradi eras

thst way.

They aeid their *hol& coarse

I»« B. Ps Amy


The Secretary o f the Treasury:


The 1 m requires us, &s

we have aaid, to lay out these districts with due regard
to the convenience *»d customary courses of business.


can you show us the customary courses of business of this

are ^rith Montgomery?

¥r. parley:
cotton is

You spoke of Georgia.

A ^reat deal of our

shipped ri^ht through to SSavann&h for eao>ort.

It is not a desd with Georgia.
The secretary of ths Treasury:

But I t*a speaking of the

To lay out ths district, we want some facts aft to

the district which related to Montgomery.
Mr. Pariey:


shipments into ifontgomery or out?

The 3eor«tary at the Treasury:
Hr. psrley:

In and out.

of course, we buy from Tennessee &nd buy

manufactured products from Georgia and paiticul htly

from Atlanta and a great d e&

of fruit from Florida.

The Secretary o f the Treasury:
entire district do you suppose is

What percentage of this
focussed on Hont,gomery?


Ifr. ;paxiey:

it would be very maall, I

The secretary of %rleulture:
argument apply to other cities?


To whst extent would your
Vhst is there in Montgomery*s

situation which would make the argument unique in itsasp-


I*. B . P a rle y


You rc^an as to the volus« of trade?

The Secretary of Agriculture:

TTof aa to the location for

the Reserve Bank*
©te Secretary of the Treasury:

Whait makes it pro-*

eminently better than Heir Orleans or Atlanta or any other
Hr* Farley:

we are do an here in Wew Orleans and I am

sorry you have bxouf^it up that point.
Hew Orleans, but we feel
we are

We are

third for

i f we are put with Hew Orleans

first putting a foot


before we go for­

tho Secret «*y of the Treasury:

Would not $ew Orleans

feel the saee way as to Montgomery?
1?r. FajfLey:


The Secretary of the Treaaury:

Is no t the thing *hich

8«en« to be uppermost, thst it is the center of the sur­
rounding country?

He hare had a lot of cities to a manu­

factured circle which they are ths center of.
Mr. parley:

Yes, I have no doubt that every city tfhich

has not been the geographical center claims it is ths center
some other way.


B. Parity

The Secretary of the Treasury:


As Mr. Houston


in thess esses he finds that every city ia the center cf
the aurrounding: territory.
Mr. Parley:

Yea, even Few Orleans.

The Secretary of Agricul turs:



advise ua in the

operation of this abaters to secure the largest benefit, to
8eleet citieson that basis, because they are the center of
the district
Mr. Farley:

around thesi?
That would depend

road faeilitiee and

entirely upon the rail -

facilities for handling business

The Secretary o f Agriculture:

If you hid this problem to

solve, that would be your ides?
Mr. -parley:

Z should think so.

In othar words X would

not select cities —
The Secretary of Agriculture:

justification of

You ssy that is ths

your claim.

Mould you utilize

thst in the selection of each district?
Ifr. Farley:

tfo, I do not know that I would in every

case; it would depend upon the facilities to

in thst district very largely.

The Secretary of the Treaaury:

reach other

That is all, thank you.



How, before tho hearing closes if there are any gimUe&da

horo who dcsirt* to bo heard froa any other cities, and who
con shod any new light on this subject, we t»hould bo glad
to hear from them*
Mr. Wexler:

You m i 6 eoeiething sfoeut wanting to recall

ae vith regard to tho other cities*
l?r. Mooney:


Collins made a suggestion that probably

we con anawar clearly.

The unanimous choice of the dole*

jj gation frem ireaphis, representing the V^aphis bo<fcr as to
escond choice, ie not asked of us*
The Secret taey of ths Treasury;
ITT* Mooney:

You onl;

I did ask tho question*

asked I t personally, but ths body

took official action in regard to that*

Our second choice

1s Chicago*

The Bsoretsry of the Treasury:
Ur* Mooney:

What ie your third?

The third is Mew Orleans, but the objeotions

which you make to borrowing applies there*

They are

Just as great borrower* and are is the seme borrowing texw
ritory that we are*
The Sooretary of ths Treasury:

*o aro no t making objoo-

tloas 9 wo are throwing out suggsstione to develop ths ea>



Mr. Hooney:

Well, our fir*.


ie chicago,


the committee did net paec upon the eecond choice, but I
take it

that — I am not eure —

The secretary of the Treaeury;

Tou h**d better etate your

et cond and third choicee, because eo far ae Chicago ie co»earned, I seen its geographical consideration, it nigfrt prod u d e that coneideration,
Mr, Ifooney:


had thou^it itmi ^i t include rentucky and

Weet Tenneeeee and the Wieeieelppl Hirer mi*$it be the
dividing lin e.
The Secretary of Agriculture:

Would you not consider thie

aatter further ae to your next choice and give ue your
Mr* Collins:

Wev orleana ie the third choice.

Would not

that coTer it?
The Secretary of Agriculture:
Hr. Collins:

Thot m

obout u

Tho Soorot try of tho Trooourys

We cannot tell yet.
f « »t you ooked tho othoro.
Too, but »o h*r« ooke4


for tho fifth choice.
Wp. Vooney:


h n « no furthor eholcoo.


would h*ve oh-

J 001ions to Loulerlllo oat » l*ato beeouso thoro io no bu«inooo botvoon uo ot a ll.



The Secretary of the Treasury*

Bo you object to St.

Mr. Mooney:

W& do no t object to St. Louie.

Tho secretary of who Treasury:

How do you rcgaid St.

Louie es e choice?
Wr. Uooncy:

Well, we would rugard St. Louie after Hew

Vi ret, Chicago,

second Wew Orlawne, end third

St. Louie.
Mr. Collins:

St. Louie or Kansas Cit^.

Kansas City

would put ue in the edge of e district.
The Secret ery of the Treasury;

Well, the geographi c&l

ocas ids rat ion h&s got to enter into this, of course.
are feeing to skip orer a let c f terrlloxy

If you

to get into ecsae

other one —
Mr. Collins:

Z did not know hut what vim sas City would

take in St. Louis.
The secretary of the Treasury:

We do $ot know ourselves,

and that i s the reason we ask so asny questions.
Mr. nooney:

There ie no relation between Georgia end this

terri fcory.


secret say o f ths Treasury:

o p sol w exler .

Hr. Wexler, Z want to oak


S . Wexler


one question which I omitted yenterday.Xn leylag out thie
district for Sew Orleans you stated you did i t upon -he
aesisaption there would be eight districts in the
Mr. ^cj&er:


of course, not less than eight.

The Seeretary e f the Treasury:

I understood this district

had been laid out with reference to eight.
?Jr. Wexler:


The secretary of the Treasury:

% sJUqply wanted to ask shat

other districts you had in your Bind when you laid out
thie map?
Hr. Wexler:

I hid in mind there would be a district

located in Bcs ton* one in Few Yezfc, one in Hew Orleans, one
in Chicago and one in Ran Francisco beyond any question ef
doubt i that those were five cities whife under no cirrn instances
could be emitted.

That then would be a consideration ae to

St. "Louie or Kansas City as another cent re! point.
make six.
Loui grille,


Ths t would

that Use following* Atlanta, Cincinnati,

St. Louis, Kansas city and Denver,


ing the central, territory, would be the next in consideration
after these fire above referred to*

I had figured the matter

out that you would have one either at St, Louis or Kansas

S. Wexler

The Storet&iy ©f Agri etaJLture:

Have y©u tried t© lay out

the districts?
Mr. Sexier:

Bo, but I can d© ao and *ould be very glad

to do it .
The secretary of Agriculture:

It ie one fchin^ t© ©elect

© city and then *?hen you begin t© lay ©ut the districts, it
is another


The secretecy o f the Treasury:

We would like ycu to submit

a m&p with your suggestion e f the districts, such number as
you think would be be at *i #iin the limits of the 1 m 9 and
also attach to it a saeEsorandum giving the


©f the reserve bank and th© resources ©f eseh ©f the district
as you lay them out.
Wr. Wexler;
nake one

That can be flie d as an exhibit.

I will d© it with pleasure.

point which

Will you let ms

say go in the record or not, which X

Ihink would bo ef seise advantage t© you in considering this
The secretary cf the Treasury:
Hr. wexler:


There has been a g©sd deal said about da*

■posits sad about rsources ©f various suctions,

lew % take

it as fundamental that ths volume of buslnsss transacted in a
|| section has really ths greatest bearing upon it , mo re than say

S . Vexler


other question to be considered.


The volume of the business,

the iura~over$ the residuum cuts very little figure.


residuum expresses the savings, ths surplus fundsef the

community, but not the volume of business.

Z maku that be­

cause X think it is a ver% strong one for sons sections aa
against others.

Hot particularly as to Wev Orleans, but

orleane as a point, the cl w in g s «aount tc a

billion dollars.

Take ths business done for

c&sh, which

we will say is 25 per cent, and we would hors $1,250,000,000.
Add the foreign transactions c f 1250,000,000, and yen would
have £1,500,000,000| and i f you add to that the county
checks not cleared in such a manner and not represented in
it, you have #£,000,000,000 of t rtnsactions.
billion dollars arc

Those two

at present handled end financed without

the aid of a Regions! Bank at all.

And it is figures of

that kind that have a direct bearing upon the location of a
Region &1 Baric.
The Treasury of the


So far so clearing house

represent real transactions.

Hr. Wexler:

Yes, provided they do not represent duplica­

tion of transactions.
The secretary of the Trcasuxy:

Yes, they are of value*


S . W exler

p jb

but the difficulty is that in Moat every city they repre­
sent varying baste of computation and in many instances they
ere largely artificial and therefore, they are not altogether
reli able*
Ifr. Wtoder:

I will admit that.

I know of a number of

cities, I h w e endeavored to get these statistics and make
clearing house comparisons and I find that a great many
cities pay balances to each other on c&shier* a checks,
and that is balanced ths next day and then another cashier's
cheek is presented.

But in Hew Orleans we pay in fold every

day the entire balances existing between the banks.
The Secret ary of Agriculture:

And ®?s find some other

conditions, as at Albany and Pittsburgh and so

Mr. t^exler:


Take Hew Orleans exchange, they trade

Wew York exdiange with each other, and I think that pre­

vails at l*es^hls.
The Secretary of the Treasury;

The difficulty about so

san> of these statistics is that they reflect a condition of
almost complete artificiality,
?r, wexler:


The secretary of the Treasury:
be t«jken


safe guides.

And therefore they cannot

We take /hem for what they are


S . ^etxler

Hr* Wexler:

I t&ke it when you got back to Washington

and sit down at tho table with tho o;xpert advisors whom you
will have, you will got all the info motion that you


Vr« Troaevant:

Is i t contempletedin tho law that a

Reserve Bask in one region may "borrow froa Reserves Banka
in &ny other region or regions, for any demand in excess of
the available supply of the borrowing bank?
The Secretary ©f the Treasury:

The federal Reserve

Board has tho power to penait one to borrow from another,
or under oertain conditions to coiapel it to lend the other.
Mr. foxier:

The lew requires it.

Mr. Trszevant:

It is not very clear, because Galveston

asked that question —
Mr. wexler:

The 1 m prescribes that.

The Secretary of the Treasury:
sire to be heard?

Whereupon, at
tdjtv raed.


Bees anyone else de­

I f not, the heaing is adjourned.

12 1 « ,

the hearing at Hew Orleans was