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STENOGRAPHER’S MINUTES T^E RESERVE BAMK ORGANIZATION COMMITTEE«_ FEDERAL RESERVE DISTRICT QE- FEDERAL -RESERVE-EAKXS AND-HEAD OFFICES, " rs. At. Date_ New Orleans, La. February 11-lc. 1914. Law Reporting Company, Official Stenographers 115 BROADW AY,— NEW YORK TELEPHO NE, 2820 RECTOR 3 2 *272. .vi 3 7 £- r' 9 , for. StacJ« 10 5501 Hew Orleans, T.a. , 'February 11, 1914. Vat pursuant to adjoum m wt at 10: 0 V. " . PRESENT : THE PHCRXTAKY OF THI TRXASURY. THI SlCKWiLHy OF AGRICULTURE. APPEAR A*CF81 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 .) , I L. PALUKt (*«t Orleans, La. ) LOUIS JT. GOLDSTEI* (Hew Orleans, Ta . ) , Csttsn 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 Fxchan^e. o 3502 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 elation. KJfBRY X.. JfWXARTHOHK, ( I w U t U l i , Ky. ) Tlret national ijlank. PRAWC M. aWTYS, (Loulswills, Ky. ) Union Rational Bank. 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. H. 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 Association. o 3504 The Secretary of thi Treasury: order* 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 prestlgs. 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. As 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 0 Rel Wexler 3505 economic prebleas we here te deal with facts* 80 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* STjffKCEKT 0? SOI WSXLER* 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 3506 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 Association? 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 http://fraser.stlouisfed.org/ Federal Reserve Bankiiof St. Louis G Sol Wexler * 35^7 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* No 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 Pation. 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 19on 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 35®8 Sol Yexler 0 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 5 6 por cent of # 8,900f000t and por cont of an aggregate of #475,5°Ot®00, without counting Government deposits, of #24,000,000* 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 ♦82,500,000.00 Recounts (profit k lass) i 7 6 0 .0 )0 .0 0 112*5,060,000.00 Sol V e x e r 3509 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 alonet 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 25 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. http://fraser.stlouisfed.org/ ;i Federal Reserve Bank of St. Louis Tn this territory the most remote elty having a Sol Wexler G 5510 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, - 689 a ile s , or 26 hours and 40 minutes; to %ho north Paris, Tonnossoo, - 529 miles, or 16 hours and 10 ainutoa. Such so at western city would bo noaror Houston by only 362 Miles, farther froa Atlanta by by 777 miles; 8>'7 mile a; farther froa Blminghs* farther froa '{eaphia by 758 miles. 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 8ea; and by rail by the Southern Pacific and its aany connections; Texas and Pacific • • * * * * Atchison,Topeka k Santa To • * 8t# ■ Louis Is Baa Traneiaco I# 0* Texas k Voxico and La* Kwy. * navigation Co. To tho eastward by tho Louisville Ii Hashville and its nany connect ions# Southern Hallway 0 0 0 Mobile Ii Ohio • • ■ Queen k Crescent System • • • 0 Sol Tazlor 3^'U. 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 0 Sol Wexler J512 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 Orleans 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 dsposits* http://fraser.stlouisfed.org/ Federal Reserve Bank1of St. Louis Sol Wexler 3513 national Banks C a p it a . Papa alt«. T«rr* $^,900,000. ♦24,000,000. 7,430,000. 20, 800, 000. Woot Texas 7,952,000. 21 , 515, 000. • Woot Tennosooo 8,720,000. 23,445,000. 9 Georgia and Weot Texas 6,432,000. 18 , 315 , 000. Georgia and West Tenn. 7,250,000. 20,245,000. West Texas and West Tenn. 7,772,000. 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. 2.949.000. 6 , 668, 000. • Wost Texas 3.715.000. 7 , 711 , 000. • Wost Tennessee 3,489,000. 6, 897, 000. • Georgia and Wost Texas 2,764,000. 6,379,000. Ooargia and V««t Twin. 2,538,000. 5 , 567, 000. 3.204.000. 6. 608. 000. 2.353.000. 5 . 276. 000. * * * Vaat T<>\-*■ and Vast T*nn. Oaorgia, Waat Texaa * Vaat T a n , Sol wexler 0 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 $0 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: City. Hew Orleans Atlanta Houston .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 55,ooo,ono.oo 1 5 .4 0 0 .0 0 0 .0 0 42,0 0 0 ,0 0 0 .0 0 , , , , Birmingham ghaa 7 085 100.00 27 289 000.00 vamphisa 8 ,8 0 4 ,6 0 0 .0 0 35,130,000.00 Tha oaa.aratlra total raaouraaa ara aa follow*: Sol waxier 3515 Total ptou rcei. S ite », Woo Orloono $ - 110 f000, 000.00 Atlanta 51 . 000. 000.00 Hou Ston 57 . 000. 000.00 Birminphom 35 . 510. 000.00 ifonphio 45.934.000.00 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* ond A statement of tho comparative distances of the principal cities froa Vow Orloono is os follows: Treat City of Ts City of Vow Orleans Mobile 141 Tensocola 2*3 Atlanto 499 Montgomery jie dumber of 1 e lirmlnrhom e Chattanooga ♦98 VaehTille 622 •aphis 396 • • Little Keek ♦87 * Sol W<nr Orleans or $516 Dallas 515 • Austin $28 • Houston 362 San Antonio 571 Galre ston 412 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 0 Sal Wexler 5517 b t'iP I 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 0 Sol Wexler 3518 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 0f conditions, 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* 0 Sol Wexler in their time of need* nearly 3519 Tn tho panic of 190?, 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 8aint Louis exchange wss oold at $10 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 3520 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 G Sol Wexler 3521 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 * 0 Sol Wexler 3522 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, wearly 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: Yes. 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. Q Sol Wexler 3523 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 #2,000 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 5 an inereass of one hundred years* 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* 0 8el 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 3349. 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 rast 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. It } Sol Wexler 5525 lo as Inevitable end certain os tho law of gravitation. oaro for tho present a Regional lank To 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: Cotton Wheat Corn Oats, . Hay, Sugar Cane, Riee, Strawberries, Citrus Fruits, Tobacco, Togo tables ef every kind. Sol Wexler 0 3526 The mineral production is at follows: Iron Coolv O il, Xatural Qae, Sulphur, Salt, Building Stone. Tho live atook production is Cattls, Hours, She<*>, Poultry* Tho So a products are Oysters, Shrisp, Fresh and Salt Water Fish. The Forest products ars Fine, Cypress, White Oak, Hum, Ash, Poplar and aany other hardwood varieties. The essds manufactured are Cot tan Cloth, Yarns, Knitted Ooods, Steel Bail, Wire, Ftps and rolling s il l products ironorally, Tin and ftalvmlsed Iron Caie, Tanks, Culverts, Staves, Cooperage, Saah, Dsors a Blinds, Gross Ties, Furniture, Wagons m d Carts, Fertilisers, Sol Wexler 3527 OhtalotXii Aeidfy Soup, 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, Cement, 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 1 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 -’ 3528 Sol W«xl*r 0. 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 that? Hr* wexler: I think I hare* Tho State of Texas has Sol w r ie r 0 3529 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 8t. 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 another. 300 here thea with one northern city and 143 with wow #utt here you to sqr as te the eourse of trade 3550 Sol Wexler 0 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# Louis# ?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 http://fraser.stlouisfed.org/ Federal Reserve Banki of St. Louis a Sol Wexler 3531 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: ions I should think you would aeoopt tho conclus that you would arrivs at frem the geegrapioal location Sol Wexler 5532 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 I tho mcreaent to and froa* Wexler: 4J 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 1 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 Texas? .r. Wexler: Yes* Sitirely Texas? The Secretary o f Agriculture: vr. wexler: Yes* I think I hare* The Secretary of Agriculture: jt you hare not, you can file it later* Hr* Wexler: yes* 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: Oeorgla* wow take Florida and 0 Sol Wexler Mr# Wexler: 55M Taka Tlcrlda and Qeorgln out? fhe Secretary of Agriculture: report t a f the 55 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 Orleans? |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 **5: very little bearing up on the financial state ef this propc* sit Ion or the territery which should be served# a 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 Ivory 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: We. 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 3536 Sol Wexler G 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 goods* 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 section? 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 3937 Sul Wexler G 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 here? Mr* Wexler: Hone whatever* I have one or two froa whoa Tlorida, you will boar from, but froa Georgia we bare tea none* 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 0 3556 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: To*# 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* 0 Sal »exl*r 3539 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 union. The Secretary of Agriculture: Doss Wow Orleans distribute ae st o f tho hardware and la^loanato that Texas uses? Mr* exlor: I do not say most of then* They distribute dlstributss 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 1s 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 0 35*0 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. question 1s The 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 tr-.de on tho aast coast of Florida is not to Yew Orleans* Agriculture: Tho Secretary o f xauxSboonxxx Wexler: 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 — Q Sol Wexler The secretary of Agricultures 35^1 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. The 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: Yes* 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, and X think you will find th * very strong. G Sol Wexler 35*2 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 respect, 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 G So1 W oxler 3543 theau 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 bank 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 0 Sol Wexler 3J44 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: argument? 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 not aa between depositors and the banks 1 s/rjoing to bo inter* fared with; you are going along Just as usual, Hr, Wexler: m Y es, The Secretary ef tho Treasury: Your foreign transactions sre conducted between the banks and individuals just ss now, nr» Wexler: yea« The Secretary of the Treasury: Vederal *eserve Bank itself only You have recourse to the under certain spoclfled conditions? Mr, Wexler: Yes* 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 0 55*5 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 itself. 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 directors? 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 shout? The See rotary of the Treasury: yet us touch on that point. Here is the vederal pesorve Bonk; its directors are chosen 0 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. district. 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. Wew 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. Do 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 0 Sol Wexler merely 00 35*7 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 1s 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 that 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 the reserve bank of tho district. That inevitably follows. 0 Sol Wt,xlar 35*8 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 sub-treasuries. 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 0 Sol wexler lo correct, 5549 ^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 tory. You moan the Reserve Board. £00 or 600 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. The 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 3550 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 built 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 belongs? What rood reason could there be fbr placing it in an inland city? The Secretary o f tho Treasury? <?uestion. 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 district? 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. 0 SoX Wexler Hr. Wexler: 3551 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: Yes. 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 0 . 3552 Sol W«xlor ve hare un /7u« st 1on ably the vest side ef Florida; we hare unquestionably 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* horo We hare all thio business centering in/froia abroad, and that wo aro anxious to cultivate — Tho 8ocrotary 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. What is the custom in Wow Orleans? *3% Wexler: Wo pay two por cent on balances. The Secretary of tho Treasury: collection. now about tho fro 9 eheck 0 3553 Sol. Vexler Hr* Vexler*. Vo choree evory bank that does buslnsss with us tho actual sunount that wo pay for tho collection of thoir items* 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: Yes* 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: X ms speaking of Texas now, because you havo got Texas in this district* ¥r* Vexler: Yes* Tho Secretary of the Treasury: So that these rooorveo would indicate somewhat tho natural flew of business, would G Sol Wexler 355* they not, an between these different points? Hr. Vixltr: y «*» Tho Secretary of tho Treasury: The amount of reserve balances would Indicate a no rani condition* Mr* Vexler: Yes* 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: Yes. 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* a Hr* Vexler: know, T et me explain* The State ef Texas, yeu covers an area I think larger than Louisiana and Mississippi combined, end our other states • • 8*1 0 waxier 3555 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* number, Kansas City has a larger but that is not a central reserve city* Sol Wexler 0 Mr# Wexler: 3556 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 It 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. a Sol Vej&or The Secretary of Aprlculture: instance, Mr* Vexler: 3557 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: y.et 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* 1 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: Correct* The Secretary of the Treasury: * Texas banks hare sane* http://fraser.stlouisfed.org/ thing Federal Reserve Bank of St. Louis like $ 75 , 000,000 capita and surplus, «nd Louisiana 0 Sol Wexler 3558 bag £13 *000,000 appro* mately of capital ond surplus, yr. Wexler* T«s. ? ■ V 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 j section. Vr. Wexler* But T think area should be considered in connection with that. You might just as vail take five ststes, if you like — w The Secretary of the Treasury: I am taking — if you do that, ve get down to Houston alone as compared with lev Orleans. 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 from 519* The Secretary of tho Treasury* I f lev Orleans vac exercising a dominant influence within this nearby Sol Wexler 0 3559 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* The transaction is made and the credit is given, and tomorrow wo will probably got a telegram to remit that to low York* The 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 I exchange is sold in Wew York and some in Philadelphia, Just as you claim that those exchanges between Wew Orleans G Sol Vexler 3*60 and Houston are net reflected. ^r. Wexler: Exactly* 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, stoek Bat 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. 0 Sol wexler «r. Vexler: 3j6l 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. yes# 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. Tho Secretary of the Treasury: Vh&t are your trade 0 Sol Vexler 35^2 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. Louis? vr. vexler: of that kind* I think it is about 17 or 18 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 cities. 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 0 3563 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 xehange 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 there# 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 o 556* 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: Yes* 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 G 3565 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: it* 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: discount? nr. Vexler: Yes* All the stats banks re* a sol Vexler The Secretary of tho Treasury: 3566 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? 0 Sol Vexler 5567 I do not know but what yea hare advanced with groat paw or oosio of thooo arguments >ourself, T would like to know what j your views aro oinco tho b ill has been passed# Vexler: 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 00 Th^r would be locallaed apt to ce&rceinleite with headfsarters* vr. Vexler: Vo, and I aa hoping that you will organise theae branch banka 00 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 o Sol Vexler 3568 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 districts? nrr* Wexler: Yes, sir# The Secretary of tho Treasury: Assuming eight, L „ your ▼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 1 Sol Vexler 356 9 1- \ 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 four, 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: 1^*1 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 3570 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 not? 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 , 1 h G Sol vexler *571 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 problem? 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 any 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? W. Vexler: 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 4%# 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, Vhy? in 1907 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 S > Sol wexler could get it and do the business* 5575 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* felt 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 questions* 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 0 sm 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* • not 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: yes* 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 0 3575 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 a Sol sexier conroyed* 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 banks* I suppose your question is directed as to How that best can be done? The Sooretary of the Treasury: Exactly. The purpose of the A<* is to substitute a syetea cf elegances for the present slow and cuabersome and expen0iT0 systea of cheek collections* * Mr* Wexl*r: And of transfer of funds. The Sooretary c f the Treasury: And the transfer of funds, precisely* 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: Exactly. 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 0 Sol Wsxler The Secretary o f the Treasury: 3577 of course, there is another feature of the Act in that same section requiring shell •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 expense. j0 Sol vexlor *fr* Waxier* 357® 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: y«s# 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* there and A iie nerer been any object ion by *he State Banking Depart* ment* 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 0 . 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 : Yec* 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 him? 'ir* Vexler: yes, * will get the information for you* 0 Sol Vexler The Secretary of Agriculture: 3580 Do you know how It ig in ViOOiMlpplt 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 you? 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: flpwro Ho, T did not. That It a hard thing to out. 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: *1 *ut there might be some aho would not be I0 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: Yea. 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 w 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: Ye^ that is t n e , but thoss government offices would not bo there if they wars nst cities of some lnportanee* 3582 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 overlooked. must not be Hew Orleans Is the place which the government oupftt to look to for the development of this business. This 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 3583 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: 4k 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 located* 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 * best place to put one to servo this territory? wr. Wexler: so far as Wew Orleans is concerned, Wow York. 0 8ol Wexler I The Secretary o f the Treasury: . > 35$* I know, but that I s net practicable, because you cannot attach Yew Orleans to 1 ew York* ^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 Cincinnati, 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 semi-respeotable* 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 35*5 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: y«s* 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 !0 Sal wexler 558^ 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. ! bualneaa. We hare tho city to da the V* hare to accapt their bllla inatead of thair H being accepted by London, and we have to promote to a great i s 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. eatabliahed. 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 0 SoX wexler 3J87 reaeH our limit very quickly. The secretary o f the Treasury: That comb to a question of re-discount. ’n r. Wexler: yes. 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 0 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 business, 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, Yes. 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: chans 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* further, 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 Committee, ve must ask the questions in order te develop the argument, and they have no slg n lfic »o e further than 0 S o l W exler 3589 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: t.Vi*** Twin* I ft t r in i We would like to have ic&t«$. 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:) THB WI5W ORLEANS BQAflD 0? TKABS, I*TD. Wew Orleans, Web. 3 t 191*. RXSOLUTTOTB A30BTTD BY TKB **W 0KL1SAVS BOAHT) 07 TRAD*, mkttito, tebruaky 3rd, 1914. » 'a Sol wexler 5590 •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, 0 Sol Wexler 3591 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 0 Sol f « l « r 5592 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* • (Sifted) Jeff D* Hardin, President* H# S# Herring, loorolarjr# IH f ORLEANS ASSOCIATIOW 0? COMMERCE. Bow Orleans, January 14th, 1914. Organisation Gowaittee, federal Reaerre Board, Washington, D. C. Oentlemons 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: (1) Central location for handling domestic paper for tho greatest number of Southern States and Cities* 0 Sol wexler 3$93 V (2) Central and natural frat #way for tho ffisslssippi Valley t Central South, and Panama C»nal and La tin* American Trade* (3) financial importance, ‘being the South*• largest banking city. (4) Industrial Importance, being the largest manu facturing City in the South* ($) Commercial importance, being the largest whole* sale market in the South. (6) Shipping importance, being the largest seaport of the South and second only to Yew York in volume and value of exports and imports. (7) Metropolitan importance, being the largest City in the South# (8) 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* (9) 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 http://fraser.stlouisfed.org/ Federal Reserve Banki,of St. Louis 0 3594 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 South, believe, hcwever, in all sincerity that no matter how meritorious their claims, those of Hew Orleans take precedence, 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 Orleans* 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 11k in all sincerity that our representations in this remP«et will be confirmed* Yours very truly, (Signed) V, 1* Tresevant, General Manager* Mr* Vexler: I would alsc like to file the printed report Sal Wexler 3595 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* (Signed) 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* 6 S o l w * xlo r 3996 (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: necessary, 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 0 Sol w«xlor 3597 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* Wexler? 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: Yss* 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:) 0 5598 1 # I* B «n tley lRAJrCHT*8 or THI F^SRAL SFRVTC1 ALREADY ESTABLISHED AT R V ORL.TSAKS* 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; therefore, 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 0 L# X* B en tle y 3599 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 0 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. The 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 455 employes in the post of flee proper, and all the rural mail carriers In Louisiana, besides the of the Ballway 165 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 L, 0 * Bentity 5601 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 #60,000,000* The balances os hand in the raults of the T. 1* P*ntley $602 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 vaults* 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* 5605 *. Bentley U 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 j Louisiana, Mississippi, Arkansas and Tennsssee* The 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 G L , E* Bentley 5o04 » 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 Zone* 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* points 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. An 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 Bellse* 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 3606 L. K. Bentley importance, 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 any ort in tho district. This city is also headquarters of ths Tenth Super* v 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 Rico. 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 tributaries. The United States Court of Appeals for the Fifth ______ ___ I,. 3606 Bentlay 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. Through 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 3607 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 0 I.. S. ?«ntloy 3608 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. STAWCEJfT 0* WM. B* THOWPSOW. The Secretary ef Agriculture: Give us your aame, occu pation aad address. - - ■ — ---- - - -- -— } 3609 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: Secretary, that 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* tioular phases o f the subject. • r 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 1 affect the i essiblllties of expansion thereof to 11 wj—mini i W. B* Thompson 3610 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 nations* 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 0 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 0 ' W* B. Thomson 5612 problem of adjusting the ^orernment • s great plan of currency reform to tho needs and the deaindi of tho country's common good# 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* It requires no gift of proftaocy to foresee that a tremendous expansion in the relume of this commerce is imminent* Ur- asid sted logical rision will demonstrate the rerity of this forecast* 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 62}C 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 3613 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 trade* 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 G ¥* 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 <■ prlvl* leges are utilised by such grantees primarily and often exclusively for their own profit and net for the advantage of the lmprsvidont former owners of the earns* A private |0 ! V. R# Thomson 3615 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 augmented. 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 solved. 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 public property for an essentially/good , took over the old Wharves http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis ___ G $6l6 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; in 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 s. front, 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 0 switched upon its tracks* 361? 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 municipality* 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 i W. B* Thompson 0 36X8 low* 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 require, 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 91;* 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 compensation* Wo charge Whatever i s wade for the use ef these ¥. B. Thomp son 3619 || 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 1636 arrived 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 #100,23^.70. 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 I n V* B* Thomp son 3620 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 selection. 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- ^-1 600£. 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 5622 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 ll expenses and the Interest on the #500,000 outstanding bsnds,9 w yielded a net revenue of #15t989»B5. The bus ins ss ef the utility has shown a steady and rapid growth from year to 0 V* B« Thomson ^623 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 el sd 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 facilities. 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 future. 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 http://fraser.stlouisfed.org/caused Federal Reserve Bank of St. Louis by the accumulation of freight awaiting ehlpment and 0 W# Thomson 3624 distribution, but should materielly increase ths business handled through tho port by providing adequate and inexpensive facilities for assembling and dietributlng cargos and consignments* Although the public warehouse adjunct to the pert system is not yet in actual existence, yet its ls$ort«nce is so great, its significance so far-reaching, Its consummation so imminent and its logical promise so reassuring that I feel justified in claiming a snail share of the time of the Committee in calling attrition to the very considerable impetus which thie development will £ive te the City's pro gress and growth. Tt is the purpose of the *oard of Commiesloners to Inaugurate the mrehouse w stem by ths construct ion of mammoth storage and shipping facilities for cotton* Hy utilising the great advantages and economies of public con trol and operation, It is an ell but gemonetrated fact that the oost of handling and carrying cotton at the port will be reduced to an astonishing minimum, and that ths negotiable value of the commodity held on such storage will be greatly cmha no ed. By ehieh means it Is confidently expected that a resolution will be effected in the prevailing methods of 9 *#>2$ 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 year* 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 0 V* X# Thompson 3626 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 satiated* 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 if businsss proposition well afford to do so. 1 The cause of tho uneconomic condition complained of is obvious. There is no market in America offering facilities which make the holding and equitable distribution of tho crop profitably feasible. In ether words, under the warehousing conditions that e?d at in this country, tho cost of carrying cotton Is http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis _____ *♦ ?.* Thompson 0 &27 too great and tho difficulty of financing holdings too esnslderable to encourage tho ordorly course of sskricetlng desired# 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. Trom 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 0 3626 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 Galveston* 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* Ve 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* 5629 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, Tt is not onougfc to mereXy improve conditions, they must be revoXutionised, 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, 0 ¥. B. Thomson 3630 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 belt* 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 Q W. B« Thomp son 3651 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 0 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. Vith confidence, therefore, and with respect, we srtnxlt the claims of ths port of Wew Orleans. 8TATH9TC OF S, J, GXSKVY. 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 a S. J . Olenny 3635 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 1912* 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 9 5634 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 exchange. That is as nearly as I could arrive at it. Tho Secretary of Agricultures How do you got those figures? 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 honks. 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 0 B» J* aienny , 3635 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? Kr* Olenny: 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 I• && 1* J . Gl«nny figures ve rely upon are the government statistics* The Secretary of the Treasury: supply us vith that data* qf 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 record. wr, Olenny: You vant simply a statement of the amount of cotton handled through Wew Orleans, its value and hew it is financed* 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* You aay file your atat eaent. (Ths statement vas filed and is as follcva:) The cotton business of the section tributary to Vev — a -- -- . ........... . ..... E. J, alm ny — --- n 3637 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. As 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 1 365S S. J. Gim ny Bank, it would be the centre through which 11 v&atly increased 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* 1 f These bills of exchange, under the present intern of financing, anst — K 0 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 fore, nore readily appeal te ths people of this section and 0 S. J* O le n y 3640 in so ap ealing inure to the development of the Reserve Bank. 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 3641 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 3642 IS* J* G lsnnjr exc«eding the balance of trade In our favor* The otal 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 Orleans* 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* 8TAVM HT Q* UATTHKW J. The Secretary of the Treasury: RAWTOM* Will you stats your name, residence and sccupation* VT* Sanders: Matthew J, Sanders, WtsaasHip Manager, 0 «T* Zander* 3643 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 9 X» / • 30 th, 1800, Sanders 5644 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. For 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: for 30 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 j*. sender a: $6*5 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 hare* 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 trade* 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* The G 5646 • 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 everts #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* 1907? 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 period. Ifr* Sanders: Here are the figures — The Secretary ef the Treasury: 20r. Sanders: 1907 Tsfce 1907, now. * » exports of $ 170 , 000,000 and 0 V. J. Sanders $6*7 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: 1912* So, it is erm less in 1912* It was ♦149,000,000, ths difference being largely in ths Talus of cotton* Ths Secretary of the Treasury: W. Sanders: 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 1907 MT. Senders: ta We, I am speaking of ths 1912. it is Tory largely the Talue of cotton, the largest commodity we handle, ehieh ranges in price enormously* 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: bales? What was tho number of G K. J . Sanders Hr. Sander*: 3648 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 500,000 Louisiana 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 year? -MT. *E0iders! Yr. rlenny: 300,000. w 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 http://fraser.stlouisfed.org/ Federal Reserve Bank of *St. ' * - Louis n r rMiiifMfr*narfir r~i ■ ■n ^ ---- ------------ _______ . .... . . M# J . Sanders G 3649 like to hfcvi th ® . Hr* Sand or 0* ll this, Yes* "*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. The 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# 0 railroad building east and west. 365O 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 a 36?a 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 continent. 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, i860: 3653 X* S&nders noKisrro exports Avge* yearly ralu*. Wew York far cent Total ATge. yearly Tfclue »*r cent Total *102,257,675 30.95 *208,080,149 62.71 18,513,657 5.60 41,495,022 12.50 6 , 059,011 1 .83 15,294,205 4,61 Baltimore 10,403,907 3.15 A , 625,993 2.90 lew Orleans 93,317,338 28.38 20,486,416 6.17 San TTaneisoa 10 , 808,085 3.27 9 , 227,622 2.79 Boston Fhila delphia lew York * s percentage of tho total export trade of the country during this period, averaged 30*95; Wow Orleans 28,38. 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 port. 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. G 36?4 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. This 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 follows: 30th, I 898 was as M. J. Sander# 3655 DOMESTIC SXPOBTS Pive ye arc ended June 3°th, 1896. Atg£».. »«r. cent total *459*&U »892 43.52 Boston 96,051,735 9.09 Philadelphia 43,581,218 4.13 Baltimore 82,223,787 7*78 Hew Orleans 88,432,371 8.37 39#05X,660 3.70 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: ? * ■ / 1912, 0 J. Sander* XXPOKTS Wew York 36 56 TiPORTS totals *8X7,9*5,605 ♦975,7*4,320 #1 , 793, 690,123 Boston 69, 692, 17* 129, 293,016 198, 985,187 Philadelphia 69,069,750 85, 038,185 154 , 107,915 Baltimore 92,210,877 26, 438,400 118,649,277 149, 160,910 75,089,887 224,250,797 San vrancleoc!> 49,2 *9 ,754 59,235,*71 108, 465,205 Wew Orleans This shews Dew Orleans again the second part in ths country in the value of her total foreign commerce. The 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 189ft. 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 a «T. Panders 3657 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 port. This second channel is now praetlsall. completed >1* J* Sandora 0 5658 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 1911 1913 being 4 ,6 3 * , 217 ions * 6,080,071 • 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 thousand miles In extent, like all rivers, have variable 0 >'♦ J. Sanders 5659 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. r 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 a M* J* Sunders as far north as 3660 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 H«Iy 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 G M* J . Sander# 3661 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 0 M. J. Bandore C. H. £111 g 3662 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. STATT'SNT 0? CRAWFOBD H. KTAXS. The Seerotary of tho Treasury: Will you state your name, residence and occupation. 10*. ELlls: cr* wfor’£ H. E llisf Manager of tho United Fruit Company. The Secretary ef Agriculture: What is the nature of this company? 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 cotot 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 6 0. H. m i s 3663 the tropical fruit trade from Latin America? Th# Secretary of the Treasury: statement, T see It la brief. You way proceed with your You m y incorporate It In the record* Kills: 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, http://fraser.stlouisfed.org/ Spanish Federal Reserve Bank of St. Louis Honduras, Plearagua, Costa Rica and Panama ars 0 C. H* 33.11 s 5664 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 o c. h. m il 3665 |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 mm 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 Berra 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 s c. h. m i s 3666 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: #16,000,000.00 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 Total The Secretary of Agriculture: What was it for 1910? Ws | would like a little comparison to show growth, in I 910 and jj 1907, five year periods* nor, ^11 is: T cm Can you give ue that? give you in 1906, 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 0 C. H. m i l 3667 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 ships? 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 operations? 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: T j 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 (J c. K. m i l 3668 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. STAT1KEWT Of ¥. S. VWXCK* 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 trade. 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. http://fraser.stlouisfed.org/ Federal Reserve Bank of B St. Louis . .. • -. >■ --- ---^ ^~ - 0 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 Boston, 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 amounting in good years to something like 300,000 long tons; and in addition te this 378,000 leng tons of foreign sugar arelm orted and refined, making a total of 678,000 tens. 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 0 V J. S# P e n ick 3670 entirely upon Vew Orloono for thsir supply of sugar and molasses* 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 3671 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* From 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 0 3672 largely upon Hew Orleans for its supplies ef sugars and molasses* 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: Yes* 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 0 # 73 sea sonfid deaan d for money for the sugar crop? Hr* Penick: In November and December* Sfe Ths Secretary of the Treasury: Tt comes along right after cott#n? Tfr* Penick: J ight sfter cotton, yes, The Secretary of the Treasury: Mr. Penick: sir. 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? Yes. 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 0 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: Yes* 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 0 3675 adrant*goou«ly jlnced for refining purpose** % Vr. ’Peniek: very, T sho Id say* The Secretary of the Treaoary: Kara they water navigation facilities? Mr* penick: ye s, tooat 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 $90 oil mills, located in the cotton producing states, for outranking all other points in this regard* Wow Orleans holds the same relative position in cotton seed oil 0 S. T* George 56 76 I circle% 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 combined, 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, 5750 t&**k cars of 160 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 a X. T. Oeorgt 3677 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 next* 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, 5000 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. C B* T. George Cottonseed hulls: 3678 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 season* This product Is either boiled down into an article testing alvut 95^ 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* ____________________________________________________ 0 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 $100,000,00 0.00, are sold for crushing orer a much longer period, hence during said months, the mills generally exhaust their local credit, and are compelled tc discount fcur and six months notes in the money centres of the country. Cottonseed products aro inrarlably sold for cash, and meet with actire demand each month of the year, both at heae and abroad, making the paper, as a whole, safe and desirable. A Resenre Bank hers would be cf great baaefit to at least m x fire hundred (500) crude Cottonseed ell mills, contiguous to Vew Orleans, besides lecal refiners and exporters* Th« Pa«retory of tho Treasury: Haw about tho finanelng 1 s 3680 2 * T. r*eorge of these requirement a, do you hare any difficulty in getting tho accommodation needed hero? yr. George: Wo get a large proportion o f our accoamodat* ions hero, and after that we discount our four and six months notes through — Ths Secretary of the Treasury: Ifr. George: Where? Through Wow York and Boston. The Secretary of the Treasury: £r. George: Through not# brokers? Y «s, sir, this year largely through Boston. The Secretary of tho Treasury: What sort of paper do you give? &r. George: Wo generally giro our own paper with the endorsement of two of the officers of ths company. Ths Secretary of Agriculture: What percentage should you say you hare to discount? ifr. George: K«re or else*hero? The Secretary o f the Treasury: Hr* George: Outside of Vow Orleans? Some seasons more and soms seasons loss, Tor instance, ths price of cottonseed oil varies from tho size of the crop, from 25 conts up to b5 cents a gallon. This ysar I should ssy about 5$ per cent has been discounted in ths sast. 0 S. T. Oesrge 3681 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: No, 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 collection. 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 0 B. Y. 3682 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!: here. \nr* Wexler: And it is the same way hare. Mr. George: Yes, sir. 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 Yes. 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. aa MT. Wexler: 1 Tt is about luncheon tine* I0 J. T>* Hardin 3683 Tho Secretary of the "reasury: Haro you seme witnesses here upon the manufacturing phases? Ur® Vexler: Yoaf sir, m Hardin will Just say a word on tho gr si n business of tftepert. STATiraT OF J. % HAJ The Secretary of the Treasury: 8R. Will you give your name, address and occupation* V r. Hardin: Jeff 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* 0 J. ». Hardin 5684 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, bo far as Grain is concerned, the benefit that would accrue by the establishment of a Regional Bank at Hew Orleans. It 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 recognised. 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 0 3685 J . n. H ardin | recognised by all chipper* as the nost perfect In the country# The Secretary of the Tree,cury: How many elevator* have you? Mr. Hardins fire. The Secretary of the Treasury: Have you given their capacity? yr# Hardin: T will furnish you with the capacity. I 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 grain# 3. T>. H ard in 6 3686 The secretary of the Treasury* Kr. Hardin: What kind of grain1? Wheat fend corn and so?ne little oats* And , 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. The •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 flU 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 <5 3687 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 cause? 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 1915 our grain export business steadily | decreased, the average during this five year period amount ing to about 7,600,000 butfiels a year* 0 J* 3* Hard In J688 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 3689 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 demand 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 0 3690 In connection with Wow Orlean a as a pro due • and provision market, our trade runs up into tho millions of dollars. 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: http://fraser.stlouisfed.org/ Federal Reserve Bank ofiiSt. Louis Are you advocating thlo ____________________________________ J. D* Hardin a 5691 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: yss. The Secretary of Agriculture: Mr* Hardin: and hare then yes. 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* ■ Hardin: * ■ Yssg sir* Ths Secretary sf Agriculture: in ths future? How Is it £olng to do it (I J. D. Hardin ¥r* Hardin: 3692 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? Hardin: 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: y *«» «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 0 Mr. Hardin: 3693 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, j 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 90 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 J 1912 thorot *r , Hardin I In 1912? What eas tho value of the or 1913, the latest year you have 1 G jr. B. Hardin The Seer©tary o f the Treasury! 3694 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 decrease* The Secretary of the Treasury: «r* Hardin: A continuing decrease? Yes* 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 that? 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 { 6 J# H* Kardln Or. Sexier! T et ae explain that from the bank standpoint. The Secretary o f the Treasury: 1 r* *fexler! 3695 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 agent 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 0 be made a 56$6 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? W. Wexler: There is not any particularly 30od reason, 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. G «T• 5# HftPdlR 5697 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 $75 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 question *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* Tho Secretary of tho Treasury? do you aeceunt for 0 J. j the decline? fr* Vexler* 3698 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. 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 ban** 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* I 0 3699 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, 0 2, !• Harral. 5700 I I 2:00 A r rm Hsctss, p. x, ttATEOWT 07 S. B, HAHRAI, 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? G S. B. Harral 3701 The Secretary of Agriculture: vr* Harral: Only* 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 90 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: be* 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 G 5702 %. 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 90 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: yss* long after those 90 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 0 s. B. Harral 3703 probably the small banking capltal her®, that is, «e should hare more, amounts to about a quarter of a million bags to 300,000 bags of coffee* The Secretary of the Treasury; Ur • farral: 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, say a couple of million bags. The Secretary o f the Treasury! Would that be carried for specula tire purposes? Mr. rrarral* Ho, 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 business 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 loans? 1«r. Harral: the I think that the position 1 s just this, that business is as large as they can finance, but with m ore JU » . Harral 0 3704 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 300,000 bags you carry anyway* VT. Harral: here* I 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 prevails. 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 9 *• *• Harral 5705 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* You 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 http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis ____________ ________________________________________________________ a 3706 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 Galveston? 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 G 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 centre. 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 the 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 about 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? This coffee is distributed throughout tho United States, excepting a 3708 IE# £• tferral the l*orth Atlantic Seaboard east of the Alleghenies* The shipper of coffee from Brasil at 90 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 0 I . £. Karral 3709 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. STATHir^T OP KDOAR ft. STJSR*. 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. 3 0 S. B. Stem 3710 The Secretary of tho Treasury* Will you stato briefly and summarise *hat you have In your brief, and file it as an eshibit? 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 1909* 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 Yes, sir. 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 bureau is simply estimated and is a guess* The eensty* takes the 1 3711 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. Yes. 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? yes. 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, nake up 60 per cent o f our total, aad the other loading X, B. Ptem 3712 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. That ' was tjovcd a few feet outside of the city limits Just before 1909, 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; lumber 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 1909» In th e first fire years — The Secretary of the Treasury: 1909, 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 1909, and taking almost their minimum product, # 50, 000, 000, it would be $108, 000,000 in well, I have not tho 19<>* figures* 1909 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 http://fraser.stlouisfed.org/ Federal Reserve Bank of.A St. •__Louis • r E. B. Stern a little o t©* 59 371* per cent. flow I have the figures for the State of Louisiana as well a a vew Orleans? The Secretary of the Treasury: 1 9 that stated in j*ur brief? Kr. St era: yes. 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 state. Mr* St era: In capital invested Louisiana heads tho list with # 221, 000, 000. The Secretary of the Treasury: This is the census figure now? yr. Stern: yes. 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. census I merely want to make the point, if I m y , that ths points out that in making up that column of capital G S, B. Stern 5715 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, and 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 G E. B. Stern 3716 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 to 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 . Their 0 X. B. Stem 3717 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 united 1909, 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* 1910 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: Louisville #101,284,000 Vow Orleans 78,79^,000 Richmond 47.358.000 Atlanta 33.038.000 Memphis 30.242.000 Yashvllle, 29 6 50.000 Dallas 26,959,000 Blnalnghwn 24,128,000 . E. B. Durham, if. C. zturn # 25, 271,000 Houston, 23 , 015,000 Chattanooga, 16 , 036,000 San Antonio, 13,435,000 Charleston, 6 , 951,000 Bessemer, 6, 106,000 Mont gomery, 5,443,000 Mobile, 5,429,000 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 *77,385,000. 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 0 5719 X» B« Stern In the State of Louisiana we find arrain a very strong show ing for what is often considered primarily an agricultural state. Think ing 0f 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 Texas ♦272,896,000 . Louis iana 225 949.000 Kentucky t 225.754.000 Virginia 219.794.000 Tennes see, . 202 ,863,000 180 ,217,000 Alabama 145. 962.000 South Carolina, 115 . 236.000 north Carolina, Georgia 216 656.000 Mississippi 80. 555.000 Arkan sas, 74 . 916.000 Florida, 72 . 890.000 0 K* S* Stern 3720 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: 3721 £• B* S t e m Louisiana, | 22l , 816,000 Berth Carolina, 217, 185,000 Texas, 216, 876,000 Virginia, 216,592,000 Georgia, 202, 778,000 South Carolina, 173 , 2^,000 Alabama, 173 , 180,000 Kentucky, 172 , 779,000 Tennessee, 167 , 924,000 Mississippi, 72 , 393,000 Arkansas, 70 , 174,000 TlorIda, 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 decide* 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 a 3722 x* b . ste m advantajgs 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* T 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 1909 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 0 K# B. Stern 5723 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^* Tf it had been k opt within the city and counted in the census the total figures for Hew Orleans for 1909 would have been about $108,000,000 as against #57,446,000 in 19*>9« Thi* 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 a 1» 8. Stem tendency, 3724 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. Manufact 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 G K B. St era 5725 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 centres* W W O B r t 03? LOUIS % The Secretary of Agriculture: GOLDSTEIN. You 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 3726 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* those 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 had 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 56 86 per cent in imports, or a total per cent within seven years* As cellared with those totals, the inoreaso of the North Atlantic ports of Philadelphia, sent s 33 por cent slnco 1905, 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? 0 S. Gold Rtein 10% Goldstein: 5727 r€W Orleans showed m per cent in imports, and 67 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: i 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 9 I,. S. Holfltoln 3728 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 America? I£r« Ooldstein: Westem South America and only recently there has been a dependable sailing between Wew Orleans 0 T , S. ^oldst«ln 5729 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* since You think it has increased 1909? Vr. Goldstein: Undoubtedly. The Secretary of the Treasury: other figures we hawe had hare shown a decrease in certain lines* *How is it with this Jtrade’ 1Hr. Goldstein: 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: America? 'nr. Goldstein: You mean with T,atin* » yes. T think that 1 s due to their depen* \ * deney upon the vex lean trade, which of course under present conditions has decreased. r# Tht Secretary of the Treasury: Suppose you file that 0 L. S. Goldstein 3730 b rie f, ^r. Soldstein. (The paper was filed and is ae follows:) It 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 1912 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 #719,17B,859#00. Te illustrata the growth of this trade within a brief space of time it may be well te consider aa a I. 0 comparison the totals of 5731 r . O o ld ste in 1905;, 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 i 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, Tt 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 <J $18,408,449*00 in 3732 ‘sports went through the port of Sew Orleans — an increase in seven years of 147$ in imports, 67> in ejports, or a total Increase in ratin American commerce of 1 2 ^ as c o lo red with an increase of 5 6 of 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* !a T- s. Ooldatein 5755 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. 1s Being the outlet of the Fississippi jiValley where is produced about 6Z 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 been dons heretofore# The railroads interest* have a move* 9 U S . O o ldstein 375* 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. Through 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 3735 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 0 X. C. 5756 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 0 'serve# L* C« rircon 5737 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. All **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 a I** C* Simon 373® quarters times what ]f«9 h U doe a. The Secretary of the Treaeury: Air. Sinon: You meant it did in 1909? 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 facts* 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 able* 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? f *« I 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 0 X* c* Simon 3739 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 Labor* jt i s vi« i i known that, gen <srally speaking, the actant 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 I 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 0 57*® 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 demonstrated* 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 pointy 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 0 X,. C. Simon like dry poods and shoes* 5741 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 ways 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 37*2 | 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 line* 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 business* Ths Secretary of the Treasury: Houston, Dallas and Tort Worth? Do you do any buslnsss in id 97*5 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: latest 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 G Xw 6* S in n Regional Bazik In ths south 37** 10st 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 Bank* 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 Houston* 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* G L. C. Bimon Mr. Bimen: 5745 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 cities. 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: yes* That would be a very difficult thing to answer offhand, because I imagine you would want something 0 I* C* ?iraon 37^6 authentic* 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 business* 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. i£r. 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 Gr STATE SST 07? L. PAI^fFK* 'Hie Secretary of the Treasury: You may at*te your name, residence -md occupation. Vt » Palmer: Journal. 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. Oive ub 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* section. *» ■ '<•*;' r _ ■ i, L* Falser 37*£ 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* 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‘ •**' ' . y aot have the figures when I made it up. Since then I have 0 37*9 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: 120,208,697. The Secretary of Uie Treasury: per annum? Mr. Palmer: Last year. The Secretary of tho Treasury: yr. Palmer: Yes, sir. The Secretary of tho Treasury: vr. Palmer: $20,000,000? 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: 5750 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, ploass* yr, Palmer: t simply want to call attention to the last e£ihit, as to what 1 • to follow the lumbsr industry in this section, (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, 0 L* Palmer 3751 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 trated* 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 $448,491,000 representing 7,723 concerns* TO the nature of things, this i s only aa approxl G L . P alm er 3752 mat Ion, but it is believed to bo conservative and tho actual value of the holdings is naturally considerably in excess of the capitalisation stated* Special mention need only no made of the figures for Louisiana, its small number of co3$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 0 3753 this « h io i t do not fciro tho industry tho same relative importance as ths os of Sxhihit 2 , they nevertheless strongly 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* As 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 0 X* P alm ar 575* locally »t tho ports, or at least in tho territory adjacent thereto, and aro therefore an important element in banking operations* 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* Exhibit 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 G It Palmer 5755 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* EXHIBIT SO. 1. > STATXtfKUT OT CAPITAL employed in the Lumber Industry in the Southern States tributary to 17ew Orleans* naturally dependent on Vow Orleans as a banking centre L. Pelaer 0 575& 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. These figures are obtained from credit rating books, supplemented by personal knowledge. CA?TTAX iOMPAWlra. 100, 065,^00 739 Ifissl Dslppl 45.914.000 1 ,U 0 Arkansas 62 ,068,500 1,153 121 992,000 1,950 Alabama 42,218,500 911 n e r ld a 53.908.000 651 Georgia 5Q° ^029 4*8,491,000 7,723 Louisl<si a , Texas Total D e ttlla will fu m l,h «d I f desired. vr L. P<*l*er E X H I B I T 3757 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). 1909 States Louis iana Production M Ft. 191* Value Average ProducValue tion M Ft. Talus 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 14.S3 3 ,3 6 1 ,3 9 8 Arkansas 3, 111, 300 3 1 ,8 3 9 ,2 8 3 15.06 1 ,8 3 1 ,6 U 3 7 ,4 7 3 ,9 1 0 Texas 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 Alabama 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 lfc-,514,618 Gsorgia 1 ,3 4 3 ,3 4 9 1 4 ,6 5 0 ,5 4 1 13.74 94 1,39 1 Florida 1 .3 0 1 .7 3 4 1 4 .6 9 6 .4 1 3 Mississ ippi Total Percent 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 of 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 r 3756 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 able. 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 v^iue. ,.lIB IB I3LJK k-A . AHALTSI8 OF WOOD PRODUCIIG 0PEBATI0H8 in Louisiana, 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, being 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 3756 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• NUMBER OF EMPLOYES VALUE OF PRODUCT VALUE ABE! MAHUFACTt Louisiana 46,073 | 63 637,©13 | 39,681, 716 Mississippi 33, 397 42, 793,644 36,566,346 Arkansas 32,833 40,640,337 36,340,660 Texae £3,516 32,301,440 31,197,137 A1 abasia 23, 409 26,057,663 16,913,033 Georgia 33,£57 £.4, 632,093 16,137,490 Florida 19.237 30.663.016 14.633.571 1*9,813 1350,035,394 1163,469,643 Total Being percent of 36.75 Total for United States 6^5,019 , £ZHXSU 31.63 $1,156,138,747 35.36 1648,011,166 *. STATISTICS OF EXPORTS OF F0PE8T PROTECTS (so far as available) frcs Ports in Georgia, Florida, Alabama, Mississ http://fraser.stlouisfed.org/ippi, Federal Reserve Bank of St. Louis Louisiana and Texas during 1913. L . Palmer 3760 (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. HEW OBLEAHS Quantities. Values. MOBILE Quantities. Values. 5 ,7 8 * 161, v>66 Logs 41,016 % 1,477,893 Timber 26,421 601,521 212,116 4,661,334 Boards,Deals, PI anas. Joists,Scantling-Yel low Pine, 140,7*7 5,951,489 490,067 10,580,163 £09,165 8,576,916 8,047 356.797 621,615 4*8,364 163,518 76,489 * All other Railroad ties | L. P a l* er (Cont'd) MOBILE BEW0RLEAK8 Quantities Staves 3761 33,170,013 Quantities Values 4,306,15* 2,001,389 660. 220 120,206,697 116,662,192 PEHSACOLA Quantities 1,698 164,104 1 .S 6 5 ,335 Miscellaneous Logs Values GALVESTOM Values Values 35,216 5 , 47S 103,953 3,319,167 10,036 215,030 Boards, Jo i eta, etc. Yellow pine 162,£41 3,796,312 56,472 1,£25,653 559 16,637 3,976 151,307 -- -- 5,044 2,421 3,068,861 353,268 7,933,704 650,564 Tittber All ether Railroad ties Stages $ Quantities Miscellaneous Total Value # 175,*£5 2.565 150.253 | 6 , 325,206 12,571,353 SAVAHKAH Quantities Logs Values 6,716 |l62,535 Tlaker 22,923 467,551 Bcaiua,Juisls, etc. Yellow pins 15,436 335,726 5,436 210,599 41,743 20,037 All other Railroad Ties ! L. Pa.la.er (Ccr.t'd) 376S SAVASHAH title* Etavcs Vaius. £,335,704 1*1,528 Miacel laneous 65U, 34w Tct~ 1 V^liie • 318 (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. FIVE POBTS. Quantities Logs Values 6*, 693 % 2,038,655 COUNTRY Quantities Values 1 7 3 ,5 U # 4 ,2 2 3 ,4 0 * 11,150,577 Tiabsr 377,43fc 6,lb 4,603 511,637 Boards,Joists,etc. Yellow pine 883,335 18,889,543 1,147,467 24,343,630 All other *3 7 ,1 62 9,316,256 1,426,766 37,505,33fc Bailroad Ties 631,930 533,331 5,416,763 3,616,563 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 Stage s Miscellaneous http://fraser.stlouisfed.org/ Total Value Federal Reserve Bank of St. Louis 3,446.733 $47,865,763 £7.664.563 |1 1 5 ,704,771 r 3763 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, it 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. m i B I T NOy. STATISTICS OF CQHSUMPTIOB OF LUMBER Dy Wood-Using Indus 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 Louisiana Texas Arkansas Average Cost Total Cost per ii Feet F. 0, B.Factory 1,364,954,101 $ 1 1 .f4 $15,765,456 76*,336,113 13.30 10,144, 325 1,361,382,000 11.4 » 15, £ 59, 1G9 1 L. Palmer 3764 Exhibit B-. 5 (Cont'd) Amount Dadd— Feet Average Coat par M Feet Totax Coat F.O. B.Factory Mississippi 61£,*70,030 13.32 7,554,531 Alabama 736,816,900 I S .24 8,6^3,735 Florida 631,141,796 1*.41 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 t&0,000,000. $60,000,000. 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 TV L. Palmer ing the out-over lands. 3?65-€b 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. 0 J. L. Taylor The Secretary of Agriculture: from « few of thO0 Utside bank ere. 37^9 Now tro »r« to hear briefly vr« Taylor of Mobi lo. STATEMENT 0? J* L« TAYLOR. The Secretory of the Treasury: V ill you st *te your name, residence and occupation? Mr* Taylor: J. I.. Taylor, Secretary Mobile Clearing rouae Assoc iation* The Secretary of the Treasury: Do ywi oome with m y authority to speak fmr th* Clearing House, W . Mr. Taylor: Taylor? Yes. 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 0 J* X* Taylor 5 7 6 9 -6 - our support in favor of Vet Orleans*. «T* L# Taylor, Secretary, iTob lie Cl oaring House Assoc lotion* ■ Tho Secretary of Agricultural ho » many b&nJto aro in tho Cl taring Kou so? Hr* Taylor; Five. 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 close# 3770 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. Our 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 distributed? 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 facts? 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* rtr. Yea* i ■„■ * o t sir, it Is a state bank. a J. X* Taylor The Secretary of the Treasury: 3?71 ©id the Mobile Clearing House conrider tho district that *as to be forstd hero? Mr* Taylor: y e^ air. 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* lsslssippl, 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 bin 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 bank? 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. a J. L , Taylor The Secretary cf the Treasury: 5773 Take Jacksonville, Florida, and all the east coast, do you think that relates to Vew Orleans? 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 district. The Secretary of the Treasury: With what city under the existing system do you have most of your banking exchanges? Hr* Taylor: now Orleans* The Secretary of the Treasury: I am speaking in the country, Mr* Taylor: Ysu are speaking in this section? 0 X. L. Taylor Th# Secretary of the Treasury: 377* 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 exchange? 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 money. 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: yes. How What point was it you wsnt? I 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. 8 E. H» PurcsXl. Mr. Taylor: 3775 yea. The Secretary o f Agriculture; gTAlE nm? 0^ E. % *hat i s a ll, thank you. PUK233IX. 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: yes, sir, definitely* tho matt or with the other two. Definitely? I have not discussed $* M* Purcell The Secretary of Agriculture: Mr* Purcell: 3776 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* 3777 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 York? 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 0 S. K. Pure all 3778 arrangement? wr* Purcell: y«% sir, t do, Tho S^cr etary of Agricultural To hart it dependent no nanny t urtfmroollS 0ht no,T do not think tt i s a good arranse- nant to have it dependent, hut I think it would he inde pendent. The Secretary of Agriculture! T thourht you said it was dependent? 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 t* * o a borrowing. The Secretary of Agricult«re: wr. Purcell: Then It I s dependant. yes. The Secretary of Agriculture! Do 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: t think. 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 south* Now Texas and Arkansas, 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 Ofeorpria* 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. *rr* Purcell: probably so, but I am not familiar with it. 3780 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 of 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: yss. 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 — <5 & X , P u r c e ll 3781 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: yea, air. 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. STATXMKUT OP WAT,OR BROACH* 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 * 0 3782 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 32xchange. The Secretary of the Treasury: Will yeu produce those and f i l e then as exhibits? ¥r. Broach: Yes. (vhe papers were filed and are as follows:) RESOLUTION INDORSING HOT ORLEASB ?OR LOCATtO* OF 71DSRAL RESKRVK BASK. 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 a 57&5 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, B* IT RESOLVED, that th« !fERIDTA* (TIJKABIS<3 HOUSE 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* the 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* w m m AV CLBAKTKO HOU«* ASJBCUTIOII. Paul Brown, President. a 3784 Broach 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 needs 8 W. T?ro*cti 3785 MERTDIA1? BOARD 0? TRADE & SOTTO* EXCHAKOB of Meridian, 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. (Signed) The lOERIDTAl BOARD 0? TRADE k COT TOH TO5HA*?0JE, Gee. m i l a t , President. Attest: B* Ooodman, Asst. Secretary. This 6th day of February, 1914. 57B6 W. Broach 0 The Secretary of the Treasury: fow rnmiy banks hare you Ttow many national banka? in Msridiaas? wr0 Broach: Five* The Secretary o f She Treasury: ytm broach: Two. The Sscrstary of tho Treasury: What is yeur view on thie question? Mr# Broach: X only know the views of ths four incor porated banks ^hich are members of the Clearing House. We 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: Yoa* The Secretary of the Treasury: Do you net think the I8 ¥. Broach 3787 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 that? Mr* Breach: Bo* 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 a 3768 W. Broach choice? 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* STATESfEfT 0? J. B* STIRLING. 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 . 0 The Secretary ef Agriculture: 3789 Do you represent any asso ciation there? ?fr. Stirling: I am a member of th« Clearing Fouse, I 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: 5790 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 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 choice? What would bo ;• our second G J* B* Stirling Mr* Stirling: not think* 3791 We would net have any second choice, T do I do not think St* Louie would be available* I 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 bank* Tho Secretary of Agriculture: Mr. Stirling: The stato Yes, sir* The Secretary of the Treasury: nr* Stirling: banks? 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. STATUBCENT OP J* f* l&OTOfr'OY* The Secretary of the Treasury: State your name, reel* denoo and occupation* Mr* Tlournoy: http://fraser.stlouisfed.org/ 1 St. , Louis• Federal Reserve Bank of *• J. J* Tloumey, Cashier, virst National 1 J - V s'. , , 3 !| G . *. nourney 3792 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 ually? 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: Yes, sir. The Secretary af the Treasury: Hava you considered tho 0 3793 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: Yea* 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: ,Tot 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: choice? Mr* m»urnoy: wew York* What would be year second 8 J. T, Flournoy Th * Secretary ef the Treasury* 3794 I am speaking of practical things. *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 0rloa/i6. 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- 8 Jr. 7. Flournoy 5795 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 iinht. 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? 0 J. r. Tlournoy tr. yieuraoy: 3796 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 Louie. 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 0 J* • Flournoy file briefs, we w ill receive thorn* nr* Wexler: Do you want to hoar from anybody also in Mississippi? 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* http://fraser.stlouisfed.org/ Federal Reserve Bank of ■St. Louis 1 Q X# !♦ Barr mr« B&rr: 379# 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 and 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* 0 It W. Barr 3799 . (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 sary* 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 S J* w. Barr be changed from their y I gwb $S00 to our tfews, or from our Tiew# to their wiews in order to meet those requirementa. Xew thin plat show* that, and wo will call this tho geographical map, and hero is our boundary indicated by the dotted linos. These are tho lines of cossnunle&tlon, indi cating tho time required to deliwer the malls. Hew Orleans of course, is 24 hours, hut that is In an entirely different territory. Our territory, therefore, «sabraee% in order thatj it may ho distinctly understood, southern Indiana, Just south of Indianapolis, the sta&e of Kentucky, the at at* of Tennessee, northern Mississippi, the entire state ef Alabama, Georgia and £*lerida, and as swm by this map, it le within • • The Secretary of the Treasury: Do ;jgu include Cincinnati? l!r* *Barr: T?e, we have put Cincinnati north of the Ohio trer, #i«ere it belongs, Mr. Secretary. The Secretary of the Treasury: I see you hare it on the asp, and there was a little confusion as to whether it was in the territory or Just outside* ?tr* «arr5 They want to get in our territory, but we think they belong cn the other side. So you will see frcai this, as a matter of convenience, our accessibility to all cf ttie cities and towns eiadbraced within this region, and that la 3801 «T. W. Barr the first pre-requisite, as we understand i t # under the Act* Sew in the second place, and X have heard you gentlemen and hare had a little trepidation, *hen yeu are going to ask a U these questions about the course of trade -- we want to show you the vadt volume ef business whteh is dene. is right up te date, 191$. This 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: Barr: that is that? 9 $ 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 that. The Secretary ef the Treasury! You da not ask u s to express an opinlen on that? il f t \J G J. W* Barr ir* Barrs Kot at all* 3S02 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 authorities? 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, V valued at #122,000,000* Tho total amount financed through a J . ¥* J a r r Louisville was 3803 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 conservative. 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 0 J. » . Barr 3804 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. After 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 I 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 G tobacco. 3805 So that Is peculiar to our tf-ate, and thoro is no- where else there tho financing of It lo with us. go 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 it. 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 a 3806 J. W. Barr be drawn from th*s entire district* K r. Herr: y « 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 to them 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: Yes. Sow our other l a r g e volume of business consists ef grain ef various $ 1 7 ,0 0 0 ,0 0 0 , kinds* 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? Hr. Barr: We will do that, of course, you maet recognise J* V. Barr 3807 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 bank? Mr* Bar^: Ve are coming to that. That follows on another chart* 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 Take capitalisation of 0 7. W. Barr 5808 $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 remainder* 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* But 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, So soon as they hare gotten tho — Tho Secretary of tho Treasury: Sorrow from the Louisrlllo banks? W. Barrx Yes. So soon as they hare gotten the tobaoco ready for shipment, they pay off tho banks, aa it were, by ■ ■-. ' V '• ' Q J* ▼* Barr 3809 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 started* 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 parlod. Hr. Finley: Mr. Barr: time* 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. 3810 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, then, 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 0 J. V# B err 3811 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, under 30 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. 0 J . V, Barr Th* Secretary of the Treasury: $812 t asosed that in the question, because after you gat the finished produet in bond I 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: Yes* 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: Yea. Coming to the figures upon the banking J. W. Barr J815 capital and aurplut and dopoaita within thaaa region* included, 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. Tf 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. within So you will sea th«q/thls proposed region $ 0. 3 Louisville is first in population, in olearings, cpital it 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* a X. V. Barr 3814 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. Region 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 $10,813,000? Ur. Barr: Yes, • • would haws in addition to that the capital which would come out of this dl strict sn ths six psr cent. J. W# Barr 0 The Secretary o f the Treasury* Itr* Barr: Where le the capital? $6,615,000. 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? 0 5816 J. V* Barr Mr. Barr 2 Ho, it do ©snot. The Secretary of the Treasury: MT. Barr: Yes. And 00 forth* 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 1915. 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. Of 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 1915? yes, 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 0 J . ¥ # B a rr 3817 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 ♦328,000. deficit? y «*« 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 district. Mr. Barr: That is true, but — a 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 Yes. Then wo are led into mere cojacture. We have to use the bost data that we can, as shown by ths reports. The Secretary of Agriculture; information? 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: 70 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 0 J . » . Barr 3«19 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 ville* We can speak pretty accurately as to Louis T do not knov so much abut the other cities in the district. 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: res* 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 http://fraser.stlouisfed.org/ business. Federal Reserve Bank of St. Louis 0 I . V. 1 err Hr# *arr: 3820 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* 3* 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 conTenior.ee 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 when 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. 0 X. ». B w r }8aO-«- 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: Certainly. 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* dition* ts it not ths period of ths year whan you have your maximum demands? That would fairly reflect ths con J . » . Harr J8Z1 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? ?JirrJ 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, 0 J. V. Barr 5822 unless ysu gsntlsmen want to/ask ms aorae questions* The Secretary of grlculture: You say you sent out 1 otters of Inquiry? nr. Barr: Yes. Ths Secretary of Agriculture* ir . Barr* Throughout this district? Throughout this district* Ths Secretary of Agriculture: Hare you copies of the inquiries? Mr. Barr* Yes. The secretary of Agriculture: nr* Barr: Yes, wc will file those* The Secretary of Agriculture: Hr. Barr: And will you file those? How 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, second 0 J. ▼. Barr 3823 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: Yes. Tho Secretary of the Treasury: Have you any additional suaraary? *fr. Barr: Yes# The Secretary of the Treasury: Pile this in triplicate, please* 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 person. ^motion, you do not need to hare tho witnesses in Vo get our best lnpresslons from the maps showing tho percentages. G J. V* Barr Barr: Yt% 3824 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 implement 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 anticipate* 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: http://fraser.stlouisfed.org/ Federal Reserve Bank of_St. I___ __Louis ___ y «* i very read a y . ___ ._______ ._____ i_________ .. 9 J. W. Barr The Secretary of Agriculture: 3825 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 choice? Mr. Barr: Well, we had Louisville first choloo, Sew York second choice and Chlcage third choice, further* 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, t but our trads relationship with St, Louis is nst very close. The Secretary of Agriculture: Jfr. Barr: You go north or east? Yes. 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. 3826 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 states. Wo d id net oonsider it seriously in ours. Tho Secretary of Agrloulture: a* 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? yes. The Secretary o f Agriculture: You Indicated a preference for Wow York or Chicago? Wr* Barr: Yes. The Secretary of Agriculture: Has Atlanta any special toudi with you? Mr* Barr: Wo, no very direct touch. -- -- ---- -------- ----------- -------------------------- _ ------ ___ J* 0 V. Barr Th# Secretary of Agriculture: 5827 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: Atlanta, 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: If yeu eliminated Georgia 8 I , * . Jarr 3828 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 50 very ouch to Louisville, does it? Ur. Barr: very considerably, yos, sir. our relationship has \>€«m growing very materially in that direction. Very 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: Yes. Well, T rather think it would strengthen it. J. V. B a rr c Th® Secretary of Agricultures 3829 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 condition* ?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 desire. Irr* BarrS V eil, from the needs* The Boorotary of the Troasurys -------- -— And looking *t tho matter — »- *«-- - — - «f o J# W. Barr 3630 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: Yes, sir# The Secretary of Agriculture: tfr# Barr: And their choices by states? Yes# The Secretary of the Treasury: Ye* thsir choices by states#ndt What interest do you pay on reserve balances in Louisville? http://fraser.stlouisfed.org/ Federal ReserveBBank of St. Louis jfcffeiiiin - — ___ _................................... I 0 W. Barr Mr. Barr: 385* Two p «r cent. The Secretary of the Treasury: What de you do about check collections? r* Barr: Well, the Clearing ^ouse gerem i that. Tn 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: it 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: Yes. 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 ? 0 J , t , Barr R« ¥* T0;f)t t* you vith co p ies 5832 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 us* Kr* *arrt Mr* Finley: yes* Tho next Is ^Tr* Richard W* Knott, Editor of the Louisville Bren lug Post* fffATBONT OT RICHARD W. O O TT. 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 accumulation e f the loanable cqpltal of this whole soetlon 0 R. W. ICnott of th® country in the east. 3B33 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, These 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. Put 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 0 K *• 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 the 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 3855 vindicated. 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, months We hero had, and the strees of shows wc have, a remarkable .confidence throughout all this country in tho system of banking as it stands* Vw 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 made 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. I0 ft. w. Knatt flow It is idth us ss it i s with you* 3856 There is guch e thing ss indigestion frem statistical matter, as we all knew. But 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, of 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 0 H, ¥# Knott 5837 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 industry, and 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 G R. f« Knott 3838 of tho officers appointed by law to administer this. Vs 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 I a 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 commerce, 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. You cannot build up th o live stock Interests of these states R. W, Knott G 3839 of Kentucky, Tennessee, Jfississip i and Louisiana without money. 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 stock. 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, t* 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. Mr. put, 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 50 years, and released from that influence that has drained the country that needed the money to enrioh the cities whleh needed it not. 0 3840 &• 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 world* 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 3841 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. 4ft* Is It your view, $r. Knott, that there should be eight of these banks at the beginning, or more? i£r. Knott: Twelve. The Secretary of tho Treasury: You think we should have the maximum? XT* Knott: twelve, yes, sir. 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 G 3842 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 units* 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 taken. 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 0 5843 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 50 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 orer 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 bank, ^ut I cannot bellCTO that those men kadi a complete how 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 go 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 3844 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 five* 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 patience* bank. 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: Purely* 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 pjb B. W. K n o tt 364S •■'j* farmers thst your property is a basis of credit, **nd you are entitled to more jaoney then you have been getting. But |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. HT ttEJOOrf OP HOMO2M 0U The secretary of the Treeeury: occupation so well, I WVT^K SftfeHLEY. 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 three baeic things. First, as has already been intimated here, the purpose of thie law was to decentralise capital, end it was to make the financial lines follow trade lines, pjb S. Shirley. 5#4d 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 transaction. 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 384? 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. Cities, 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 through 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 map would seem to put 1A in pjb 8 , Sherley 3o4£ 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, we would get rid of the financial peaks that would fall upon many banks and would be able to use our money during a http://fraser.stlouisfed.org/ Federal Reserve Bank ofgreater St. Louis portion of the year than many other cosasuni tie*. 3649 S. Sherley because the time /hen the demand on tobacco and whisk* comes, and those ere the two bis? laovejients of money requirements in Xeuierllle, 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 in arith that north middle section of the eastern part of the continent, But Kentucky ie essentially southern, and it has always been. I 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, pjb and it S . Sheriay tm urged that any objection 3850 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 couldr-rovf that ths sssss objection of in aonoy That is true, h ardly fbir a city half the sis* and say to 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. Sc that where you hare the brguaent in one case which you pre sent, wc hare the reverse of it in saofeer Hr. Sherley: I place. am not responsible for the other fellow9s argument, but I aubait — The Secretary of the Treasury: nevertheless, 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 pjt 8 . Sherl«y tc lie tied to ae it would be for 3851 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 Ho. 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 Louisville. 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 the ooast and doss not belong in this part of ths country, pjb 8 . Sherley 3852 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 have 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 stock carried in bond. The secretary o f the Treasury; tomorrow, 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 with stlU 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 pjb S. Sherley 3653 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 to 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 you 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 3654 S. She rley 0* .Tories dition for half e century past* it has bees subservient by law rather than by nature to the financial center* of the last. STATSHEHT 0? SEHA20B OLIVBK ¥. JttQiS, 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 Banks. 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 3355 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. Of course, it is greater in manufacturing than Sew Orleans. have got the They greatest \agon ^orke in the world Uiere; they hare got one of the four largest tabli jftmente in the world. market in the eorld. plow 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 ebly 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 South. 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. Well, servo 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 0* a bank s»nd fcr&nch & R eg io n a l f a l l o w who h a s g o t Has h is JseaeS. a c rib Bank full com in the field, of as 3665 3L there com where ho and ie between * the f o l l o w vfeo has got to go after it. Louisrille producesone half of the whisky in the country* 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, and also the tobacco b u sin e ss, w h ich is also a revenue p a y in g e n tire business, one third of the/tobacco in the United States is produced in our state and financed through the city of Louisville. Tht* city of Louisville has first and last about ten railroads and branch railroads that serve differ ent parts of the country. transportation. of 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 pjb O* James. 3&56 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 South? 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: Certainly, 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 a 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. 5&57 nirht be said thst wso not said X would suggest it, 'but it has 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 Louisville* 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 cutting 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 Louisville, 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 ., February the hearing was adjouxned to 12, 1914, at 10 o1clock A. V m 3856 Hew Oris line, Leu, February X2, 1914. Wte pursuant to adjournment %t 10:00 A. M. Present; Parties r>s before* The Sssretary of the Treasury: please. 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 fore. STATBOSt 0 * 8T1HLXW0 ¥r. Fort: K>KT. 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 , con ths sm bs attitude in Hew Orleans as louisrille first *nd St. Louis sscond, 1 X was in St, Louis, Tou understand that, of course. Ths Secretary of ths Treasury: Yes, 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. (Beading): ■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. The 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 By Pt« First Trust « Sarin^s B&nkg 3y Southern Trust CosQ>'&nyr 3y C. I , B&iluyr Cashier. Security Trust Company, Hy Geo. Fort, Prest.» Cashier. S. Fort. Tho secretary of Agriculture: 5660 How mamy banks hare you there? l*r. Fort: There are six banks there, feurxvgular ccissmer- 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. Fort: W ell, our principal reason ville is stated in that resolution. for wanting Louis It is the tobacco section, and Louisrille is the largest tobacco j the w o rld i s the for largest all characters of tobacoo, B trie tly dark m arket in and Clarkerille to b a c c o m a r k e t , a n d we have * 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? pjb S . ?orfc. Kr. Port: 3661 Yes. 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 ats 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 Louisville? ¥r. Port: Yss. Tour trade mostly goes to ¥ . Prs*ne stAsnrai? oi- w:srjnr m m .. The s e c re ta ry o f the Treasury* realdense 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 bo at *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, the 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 , in 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 territory. 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 , http://fraser.stlouisfed.org/ clal 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 notes th is j] I t a *nd It 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 , Tennessee, bank at L o u i s v i l l e , ie those states. logical place for hankers to re din count their the whenever n e c e s s a r y , g a n ise by banks h?»7e been for many years correspond Its fo r financial Institutions through ents in 3663 lo cated i n one of to m a r k e t the l a r g e s t th is can certain ly be b e tte r than at tobacco 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 through w h ic h In v o l v e s m ore of in th is o f L o u isv ille th e c o m b in e d the wo rid j in do llars tran sac tio n s the a i d then 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 served c ap ital are re- great banks, o f our local banks. In reed o t h e r words t h e c o m b in e d The largely 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. and «e e n e Our of in c ity is and i n exported has ofay to b a c c o to E u r o p e p rim a ry and day o f t e n &xr* In stitu tio n , products draw 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 tobacco fo reign reputa markst s i n ths pjb V . Brane world, and In times of financial ready money to mere thi* crop. 3*£64 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. . pj\>l 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 Yee. 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 piece. 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 them* 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, IUKTHER STAiOaQSHT 0 ? THOMAS W , LOHG, The Secretary ef ths Treasury: You reside at Hopkins* ville? Wr, Long: Yea, 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 3»6? 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, perhaps 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 present? Mr. jong: Ho. 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 dpr say. ST ATKIQ2HT OF 1AHL Ths secretary of the Treasury: S. GWIU. 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 pJb4 * • 8 * Rwla* jaea 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 presums? Mr, Gwin; Yss, The Seeretsry of the Treasury: W i n you submit them? | Just read the resolution, Wr. owin: (Reading it resolved by the Chsaber of Cojameroe of the City o f Hew Albany, Indians. thifi 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, pjl) B . S. Gwin 3d69 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^ CHAMBER OF C0MHKRCT OF THE CITY OF HEW JKBjflTY, IWTIAKA.* S . C » in . 38?0 V I 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 reserve the 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 Meeting. The secretory o f Agriculture: Whet is the population of Hew Albany? Hr. Owin: 25,000. 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. $*in« V i. a«lB] Hr. Secretary, of the thou^it thst is in the if X have the proper conception Kinds of the Organisation Cota- mittoe with regard to the establietoent of these Regional Banks, they arc taking into consideration first the ience, second, the natural course of trade, and conven th ird the territory that will furnish the required capitalisation. Upon that theory* I feel that the division o f the stats of P Jb6 B. 3671 l?o rt. Indian* south of Indianapolis would fit la very well and logically to tho section outlined by the cosmlttee from Louisville, F irst, trend o f in tho suit t o r of c o n v e n i e n c e , i t i t cojsmerce fr o m S o u t h e r n I n d i a n a , . sented in that see ion This would furnish of tho tow ards tien o f tho federal Beeerve Bank, The Southern Indiana national banks &rera$* the 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 , the c a p lta liz*- total deposits of about #7 5 , 0 0 0 , 0 0 0 , Federal Reserve Bank would be about ( -,000,000 froai this section. The point that I would like particularly is that thise section of Indiana, a to emphasise at no time of the year is borrowing community, with the exception, of course, of Individual cases under special clrcissstances ; but generally || speaking it is a lending community always, Kowt the difficulty has seemed to ber in outline a southern territory , o r a territory which will take in ths j-Southern States, to overcome this natural difficulty, that South is a borrowing cocsaunity rather that a lending ity. I believe that ths placing of this part o f cotsaun- In d ia n a with Louisville, which can be done without distuifeing t! ths P$b7 3672 2 . 3 , G^ia natural course of trade, would help to level the load, ao It wsrs. The secretary of Agriculture: To what extent do you think ; you ct*n epe&k for tho banker® in that section outside of Sew Albany? 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 them, 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 off? Ur. c-win: I f I had s map —> The Secretary o f the Treasury: shows H»ve you toy &ap tfhich Just the exact position of the line? Mr, Gwln: Indiana, 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 pjb8 2 . S. fjwin get s*n c x M t ides of that line. 5li?3 i f you will prepare ouch 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: The cojaaittee? Yss. Senator yames: Indians proposed And I think they have the counties in eet out there. secretary 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: Yea. 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 Pjb9 B. S. Gwin 3674 of the Indiana Bankers Association? Wv* c 4 » . yes, sir* 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 district? 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 and 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 pJ'blO £* S# r.wln 38?5 the eastern pert of Georgia, I thinkt yes* The secretory of the Treasury: Ifr* nwin: Yea* •he Secretory of the Treasury: Borne, 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: Chicago* 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* !>ecidedly? Tor instance, I do not suppose there is a bank in our city which carries any deposit in St* Louie* X. S. 2&rm Owin 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: Yes. The business of Indianapolis is v^ry largely local throughout the state of Indiana. The Seeretary of the Treasury: Tto you carry reserves in Indianapolis? yr. fjwin: A email portion of our rserres, yesf sir. The secret sty of the Treasury: How isuch do you carry in Louisville? Hr. n*i n : About 05 or 70 per cent. The Seeretary o f the Treasury: tod where do you carry the remainder? Mr. nwin: Indianapolis and Chicago. The seeretary of the Treasury: And a working balance in Pjbl2 38. S . Rwin #ew Yodc only? 3677 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 add? Vr. n*fin; of Only one point with reference to the agriculture ; Southern Indiana. vadison, located on the river east9 is rapidly beconirif* a very important tobacco point. Tobacco 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* formation. The #eerstary of ths Treasury: Yss, X aay say now, between now end ths first of Karch you nay fils or exhibits that any brisfs that you chooes to vith the Consaittoe at V ash in ^ pjbl3 2 . S. owin. Y . Alexander. ion* You will have 5S78 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. would like to know what you desire to have furnished, and we will fum i #1 it. 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 Y. ALKXA&BER. 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: Yes. 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 3*79 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 sists us a greet deal in helping ue to finance it. about 40,000,000 pounds of tobacco. The secretary of the Agriculture: we sell What does thfet represent in dollars? Ur. Alexander* About 000,000. 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: Wo. The Seeretary of ths Treasury: You are not farailiar with the courss of trads end business ef ths district as s ahole? Kr. Alexander: To sobs 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: 5*ao 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 know? Mr. Alexander: I aa not positive. The secretary of the Treasury: What would be your second choice? Wr. Alexander: Cincinnati. 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 reserves? Wr. Alexander: Louisville, Cincinnati, Chicago and Hew Y oi*. lhs secretary of the Treasury: What percentages in the different places? Hr. Alexander: reserves in I should say we keep 60 per cent of our Louisrille. Pjbl# Y . Alexander The secretary of the Treasury: Mr, Alexander: tJoiiX How such in Cincinnati? Probably lb or SO per cent, and tho balance in Wew Yoxfc. The Seeretary of Agriculture: *hat *ould be your third choice? 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: Yes. 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 wwpfcttf? Hr. K. B. Snowden: 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 Pjbl7 st&^w a n a? c. 3&82 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 well? Mr. Mooney: Yes. 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. position. This is s synopsis of our pjblti 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 . jarts 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 c?*n 3884 mail a letter or you c&n make * trip and tance within lose than 24 hours. that dis cover 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 railroad 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. The 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. If Reserve system, they I f the state banks enter pjb20 Mooney 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 numbers. 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 . Within | 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 States. ths South. gold back to the Unitsd It brings back into the United States the rrold that goes abroad in travelers. 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* Memphis handles mors spot cotton, mors eotton is brsu#it to l'waphia and sold along the boards, that i ,s cotton is thsrs sasplsd 4 pjb21 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* a Ho cotton is handled in Louisrille, and about 250,000 bales in we* Orleans and thirty or forty thousand in Atlanta^ The Georgia crop is handled in Savannah* The Secrstary of ths Treasury: How about Galv&ston said Houston? Mr. Mooney: Houstdn is the funnel for Texas, but the cotton that is gathered in Texas is Delias, 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 p)y>ZZ C :P . J.'Jooney ]! Houston factors, 3867 numbers about 150,000 or 175,000 bait** a year. 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 titles* The secretary of Agriculture: U r. Mooney: this way. 1,300,000* 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 hare? 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 pjb23 C .P . J .Mooney arrangements are made here. The bottoms arts already ar 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: ments. 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, Covington, and stapled there and then shipped to H^ruphis and rehandled there. is called through cotton. year is a million bales. That 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 pjbS*4 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 If from the morning paper — The Secretary of Agricul fcurs: You think that can bo relied upon? Hr. Fooney: Yes, air. 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: a Fcsphis paper? It is . The socrstary of ths treasury: Hr. looney: It suet he Oh, you are the s*ditox? Yes. 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 Rent. Th*re is the net rscelpts yesterday and ths gross and net sines September 1st. cotton state* cross, that is 660,000 bales. That pJb25 C P* J*Kooney 339© 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 Galveston* Savannah 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 export. Here is Tilminr ton and Hew York and other ports. How you see Houston aays receipts 10,000 bales. an It is interior count, and that is 10,000 bales which wers shipped through Houston. know* 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 htl& 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 pjb26 C .f . J.Mooney in the world. It covers m area of 3891 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 pensive. 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 cotton* 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 middlings. 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 demands. 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 pjb27 C.$.y*Hooney 3892 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 Continental 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, however* Another 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 of 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 there 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 India* This region produced 7,000,000 bales last year in this area alone, into and is capable of producing about pjb28 C* P* J*, looney 3893 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 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 it self brings back tc ths United States even in thie terri tory itself about #550,000,000 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 always brought the ~old back to the United States* The peculiar thinrr about the South is this also, in relation to cotton* 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 ^94 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. Memphis Last year $20^000,000 of cottoftssed products «sre manufactured in Vemphis. 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 seed crop handled by Kejraphie this year will be §20,000,000 o r a totA sf about $100,000,000* Thst cottonsesd product is ussd, the oil and so forth, in risking s very superior brand of lard and in nksing butter, \ pjb30 C.P.J.lfooney end in making seep. have plants there. 3395 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 lemphis. It is a largs yellow pine market, and the yellow pine is mostly down in this there (indicating). woods 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, Memphis. The pine lumbers and Louisiana and the cypress is But a great deal of that is handled in The headquarters of all the larger Southern lumbering concerns are in Memphis, and they hm dle a great deal of lumber out of Louisians end some Texas points. The 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 pjb31 C* P. J* Mooney 5896 il 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 not* 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 until the freight rstes allow that to send ths lumber back from Washington and Orsgon* 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 pjb32 5697 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. Yes. 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 harveated 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 pjb33 C. P . £* Mooney money? ¥r. Hooney: reserves with we get that money froa the fr o m J a n u a r y until March, p eo p le Boston, we put aur Mew York asd * little from Philadelphia sad some from Chieago* The secretary of the Treasury: Mostly from Hew York, Z suppose? 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. Chicago has £one into that business in the laet two or three years* The Secretary of the Treasury: Does St. Louis do any of it? V r • Mooney: business. Vot St. Louie does no ^arehoues certificate They occasionally loan money to 1‘esphia, their rates of interest are Tory high. but St. Louis is a pjb34 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 from Philadelphia. 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. However, 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 certificate? Mr. Booncy: Yes, I am talking about cotton after it is in a warehouse, after it is in a guaranteed or insured ware house* Ths Secretary of A^rleulturs: What is ths object of that? pj'&sd C .P.J.Mooney ¥r. Uooney: after men that we h a d y y in the warehouse it who befo re had it, 3900 to finance this cotton merely on the 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 of cotton, whan he had secretary of the Treasury: no that he had ten evidence The w arehouse of it, receipt — you have now is evidence of it? Hr. Mooney: Yes* Wo now have a warehouse receipt that is guaranteed, end it is like a whisky receipt of a bonded warehouse, almost, tion. 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: Yes, 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. Bow people It is not. 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 earlier, C.P.J'.Kooney 3901 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 tribution. 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 i pjb37 0 . P . J. looney 590a of cotton on hand. and could not aove it because the Buropean marke t was alow because cf the Belk an war over there, • lo t of the German brokers broke because and 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 nillion bales sf cotton handled through ffcaphis, there are 50,000 thers 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: Yes. 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 3903 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* Yea. And you have your re- certificate? Heretofore you could get money — the C. P . J * &on«y 2few York banker loaned it because he knew Hr, 3904 Snowden or hie fether* end the ifhoXe business wee done on character. 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 cultivation* 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 . states. 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: I ill reach the conelusioa in a minute. pjb40 3905 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 nost tho rashly cultivated states of ths United States. 5f*or 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 find 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 PJ*41 590S 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 »m in debt for money but hsd produced. 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 we 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 cotton territory region. This 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. How your argument is that this will not be self—sufficient. Hr. looney: The entire South is not self-sufficient, i f pjb42 C. P . J. Mooney 3907 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 PJV43 C. P . J . 1/ooney of $24,000,000 * year. ^906 Vzrzphi* is the largest or one of the largest hoy and groin markets, and it hao $16,000,000 o year. 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 fill? 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 coal. the iron and Along here is the iron and coal, running Bast Tennessee and Alabama. the year round* to ?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 Tennessee. 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: that. 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 pjb44 c , P , Jm V ooney 3909 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 course. balanced as any o Chur in she South, How, there is this, %hd I aa throuj£i, of 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 Louisville, 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 ,!rove 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 http://fraser.stlouisfed.org/sires Federal Reserve Bank of St. Louis to fro to some other place than yesphis. p jb 4 4 C. P . J*. Mooney YTm Mooney: 3910 Ye®. 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. Yee. 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 net the center. Mow, that/only applies to the first choice, but to the second choice end the third choice with one ex ception. 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 pJh4S C* P . J. Wooney 3911 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: question* 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: j 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: Bo* The Secretary of Agriculture: does? Mr. Mooney: So* Have you any that Texas p K o o n § y fhe secretory of Agricultures <v§X2 w r e you any that Louisiana does? Mr* Mooney: Ho. The secretary of Agriculture: or any that Kentucky does? Mr. Mooney: Ho. The Secretary of Agriculture: tieve yow any that tho larger part of Ark oneaa does? Mr. Mooney: Yes. Mr. Snowden: You will recall at the 3t. L o u jis hearing Arkansas, 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: Ho. The secretary of Agriculture: Have you any that Tennessee does? ??r. Mooney: Yss, they will be produced here. P«Jh4ti Cm P . J . Mooney The secret sr.? of Agriculture; ITr. Mooney: 3913 Vhat part? ?/est Tennessee. The Secretory of Agriculture: How that ie the only section thefc prefers Memphis? Mr. Kooney: Yea. 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 # problem.e 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. pjb49 C. P . J . lfooney !*r. looney: 3914 Yes. 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 direction. 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. The first proof of that will be the fact — The Secretary c f the Treasury: Wave you someone isho can testify to thst? Ifr. Mooney: Yes. The first proof of that is that the greatest railway tonnage in the South goes in and out of V n p h is . There were handled last yead.0,000,000 tons ef freight ~ The secretary of the Treasury: That is pausing through* -------------- pjb50 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: And What about the value of it? the value of it ie probably — it io cotton &nd lumber and those values v?ell 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, I 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. Mr. Hacrney: 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 pjbbl e. P .J.M o o n e y V . H . Fyle than doss any other one c it y in 5916 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 you 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, think is the V . W. Kyle The Secretary of th© Treasury: 5917 Yea, 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 At one tiiae 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. Personal 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 http://fraser.stlouisfed.org/ the certificate. Federal Reserve Bank of St. Louis That necessitates acme expense on account W. H . K y le the certificate. 39ia 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: 5919 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: point. 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: Yea. 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. Ho*? if a Regional Bank It does not bring any ®ox*e capital here. Mr* Vy%9: It dees not brin# wry mvre eepit& bore, but 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: Yes* 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: http://fraser.stlouisfed.org/ 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: m Z say yeu have ^Jje reaerre deposits with that bank, but so far as the capital condition ie concerned, i t does not add te that, but it sisplj trans 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 cerned, 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* They 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 necessary* Fr, Kyis: I flours the factor would kesp it at home, be pjb56 W. H. Fyle 3§22 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 tho 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 trend 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 3923 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: reserve 5924 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 cent* 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* Louis? 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: Yes* The Secretary of the Treasury; Why do you keep such 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; Sfr* Kyle: Ale© for exchmge reasons? 'Sfell, yes, most of the cotton foreign exchange PjhS9 3925 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 statement? Mr. Kyis: Yss. Ths Secretary of ths Treasury: Showing by states the nun** bsr of accounts kept by othsr ban1 a in ,fesphiS? Wr. Kyis: Yss. 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«. vyle: 39a5 w« p»r checks vrhert the balance is sufficient to do ao. Tho Secretary of the Treeeury: practically Mr. Kyle: I mean in effect you par all checks, I presume. Yes* The Secretary of the Treasury: How nany national 'banks are there in Men^his? Mr. Kyle: Three. 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 system? Hr. Kyle: I do not know. Mr. Collins: can. 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 PJV51 3927 opinion* Mr. Kyle: Chicago* 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 : Ye*. The Secretary of the Treaeury: And that they would not he in eeparete districts? Mr. KyLe: Me, my idee ie that they would not he in separate districts* 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# 392a 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 3929 W. H. Kyle pjt>63 Mid it is bound to be naturally so on account of the rail road*. 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 Memphis. 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: Yes. This map was drawn *dth the idea that there '*ould be a sub or b ranch bank in Mew Orleans and that Hew PJ1»64 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. capitaliza 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. We 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: Yes* 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* Por p jb in atm c e our fr ie n d s a n y th in g s u c h , in to so W. H. K yle J. H. McDo w ell &t H &a h v ille there l a s 3932 and. personal we never a g r e e upon e le m e n t a h l c h e n t e r * it. 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 : Mr. all, next K yle. w itn ess. F . M cDOW HLt. You s a y s t a t e your * no ne, residence Ifr. M cDow ell: and occupation? J. H . M cDowell, Buntyn, 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 Tennessee* 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 : fajaaing 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 , m w ill b e glad to have it. 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 them. 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 3933 standpoint why on® of tho Regional Banks should be located in Heaphis. 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 staple 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 nation frugality 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 3934 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 Up* 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 aid* 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: understood. Well, 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 all. Hr. KcDowell: It does not affect that at all? thst at ! J. H. Ifcltowell pj* The secretaiy of Agriculture: farmer is interested in is Bo. 3935 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. the 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 cannot 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 ot 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, and it says they are for Memphis* Ths Secret try of the Treasury: error* 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: it, 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 would c 393? J . H. McDowell pjb you h w e bo n e c e ssary to arrying out the cally destroying asked moot greet he th is question, the dem ands o f currency » * e s u r e , trade relations now 12 Bsgional Baifes commerce in w ith o u t too r a d i existing* 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 a fact that they propose to lend xaoney to farmers on five years* time* The Secretary sf ths Treasury: Oertain banks may lend a car tain propirtion tf their capital to faa&ers on faaa moxtgages* rr. Vfc.noaell: Yos* 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 • mormmnt. The Secretory of Agriculture: lending the money. the people. govern 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 money. Tho Secretory of Agriculturo: bssis of existing But thot is still upon the resources. 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 dlstilct. PJ* J . H* UcDowell ¥r* McDowell; 5959 The amount of money will depend on the strength of th® district, I understand* The Secretary of Agriculture; You aay pro cued, Ifr. ,rcBow«n: Mr. McDowell: Ae to the question of developing theee lends, you anderetend thst. The Secret ary of the Treeeury: the gentleman 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 under 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 up in the South* The Seeretexy ef the Treeeury: And X wee reised in the South* Mr* McDowell; It takes e greet deel of raoney to raise cotton is the South* The Seeretery of the Treeeury: Yee. I have picked it siyeelf end know ebout it* Ifr* McDowell; And we need this aoney ell the yeer, net J* p j* H. WcDo mil 3940 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 their 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 deficiency? 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. Pjb J . H. |feBo*ell Ifr. McDowell: 594a 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. sseie arrangement. 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: fact. But do not overlook this and You have a bank in St. Louis <r >Tew origans*/the J. H. KcDowcll PJ*> 3942 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 «hoa 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 they 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. have any business farmers there is your chance. wow i f you J. *?. vcVo mil The Secretary of the Treasury: 3943 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 . STATBBKKT OF HR . FKEB COIXIF*. 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? vr.Ctt.line: Yes. 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; 3944 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, ,t.re not /or.h e*ny t&ing, I 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 pjb yred Collins 5945 question, Ths Secretary o f Agriculture: Ho. We Understand it is go inn to make certain change®. The Secretary of the Treasury; certainly* 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, to so Ij that ths derasndson ths district eould follow each other along* The secret wry of ths Treasury: Wr* Collins: Yss* 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* Ths Secretary of the Treasury: Precisely* Are you ad- pjb Fred Collins dressing your remains to this Mr* Collins: 3946 district? 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 territory 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 idea? 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* pjb yred Collin* The Secretary of Agriculture: 594? Th at would probably discount about equally orer ths country. mr. Collins: We had two or three very intelligent gentle- 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? i Ifr. Collin*: Except in the temporary demand in handling pjb the cotton yred Collin# 5946 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 axe. nrr. Collins: He. 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 fore. r Ths Secretary of Agriculture; You know that is foolish under ths new booking system? mr. Collins: yes, s ir. t»red Collins 3949 The secret sary of Agriculture j: you know they h&ve re sorted to Indirect Vr. Collins: re-discounting methods. Yes. 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 bank 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 evidences? Hr. Collins: I dc act believe you could hardly establish ’ "S ?red Collins 3950 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 convenience. 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: wants. The v & u e of the system to the countxy depends upon the creation of well balanced units, ifr. Collins: S till, there is a point beyond whioh you p j* could aot go. pred c o llin s 3951 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? Would 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: that. I understand that. We know yrcd Collins The Secretary of Agriculture: 3952 That i s our duty under the lew. 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 . few 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: Yee. 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: 3953 ^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. cattle Wow that is a little hint. Mid furthermore it did not appear in the re-discounts of the banks. 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 \ ec 3954 Fred Collin# that t&is district wae one which aculd, as nearly toe in* j dependent as would be possible, coneidering the *atter of convenience. 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 too, 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: Yes. *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 The Treasury: th e 5955 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 : Yes. The s e c r e t a r y o f lo cated Hew in the T r e a s u r y * x* and you hod O rlean s, Beserre ^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 than w ill hare the d i r e c t o r s o f as e seven the h e a d quarters ban k. M r. w4th C o llin s: The m anagers o f the b u s i n e s s that 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 better chance 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 in touch, The Secret ary no t« a Bank is £0c d in cf Sew good th is en tire th e m oney touch who g e e s w o u l d ha r e the fin a n c e to a com- away o f f somesfriere an d i s no t argum ent — th is I beg ycur pardon, case, the s i x because d ir e c to r s if of i t is the Beserrs th at b a n k are d istric t? Yes. secretary of by the government. is the T r e a s u r y : Orleans, Hr, Collins: s argument in chosen from Ths who 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 in the T r e a s u r y : A nd t h r e e m o re are chosen yred Collino ^ r . Collins: yo * often do they meet? Tho Secret&ry o f tho Treooury: os necessary ??r. Collins; 5956 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. So 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. Still ws all feel we would like to do business with the parent in stitution. pjh i*red Collins The Secret wry of Agriculture: 3957 But it lo & bastion of pride. 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. vague* 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: Fesaphis* 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: 395* 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 us. 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: here. 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 3959 STA33MOT 0 ? JOHK T. KDTfH. 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: » . *'ofcn: ycs, sir, 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 $ulf States will be regarded asone ef the great subdivisions of the United Ststes. Hon turnery has always been recognised as the logical centra of that great subdivision, and this cossaittee begs leave to submit a few facts and figures upon ehich that conclusion is based. Trade statistics and railway authorities agree that uontgoatiry is the best distributing point in the South. A map pjfc jr. T . xrohn 3960 x which accompanies thi* paper shows that a circle with Hontgeme^ &s the center and with a radius of 400 miles embraces Memphis, Tennessee, on the Borthwsst, Shreveport, Louisiana on the axtrsme west; Clarksville, Tennessee, on the north; Spartanburg, South Carolina, and savannah* Georgia, on ths Xast$ 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 production. iron ore P jb J . T # *rohn 3961 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 resources and oa the other side of her water transportation to ocean ports, tfontgonery reaches tho Hast through ths Southern Bail* way* hss three different trunk lines to the Atlantic sea board; the Central, tho Coast Line, the Seaboard; is con nected with both ths Gulf of ¥*xico and ths Mississippi y, T , vohn 5962 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. pjb J . T* **ohn 3963 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 choice? 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: you? *»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 to Mr* Mooney, the question of arranging a diet rid. which *>uld P^b J. ?. 5964 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 proposition. 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 proposition 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* ws 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 pjh 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 Atlanta. The Secretary of the Treaaury: They have all been visit ing, hare they? Ur. Kohn: And latterly from Bi iminrcham, much to our embarrassment. The Secretary of the Treaaury: They are getting veiy sociable, these daye, aren't they? Ifr. Kohnj yea. 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 pjb y. t. wei® 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: Bo. 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. deal. ^ot so Much now, but still a good Still wo have no reciprocal Wr. Farley; wr. trohn: The 396? relations, **he basks oil keep accounts there. Y«», they do that to keep thei r reeervea. secretary cf tha Treasury; Where do you carry your reeervea? Ifr. Kohn: wo ore o state bank. The secretary of Agriculture: fhat is the law aa to atate bank a? Wr. rohn: of our ipb 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? Yea. 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: Yea. (The papers were accordin ly file d .) STATEMENT OP LOUIS The secretary of Agriculture; B. TA H U S Y . State your name, residence $969 L . »* ymrley and o c c u p a tio n . **r# 1>*rley; Louis Parley; President ©f the Hew Farley national Batik, t?6ntf-omery. In presenting the cl alias of my native city, Montgomery, Alabama, as the moat logical southern city ffer the location of one of the 7ederal Reserve Thanks, Aether only ei^ht are created or the maximum number twelve, permit me to emphasize ita geographical location as being in the very center and by comparison more central than any other city of seven of the moat 1BPC ratnt of the Southern Agricultural States, namely: Tennessee, South C aro lin a, rfeor#a, Florida, Louisiana, Mississippi and Alabama, and on this account drawn close by its endless bands ef steel to every town and hamlet in thess seven states, and in consequence thereof stands peerless in its readiness to serve in conjunction with the goverissent o f the United States not only the seven states named, but another still to the north, Kentucky, and still another farther to the west, Arkansas. Exhibit •A* attached. Vontgeraery on account o f its *de(fuate railroad facilities, its six trunk lines and other short lines readies almost over nl/$it the farthermost point in each T of the seven states. parley Its mail service to these points is no less quick than its service hy express. Exhibit *B# at tached. Vow I have prepared Exhibits A and B. 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: Veil, 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: . 3970 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, Florida. 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 points. The 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 http://fraser.stlouisfed.org/way. Federal Reserve Bank of St. Louis pjb L . B# Parley 3971 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, touching Tuscaloosa, Alaba&a, West Point and Corinihr Flsslsslppi, and Jackson and Union 0ityr Tennessee, and other on 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 3972 from Hontgonery is always at any reasonable destination by 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 states. 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 on 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. this 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 railroad 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* ranking no* as third and annually gaining on remphis for second place. 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, third* 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 Pjb her merchandise, 3974 home grown &nd manufactured product*. Should Montgomery he chosen as & point for on* of tho Fsderal 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 Federal Huserve stitutions sum of §8,774,20©.00 to the capital of tho 3ank# there being 2571 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* pjb T,. * . Farley 3976 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 tion §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 292. 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. The number of national banks doing business in Alabama pjb X,. Parley 597ft 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. Alabama : 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 *762.00, 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 1906 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 5977 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 its 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; 597© 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 Atlanta, 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 we 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 adjacent. The Secretary of the Treasury: Wr. Kajley: What is your third choice? Wew Orleans. The Secretary of the Treaaury: Whet do you think about Louisville? Wr. Parley: Well, I really think that Louisville is a X . B. parley lit t le bit to© far away. 5979 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 crop? Hr. Ttartey: for cotton any ws run b u t now it d o v e ta ils taors. all in to do no t hove a it used to be September to season January* 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 ourss 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 district? To wh t extent does Mont* el at ions with the rest 4 f thoa Take Knox vill s, Tennessee, and Ifashv&ls, Jjm pjb B. Parley 5980 Tennessee* Irr. verlsy: the V* only h a w reciprocal accounts there for setter e f collection. You mean with the b sties? The secretary cf the Treasury: Yee. The custosary course c f buslnessls not frtm Hashvilla and Tnoxrille to laontgoesery. V r . parley: W 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 is 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 there. 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 pjb The Secretary o f the Treasury: 39*3. 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. How can you show us the customary courses of business of this district 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: district. 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: You shipments into ifontgomery or out? The 3eor«tary at the Treasury: Hr. psrley: some 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? 63$>ect. To whst extent would your Vhst is there in Montgomery*s situation which would make the argument unique in itsasp- 3962 I*. B . P a rle y plication? Parley: 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 city? 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 backward before we go for ward* tho Secret «*y of the Treasury: Would not $ew Orleans feel the saee way as to Montgomery? 1?r. FajfLey: Yes. 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. J». B. Parity The Secretary of the Treasury: 3983 As Mr. Houston s, 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: Would you 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 generally. 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: unique 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 points in thst district very largely. The Secretary of the Treaaury: reach other That is all, thank you. pjb 3964 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: Mr. 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> foment* PJ1> 39*5 Mr. Hooney: Well, our fir*. choice ie chicago, *md 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: W 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 preference? 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 00*0 for tho fifth choice. Wp. Vooney: *0 h n « no furthor eholcoo. w would h*ve oh- J 001ions to Loulerlllo oat » l*ato beeouso thoro io no bu«inooo botvoon uo ot a ll. 3986 Pjb The Secretary of the Treasury* Bo you object to St. Louie? 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: Orleans. 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. Ths nn.THXR sTXTEnarT secret say o f ths Treasury: o p sol w exler . Hr. Wexler, Z want to oak pjb S . Wexler 398? 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: country. 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: Yee. 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, Then Ths t would that Use following* Atlanta, Cincinnati, St. Louis, Kansas city and Denver, represent 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 City. 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 thin/% 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 capitslisation ©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 question? The secretary cf the Treasury: Hr. wexler: Yes. 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 pjb other question to be considered. 3969 The volume of the business, the iura~over$ the residuum cuts very little figure. The 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. taking 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 statistics Treasury; 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* 3990 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: abnormal And ®?s find some other conditions, as at Albany and Pittsburgh and so forth. Mr. t^exler: in Yes. 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: Yes, The secretary of the Treasury: be t«jken ae safe guides. And therefore they cannot We take /hem for what they are 59$1 S . ^etxler worth. 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 re quire. 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. Yes. Bees anyone else de I f not, the heaing is adjourned. 12 1 « , the hearing at Hew Orleans was