The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
OGRAPHER'S MINUTES
Official Reporters
LAW
115
REPORTING
BROADWAY
COMPANY,
NEW
282O
YORK
STENOGRAPHERS MINUTES
THU RRSRRVR BANK:
ORGANIZATION COMMITTEE.
•FKDKRAL RESERVE DISTRICT DIVISIONS AND LOCATION
OF FEDERAL RESERVE BANKS AND HEAD OFFICES."
At
Kgw York, i:.Y.,
.T«niiAry
fi^
Law Reporting Company, Official Stenographers
115 BROADWAY,
NEW YORK
TELEPHONE, 2620 RECTOR
BEFORE THE
RESERVE BANK ORGANIZATION COMMITTEE.
—
—
^
«••
—•
«•»
••
—
<w
-•
—
w
MB
—
—
—
^
—
••»«» —
—
_
—•
^
-~
—
—
—
—
—
—
"—
—
mm
•— I
IN THE IIATTER
of
THE DIVISION OF THE UNITED STATES
FEDERAL RESERVE DISTRICTS AND THE
LOCATION OF FEDERAL RESERVE CITIES
fHEREH,
New York City, Char.ber of Commerce,
January 5, 1313.
Before:B SECRETARY OF THE TREASURY.
THE SECRETARY OF AGRICULTURE.
Appearances:-
3
G
The Secretary of the Treasur
The coariittee desires
to express i t s appreciation of the courtesy of tha c:r«n:ber
of Commerce in percni*:' inj Lt to vte *^ese rcorns for
these
meetincs.
The Federal Reserve Act provides that an Organ iea ion Committee shall div:
twelve nor l e s s than • .
into not core than
rese^/e d i s v
meetings are desicn*ted to el:
These
= :_ information possible
to enable the comr
arrive at as intelll
conclusion as possi I
o wlaa
a
sions should be t
as to the number cf die
i, and xlso i s tc tha c i t i e s
which should be selectee
ne headquarters, fc
reserve banks in the ;
:cts.
In proceed:
,
e committee, in earh one of
;e purpose of
ited, to ask
the representatives of the bankers and business men who
nay attend, what their opinion i s , not only with respect
to their particular city ind as tc
ucus to that c
but alsc as tc
of d i s t r i c t s into
should be placed in the d i s t r i c ,
.sir best judgment at
the country as a whole should be
divided, 'ind as to
country as to thoc
r.ber
best division of the
s.
I
is not, ot
,
ie
1
G
pose of tk c c
governed by stat
the Act so p r o " i d o s ,
,
:.
.
Manifest:
possible to adhere s t r i c 1
a problon
I te lines in deal:
racter.
3. ion
an-
appro ached in a *rery brr
ic s:
not
the local c
i t is a •
co:
be
ns only
head.;
e;
ind important c-cc^or.ic problem!
i the
ee i t
that s p i r i t |
1 be der.:
ind
r -; local considerations w i l l c
be allowed to bias the Jud
.res.
c o u r s e , we a l l 'jnuorstand t i e •ery n
whl<
h in
- . ride
sry community has and wnich p^or^ti:
se
o sec*;.;*e on 2
of these banks, but w}
take into consideration that
no n a t t e r *
,
be branch banks es
district,
rmd
litier
-
such supreme ir.;
extended to
When the
ie he;
ill
urt
not of
*<o
em i s
branches are established li
are
* of the
of the d i s t r i c t , for that rea
belie"
* ers
laportani localities,
the i
Ities ofnthe system w i l l , of course, be readily
ace
le to
I par
of the dis*
t.
I do not nean
by that to say that the he
of very gr
is net a
nee; i t is a matter of *
importance.
The committee wants
ft]
er
reatest
-
can get
from bankers and business :;er. and others interested, and
Is fcr
we have determined to ha-re these
hearir.
roughout the country.
In order that
lejien who wi E
• eetify here may
not be kept too long from their places of business, as we
• people are, in 2:ew Vcr
ow ho
we will ar*
*icula - ,
as far as practicable for de
which t h e witnesses may attend.
T may say f
B hours at
3r
a hearing! of the coramittee are entirely public and
we should be
1
ln^bocty who i s interested
and vho wiahefl to come here to t e s t i f y ; of course, we mean
hin the
s of the *i I which the committee i s able
to allot these cc
?
ur.ities.
!r. "ecre*
oustc,
"e you H
U would
lil:e to state 9
The Secretary c
to as
'.her at
want tro t e s t i f y , so v/e could
:
,
» except
L,e here who na
* ine for them*
4
4~a
The Secretary of the Treasury:
want to testify, nay
Qei
en here who r.ay
Lth --r. Elliott, Secretary of
the CoLjr.ittee pro ten., fc can be hear
Lnite 1 ur in which they
fer to do -.. t«
Now, : r. v lne, will ycu be go~d er.
to give us ycur
views as to the Sesirabil:
a Reeerv
~n
the State of New York, and -6 tc what territory contiguous
you think ought to be
raced in the District,
upon the assumption -"irst, that there are to be a
say eight Reserve ranks
ally, anl ;•
cf
* country, and then B
the assumption that there .
the &exizur. cf twelve.
-
be a l?rgcr no
on
r, up to
I "ill state the question gener-
-
Lth it &e
think bent.
18 L. KIJ
I will siiLfly say that the feet thl \
coney ziariiet and cocrerci -
m Ycrk is the great
itrppoXis of the Western
*orid, constitutes In itaelf a sufficient reason why a
Reserve Bank should be located here.
that there is
I Ao not know
to that state»ent«
to the territory- which I
As
I be included in this Reserve
District, the extent cf the territory, ^eeais tc me,
should be eor.evrhat cc
New York as a r.oner*
-• te with the importance cf
-.-et.
I
3r, the fie^ bill having
ga2-Con
(let
.d the KinimxiB nur.bsr as wall as the maxliPU
In care of the establishment of a bank in Boston,- it
sec
I tc
, offhand,
that this district rr.ight in-
clude New York State and Connecticut, and assuming that
there is also to be a- fiesarve Eank in Philadelphia, I
would say the State of Veil Jersey down to a line
across the State, say
iitb Trenton.,
^r.
Shersr, how does that agree 0
Mr. Sherer is Manager
of the Clearing House, and I would like to askrrhirr. if
that agrees with his view.
I arc here in rather a
dual capacity, aa President of the Clearing House and
also President of the First National Bank.
Do you agree
with th'at, Mr. Sherer 7
Mr. William Sher^r:
Yes, entirely.
The Secretary of the Treasury:
Is that an assumption,
Mr. Hine, that there would be eight Reserve Banks, or
a larger nucber in the country?
Mr. Hine:
'. y L.ind has not gone so far as that.
The Secretary of the Treasury:
Is it your idea that
whole of Connecticut should be erbraced in the Nww
York District 7
Mr. Hine:
I would think that desirable, because the
6
ga5-Con
State of Connecticut dose its business largely in New
York now.
I uould say that that would bethe natural lines.
If they are made geographically, why, the Connecticut
River
: :t be a dividing line, perhaps.
The Secretary c
Tr^ury:
Ie rt your idea that
any part of the V'estern part of Massachusetts, for
instance, should be ettraced in this District, or would
that business very naturally drift to Boston as the tost
convenient point?
r. Hine: Well, probably the Western part of ilassa. setts would incline this way —
probably incline to New Ycrk.
Eerkshire County
If the Connecticut River
were rr.ade a dividing line, you see that would take care
itself.
The Secretary of Agriculture:
^ould you contemplate
including Verrr.cnt In that case?
Mr. Hine: Verr.ont would go to Boston —
Maine, New Hamp-
shire and Verror. •
The Secretary of the
Treasury:
You spoke before of the
entire State of New York as being included in this District, Mr. Hine. Do you think it essential that the Westtern part of the State should be a part of this district?
7
kr. Hine:
I do not know that it is essential.
I think
it would be their preference, probably.
Th
Jretary of the Treasury:
L, ]
the other point of view, r: ply M
tc
-t would be
in the division of country, beet for business generally,
ine: Yes.
>cretary of the Treasury:
or
here should Euffalc
tern part of Nev
Mr. Hine: buffalo?
to g:
Replying to that, I would prefer
- a little more 3tudy, because the I ill
io now an established fact.
r.g, but it seer, s tc
ie8erve centers tl
It is law.
IB
...
of
bter,
-
rd,
the central reser-e eitiefl Hire the natural places t
Reserve
1, so that beyond those three, I really have
not
-
. r. Secretary,
The Secretary of the Treasury:
enough to give t
ttee is !
. Hine:
•
Wou3
-
Lng the tice the
t that, :
. and give us ycur view*
On the assur."
atary of the Treasury:
* e esf
EJ
nt of
-
m core, or
e
8
_.,=••, => i'T(r=T nur.ber o:"
Lsti
* . "e should ba glad
also if ycu v.culd review the tap of the country, and sutz&it your vi=w8 as to what you think would be the best
division of the entire country into districts.
Ao I
said b2for3, we expect tc ask that question everyone: ,
because
lant to £ I
the country as to vrh
concensus of opinion all over
llbe the best general division
of ths country, and as banking exchanges, related tc the
entire country, we assuce that you gentler en, of course,
have large knowledge of that question, and that you iray be
able to give us a great deal of light on it.
I iuay say
further, that the Cor.nittee ^ill be very pleased to receive
afs fron: any of the clearing nouses, rritten briefs,
statistical and containing all the infonrAtion they i
chocse to put into them, as well as
and other crra. izatiens interested.
rcial bodies
Thc*e i.ay be eubr.itted
as early as practicable•
Mr.
e:I should be glad
ive the tatter further conoi-
ration, of ccur? .
The Sacretary of the Treasury: I 7.ill te V3ry glad to have
you do that.
e Secretary
0
-
sury:
.;
Lveub ^cme in-
fer nation as t o t h e c
i_
ness v.hich i s cb n? here an
e*
, jul
..e in
L>or. e e^
;
e,
c 3c ss one, except t o say t h a t t h s 1 .
Ne
but not a very
_
o f miscellaneous
: o n r e c t i c u c a n d Rbode i s l a n d ,
nov« ~ces t c B u t t o n .
n esd t h a t \je
.
fmm Bo-
; of *^-
-•
• -
Philadelphia
.
:
per cent ace of the bu. -
LB i t bith r e s e c t to
La [ Tier^lly?
Pennsylvania of course
Philartelp|iia, an
- -he s._
ally
g r a v i t - t c s tc
I presuie there is no bank
of importance in t h e i u ; e of Pennsylvania t h a i hag net a
banjeinr, ctnnecticn in Ke'w
t h a t Pennsylvania c a r r i e s
ces _
.
a
r
...ortion t>t i t s balan-
phi a,
t h a t i s spea^in; of
« baiks ov'*eiue of Phil Delphi:..
,il
that be your ji
-
i Itr,
.
•
.
Philade^.
I really could not
say.
The Secretary of the Tr easur :
\#ecfe8ireto
is there anything eli>e that
10
The Secretary o:
I tb
The Secretary of •
; r.
e.
be a l l , thank you,
You will B\
have acted for,
Jt.
fell]
»«additional da1
, ar soon, as
I .ill .
^
....;..
can?
- ny viev. , yes.
Seer jtary of tlie Trap.
Yuixviev., r a t h e r ,
meant t o Bay r-h
..
Hin e:
Yes.
.
The Secretary of t h e Tr *
you kindly t e l l u:
. outerr
. . ; . . .
.11
. u r occip t i o n i
:
.ulacturer.
Tlie Seer (Jtary o f t h e Tr «i u-x
Ch.
,
. eyr esent t h e
of Cormorce, I belier. Outerbn
I I
sen us A£ i to represent
but I nay s t a t 3 t h a t un
Conr.erce I t
Jale r e a l l y
for anybo ^ to repre-
desinate
t
j r a l nee -
^er hae no-
you cieterr.iine -' t o hoi
3m an
of t h e Chanber i s a;.ay; but I have bt
officers of the
,
rules of t h e Chart? ar of
sent thcmunlcBfl 1
of t h e Clianber.
t]
3r tg
er
1
•. ber of 1
*.
11
Committee which naue a report on t hi s b i l l when i t was
in Concresb.
Therefore I ..ish to cisclain t h a t I
exactly representinr t h e Charter officially.
I an
sebtin ; i t only as a i.aenber of that Cor.iiittee.
The Secretary of the Treasury:
yr. outerbr.
•,
are
you familiar v.iththe present la..?
. Out erbi
I i .
The Secretary of the Treasury:
lven a
L~re^
deal of thoujrt
elieve you have
*o t h i s financial question
for some ticie past?
IT. Out erbr idfe:
I have, for a rood nany years.
The Secretary of t h e Treasury:
tions v.e have Ju3t ai
r. King,
You have hard the ques" i l l you be cood
' enough to cive us ycur vie..s about t h e establishment of a
Federal Reeerve Bank in !Tev. York City, and asto what
territory
conti^uc^ s to Nev* Yo rk ou ht to be embraced in
the J)i st rlct °
. Outerbri' f \e:
:*r. secretary, i f you will permit i,e,
I should like to say t h a t so far as e^pressin;: any vie*s
%s to the exclusive t a r i t o r y of any one ?ederal peserve
Bank i s cone ern ed ,
I d o no t fee 1 c enpetent o r qua li fied
d
1 2
to express an opinion on th^. point, because I think it
i s very much a technical bask,
^ter
the ..ay the current of business
heretofore in the past;
and exch&Ees has rm
but so far as certain <
_
* 31 era l
principles are Q> re ernec.,
like to express
dependent upon
i f you will pernit ne I should
an opinion that I have very
definitely
forned on that subject.
First, of a l l as to the number,
the report of the
Chamber an d the opinion of the Co/r.ittee
of the Chamber
was that the snail er the number could be Kept, ihecore
effective the results ..ould be in furnishing a discount
market and in r. akinr conmercial b i l l s
liquid and inter-
changeable in different parts of the country at different
seasons,
when there was a plethora of money in
the
banks o f one part o f the country, and a train upon the
resources of the other;
also that the fewer there were,
the mo re po «erful these banks would be,
reserves and their deposits,
the larcer thr
and therefore the creater
confiden ce th ey would i n s t i l throu iiout the c ountry and
th e ir iran ed iat e d is tr ic te •
It 8eens t 0 ne that after ietercininc upon the nunber,
the nain factor
that should rovern the location should be
e
13
that each Reserve Bank shcul 1 r epr eeent a variety of int e r e s t s ir.
t
.'iich i t covers;
in other v.or
that a reserve bank should not be a o located as ;o embrace
a t e r r i t o r y or a
at net :.r.: -
U
of one c lacs in
i t s n a i n c omii ere ia 1 o r arricultural interests;
under t ho se circuns taaces the drain for
facilities
because
r-risccuntir
would aH cone on that barL a t one t ine.
For instance, in the Sou ii, in the cotton season, if a
Reserve Bank er.braces a d i s t r i c t v.hichhas no other interest
than cott cnf every nenber bank anl everybo Cy in ih^
^is-
. ct. v*ill be v.antinr accomnocation at the sane t i r ^
an ;
therefore there >. i l l bo r serious
rr in upon the resources
of that one institution; v.hs*aas i f ihe d i s t r i c t eribraces
not only a locality
-
?st- of that sort,
o larce
industrial or ccnr.id"cia.
a^ests of S « B other kind,
there v. i l l not be t h e same
pull a l l
at one time upon t>
resources of the institution as there v«ovld be if i*
purely local interest; and fgr the saie reison,
Tldftd
ne la. .
I
..
as pro-
oes comei that one
bank needs the assistance of another ,
\.hen the federal
Reserve Board can r equir e ano ther bank to rediscount, I
a
i
14
seens t o me t h a t there nu st be sonev»here one or no re of
these federal banks so powerful, an d er.b rac In c so *ide a
number of interests in i t s c1 is trie t, th * i t will practi ca3rly always be in a position
called upon,
t o afford t h a t f a c i l i t y *h&
without distress to i t s e l f a n i i t s o w n dis-
trict.
Ther efo re , in so far as t h i s d i s t r i c t here in yew York i s
concerned,
it seers t o n e th Jt either i t , or i t and
the Central District — I an assunin - that th & woul d be
the Chicaro D i s t r i c t — should be larce enough to have one
or t H> of these Reserve Banks surrounded by such a divers i t y of t ,ade interests
that they will
practically al-
ways be in a position t o lenl th 4. assistance t o t h e sraller
regional banks »«h en t h e necessity or stress nay come, and
that th it i s nuch more likely t obe possibl e i f the d is trie t
embraces
a variety of different
i n t e r e s t s , some of
hi ch ar e no t ac t i v a in wh ei r d an an 19 f or mon ey at t h e
e %«hen other s a r e .
The Secretary of t h e Treasury:
Ku.ve yJU c.ny d e f i n i t e
idea as t & v.h3t t h e limit s of t h e Ke* York D i s t r i c t shoul d
be?
e
15
. . Outerbrirlre:
I have no ^ atier.pt ec* t o cover that,
because I thou ht you v.ould fet so much testimony fran
banker s v^ho a re so much bett er qualified t o speak -h^n I
coul'i poaBibly be,
that I really wanted merely to express
an opinion on certain fmd amenta 1 pr in ciples.
16
a
The Secretary of the Treasury:
Well, upon the theory
you have expressed, and in order to get the necessary
diversification of industries in the New York,' Chicago
and St. Louis d i s t r i c t s , for instance; those being the
several reserve c i t i e s to which reference has been made
here, you would consolidate into those three banks so much
of the resources of the country
c s would make the other
•
banks comparatively lean and i n e f f e c t i v e , would you no*
Mr. Outerbridge:
I cannot answer that question unless
I were to £0 over the reports of the Comptroller of t h e
Currency and make a careful study as to the capital of the
banks in those d i s t r i c t s and determine on their percentage
of contribution and the capital any bank would have.
It
seens to me t h i s i s susceptible of so many mathematical
c a l c u l a t i o n s , when you come to draw l i n e s upon a map and
make your checkerboards of the country, you can pore over
that a lone time and s t i l l perhaps bring them a l l within
the limit of four millions of d o l l a r s , which T think i t i s
at present.
The Secretary of Agriculture:
have to do, Mr. Outerbridge.
That i s exactly what we
Can you not think over i t
and submit your views in a d e f i n i t e form?
1 7
Mr. Outerbridt;e:
Saturday morning T
Frankly, T was only notified on
i be asked to be here this morning,
and prior to that, ti*ne had not time to Give any study to
the detail of d i s t r i c t s or to map i t out on th e map or to
study the capitalization of the various banks that would
. within that d i s t r i c t , to see how that would work out
.with the capitalization required in th e law.
The question
of trying to arrance them so that they will be stronc
enough to stand on their own bases, to paddle their own
canoe, under ordinary conditions and not always be in the
position of having to c a l l on some other one, or sor.;e other
one call on those to re-discount them, v/hich i t seercs to
me to be a material question of importance if they are
going to f u l f i l l
the purpose for v/hich they have be<jn de-
signed and which everybody hopes they
The Secretary of the Treasury:
. i l l do.
T suppose you ha~e taken
into consideration the provision of the lav/ that the banks
may apply directly to the Federal Reserve Board at ^ashiton for
Ihe currency against certain forms of liquid
assets?
r. Out erbridre:
Yes.
The Secretary of the Treasury:
And that relief
be
18
c
had from that quarter without resc
to th^t provision
cf the b i l l which authorizes the Federal Reserve Board
require ^e-discountincMr. Outerbrid^e:
ey can only set that when they can
Id
set up a sufficient/reserve for i
The Secretary of the Treasury:
measure of
Exactly; 'out i t is a
relief.
llr. Outerbridfe:
The Sec*
Yes.
of the Treasury:
You are not relegated
solely to ^e-discountinc by one reserve bank for another.
. Outerbrid
That is true.
~ :e Secretary of the Treasury:
in the b i l l ,
So with that pro-ision
It would be safer to divide the country in*o
a larger number of d i s t r i c t s than i t would be without
"r.
Outerbridfe:
Yes, T agree with you.
e Secretary of *
you concede t
it.
-easur
T suppose, of course,
he amount of .banking capital that will
be available for these V
B an important bearing upon
the division of the country into d i s t r i c t s .
Mr. Outerbridce:
Tn so f
the banking capital of
these banks should correspond to the general business of
the district; the General business recjuiremants of the
19
district.
Naturally a district of very contested business,
manufacturing or other classes of business, is going to
require a ( r e i t deal more powerful reserve bank and a
great deal larger f a c i l i t i e s than a widely spread agri-*:
cultural community, not largely populated; but when they
want their money they want it at once and at one time.
For instance, in speaking of the cotton business; the grain
crop i s moved generally earlier than the. cotton crop, and
if a southern d i s t r i c t
embraces partially a £rain d i s t r i c t
and partially a cotton d i s t r i c t , the amount of exchange
or money which had be<*i required in "he earlier part of
the season for moving the grain crop, if that v/as a normal
season, those crcps would be marketed and that money
would be released in time to take care of the.cotton crop
when i t began to move in large
quantities.
The Secretary of the Treasury?
Mr. Outsrbridge, you heard
•
Mr. Hine's views as to what should be incorporated into the
New York District.
How does that appeal to you?
Mr. Outerbridgv^: Well, so far as he went, I thcua-ht it was
no doubt based upon his own banking experience, of the tendency
of exchanges and bank business in this District.
It seemed
to me that it embraced a very small territory for this district,
ir. a general way.
The Secretary of the Treasury:
Kill you be good enough to
giv% us your views on some of the points we have raised,
Outerbridge?
Mr. Outerbiidge:
If ycu wish r.e to, while you are here, I
will take the reports of the Comptroller of the Currency and
the map and see if I can get any more definite ideas on those
points and present then to you.
The Secretary of the Treasury:
have you.
Mr. Elliott,
Fe will be very glad to
have ycu some other gentleman in view
to make a statement at this time?
Mr. Elliott:
I suggest Mr. Ccnant.
STATI
CF MR. CHARLES A. CCRfcFT .
The Secretary of the Treasury:
'. r. Conant, r,ill you Qtate
briefly what ycur occupation is, and what has besn your ex
~
a
perience in financial n.c.tters?
Kr. Conant:
I an a sort of consulting specialist in regard
to n.onet£ry syster.s.
I prepared the plan fcr the coinage
cf the Philippine Islands and was consulted by the Governi.
of kexico in their n.onetary reforn. and by the Government of
Panama end by the Government cf Nicaraupaa in the adoption of
the monetary reforr
I h has teen put ir. operation there.
The Secretary of the Treasury:
Philippine syste.
You were connected with the
re you net?
ilr. Conant: Yes> I prepared the ronetary reforr. for the
Philippine Islands, which was put in force under the Act of
March, 1903, and ~hich is no^ in successful operation there.
The Secretary of the Treasury:
ffeat has been your banking
experience?
Mr. Conant:
I was Treasurer of the Morton Trust Company for
some five years, which has since been absorbed by the Guaranty Trust Company, but r.y duties there were special, rather
than rcutine.
The Secretary of the Treasury:
Are you fan.iliar with the
Federal Reserve Act?
Mr. Conant: Yes, I I .
The Secretary of the Treasury:
You have riven a good deal
22
a
of ctudy to it, have you?
Mr. Conant: V'ell, as r.uct as I could incidentally as it passed through the two Houses of Congress, and I have studied it
some since it acquired final fort.
The Secretary of the Treasury:
Tou are aware, of course,
Mr. Conant, that this Organization Coccittee is required by
the Act to divide the country into not less than eight nor
tore than twelve districts, and establish a Federal Reserve
Bank in some city in each one of those districts.
given any thought as to what would be the
Have you
- division of
the country into such districtsf
Mr. Conant: Well, only generally, until I received on Saturday afternoon your despatch asking te to appear here.
oome quite decic
do not appear here
New York.
I have
inions on the general issues involved. I
aa a special chanxion of the interests of
I am not representing any banking organization and
I at present rsreonally hold no tank stock and aa not an officer or director of any bank except the National lank of
Nicaraugua, which, of course, is in no way affected b*' this
legislation.
In my opinion the mi
kspt as small aa possible.
i of institutions should be
1 should have preferred that it
a
should be less than eight rather than rr.ore, tut, cf course,
the law having fixed the ir.ir.irr.um at eight, we must adjust cur
future
e?<uLination of the question to that nuir.be r.
reaa
eon for 1
. - low
r is that thers is a greater concei
tration of reserves and greater rover I D the individual reserve banks than ther
:
be if that power were split up
and distributed amongst SiiAll institutions.
In appearing here toetay, c~e I said, I do net appear in
any respect as a champion of the interests cf New Yor£, fr
a local point of view.
I propose to consider the whole ques-
tion from the National point of view, of the relative efficiency of the new system as a whole.
And froir that point of
view I think it is very desirable that there
US be crea-
ted as large and strong a district as pcs«itle in the Tortheast.
I think it v.culd be very unfortunate from the stand-
point of the public interest to have separate institutions at
Boston or Philadelphia.
I should pay that the whole country
northeast of the Pctoa&o and including Fe:
constitute one district;
Lvaala, should
the essential reaper being to cre-
ate in re* Ycrk City a power, re-resenting the Federal Government, strong enough to deal with the
-eat private BU
joint stock in8titutione which are located ir. this distri
34
I will amplify that idea rerhars a little further along.
But
I have taken cut the amount of the carital and surplus and
also the amount of deroeits which a Federal Reserve Bank in
this district would derive in certain territory.
I find that
if the whole country northeast of the Potomac, and including
the whole of the State of Pennsylvania, tut not *est Virginia,
were taken, the capital and surplus of the National
B&nki as
of October Slst, 1913, I believe, the date of the last report
to the Cccptrollsr, was *652,521,000.
How if three r«r
cent were paid up by all these institutions
national banks;
trust companies —
these axe all
I am net dealing new with state banks and
but if the three per cent required by the
law were paid up by all these institutions, the amount of the
capital of the Federal Reserve Bank would be *~f,575,000.
That would create a strong institution, which would comr.and
the respect of the big joint stock banks, that is, the national tanks- and state banks and trust companies in this city and
in other parts of the district.
/
Now New England, excluding Connecticut, if *he were
erected into a separate district, would have a reserve bank
with a capital paid up of atcut *4,0C0,CCC, --.'4,023,000 and
some odd.
3 Secretary of the Treasury:
25
That is upon the aesur.ption
t three Per cent only is calle :.
kr. Conant:
Yes, I ar. assuming that the three per cent is
to be called, and the other regain as a reserve resource, just
as in many European banks, there is so r.uch capital called
the ether is subject to cell, cut which never is called, exce.
case cf 1:
latlon or something cf that sort,
rut
of ccurse if the intent of the Ccmr.it tee cf the Federal Reserve Board is to call . -re than three per cent,* that would,
to scrre ixi
t, alter the figures, but I do not think it
would alter the essential principle.
itary
.e Treasury:
:
It
. Dot alter your
conclusion^.
Mr, Conant:
cate.
Nc, not essentially, as I will ^o en to indi-
It
rossible to take off one or t
tiens of this district vithcut 5o:
,
U
or-
take kary-
land and the District of Coiun.bia, for instance, if it were
desired to create a
ral Reserve Bank in Fashington or
Baltimore, the capital \
of Columbia, inc
their reserve cities, would be, on
the three per cent basis,
desirable i;
_n by Maryland anc? the Dis^^ict
:, I
.
Of course if it
the districts, to deduct tr *
ere
cunt
36
from the twenty-five r.illicn odd reorienting the whole territory northeast of the Pete• ^, it cruld be dene without seriously in/pairing the strength of the Federal Reeer
nk of
R York.
Further, if it rere desired for geographical or ether
reasons, to eliminate Pittsburgh, the carital r?-id *a by
the Pittsburgh national ba.iks, at three rer cent, rould be
*1,395,420.
I surro3e, of course, if Pittsburgh *ere pi
into another diccv
#
it would necessarily carry a chain of
I adjol ning Pittsburgh, but I had not the data
cr tiL.e yesterday t<
^ute tr.ose by individual banks. But
if it v.ers desirable fcr ^eo;
cal or other reason* to
eliminate thoat ti»o factors, Maryland and the District
Cclur/cia, and Pittsburgh and the c
would still be over $20,
rjF arcund it, there
» ' 00 left. And taking Pittsburgh
out alone, and Maryland and the District of Columbia, there
would be left neerly ftB3, »000j
try around Pitt*v
,
and allorlng for the cc
Ld rrobably brlnr it Sown to I
neighborhood of *S3f000t00C cr A-3,5OC,OOO.
I n8ve also a^suned the ultirate cocrulscry derc9its
as far as they could bs readily calculated,
reserve darosits required by 1
I . *?n the
to be made in the Federal
37
Reserve lanks, taking the figures, of course, at the expiration of three years, jshen the new syster. is in full operation.
I find in that case if we had.a district limited only to the
State of Few York, -with Ccnrscticut and New Jersey, we would
have reserve lepceits in the Federal Reserve Lank of
• ,763,000.
I:
3 take in all of the territory I have tmi
ed northeast of the ?otcr/,c.c, e::cept karyland and the District
of Coluirbia, we vculd .-have additional deposits of s*65,130,000,
ing us deposits in-the Federal Reserve Eank in that aggregate district, excluding Maryland and the District of Columbia c
3,000,000.
Now, with a capital Of, sr; , "~~,000,000, and deposits
D£ '152,000,000, there.wculd.be
te resources of, say,
$175,000,000.
1 have taken no account of C-overnn.ent deposits, becauee I do not know what preportion the Secretary of the Treasury cay, in "his judgment, se.e fit to leave with the Federal
Reserve Bank of Ner^York.
entirely v..
!
I
his discretAticr.
tter is left by the law
I surpese it ie fair to
assume, however, that there wculd be Qc
in the Federal Reserve
:
-
.11ions ace.
'
OTLB
te
and
ether sources, even If it-i-ere r.ct.wthe policy to make deposits
28
as such, ard ler.va then in •:* •
rk#
Eut those figures, while
*
respectable, are none toe formidable
*
b to equip
the Federal Reserve Eank of New York in dealing with the
Clearing House banks and its
r bar.
I need net remind you how large the figures are of
the resources cf the N?
affc-
v. banks. The legal net deposits,
. 3 to the statement of last Sc*
y, of the Clearing
House bank* alcr ? national and state banks, were
*1,308,000,000;
trust companies belonging to the Clearing
Hou<?e had additional net deposits of f409,000,000; loans and,
disccunts cf the combined Clearing House banks, national and
state banks and trust coir.par.ies, *ere cl,874,000,000. And
the^e
ee of legal net deposits, as you ,are doubtless
aware, are somewhat less than the gross deposits, o*int. to
the deductions allowed by the Comptroller cf the Currency.
ID ought tc hPve stated by the way, that in cor.ruting
the deposits of the banks rhich are to be reserve deposits
in the Federal Reserve Eank I tcck- only the indi
1 de-
posits cf the banks inrol-ec', because in cy c^ir.icn r.sarly
all the other iters "?ill be eliminated by the abolition of
asent reserve deposit system.
L.ay not be absolutely exact, tut I t
Of course the figures
they convey a euffi-
•
ciently accurate approx:
I
89
ea of the strength of the new
bar. .
yw i t seecs to ir.e of very considerable importance tc
^ate a bar.k cf this fc&gnttudft ar.
City.
raotex in New Yc
The financial cord it.'.ens cf the country as a rrhole
would not be grea*
", in I y opinion, if we did nc*
have a bank which I
I haril;
r.ded respect abroad -s \ e l l as at hoL.e.
t a Fef.Brzl Reeerve Bank wit:
do31ar3 paid up in BC.
:r.
iistricts of the country will
have a very important status in Europe, cr that in ca^e of
crisis it 3OUld eotablish credito cr borrow largely there.
The country' cust lock to the two or three largest Federal
Reserve Ear.l-:s tc :
s oatlonal credit abroad, and
naturally those wovld be Ne^v York, Chicc.gc, end peseibly seme
one other.
So far as the claiiLS of Boston and Philadelphia s.re
concerned, I think they ^ould be adequately served and wculd
be in a ciuch stronger position by having tranches cf the
Federal Reserve Bank of New York, which brsnehes are perfcltl
•
ty the law as finally
ld« Either of thc3e cities is in
a much stronger p
on in case
i to
the consolidated resources of the 3».tira diDtr^ct ncrthe:.
30
cf the Potcn.ac than to appeal to the segregated district, ineluding in the case cf New England, a
• .1 of four Bil-
lion dollars and other resources of about twenty-four millie;- idler?,
lelphj
£wsnty<~elght million dollars, /nd Phila-
.
r to the c
:4a
ted resources cf a bank ^ith *300,000,000 capital and deposits
than it wculd be simply with a district zads up of Pennsylvania and Talaware,
er a capital of seven million odd
and deposit? of sore forty millions, for the Pennsylvania
District, if it included the whole state of Pennsylvania,
Phila-
2, Pitt^
. and Delaware, would have deposits
of c43,000,000; and obviously these wculd te overshadowed
very greatl
esources of scn.e of the Fniladelptia
tanks .
I I
in the care matter of note issue, to have
ngast note issuing bar./, ir. tnis country have a
capital of only ten or twelve million dollars, wculd be a
very unfortunate p4Biti<
*hich tc put us before the world.
To say that the strongest bank of issue in Areric
only
a capital of ten cr twelve million dollars, and t;
at
capital was all that 3tood behind I
of notes
*3 of millions
re ultimately to be put out, would bs a
very unfortunate situation.
actly the propcsi*: r..
r
I do not rcean tcrsay thatis ex-
' course they would have all of
the capital of all the ban*8 and a vast nutter of ether assets;
but it would not be a very creditable situation, to
have it said that our vast currency system rested for its
strength upon a Federal Reserve Bank with ten or twelve nillion dollars capital*
The Secretary of Agriculture:
What district have you in
mind?
Mr, Conant: A district .aade up of New York alone, with Net?
Jersey
—
The Secretary of the Treasury:
And Connecticut,
Mr. Ccnant: Yes, Connecticut possibly, but shutting out the
rest of New England and Pennsylvania and Delaware and the
District of Columbia.
The Secretary of the Treasury:
You are proc«edin£ on the
assumption there, that only three per cent of the capital would
be paid ir.?
Mr. Conant: Yes,
The Secretary of the Treasury:
Ycu Right have 20 per cent.
Mr. Conant: That would be better, but that would lock small
for a ccuntry with the resources of this country.
I shall
32
discuss later or. the rela-ticn cf these banks to the Federal
Reserve system.
I .air speaking C
s, not that i t would be
possible through jrepJrjMen *..-:.
"e eyetec., but i t v/ould
be a situation which- would not etr^ngtaen our international
credit.
The Secretary of the Treasury:
le I understand you, you '
are sug^estin^ tr.at New York be made the headquarters of a
bank or d i s t r i c t which shell erbrsce the states of fcarylabSL,
Delaware, Pennsylvania, !!ew Jersey, New York, Connecticut,
Rhode Island, Massachusetts, *
r« Ccnar^t:
i , Few Harrshire and Kaine.
Yes, that is tfy sutfestion except that I —
The Secretary -of the Treasury:
Now that rould eubrace*
rrobabiy about 140 per cent ct the t?.r./.ing capital of the
country, ^ould i t not?
Kr* Ccnant:
Yes, I think a l l of t h a t .
The Secretary of tb,e Treasury:
of the combined banking
I -,
Eet^eea 40 aa:"
..
in bankigg c
?r cent
- I I in-
clude not only the c a r i t a l but the surplus-of banks.
Mr. Conant:
Yee, Oftpll -
because that is .
.
rocri?nce with the law.
-stary of the Trsaoury:
of i t in one back in tfeli
ur^lus we i.re speaking of,
An
Mr. Conant:
Yee, 45 per cent.
I am trilling to have
eliminated Maryland and the District of Columbia, if that
will contribute to a better distribution of the regaining
districts.
the Secretary of the Treasury:
V'ould not that leave the
remainder of the banks which must be established by the Bill,
as rather puny institutions? •
Mr. Conant:
Relatively speaking, perhaps.
Put I think it
ia tetter to have one strong and seven puny bc.nks than eight
puny banks.
The Secretary of the Treasury:
But how would you be Able
to command the iLiniinujp capital required to establish the
cthrr seven?
Mr, Conant:
Tr.e c.rcunt is adequate, I think.
The mini-
mum paid up capital is *2,000,COO, and there is about
3,000,000 available, so there is capital for 14 banks with
a minimum paid up capital of *?,000,000,
I Secretary:
Mr, Conant:
Y^u would starve Chicago on that plan.
I do net eee that it would affect Chicago
materially, for Chice^c, I I8sunt4 will be n.ade a pretty
strong district fro:/, territory appurtenant;
and while, of
course, you may argue that you would have to take something
34
from Chicago's territory to make the other six districts, I
do not'think that would be a very itrortant factor. I
should say that Chicago should be strong, and possibly one
of the southern districts, and it would necessarily follow
that the others cannot be banks of very large capital.
If
you take your whole £53,OOP,OOP paid up and divide it
a&ong all the other banks, you would have *6,000,000 each,
or a little over for eech bank and that is icpractic&ble.
You cannot get New York down to that figure b* any ingenuity, unless you isolate the city and aake the state
a separate district, and. I do not suppose that is a practical solution.
Tte ,-^ec r a a r y of «he Treasur. :
r
" Vt -
do violence to the course of canr.ercirl
oo no t have to
exchin^es and
3 in the very lar~e t e r r i t o r y ~*e£ t of t h e
. Lppie Riva-, upon -he plan you are oo> SuCLestin-^
For instance,
take Chioagi arid St. Louis.
Th =iir exchanr es
cover a very r;uch greater a r e a , p a - h . . .
n n Hew Yorn. 1
am speaJdnc sanev^liat Loitatively v»h 31 I say ^ h ^ ,
the area enbraceu t h e r e «* auld be rr gater
that of New York.
9
natu rally, than
No« , U you c en s o l i ' a t ed
zlie available bankin
I nean
so nuch of
c pitc.1 of t h e count ly in one bani:
in t h e 35a8t h e r e , you v*oul^ have to (i&clocate
to a v^ry
^Cree the ordinary and normal course of exchantes
»
and businesses in
other parts of t h e country, in order
t o establish the o
"r. Conant:
seven b -inks recuiracl by t h e b i l l ?
You mean you could not
concentration in Ciuc
: t a l for the f'aaJnin
nai:e a l a r c
p f without leavin
inadequate
rix?
The Sect»laryof the Tr xsury:
Yes,
in or.er to - ive
. car© a.n c c?t. Louis what woul - be nee sssary, because of
t h e i r own inpo iXanc e, you would have 80 very l i t t l e
f or t h e r anainm
left
five, t h a t you p.'otably could not £ 6L
36
ohe miniroun capital*
- !'r. Conant:
I think you ecu! .
I have not ficured
e t h i n j out as-niriutely as you have, but I think you
would find after locator; these three,
be able to lo cat
; - i ••--
^11
r f ive , with two r. ill ions paid up.
I ; is impossible, of course , t o have than a l l 1 arce capital
under the b i l l ,
because v.e have only
L ot'
53-1/2 millions
available in a l l , and ; h e question i & whether to attempt
to ' iv I e i t r. rtheratically, creatinr ei; ht or
in sti'wutionc,
no re
puny
or.to Iiavetvo or three that are stro:
and the others o f less consequence.
the f i r s t , as I
mten d t o show later on, the thecry of the b i l l I think is
that the Federal Reserve B«.nk shall be rel atedm itamacr.turte to the business of the district v>hi ch 11 serves.
woul i b e preposterouj to put
in the Ne\. York District
the Okl ^ioma District.
capital acco r
fc
that i s prov:
a t vo i.illion
dollar bank
ai; ^ a twenty-five million one in
other wort's, you must make your
.: e banking
1
of -he -listr.jt ,
for, la a *ay, throu r. th e provi
that each bank shall pay up i t s tlir ee per cent o f the
capital an' surplus.
It
9 rSec r e t a r y o :
ional
. ~culu,.
baiks c jul
you are
to nal;e
fou
nonaally serve
whese
37
ese re-
say
in iheir district*
If
In sect ion a so u a l l as you
in&cate, would no - tho&e d i s t r i c t s benonnally deoer.^ent
and steadily depends it on barLs ou;si."e of their
~.'r. Consnt:
a district
No t necessarily.
v.hei
\isznc\n
Ot course, if yaw have
. . c ipital oi Ih
then to pay up tvo i.iillion capital
BanJc, t h e ^resunption i s — in fa;*.
neaber banks
.^.s
u the federal Pcserve
.±nost
•
1-
ly folio ve that the resuurce3of the banici of that Ji s t r i c t
are in that p r o p o s e r , to the federal Reserve Bank, and
c a l l s for help, i f there are auch calls', b i l l
be in that proportxor..
I ae capital i s
In otter «.o: L , 11
sixty
. . . ^ e a cconun-
ens, »hoae aLv^;re:ate capi-
t a l and 8uriiLus is L u;ty niliior.s , and they pay up t\o
million s capital f o r a ^eleral Reserve Bank, their calls
for aid \ i l l not be I
lion thr
hundred Million capital or resources,
I should not coni-are
capital amebri*-
of course
n h r ^ o u r c e s , but with a
tere in th e nort heas tem : i b * r i c t t o
652,000,000, necessarily i
. . r i c t with a b i l -
b
o?:;,ooe,ooo
36
of capital and surplus and c or res pan''.irr iy 1 arf e
one
Kill demand n
... .-• . . n i
-xty millions c a p i t a l
and cprr et . .
I
deposit 3.
The o'ecrecary o l whe Tr«u
-inportrtice
do you a t t a c h LC cl e *• u
-on that t h r e sh^uli be
hrcrvtty of industry an u agriculture in these d ifrent d i s t r i c t s as tc msuie t h e ban*.s inrfependerfc of a
purely seasonal
. Con ant:
denuid?
'"'ell, thei*s i s socie force U
I I that that question i s «ra. .
the powers
erci m,
| to sor.e extent with
. ich I propc as tg r2i'or to , if you will 1st m*.
I Just -..ant to emphasize t h i s
That we rust have a eyfttta which will cowndnd re-
spect abro
•
Vou will r acall that in lS07 t
pajwent s v»ere suspended -hrov
the Bank o i
I
. . .
to t h i s country, i f thari
for i t • rj4
.
when speci
the country, almost,
- o 1 en d any atiount o f Col d
been ^jay L .
pfttDt,
Unit orl S; t PB
;ntcr
^varnna'.t of the
]
ment said "Ko, *e have no c c
I ;eL:e
b t h e Federal Ree arve Bark ife CoJifl
on ?. l i t t l e fUrthsr«
point:
.t.
-jurant * i t , and the . overnSL po\er
j any
39
:i thine a n d i h e r e was no bank in pefc York, representinr t h e nation or i t s po <er, and, i] crefo re , th* only »*ay
i t could be dort was in a rounckbout way,
or thiou
penniwtin" y >. YoribunKS t o est a cii shberec'ic in Lone on,
and
;hra
h Lci.e Rncllah oomaercial paper.
The annual
re.\?rt o f t h e Bank of Franc e f or th it j oxt s t a t e d
l e they had been anxious at a l l times t o rsider
hel..
v*hat
^uld! t o the New Yorx marKet — t h i s *.a3 a ra-
port t o t h e i r shar h o l d e r s —
th*Jir shareholders t h a t
they .want ad t o bay 10
-ouldnevei* r.dsi any~ lo^ns
or use any o f t h e resources of the bank in a manner which
was ric
-
-ty t o tli e r equir an ent s of t h e i r
s*watv.^es in r e f a r d t o t h e character
y nu st k e e : •
of t h e a s s e t s which
e attitude v.cul I ce u ; e n acain
v.a had a t v o o r t h r ae :i i l l ion d o l l a r bank h e r e , a
was t h e only t h i n
ptoie
• . h stoo 1 between t h e country
suspension.
o c r e t a r y of t h e Treasury:
whi:
. c h could s tan,; between
That i s not t h e only
,
conditions
x t no ^* exi»
. . Conant:
I appreciate ; h e f e e t ihflt t h e la»> c o n t e o
40
:?.ies pA
ter
s
n a'-'equaie currency,
putt in " saie influeice over i.
rate and. ;ha
Reserve
be-
-
that i t CUBiscount
to&c of t h e country wh rcu h the Federal
. . , ou r
It
~here n» where che »ea.na.
not be possible for a t en nillion ccl-
bank in J~e\.
v
c rk
,
T . • / use t h e slan-; phrase
acainst the creat bam: 3 and t rusi ccapar.ies, r'oin^
I l i o n s ^.nd nilxior.-
xsrs in fo.
sxcha^ce. I t
not ba posible for t h e - ta fix a diBC a r *. / a t e a:
*.ain i t .
Those institutionb would lau. h at -hem
" n they said the ?ederal j&Berve Bani: tp h«-e li •«» decided
.o fix the
liLCcunt r a t e a t '
a &tron ; i n s t i t u t i o n ,
r . apa
less you have
^hc.t by i t b
>rtiocAe ratio t o
Lll a t le^st
I -aeourcee of the
r e s t of the banks, you ..ill not be in a etr<*r; position
in
respect in fix lie the
i
iscount
r
zh 3 oi; cf lo v. o f r ol i o r ir inr irr
in
a
The Secretary of th e Treasury:
Do you think a bank1
cf the kind you su££sted would be strong enough to do that
in any event0
Mr. Conant:
They do not ha~e to be but the propo-
sition of the Federal Reserve system is to create a power
stronger than private institutions to protect the £old
system of the country.
ft i s net \v. tc the City National
Eank or the Guaranty Trust Company to protect the cold,
but as T understand it is supposed to be a function of the
Federal Reserve Bank.
That is '.he difficulty.
But
perhaps the «~reatest difficulty would be to maintain the
discount rati.
Of course, it r.:
position
be said in criticism of n^
i t tends toward the creation of the central
bank; cut I think if you will examine the natter a moment
you will see that i t is j u s t the contrary.
Tf you have a
strong insti tution here, your system will function without
much friction
and wi
the assertion of undue powers
r 1 Reserv e ~orird; but if you haYe a v/eak
i n s t i t u t i o n , then the Federal Reserve Board must in
become a central bank.
ft BUI
effect
nd 3c~e of the Federal
Feserve B^nks to re-discount fpr others under the cotnpul-
12
b
sory clause.
It rust wa
:: :
more or les^ pur.
ions and see *
eld in these
~ hey are
welded together into a harmonioua whole. flow i t can do
-,
.11 do It onl; by r.xe^c? sin.: meddli
i n i t i a t o r y powers Instead of merel.
. ervieory powers.
Eren in ordinary tiroes, when there is no special presrtare,
i t will hare to say to one "bank, "You had better pull up
on your discounts; you
etter loan soae fold to mother
bank, you h=*d better re-disccunt ro.r.e paper for I
8 whole fabric " i l l take care of i t ,
that i s , viii b«3 strong enough! but the Federal Reserve
>ard can only do it
oinc into practical everyday
banking instead of singly stspervisin^ the eic^it or twelve
i n s t i t u t i o n s which the l
central bank, with i
3.
I do not know but
I
i direction of a
overnlng board of a central bar. ,
and the local institutions vould b e in effect only branches,
but i t has
cies.
o be one c
Bithei
ther. tc ether, or you will,
other of those two tendenrsak chain bindi.
Washington strong enou :h to take charge of this vrhole
fabric and administer it practically.
c
Tf you i r e r<
desirable
,
i t , T do no
i t is a
X want ^o point out that by creating
a strong institution you escape Siat l i a b i l i t y at the
i n i t i a t i o n of the system.
Of ccurse, only tiae can t e l l
how t h i s system is join,
lit.
11 -*or:< very successfull
I t may be I
h eicht recional banks,
with one here in Vevr York with a capital of ^20,00C,000
or so, and the others
t o t a l of
up among the other se*':r,
or
i t may "be,
weak in the becinnir, f tri
,0^0,000 split •
-~ra£e of sa.
,300,000 or
hat ti •_- tin a l l
^ederal Reserve Board
11 have to step in and exercise these i n i t i a t o r y and
adminisV
^rs in
functions.
c1
T-
* ccnside>-r ,
Ltion to pur
upsr^isc
is a point that should be ve*-y.
o he*
i ah to nake such
bution of t h e d i s t r i c t a as
rerve
p r a c t i c a l l y an ad.r.inistnative c e i i t " l bank,
or whether you shall avoid that for the present until .you
see how the ne?
:a cut.
T thii
id.
telegra
I prepared
S * rday afternoc .
principal poir'
Ly
But
T had in
• recel
T
;>our
-1 be L;lad to
44
answer any further
questions you ray vdsh to ask.
The Secretary of the Treasury:
thesis :ou have just stated,
described should he orfanized,
Assuming the hypothe d i s t r i c t you have
'is one of the d i s t r i c t s ,
how would you di"ide the rest of the count
e you
given that any though
Mr. Con-int:
T hav e not undertaken to do *
n detail,
I assumed t h a t the other reserve centres would be Chicago,
St. Louis, San ?**ancisco, Denver and New Orleans - - that
with New York makes six - - and t h a t the location of the
other two was rather an opei question, with probably one
in Atlanta and possibly one at Washington, because i t
would put under the eyes of the Federal Feserve Board the
actual adninistratior. of B going i n s t i t u t i o n .
The Secretary of the Treasury:
-e you firfcred c
what the capitalization of these different banks would be f
and what territory each one would embrace?
Mr. Conart:
Vot 1
I not.
The Secretary of tht Troarjr;
uld you be f i l i n g
to think further about that and r i v e us I definite suggestion?
Mr. Conant:
Yes, but of course must be tentative.
T should sa;
LI
ifl desirable to get the vievs of *
banks as to the piac
pond.
-
h they deoired ^o cc
T do r o t care so much for the views of a city that
i s try in.
of loc
a reserve ba:
^-ide;
,
t i s a mere matter
take a bark in the outlying tc
:"
between Denver and San Prancisco, T should ask then which
district
^*-ed to belorc to.
ray t h a t i
n
if the Board desir
.
Tt i s only in
L but ion l o g i c a l ; "out
e to submit a mere t e n t a t i v e su^ges^-
ion without any such correspondence, T hatre no objection
to doing i"
• e Secretary of the Treasury:
".'r.
^e shall be flad to
rd for me| v"
T*
t a clerical
force, to divide s* *tes and to ta^e banks individually,
but roughly i
ht be ' 1
: ed out by s t a t e s .
The Secretary of the Treasury:
much.
. '.
The Secretary of
th e. Trea sury:
is good enough to make
experienc
l i k e to get i t
ief
*^e a r e famill
in'o
*
•
ptu-n,
ill
states en t of your banki
'
co**d.
Lth Lt,
would E-
ou
Mr. Hepburn:
the country in i
T was connected with a small bank up in
eneral way, and was in the Banking
Department of this state; was Banking 3uperint enden *
Comptroller
of the Currency, President of the Third
Kation^l ?,ank of t h i s city which consolidated with the
Cit
1 Eank, of which T became Vice-President, and
then csine to the Ch*se National Bank, of which T was
President for some time, and am now Chairman of the 5oard.
The Secretary of the Treasury:
You are of course aware
that this law requires the Organization Committee to divide
the country into not l e s s than eight nor more than twelve
d i s t r i c t s , and to select the different
c i t i e s in t h e
country for the headquarters of the Federal Reserve Banks.
The committee would be very £la& to have your views as
to the division of the country into d i s t r i c t s , and also
particularly as to what d i s t r i c t should be embraced in
the New York d i s t r i c t , assuminc that Hew York was chosen
as the headquarters for a Reserve Bank.
with the l a s t proposition
first.
You might d
^(
r. vepburn:
I ha've :iven t h e natter t hou fht only
in a r^ieral v»ay, and I have assured t h a t you would
make such t e r r i t o r i a l divisions as would leave enouch
banks in each d i s t r i c t
of a bank
to pernit of the organization
of sufficient
f a i r s of the d i s t r i c t
banking power to handle the af-
in a dignified, and efficient way;
perhaps woul d try to make the sever z>l Reserve Barnes somewhat app ibx in at e each o tb er in thei r b rankin r po ws r, h avinr in mind a l l the while t h e demandg that would be made
from the d i s t r i c t in v^hich they were located*
upon t h i s subject I suppo &e you Know vary* ell*
?ry views
I be-
lieve t h a t t h s wo rk o f t h i s orfanization un -er t h i s b i l l
could be Just as well accomplished by brarchss as by re.nal banks.
It.
: only just as well, but b & t e r , and
or.e c e i t r a i bank wit h b ranches, much
bett a* result s coal i te accomplish.
.
The same thine
woul".be true as to the regional bar*ks located in the
East.
I think i f-..e had one recIonal bank in ^ashinrton,
r:
.t3Char£e
and super vi si on of t h i s
Federal Reperv? Po^-r , th -t it ..cvl
into a central I
t h e sooner eventuate
.niaruzation »»ith the perfected
48
'i
machinery which haebeen d^nonstia*
- be most effec;-
ive by che CoOBarcial _*nd ba;
\»orlcL
-erience of t h e
It seems t u T^
follow in £ ou ^ elds same
p r i n c i p l e , the sama belief
recionrJ. bank east
of t h e Allecheiiies .-oul d be bdtt er than tvo o r t h r e e
more, \»ith as n a r ; branches
as you F.«y need ana
you need them co r znder t h e v<orkinrs
r e c i o n a l banks
or.
where
of theBe di:ferenfent
effasiivs.
If you a r e to have a rgfior.al banic in I e*. Ycf*, Boston
and Philadelphia,
Boston would naturally
Englana, ,-ith t h e exception of Conn '\.
l e t t e r f roFi one of
t h e banks t h e r e
.
taile New
I havsa
"^rtford correspondents sayinc -hat
.-
to fc^oin Bo &on in an ap-
p l i c a t i o n for a regional bank to be located at Bo Son,
*hic:; ;l;ey have; decline ,
Ne^« York.
I h
. : .
lottc - ;„
t a r y of whe Connecticut Bttn^cer-1
he hod
nicat-
.
It \ovld seem to be
so far as he Could
,BI the -?e cre. . uc lation Laying that
] bailies in wh
f ive t hu s f ar hmr d f ton j
York.
;o be connected v.ith
it3 2 1; —
, and a l l
.-red ; o c d s e t o !
sus of opir.ioi.,
. a t t a l l that part of
^
e s t a t e . h i s &ic-e o f uh 5 Connecticut Fiver, includinf
. ford,
v..
. - . wo coJie h e r e , and i i fteeae t o me
t h e i r vishes ou t.i ;o be consulted; come here because
. .
rt~ui «"
. . ., and i.
Be o f the ir bu siness,
I shculd ihir. :
wir.ni:i
G c czne hsre in che
. rn p a r t of ;
; with. Cancle n, ir.
ersey, be~
. . : Atlaitio Ci'^y , would reach
• Philadfc Iphi a. LIO re ca
ntly whc.nha*e.
On the o-her nan J, i f you were nox to have a r c ' i o n a l
"bank in BoSw^n, a l l
re.
!
naturally cane
re 10 have a re; . . .
and Bos-.:.,
I bank in Philadelphia
: :', then -e »uul
prefer tc
be a&s oc ia ted v, i *>.• Philac e i y l a , b oc at ee » 2 are t ^ aou rs
from Philadalphi^ and five fzott
Apply to t3
s>x,a . .
If .ther e \
te a r e£ ional ban*: a t Boston anc ye\.
Yortc> but not in Phi lad
Pennsylvania
It
in'2 think Delaware and
^o cone i
L« thini ilDuH be borne in mln
:
.
.,
.'- e r e
ou rt :o conpare favorably
-n; and t h a t woul I
.1 the while
: hare in t h i s c ity,
.-.. Li
oka as to
50
of capi *al and banking po«er, u r u » i t h t h a t in mind,
gt t h e d i s t r i c t should be 1 arc e enough and include
banks e nou j i so i b a ; wh e c
prsdaiinariw
Lc
-
.-.
. - a
influence.
Tlie secretary of t h e Treasury:
YJLV
> you .made arry
ficures as t o what i h e capital o f the refional bank of
York -oil d « if i t enbraced
hole o f whe ^ t a t e of
Be* Yoik, ^he northern pa; t Q f ye\* j e r s e y , and whe western part o f th e »Stat 2 of Connect-ic
,
of the State *est of the Conn cc
Fiver?
- . Eepbi m:
. s ( that p a r t
To, I have now.
The Secret
v e y * ~iv*i any
whoujit co th e division o f th e r<ar. aim er of the c^
o districts0
: r . Fe-pbi in: Bone whatever!
that
p
Louis, probably.
andjleii orl«Jis another, and ^ t .
As t o whe other t e r r i t o r y , I hair-r.
..:• thoU^lt or afienUon.
I hdre r
many l e t t e r s from diffarerit locallwies,
that
INOU
I astune
.,ovId be one o f t h e lar^ e dibtricic and
Francisco anc-hsr,
;'ivan Ix
e/«r,
riewobec
,
ved
from &h 3 c i t i e s
~ i haven't a.ny
• led^e and haye .
DC t
'iv of t h e subject to mafce
my opinion of try value
The secretary of :he Trcasiry:
od
enoi £h, VT. Hepburn, to lool: into tY ft q
and
submit, in the form of a bri € , .you r views ac tc
hat ;ou
~nk ..oulc be the best division of t h e counti"y Into
a minimum, for in^-unce, erf eifht
by t h e b i l l , and in .©
-
- s , as required
a larger nur.ber, if you c<u" e to
do so too; but as ^
urn number a t least,
r
stould be very.rlad 10 .
ou t"ivr. yu
^e
JUT viev.s abov
that.
:•. :-epbum:
I
could do -- - a* ^o the central points;
but as t o t h e t e r r i t o r y .o be induced, I v.oula not kno*<
enouji about t h e trend o f til e bu&ineto t o malie any surrest i o n s I v.culd ra^ce
.ol e .c t h e committee.
The Secretary of i h e Treat • •
•
. f ex-
chances"
Yesf .
would b<
. - con-
venient.
.ie ^ecretar;- of the Trial
-estions ar e t n ; a i i v e .
The
:
of course a l l theta
I
..t s as
52
l i g h t as posfcdb. .
have /our id^t
.otd
in
>oore c onoret e forn as i o Nefc Yo •
%
. i ss3\t rjicl^^>
&caire you a r e / o n e familiar with
the d i s t r i c t s here,
. ,
^y l i k e wo
wf c i x r t e .
>
- •-
That could be submitted ,
sComnittee xt here or
later: r.
:
,
. ; i - will be ea:
. I ric JtLr.^. ,
I course o f every d«y business, and
frur: personal contac*. .
bctnks ^n -ne
mi -
a s representative B o^ t h e
r>t, »<r x M>uld be uost convenient
q v er« ; u be .
Bt i s
i e r a l psserve dis-
lphia, ih€u I a.m quit e sure I
convenient, for :
.
cor.:^ 1 x 2 .
la:
^reiare th
o oou
-
.
.
Id be
aiia as a whole t o
eir business i s very
. .
The Secretary
of
^
:
|
IT6 ^r
.
h would
you gc(?
bum:
hi]
'• The .
uf -.
.
caisider
. : '.hin*: i t
pioposiwion of
-oral ,
,j>rdn%on.
|
;..
.
Id
make
e m p e m a y l v a n i a c a n e ciuvn t o i t
. . "epburn!
.
Ye-.
n
I think then pemsvlrania
.
Duw]
fc
uoina 53 c e . . . .
and chebuoii;eLs would n x u rally come t h i s way.
would wh e business from ^ela^.are.
The s e c r e t a r y o f th e Treasury:
Upon the resumption
w>u,t ^ela.ar?' , ?TH ^ l v a n i a , }<arylac.d and t h e bouThorn
p a r t o f :itv. Jersey were a d i s t r i c t ,
»i t h e 6
is,
of c o u r s s ,
of Columbia —
an d i lay
iliis
purely t e n t a t i v e and merely ZQ b rin z
. t h e poin ; — wher<
-
for t h a t d i s t r i c c rtiouH le
pburn*:
iiiclu-din ,;, of
Con
oi a
njart r ^
locatec:"
.
juld be Philadelphia-
fron a canma^cial w'ct.ndpoin *-, un^ues tionatiLy.
pat2"ize with uh 2 p r i c e , \ h e loc?.l pr-ide of al
in ^.antin^
J .
se
a r e r i o n a l bank, but J en ink whey
i be j u u as >.e H o ff v.ith a b ranch.
c ,-icQ' atary of ih<
you
t> U<
local pride
.
1
as f oin ~ co 1
-t i s - .
i
ly <x question o f
r m l comarcialafid businesssta
s ;
..
-• Jbv m:
It
-?sno c mafca any diffaraace.
B -^cretary o f ; h e Traasir.-:
adpqvate brar.
d:/v«ili b i a l l thor*i£?ily served?
. .
u r n : AX l\
.
I -hink i f we did nt
r c i o n a l bant Ka&t o f i h e Allecrenies 1
bebeiv
in -h •-
..
I v.
la
Oou
.
...
»: .v•
ov r«y* cither*
i c oncLci of *hi8 systen to prove
|
..-•...
- . I '- v ,
.
-
cen-
t r a l urjc.iusa-ion o r bank i s whe proper ana su> tit sffect:. ohin xy.
bil\,
.
Lug of whieuiiole
Lll b# vhe evo-
. .
. :
. :
f *a
.hen«ttier.
.
Ml
-• *«8
. mall
pburn:
n
/.
. . i n at?
o cary o f Aerie til
:
Jort.iy of
. fa
i
,
.init
.
. :
fn
. ir iccalbaniis
i • ! shough
l "bi .. ir.3L.
. Fepbur. :
_'.- , JUchnond i s ^ i i t e a banking i
They have a food many "oextk. ace
.
H in Rictaond from a 13
over t h e Sou ch.
a Secrevc-u y ^ f t h e ir s mry:
/.
Thank you very nuch,
' . bum.
P.G.
The S e c r e t a r y o f t h e Treasury:
] T . "'arburc, w i l l you
be food e n o u c h t o s t a t e briefly f o r t h e record your bank- e x p a i e n c e and h u s i n e s s 0
.
ness.
am
"arbu.
I had ten year a
It-
ean "uanicinr busi-
11 a partner in a European buuin es-.
ci
'.
I
. ab Cc Co-*npany oinc e IS03 , the
end o f 1902.
The •
- * of
-
-3 beoi lonf in-
t»stedin t h i s matter of currency
Mr. Varbrug:
Bv r i
The . S e c r e t a r y o f t h e T r e a s u r y :
d e a l on t h e
, TV
v*itli the provisior..
. . Tarburr:
refo
I an,
:
Kdtre w r i t t e n a g r e a t
.
JU are
famliar
I t
serve Act, of course?
The decre.
.
. : " ' . .
mittee -
Com-
.
in_* ihe ct--
.a b i l l , of. divi —
in io no *. 1 • •
more than
12 districts., and of 3s-.ciisi1.ine
in each cne
::r.
. ers banks
strict
. :
a .^ecre;
Id be very clad
to have . ~
-'
d* «*oul d be the
best divii,i.
e
......
maxinun nu
assumin
-
- .
- *ra«sdiate nunber.
folk Ci -y i t s e l f
h d Hei
.
i s diown as nuad^uart
t dml
first,
. :
I
for w!
oe
-he la*t part
ill.
I i .
.- .
*/* r 3f
Also,
- . . s t. €|
Yui
o f wh
joaber,
. . - r -he last
- -
. ~
I*
! • *lo c 0 li i *•
- -; dtritlon«
I
. i.,
i v 2 one
pi obi en,
v .
...
.
. . . .
6ys-
-S
more appropria .
.
. -e r b .
to be call in* c^.. : .
interfering
;ricib.
\. .
-.
..
. pi
\jl
. .hib nort]
regain only or.
i l l always have
^ s , an-d -h erefore
La
s h o f these o*her dis-
fin ncial weight is practically
- ra ccraer.*
rail
\ould liav^ it
-
It is not possible t o
ae-nre Bank or. ere, becausethen
lifltfibuta seven others over a very
financially chi
iry,
Yci could not provide an/
d i s c r i a fchioh \ .
le l o c ^ a n d on i t s owi bottom
for a y U.
ffy conclusion,
dee. lw with X hi i
u
uf i t
ra been z.
^n offhand way, because I
fuuf
che ."Ta8w in co
faev^r^.1
ly deal
r i c t s , i s unless we divide
rictSj
• wiyn,
..ill 1
li
and i have only
that »>e cannot adequate-
I believe t h a t probably vve
. .n end iriwt
"
land,
i haYin g wiiree d i s t r i c t s ,
o
l aave ..
-.<dbr oi
on!
- country f o r flwa
so
districts
in in w
w two| so then there
, U b e v.
»«»t poafribl;
ul
I — i n .;o »er, taJc-
i - any toe
. "
:
.
ab one only, because
9 PaoifiC
-l i
J
-1 adc |j
i. co ver, . /•. n y ou
s s s ohase people,
:.
v y ill
Con ant»fa opinion
reference.
dno-hav«a
I -hink
sufficient-
ly st rbnc bank in c;y one district coulube covered in
thi6 way, that -he
country mifht be divided,
istrative purposes., into four divisions*
for admin-
i f whe
Govrnor \»ouUta:e up .he question of f ovar rtient bcncb,
.Id and foreien exchaif.es into h i s control, the Vice
Governo r nould bs in c dorceof vte eastern d i t t r i c t ,
.-oulc1 b« penn %*1 vania t
. up in ,• -ho cB in I
nfland and re* York,
-_>i s t i e s ac one*, ".11 ch bould t ive
be in chare f
i - a grmter pc «e r; zlne.tY.
ju^-rn comer,
rtfe of whe nort}»est, and
.he fifth of
Hi
.jj...
. . . a- .
at wouH leave the
D charce of any particular er
- i s the
Conptr
i Board in c^ieral, in d the
r of ^ru Cvc/er.cy
In ch-X^ of
--
ill b
-hen ta&eihe thr^e
• 0 sou ^ crn c i t i e s ,
~v.ded 1
8i|> arvibion.
v . . . likely the
our parts.
you
ea&ver; c i t i e s as one division, the
ih&
Orleans as i h 2 secoru ,
trict
-hich
ot. I.
pin
. , v i t h a second dis-
i Pa: i f i c Coast, and -
.y
the
Ohio and Indi:.
& second t::erc,
district vrouici. oe California ,
very likely would
anyhovr be a thing by itself
e care of itself rest
of the tir.:e; I believe that in t.
bly it
cculd be v:orked cut that way so that, the interest rates
:ld probably be the sare in the three eastern districte,
Generally the sa::e in the southern corner«
the north-
west I believe could be taken oare of by one rate too.
The Secretary, of the Treasury:
.. ,
Bpeoificallyj :'r.
Mid you cay should be enbrfiioed in.the
district of He*./ Yor
The Secretary of Arriculture:
nc suggested three dis-
trict-.
rburg:
poir.t.
]
I
fa
't finjired that out to a fine
: either New York and Be* Jersey and,
ested, Connecticut, cr northern Bew
Jersey v.ith iTe.7 York.
tL Ing al]
ther
Then, thsre v;ould be l~e\: England
. rthern part, inoludl
ouid be Peni.eylvani . . . .
the District of Columbia« But t
are you croup the three tc
vy
, D< 2
ould only -./ork in
r before they
uouid be all grouped into the general districts.
.
The
ad
60
East to£t ther would .:/»ke ? sororg sho*ing. so f«»r *e
tne Reserve I
is concerned.
Tne Secretary of tne Treasury:
Tould you be willing
to submit your vie we in concrete for
In the shape of a
brief l o w i n g the figures for the divi3ion of tne t e r r i tory,
sane time during the s i t t i n g of the Committee?
Mr. Warburg:
It i s an a l s o s t impossible tnak to de-
termine —
The Secretary of the Treasury:
It would be purely ten-
sive.
Mr. Warburg:
h«ve only the s t a t i s t i c s °e we have
received them in the printed reports*
I personally
r« no ^*y oi discovering, lor instance, wnetner Oregon
would ratner be included with San ?r«nclsco or in the
system leading to^°rd Cxiic^go.
I could *ork out sever-
al tentative sche.-es.
The Secretary of tne Treasury:
Of course i t *ould be
purely t e n t ° t i v e .
The Secretary of Agriculture:
Just n& you see the .r*ove-
ments.
Llr. "'^rturr:
I -ould be very cl°d to do tr^t.
The Secretary of Agriculture:
fou suggested tfc^t th
be a tnird d i s t r i c t with Pnil^delphia «e the center?
61
Kr. "arburf:
Yei,.
The ^Secretary of A; *~icvl --.;• e;
And ho
. I. . Ju --rve
t l i i t southeastern L ct ion in that v»ay?
. .
rfcurg:
Souuh
.
.>-.
- ,ai.
c ice cai a o f *he Kiddle
OrlBctr.b ;ha - j u i i .
That ifi comparatively
' eas y to CH)up tho ae ..t or 3th or.
The Secretory c.
. 6at>ui-y:
F l o r i d a feor^da -..
. .
burr;:
"*. .
oul d you put
Lna?
t>rl9ac%
:.
-
. ncla on l o c a l
considerations v.hicli v.ili hav3 to be d i.c over eel.
The oecret I
•
*ovld no^ -Aio.x, ^
.ar.^ the courts o f QOVLYcial uranfaaccio^s , if you
• . -
" r . ' ,.:"bur:
Cho I
J
en z^ 3 IuCc*l polnx
it I o o uld
njx possibly iuio «* froiv, h e r e .
Tp-e '
•
to not
--TIL.'
from
•here?
:J.
^arbirt:
unl &L i went ther « and asked
rexary of
tion y
-
tel
if you vou]
I availac :
fully on t h a t .
•
,
i purnuae of
a any sie
t«
.
> eswior. s.
. e»id vpon such
. . - i l d be based
i «• in ravine
' 62
these local six* win
tie:
Uie loc^l color,
TCIO^
""e
hope to be very rruch bett cr informed as a r e s u l t o f t h i s
investication a t the ena of i t than we a r e now.
" r . *^ar£urc:
At
b t l a e It would be easier for u s t o
gi-\e any cdvice, because then
we would
J«TIO'«
the facts,
ich we GO not nu »
' • xnuw.
The decr«3tary of t h e Treasury:
w
e are very much obliged,
. Warburg;.
o? AUK
-
The oecrewary of the Treasury:
^ i l l you be rood e rou -ji9
::r. Ken::jhill, wo s t a t e briefly y
; experience and
t position you now oocupy?
eiqphi.
I entered t h s Gu^ranQr Trust Company
1905, asVice President, an c bac aae president inl909.
That is my bas. I
x e , wjUcb dates from 1905.
Secretary of the Treasury:
Previous to t
ii time,
you of course had- been engaged in business 9
.
-ieraphili:
Y-es.
e Sec
.
Treasury:
kno.ledge of busine
Ana you had a general
. .erciai transactions and
exchanges, relating ~o the b
Ing situation in Hew York
and the easte~r; part of the country'
.
-lanphill:
Generally.
bary of
"Treasury:
8 question
" i l l you
|Cr>. "
rfl fcdein ;
.
•
'-,
11 of the
n
.11:
really
Let me £
to fet In
T ha Tent
'.ion.
I
T came h
T did not think that T ;as
idence or d i r e c t
•
matter.
have,
*-efermce
"t of the oountry?
ng to be asked to
iy,
dtnesses.
- ••; .:ion of the
country into d i s t r i c t s , nor e p a r t i c u l a r !
to the
ou have
testi-
:reat deal of tnought to the
that T had was that we should
**• Sonant p o i n t s out, a bank of such rtron
resources,
such "banking .
.to
co:nmend the respect
of ou]
ign banks, and alto to giTe to the agricultur 1
resources a nd the coiriT-ie^ciol resources
.
o er in
t i n e s o:
particular stre: .
-e a bank of s u f f i c i e n t
York, i t seems to n e ,
banking po
o ccn.rind
r e eqp ect«
e Sec*"eta**y of t h e Treasurr
;ve you made an;*
figures at a l l -tbout t h e t e r r i t o r y t h a t bank should h a r e ,
upon t h e assumption that any p a r t i c u l a r d i s t r i c t
should
be j^rved by i t .
'-anphili:
I*
is alwsc's occurred to me t h a t a s
matter a a^a conduct ?i r
B
Jersey
course,
ind p
of Pennsylvania.
fc*h
H«w Y
Almost a l l of i t s crop moving i s
.
t u t ion and i t h a n d l e s ,
T suppose, probably one-htilf of Hi
it es
T
luminous idea a s t o
to r
ng of th« cotton
^ ' a r e mere or l e s j depjiden; on ":e
are.
as
Of
in commorci -\1 t r^n sr:ct :or. s t h e south dep&ds vr
upon New York.
done
l y , He» jhgliird **ith
r.e re
k
:ink Mr. *&rburg G&<r*e t h e m e
e country might be
the §1
;;d, eo
sy should
e 1 ea 3t nanb er ,
her difficult
.48
tc apportion th e t e"*"i * ?r;
have.
0 be
-°
one shall have the adequate straif
• of
easui-
*ide the cc
65
C
ht d i s t r i c t s and "cu e s t a b l i s h ei.--t
Federal
Reserve Banks, and assuming again that those have.in turn
t r a n c h e s in i l l the important c i t i e s in t h e different
d i s t r i c t s , would not
the course of exch
considerable measure f a c i l i t a t e d ,
Let us take Ve-v
nd.
be in
:~y
r a t h e r ths-n the reverse^
Assume t h a t t h e r e i s a Federal
Reserve 3ank at Boston and that t h e r e i s another one in
Hew York, and assuming sc*in that sorae of the t e r r i t o r y • the New Tihgland t e r ^ i t c r y
to come to Hew York,
district
til oh you think ought properly
s embraced in the Hew Bo 1 nd
and had to carry on i t s
operations through
Boston, Boston again in turn would b e a c l e a r i n g house, so
to speak, -md the exchange between Boston
would be very easy.
arrangement.
.ey
tnd -Jew York
.ould be f a c i l i t a t e d ty the
>Jowf aaOLininc those premises
would : ou do way
^e
to be c o r r e c t ,
I n c e 'o the course of commer-
c i a l t r a n s a c t i o n s i n , we w i l l R a y - - take an extreme c a s e the western half of Connecticut,
ated into the Boston d i s t r i c t
Mr. Henphili:
even if
or t h e
i t we**e incorporland.
ljustaeat would be l a r g e l y so
experimental t h a t you could not t e l l u r t i l i t had beai in
p r a c t i c e some l i t t l e whl]
T think the
readjustment
--66
would tend :o so:ne si-
iifferences and methods cf doing
business.
The Secretary of th e "reasury:
•phi 11:
Yes, sir.
The Secretary of Agriculture:
understand you think \
would probably
eastern
And inconveniences?
To *hat e::tent?
Do I
;S a practical proposition there
haie to be three district a in this north-
section 0
Vr. Kflmphill:
I agree wi*
-.
-g on thai ,
in order to glT* each bank adequate banking po*er -The Secretary of
the Treasury:
h ample resources,
you >nean by po'/er?
Hr. Hemphill:
I
resources, yes.
The Secretary of Agriculture^
Then in general, that
•:is suggestions as to the d i s t r i c * s - Mr. Hemphill:
Yes, T agree in that.
of corirse, i s one.
T
*9 always thou
The Pacific Co^st
fm Orleans i s
another.
The Secretary ol
the t e r r i t o r y , for
culture:
.ould you do
instance, from South Carolina to
Virginia amd Georgia and Florida to Louisiana 0
. Hemphill:
They ~/ould
have - - if there was a
•
la probably be the source tha
lid
have*
I Seer <::;:*-; c:
"I
lttireS
old am3a fc
n.
11:
1
• e Secretary of -
four.
•
four in t h i s instance,
LI'
.ncisco a ni
you put
^.
[oKphlil?
ica£O, 5t« Louis, Hew Orleans, B
have one bank in the northwest.
? Fec^e^j1":' ot
is j u s t a general
«a and not "fc-ised uj
.
Jui-*
ions.
len^hlll:
ised c
.
it seined to be
res a. . . 1 ,
«nience, mo^e than
the gathering of the reeources.
I think
111
go in j u s t as you have indletted, in o * coT.pilion of
statistics
A
10 ittrtita j u s .
Duld be
ngth«
The Saoretmry of Agrllculturt:
Oo you think t h e r e
would be special objection tc bavin
c
a e
" •
•
' . . : . -
ia close
".:
.
Mr, Heophlll:
p r e i t objection
T should no1
o th
.
nk the»*e '*ould be
Of course, what
3 prefer
is
e cne of Vie s^or.f "banks ^rith the branches.
•etary of A lcultur*
edifficulty
in the
••-;• i- the one that you su£5 est.
} r r. Keng>Hlli: Y e s .
The Secretary of the Treasury:
All of these Reserve
i M , upon ~.e basis of s i v p e r cent
Banks, * .
scription - -
s, six per cent of the oapltal
and surplis at the tank:,
of combined
Id
il.
.
I
ey were limit
•-ong banks, aaoiminf
that there could be a reasonable division of
I
c t s , so tbk% the c
l
-^ould
^he covjitry
have relatic
cf course, to the needs of the other d l s ^ i c t s .
you not
T^ll,
so exceedingl;- itrc
*3iatdoes not appeal to na as being
,
a divide up even the hundred
millions into eight payl. .
f
°
resources,
for
ill
/ould
Cf course, cne bank In cne
cay, with Valve or fift:<r: railliono of
OF ibly have a l l the strength r
that particular
Id
* ' - ;• £ocd b=ink6 under t h a t plan.
•
region,
stock
h^ve more thar. a hundred
to eight, you would get some : Lrly
in*o
sub-
rr
.
ion.
The Sec r
bhe Treasury:
.11*.
\ • ,- t . :
tly'th«
But if you a l l i e d it though to another
region like the region aroun:
, that "ovld be an
exceedingly limited bunk.
The Secretary of the Treasury:
fac*-o*"s -hat the cc
3e
Of course, those are the
have got to consider,
the
relation of the capital to the different d i s t r i c t s and that
in turn has a very direct -elation, because i t is a l l based*
the subscriptions to
Te Banks are based, of
course, upon the capital and surplus of banks within a
given d i s t r i c t ,
banking capital.
so I Bay they hare ^elation cny&y to the
So •, va are proceeding altogether so far
upon the assumption of only
National banks and that they
onl^ are f^ing into the system.
and trust companies to a
Of course, state banks
large extent should coir.e into
the QT8torn * rd the strength of the banks ii
would be corresf
the system
,ter.
Mr. Hemphili:
.« of the limitations
ey seen to be libe** 1,
in the b i l l ,
* as applied to ve-/ York
B so B&ll that they m^y ke^p scne of the bank3 out of
eyeters.
f
*$' e T-ea
those prin-
70
The
n s on ucceptances and
d i s c o u n t s ard so on.
STATEMENT 0"* ALBSRT H. "TGGTN.
The Secretary of t h e Treasury:
br.
7
igginf
/ i l l you be
good enough t o s t a t e "our banking c o n n e c t i o n s and exp erience.
;3in:
T have been in t h e employ c f N a t i o n a l
banks t h e g r e a t e r p a r t of r e b u s i n e s s l i f e ,
from 1885 to
1899> i n B o s t o n , a i l of t h a t time in N a t i o n a l banks, excep<
t h r e e y e a r s ; from 1699 *°
banks in
" esent date i s
ional
>j
ew York.
The Secretary of t h e Tr#a»uy5
of t h e :h=tse ^ t i o n a l
gin:
Eink*3
P r e s i d e n t of t h e Jh-«ce
e S e c r e t a r y of t h e Treasury:
t h i s Fed
You ^ r e now P r c s i d e n t
onal E
You i r e f a m i l i a r w i t h
3erve Act, are you no
• ^iCCin:
T h^e^ea.
a number of t i n e s .
The Secretary of the Treasury:
You, of course, kn
what the problem i s the committee has to deal -iith 0
:
Yes.
71
i
. e ^ec
of th e "Yeasu--y:
The division of t h e •
country Into not l e s s than eighto'r more than twelve
Federal
P
es=rvfe d i s t r i c t s , ^ d the * es^abli shment of a
P^dcral Fes«"ve lark in eacl..
•e 'J3
views as tc
conti£rjous
-I "b e glad to have you
. . - - t€T*"itOry should "be made
. e Federal . r ?2erv e Ecirk in N ew Yo~k, if one
should be este blished' in -.his
tier thi the—
and upon t h e a 3Sump«
»deral Pesarra Banks, we w i l l "
83 .
.
:£-ln^
city,
7
)ae t h e riinimum to begin
ell,
is T un
ta
.d i t ,
the a dvantage
of a hone o f f i c e ba nk ove r a bra nch bark i s purely oneof l o c a l p'-ide, so t h a t i t i s no"
th"e civ* h - s t h e hone office or the tranch o f f i c e ,
a3 - e s u l t s re-
^s.fnr
*T think in-det ^:r;ining tha ' l o c l i V / oi the
r e s r r v e banks, on ti. e theory that t h e r e ' i l l be eight, ?•
the
'a thrae t h i n g s to be considered:
cu-~~ents of exchan,- .
the ncce
.
c
:
c a p i t a l to handle t h e
section.
- o i l e - 1 c office
you*- *-eco*-ds in you"
the best bt-sis f
:e d i s t a n c e , and thi>-d,
ring pufficic:t
business in I rH^*icular
I
I ing.
P i ^ s t , the
T think
that
- i l l be ^e-illy
-,ey show clearly t h e
72
enti of ~ City covers.
? knd the
"he -eco^ds of
* - - i t o r y thtft each r e s e r v e
th e Comptroller 1 s o f f i c e
are
very clea"- -<n d 'iisMnct, a s i n d i c a t i n g t h a t your c e n t r a l
reserve c i t i ? s
i r e o r d i n a r i l y — are a p p a r e n t l y
locations for t h r e e reserve bunks, because t h e i r
natural
business
has be^i b u i l t up a nd c7*0'^ as a r e s u l t of c u r r e n t s of
exchange toward t h o s e c i t i e s .
c i t i e s a^e * ^v
it
v
, 2hlca
se t h r e e c e n t r a l reserve
nd n*. " o u i s .
^'o^, i'nm
comes to t h e additional number, proceeding on the
eory *
cific
^here w i l l be e i f h t , we must have one on the
slope;
'e must hfjve one in t h e south; we must have
one some -he*"e between Chicago
north,
sou*
T assume t h a t
probably be in t h e middle e a s t .
slope to t h e
-nd one somewhere betv/egi Chicago a n d the P a c i f i c
1 pe, f u ^ t h c
and tl
i i thfl P c i f i c
t i c Ocean.
the next one w i l l
t i s , betwew Chicago
The Secretar-
-..3 Treasury:. Ba*a ycu any erecific
c i t i e s in ycur L.ind?
**
•
*0.
I think ycur ar^^ntBtnt : o{ Feieral
Reserve Agents will ccver that t e t t e r .than anything eles ,
The Secretary cf the Treasury:
In that ccnnecticn I
should like tc ask ycu this question, he
: t the exofcai -
1
es "With these reserve and central reserve citiesare indicative of thl r.crisl trsr.i of ^usinesg and conferee?
= k that for this reascn:
Be: e cf the reaeyye-Rlties
ho'ld cut very t i ; . interest ra^ea. for the de^dsits of ccun-
try banks.
Others hold out less ladlOlitTit^ oi -that char-
acter • New la
*he very hith interest r^.-te offered
by 8on.e cf these reserve tc.nks tc the country canks, tc
tent do those figures represent the ncrcal course
of business and txc
Mr. Wlggin:
0?
I think the fi-».roa repre«5ent the normal
course cf business.
There s.re sore excerticn?.-
The Secretary cf the Treasury
u-think, do ycu, that
the figures cf the Ccr^trolier'G office cotfld bcgenerally relived u^on; .as._qajite. indicative Of' the general trend
of business,. CCL> erce. and s-x.
in:
I ti ink BO
it:
There is only one excerticn
that you cust lock cvf fcr, as 1
nand i t , as cuair.ess
will be drawn off in certain cities,
as the result of
free* ecl*scti-cn cf check*« . Tiicss oi't'ies* have contracted
..balances that, ere r o t actual balances, but balance's
figures only.
•
.
The Secretary .of the Treasury:
.
.
Chat Influence, as -sell
as the rc.ta of interest JE : . ;oes. not. rerresent the. nor
"(Jours e cf transactions-..: &r. Wiggin: .There my t*e soae riacee jihere the. rate of
interest has .effected it,, but I .io not harren to have those
in cind.
.• . The- only things I. h?.ve )
Bd is thio. ether
a r t i f i c i a l aeaxw.
The Secretary of the Treasury:
Getting back t
|
York District., JUDd proceeding en the asexu^rtion that there
wsre to be a irlnixcum of elg^t barur:9 — because we must
have 80L.eas3UL.ption ujc.
would.you>ay would be a h
base .an orinion— wh I
:-ncus .and arrrofriate
t e r r i t o r y to oe served by a bank.in .the city of New York?
kr% Tiggin:
I.should sur.icse you would want Hew Eng-
land, New York, New Jersey, Delaware and Fer./.aylvar.ia.
The Secretary of the Treasury:
You would not have
a reserve cank then in Boston, on your theory.
:
I should have no objection to it A
I should
sur^ose that a braaeh r;culd serve just as well*
-2 Beorat tf c* th? Treasury:
ir. one br.nk & B rruch of t:
-
I f you should consolidate
carital of the country
as. is represented .by the states ycu have mentioned, you
to go arcund, aadnr *
m t Of the
country, *cuid you?
.
the
:.: Ch, I c 3 .
;
Lta.1 thet the ban
I ac. takinr. into consideration
Is
crk n.uet have to handle
it? biMl&0S9j the klad cf tueiness that is outlined in
the law, It
igust Ml
iscn nil
thsr institutions.
Ycu
:er that you have t-c *15tpQ0.QCC bar.ks in New
tork City,
..
:hile
I ar_. net c.sfinite in n.y figures, if
you tcke ir* til '
y ycu are not getting over
130,000,000^
The Secretary of the Treasury:
On the basis of six per
cent you *culd hc.ve s/ccut *50,0C ,::: capital —
Mr.
.: Takir?- in th?.t territory7
The Secretary of 1
.The Secretary of A~riev
Yea.
: Cn tha basis cf three rsr
cent?
The Secretary cf the Treasury:
Urdsr the Act three
76
cent
be called in qjjc acnthai
3ft.
co.-the c?.ll of ths Reasrve Eoarl.
mv
M M tr.F.t • n — .
-jir
^rsfore we
t would-consolidate into one
.....
leble crritc.1 of the ^hcle
l ReseTve
. l i t t l e to k
I ie
-have a cayital subject to a
cc.11 cf si:.
:
tut ths r9BAi
.....
: ni Fattljr that would lee.ve too
^i"irv3d an.or:r tha o*
bftakl which, under
the law, the ComrLittae lLuet estc-blish.
th<t th. t .
o cculd not -he.
. t c r r tc bi serf
Now aesuiLing
., and that the t s r r i -
' a htu.% in 'the City of Kew York cuet
be V3ry largely reduced, • whr..t wculdL ycu say was the
ciniaur territory .th't ought to be ir.oorx^orated into this
district?.
. lir. rigcrin-5
cent,
I »tcnld thii..
I ?35,0CO,OC0, ?.t 3jrer
me\
irum.
cut beokwardtj you ui
"and.
I ait working i t
As far as tileage goes,
you are * e l l within boonila.
You are not covering the ter-
titory.that must necssv
be covered by Denver and
sc-E-e ct.-. r c i t y f
.
! • ooncsrn#dj "you .have
- -to f.o ths busia
:*
T^^ £2cr3t:.r'- c *" *
t
•
1
01 to htre a I
;i tc • .
Ltai
city.
Fhat would ^cu t
of
:
ar^ro'jric.taly
York, the '.
..
an:'
\ ptum thl t thJ
as 1st c
is-
State cf B
•
sstizn part
of 0ci:r.eciicv •
ail
..
/ fight £.3 far as cileage goes,* ani
c.9 f a r as the curr H . : cxch&m : "ces, "but cf ccursc ths
i n s t i t u t i o n we i
necossarily t e a s r a l l cr.c "if ' i t
no' t c r e thl r. th': r ^t. : r .
The Secrste.ry c
i t s c a r i t a l would be?
Mr.
.:
- : -.
Ptve ycfU an idea ^
I : v ; r -**.--.-- . *
t i o n , cut i t c e r t r i n l y would ac
The Secretary of' the Treasur
ever
L5,000,t)C
I
.: i t VTCUH be
larger 'than that*.
The Secret:
rjuture:
Ih&t 1
. . .
cent or en 'three r s r car.
Mr. Wiggir.:
$
E^.8ad c:
•
:
.
. ,'
•
•
six per
cafital, becru^3 tl
c a l l , anf. I irf.cir.
the system
'-
rsr ce
Ject tc
that
'
-.
r^r
8
that will u l t :
Ldfl
ttx
..
Sc I •
r.ay f i g u r e t h a t we have s - r i l a t l e s :
i t a l and s u r r l u s of
*e
- e n t of t h e c a p -
:
ice as the c a r i t a l -
izaticr. that is available.
Mr. W i g . r i - :
t h e wor:- .
That i s a v a i l a b l e ,
fcv
t will not be
:tPl.
The Secretary. r
TxBtumxrfZ
It i s called c r not.
That
nde on whe*
If i t sr.truli t e calied, you w i l l
have i t .
Mr. ^ i g : i . . :
Yss .
! B Seer •
other words,
• e Treasury:
scr.-
*
a.
I t ie a r»eource # in
.cfc r e s o r t i^ay t e had a t
* * ing by k
have get to fceet that in cur
S~
e Sec
-
.
liged
. L A >.r " I .
•
tary of 1
* , will you
be peed enough tc -
now occury
and That ycur b£:
u Mr, La.'cnte:
s t*
'
'
surance of the State cf
President cf thfl
Jers
system here we
T
i
*
I I tiohal
,
and X am 1
Vice
to
I Sec-
ecu
•
! tV.s '
trlcts,
:
*
lot less than ii lit
*
re
lve ?
3 Seerat
he.vs
• ;• ~:z
•••. r •
ury.j
* »h&ll b« vary
. L to
ticn -
-t
:.z . I -
. i t t 2 2 have cc: 2 tc
Oron t.-.: :~
•
Lai-
• ^occlusion, becaui
-
- ... - *..: -r. *
•
•
-2
qussticn
en cf ths 9 9 t : t i .
Ld ^2 ^ c r. 9
rit.
Jsrei
-; circu. - •
:3?
. Lc. c r t e :
i cc:
1 " oy-
.
""ith 3 i - h t ,
I s : .• .
* .
tc cc a tc
:
"crk
^2
8C
State of New Jersey?
Mr. LaMonte:
If the country *?6 divided ur into only eight
divisions - and I assux&e you will probably start with tl
smallest nur.ter of uijits, because it is easy enough to
expand —
there vculd not be enough E?stern units to
rut New Jersey anywhere else.
I r—«ure !'ew England would
be sufficient to itsal^' as it g3n?raliy has be»n; and
then if ycu cars to New yzr) , I hardly see hew vou cculd
Ve another break at Philadelphia.
The Secretary of the Treasury: Fc
of New Jer?
ily be ii^ccr^crated, into a
triot of rhioh femmylr&i :? i
lir. LaKontt:
The
Philadelphia.
Per.
La.
*
It ^oes nc
"
part of
•
Philadelphia, but I
in to be a part7
: pert of Vz* Jersey goes to
and .-nore for the trer.
ient
re AC.Q a riaoe in
-
t tanks. I thlrJ
to
not tha southern pa
-i be with onturally have
rth to Tew "*-: .
The Sscret&ry of the tl
-rk.District7
to what should be I say the New T<
*bBt is your theory as
strict \
-he asourrticn that a
81
Fei
^rve I
CiV;
be s&tacli«hed in Ne?
• •t
.
us territory cusht tc be atta
- , cvt^i^e of New Jersey.
:te:
II
-resume all of
possibly Focheete-,
tfc:r
to
. - -. :
lc and these cities oi t
r.?£e alse; but I r — ~
*"'.ey wculd
-*sr to core ~
7 •
-
r--:
!
X thil
.
AbOUt Copn«OtiO\
^rurn's i
\
.3 natural aug; esticn, that f
•.
I
- \ Q'eater
.ie tide of the Connecticut
• ,
Lculture: .
. --
* 3: t b&riXy 1
r
I
*lvanla« I
-1 - "
it, but *
:?tly
\B% «*. -
.*. M Dot 9eri->up
*
7
- f of the Ti
pyjv• • • e bar. -
La i s thai
r . LeJ c r t e :
:*c, I h&Te n o t .
at sad
of t h e
be
*
.
f\ a Beorotary cf the Treasury:
shculd c
a.
A6 to what arrortionr.snt
• •
.1
"o.
I have had a mind tc do 80| but I
.. ve not lene i t .
I a Sacrat
. Treasury:
tc censi-'er t;.:t, :
In
3?cul<i you be geed enevgh
the Comt:ittee the benefit of
ycur 8ur-5^ticr.8 at any time within the next weak or
. -ays,
- .
them in writing, i f you w i l l .
ry of the Tr-easury:
You I
take a irap
ur gvrr-sstiens,
1'r.
L
di
I
so far as tc have a map.
i t ec£t 1
- •
t 1
I
raid like to gi^e i t
t.
;rstcry
cf
the Treasury; w» she.ll be very glad to
n r.i\/. "o\i vary ir.uc .
.
s;
Sac-et:
:
». -; -NON.
I the Treasury:
Kr« C I
3 the C c r . i t t e s
: ~
l£r. Cc.n..on:
i3r.ee ?:.
r., will you
Idea of; ycur
-r ^resant connections.
I ar. Preeidar.t cf the r^urtr. i.'ational Bank.
base in tha tankii-r. vusineae here in New Ycrk
-
net I n?-8 eintss.
r
Did, in vc.ricv.e institutions in
• of tha Treasury:
:
TdS,
uryj
19 rcr.frcr.ti::? t t i s 3<
•
.
-
_ ^ i a r \ :-.
-
:
LI be
*u . .
the rroblen: that
. : :ut the
•
• live.
v
-*\the
.
v
••
,
---s us ycur
views **e tc how thet livlsicn Kay best t9 i
anrs csraci&liy tc
. on:
"
.
rafer-
2 rest cf ths country.
It =5 3.r= tc :.s that ti
Li tba locating c
sc t.
.
»ir i.
-
. I
erve Eanks
2r5 Ban cc; i..ur.::,-te with
.
al
•
I
ocs of the 1
1
BffSOtSd ~- DSt IXClUSively
-.
rscos to their
.
! iy
thasa Kaans, aq
7; 311 ..9 the ag?reg tq of
Cci.:itt22 are -
err l e y 3d.
I" tfca
•• t:.i«? r^"- ~-rl2> they will no ricutt
- -.-3d t : - : is si;-;: " : -
~ 3 reserve
rr.ke *est of the Kiss-
the relative size of th3 c i t i e s ir.
thc.t t s r r i t o r y
cul::
ustify,
this lies in tha ffect
Li
tha east is bettar thr.:; in
west E4Bd scut
The nacss^ity fcr
3rvice we enjey in
oartais sactior*^
, I
the
ion vith the great dis-
tances tc bs ccv3red, wculd cf.ks the eetetlishnent of relatively r.cr3_ reesrve tanksthsre sseL i^fcrtar.
net beliere that the i^ajcrity of C
selection of their city cc*
cve :
1
:n-*ent ,
er :
?h th
: . -CTZi:
is
: "e very s e r i -
ir. th?
nt of
.
-can-
v^i^fps tr
It.
t i t cne cf the questicne
:. t
try tc../.e
The measure cf the
-ansar
1- :
:c:
.
- • ,
_jcqlte and Dt
-
anks, i s the
the coarerciPl iinfcrtance of the
ties • Lt
till
I do
-. - : 1 * j
..
. . -•
»for* you .
1
It : c a question of the
X 9 Secretary of -the Treasury:
fasilit" it- ilf,
:
-
t$ex
"
"i-or. what source it oo&es«
istion of
The
, -' •
act:
facility Itself,
City bank 1
.
i of
"t cit
I
sroantlle trar ng country.
2llev» cne
ral Reserve
lccatsd
•-
. Jersey
.
end t:.:t -.
whi
* -
"
.-
-
-
tern half c^ Connecticut^
.
bVoh l i e s e ^ s t f
-. ' %t
.
Ble points!
.^,
I
tak
*
- iiill
-
'
"I
Stroj
:
4
•
for trs.e.Ptc.bx:
• :? Xv
• •
"ve banks
.
are.
*
•
uillbz
served ani
* I
-etve I
-
-1 be fre-
Binder Of the
•
rheve are "
r the IE-hour til
ir.
•
*
,
*
. c:. are :
ole to lew Toi
Lty
86
lations are more in favor-of New York than
the othar cities in the territory.
of any of
If separate banks
were placed in othar cities, their status would be the
saae;
an! yet the
*r banks in New York City nsust,
under the ne?v la*, r.eintain an 18 per cent reserve,
while similar institutions, if established outside, would
only ts required to keer a 15 rjr cent reserve* as I understand it, unless that ie changed by the Federal Reserve
Board in Washington, bring them-all up to 48 per .car.
That is a matter I should like to suggest.
I suppose
you have talked this over a great deal, on that line. Prortided two cities in this district.I have outlined had a
Federal Reserve Bank in QOftpeti^ion for the eair.e business,
as they would be in many instances, the one would have a
distinct advantage over the other, if one had a 15 per
cent reserve and the other an 18 per cent reserve.
I wculd not include the balance of New England in the
New Ycrk District, as Eoston serves and maintains relations with New Harrrshire and Maine far more extensively
than does Haw York.
Likewise CCJJunicaticn between Eos-
ton and ether Tew England States is much quicksr and more
convenient than with New York.
Certain sections of Ver-
moot* &as8?ci:ueett8 °nd Connect.'.cut, however, =*re .rore
accessible to New York than to Loston, and the trend of
business la in cbi3 direction, and that is wby I have
included
the.a in tne New York D i s t r i c t .
I have taken the liberty of preparing a table
snowing the ti^e of the n,ail leaving New York at 6 o1 clock
and arriving at various c i t i e s * wnich I shall be very
gl*d to submit.
The Secretary of the Treasury:
TTe phall be glad to
have you submit t h a t .
Mr. Cannon:
This snows ti.
] ing tijie in New York
a t 6 P.M. and the tiise of arrival, the nailing tijie in
Phil^delpnia a t 6 P. li* and the tin3e of a r r i v a l , ?nd
the mailing ti.-se a t Boston at 6 P«lf« ^»nd the tice of
arrival•
The ttattoent is ?3
ailed in N.Y.
6 P,M,
Rochester, N.Y.
->iled in
Phila. 6 P
:ed
in £o8toi.
6 P.M.
ARRIVES
• « . . •
Ogdensburg, N.Y.
8:40 A.M.
Plattsburgh, N.Y,
5:
01e=<n, N.Y,
6:33 ".
Burlington, Vt.
4:25
4:25 A.U.
Newport, Vt.
6:35
5:20 P.U.
Bennington, Vt,
1:30
8:55 : . : : .
New Haven, Conn.
Hartford, Conn.
•10:20 P . ,
4:32 A.M.
12:47 a . 1
3:27 A.M.
Springfield, jlaes.
1:30
Greenfield, Mass.
5:57
Tyrone, Pa.
5:09 #.U.
3:53
• a ltoon«, Pa.
5:33 //i.
4:17
Sayre, Pa.
3:33 I . .
3:43
Scr^nton, Pa.
1:06 " . .
6:06
3:50 A.M.
•10:18 F. .
3:59
Hazleton, P a .
6:43 A.U«
5:*5
Lock H?ven, P
6:30 /.k.
2:40
E^ston, P9.
•
Meane same day.
39
T;
•
"
v
:
Treasury:
Accessibility aaems tc
s=, ?. rressibility is a decided factor,
3 are to act as =. cla
fox thfl
..-:••-.-
Sjcr:
tl
rt&is sxtes
Treasury:
And for the issue :
currsr.
:
I t i s very Lsportant*
: Yes.
The
- t at I t
Id i s this.
I *
I
-
-
of the Act reads
1 ?.essrv» D i s t r i c t i s tc
eicr.e ex
Of "T
ct tc te ^cnsi^srt h a t each
into three d i v i -
, I
Lble fcr directors
: A# £
~ -
-
9 of t
"
• - ••:
thl
oka ~re grouped*
:
Thr
i
0
Id wit
I t
is the
I©5 •
•• cf the Treasury:
:
-
,
I
x=ct one director,
,.s
90
LBd the intermediate barks, pr barks of medium capital in
another grour, an£ ths banks of the largest capital in
cncf
•
:r.
.:
Th
......
Treasury:
baxka
So that each class of
•-presentation on the Eoard of
Dirscor.: *?«5.
li.
3 district which I have Just cut-
v: :
Pem.*yiTj La9 t3
Lnto first New York, second ths 8t
sntlra State of Nsw Jersey and the
-crtic.s c." tha othar four or five states,
T* t i-
tty nec.rly rerresent the right banking capital,
Tt i Ijcratary of tha Tr*c.sury:
Ut«d t
:
Th3 Sac
•
That is not the grov
I i~l^
:>, sir.
f of the Treasury:
The croufing is with re-
3^-act tc tha caj^taXi^zaticn cf tha barks in the whole d i s trict?
3 £*orst?.ry of tha Traamiry:
oo«,
to
tha baj
-
-
I
Ir. this d i s t r i c t , for
sr.all c o i t a l
Ld be crcuped.
:is of selecting a director, so
\J.
those s-naill banks would hpve one director*
Mr. Cannon:
Oh, y e s .
The Secretary of the Treasury:
Then the
another class of capitalization would be grouped, and they
would elect another director.
ICr. Cannon: Yes.
The Secretary of the Treasury:
would be grouped,
Mr. Cannon:
Then the larger b^nks
~r.d they would select a director.
The grouping i s according to capitalization.
The Secretary of the Treasury:
According to capitali-
zation.
The Secretary of Agriculture:
The biggest banks
making the f i r s t taird, and so on.
Mr. Cannor.:
I have ^
ed a l i t t l e d^ta in regard
to the trend of tusiness in these t e r r i t o r i e s , wnich I
think may interest ypu.
In further support of the st^tef
ment that the trend of business in the territory I hsve
~ed is toward Ke« YorkA I nave ascertained that the banks
of New York, New Jersey *»nd Pennsylvania are the largest
buyers of C
roial paj-er in tne lev York sarket*
In
the territory mentioned there <^re 832 comn.erci?l p^per
buying tanks ^nd trust companies, a l l of vrnicn purcnaee
S3
practically a l l o:
ir r^-sr in thi=3 rc.rit't, t:.a ct'-.ar
itrta
Boston territory.
fir.urdi rculd ^2e. to i
"
Tort catux-
tha t e r r i t o r y I ;- w% . -/.e5 as a center for
cf pc:. 3reic.l r^TtXj
: . " c t j l cf 1*23*
•
• Inasnac
. - . ^ t i t u t s ^ , I shculd
.1 -= rt c
. - , i t q2*r.«5 t u t
leva t : - - .-ar -- .
-2T3 it la
* is
tt,
t- ba radltca
•
- :? ci*
at to V(
» ?. Fadsz :
TB are
823 cf
Tne Secretary oi ihe Treasury:
So i ? r as thai goes..
: . Cannon, they v ould send tn*t i^i^ei anywhere they could
1 re
_^dl8count i_t, so I suppose that /ould h^ve no ^ 5 rt.icular
be«*rin£ on the question.
Mr. Cannon:
No epeci^l be a ring, except as enowing the
trend of the business transacted in that particular l i n e .
In reference to the cai-it«l »nd surplus of tne banks
and trust companies in tnis d i s t r i c t , I ju»ve just jiade a
few figures*
I do not know whether tney v.ould be of
interest to you;
pernapa you hav<
-11 from the
Comptroller's oil ice.
The Secretary of tne Treasury:
Possibly tney would
be oi i n t e r e s t , arranged a e you r^ve them.
Mr. Cannon:
These *re rji ^roxi.7.* t e , of course;
cannot get the exact ligures In
.
you
For instance,
in New York St*te turre are 471 Rational, 196 State end
61 Trust Coir.panie8;
the latlonaJ
of '3^7,000,000, the Btatt Ban>
r.ks n^vir.
'
" . ital
.000,000 and Trust
Ooop^niet *354,ooo,o. .
In New Jersey 196 National, 34 St»te and Trust
panics 99, the K?tion«l b«^nks having a c o i t a l of
{44,000,000, St»te b«nks ."5,300,000 9nd Trust
aiea
<?4.9,000,000.
$7,0^0,000
Vermont, 42 V&tlonal with ft c a p i t a l of
,nd 34 True* ronp-nies -'ith o capital of
,300,000.
Connecticut i s divided v/ould have *29,000,000
ional, ^2,400,000 S". : :e
9,800,000 Trust Cocipanies.
.chusstts as divided, taking the l i n e t h i s side
of Springfield —
The Secretary ot the Treasury:
Connectici'4:
Lftti tc
Tpur figures in regard to
If or to the *hole
state*5
Hr* 2 .r.non:
The 'estem
If,
which naturally vould
y of the Treasury:
That i s , -vest of the
co~e under t h i s di^isio .
The Sec
Connecticut Pivar?
"r.
:
Yes, v/est of the Connecticut River.
Massachuset t s , the western half, coning towards N«v York,
ion .1 banks *l~,5^tn<~ ~, fnigt
Penns2'-lvania as
rould-be, "ational
i
\9&t that i s east of Altoor
1
,SOO,0^0, St te banks
*l7,6oo,oor
,700,0
In that te^-ito
Id be
Tcnpanies ^3,200,000,
,0^0 for
I
^ention-sd, t h e to*
atlontl b^nks, providing they
a l l cane in, of courso, ^127,000,000 State, and M60,
Trust companies.
Six pe^ cent of that, taking just- si
per cent on the capital of the National banks, would give
a capital
U
„ ,000,OCO.
of course, on the
Id " :
Tf we took r i x p e r cent,
hole amount, if they a l l went in, that
" , ^00,000 of capit
strike out P^r^ylv
Phil
Of course, you could
. f * ou decided to put a Reserve
lphia,
' "/orId £ive an approximrite
idea of the c a p i t a l throughout the vhole section.
? Tec^e4
:
Tt would be rathe1" a
Treasury:
respectable bank*>
. CannonS
Yes, rather i respectable bank.
ary of Agriculture*
the inportance of
What do you think of
the suggestion that fche bank ought to
be as larje or larger than the existinc bank.
•.mor:
j u s t mentioned
T think i t o^pht to be lar{*e.
.
Q can
fe^ence to capital =ind surplus,
le the reason, because the transition
.te 01
lese reserve
have got to fo through in
uosf err 1
othe**
T h-jve
I
98,
hich -ve
< m ral reserve c i t i e s ,
o ^ s from t h e national banks
• i- vO
, the c a p i t a l
:
ought to be large because the amount of re-discount which
will necessarily have to be done by the New York banks with
the federal Feserve Eante of t h i s city, Chicago and St.
Louis,
'ould necessarily have to be very large, and that
ought to "be fixed
our credits i
so ire could do i t without curtailing
hit city in *ny way.
The Sec
y of the Treasur
Do you not think that
i s perfectly possible without curtailing
V.r. Gannon!
Yes, certainly T do.
The Secretary of the Treasury:
the d i s t r i c t s
credits?
T mean to say, even if
ve^e divided in some manner such as we have
be«n disc^ssirc he" c , It ought to be easy to' accomplish
that object without wiy disturbance 0
ICr. cannon:
Yes.
The Secretary of the Treasury:
i s in i
;
The Government i t s e l f
:o.. to make lar^e deposits in these banks.
Mr. 2 •: o '
Yes.
The Sec
y of the Treasury:
And th
long
period, of cou-se, is a
• -.«
.
•
years.
The Secret:*-:' o:
to be very ea
insitiofr
~»-easur-
/\nd the process ought
, nd certainly can be accomplished withoi:
97
di sturbance.
"-.
'r..«on:
Oh,, yes*
e Secretary of .the Treasury:-
You agree with t h a t
conclusion, do you not 9
-.
Z* '-on:
Yes, T- think so, but my theory in having
the capital large, of the three Federal Reserve Banks in
the three central -eserve c i t i e s would be to help along
that movement as much ai
possibly could.
To my mind
they ought to be la~ce~ than in othe** pa**ts of the country,
because there i s where th e .iuovesvcnt is likely to be, more
or less.
e Sec
• cf the Treasury:
The banks' capital
uestionably should h "e relation to the needs of the
d i s t r i c t to be se^ed.
n:
The Sec^eta^-
Surel •
easury:.
And do you not think
that operates automatically under the p-lan of the law here,
which makes the subscription s have
. Ital
.
f each ACsirlTt?
Cannon:
The Sachet
think
ct relation to the
"-easury:
To ' h a t e x t e n t do you
' 2 3 in t h e " e s e n r e
ird c e n t r a l
cities
96
are not indicative of the purely normal course of commercial business transactions, by reason of the fact that in
some reserve c i t i e s a very considerable temptation ie held
out to country banks to keep accounts there by a large
interest r°te on sucn balances, and «lso by the f«ct tr*° t
checks °re collected in some of these places without
charge?
Do you t&ink taat has a decided influence, I
menn, or only * negative influence?
Mr. Cannon:
I tnink it h*s rather a decided influence,
rather more onnthe country checking side of the question,
I do not know wii»t these b^nks *re paying, but I t;*ink
both things r^ve * decided influence•
Tr,e Secretary of tx*e Treasury:
Kx« Elliott, I t^ink
K e reserve c i t i e s pay as high as three to taree and a
If per cent for balance•* do they not?
Mr. Elliott:
Yes.
The Secretary of tne Treasury:
Do you not tr*ink tnat
would have a decided iniluence?
tfr. Cannon: Yes,
The Secretary of tae Treasury:
Therefore* i t aflould not
be safe t o say tx*9t tx*ese . - I r . c e s indicated a normal
bal»nce between tnese c i t i e s «nd tne reserve c i t y banks.
Mr. Cannon:
Yes.
The Secret*^
of
T 5. -ted *ha t in "lie beginnin
"he T/easu-y:
t knew you referred to
i t , but T only wanted to <f&pha <& ze it a b i t , because we
ought not to allow ourselves to be deceived by the face
of figures' which may not imply a l l t h a t they sean to imply.
Mr. Cannon:
Yes, and T think the trend has been out of
that direction, en account of th e collection of checks
these various banks in different
The Secretary of the Treasury:
your statement, have you.
sections of the country.
You hsve not f i n : shed
I believe you have some other
figures to present.
Cannon:
I do not
^0 , T juet had some other figures here;
that th<y would be of i n t e r e s t .
The Secretary of t h e treasury:
We would be glad to see
them.
Jfr. Cannon:
Here i s a rr*ap which T had prepared,
cover-
the district^ as suggested*
The Secretary of the Treasury:
district
the
I
I
I see you take into that
ont.
:oie of Vermont, yas.
-etary of the Treasury:
and half of Connecticut.
And half of Massachusetts
3LC <
.
2 -on:
Yes, and then T take in the State of
Jersey and P« uplvania as far ^est as Altoor. .
The Secretary of the Treasury:
t plan,
And you would, under
~:e Philadelphia a branch bank?
. Itr, 3*nnon«
Yes.
The Bee ret a; y of the Treasury:
Of the
New York Reserve
Bank*
-. Cannon:
You can have a branch over there.
T think
the branches *vorld "be just as injpo^tant to this as anything else.
The Secretary of the Treasury:
You h-ive not had the
courage yet :o su ^est this to Philadelphia, have you?
Mr, Gannon:
T do not know, I nave not said anything
to ay friends a:::'"here about i t .
The ^ec etary of Agriculture:
Just what influence
-villthe c i n c h e s ::a**e on t h i s matter of Mme; take these
•tretehei of count .
canrot reach *he
how would
-k out.
e west, suppose they
t bank in 15 hours or 12 hours, just
a.ich operate to r e l i e v e t h a t difficulty?
. . .
that, '!r«
La
T should have to give some thought to
c
ecretar;-.
T do not <.iow e:
-
!
.vculd
101
very 1
---.
:-:
Well, t h e branch would
e l i e v c that d i f f i c u l t y ,
ris properl;
or.:
i s cc
is
would i t n o t , a s r
-
looked after by t h e parent bank.
according to what c l a s s of business
,ed; if i t i s cont eraplat ed t h a t the branch does
the s
- --, si of business* as the parent bank, or whether
a dif
t l i n e cf business i s going to be conducted by
the
Vanch,
,
Th
'•ould your *-e-discounting b e done with
i ik9
=ir; of t h e Treasury:
T think undoubtedly
i s thepu~po&e of ttee Act, to b r i n g t h a t f a c i l i t y
to the dif
Act p r o v i d e s
that
as close
•. t communities a s i t p o s s i b l y can b e .
The
each branch bank s h a l l have a l o c a l
directorate cf seven :nen, with t h e same q u a l i f i c a t i o n s as
t h e d i r e c t o r s of the p a r e n t bank.
suppose
the district
And, for i n s t a n c e ,
v^s c o n s t i t u t e d fcs you iuggest y
>he"e "r&9 a branc;; in P h i l - i d e l p h i a , .un xie s t i onably t h e
,/Uld hrr* e t h e pov/er under the general
o v e r s i g h t tit t h e Poa^d of t ) i r e c t o r s here,
gen er
per
.
^hich wculd be a
ht in '.his case, "ind you would hftTt to
ee of discretion in you*' local
102
Pfjr- Gannon:
That i s j u s t
t 1
"in- i t , just
exactly ho-' much of t h e b u s i n e s s done by the parent bank
'ould be done by the branches.
;iot c l e a r
Tn reading the Act T '?as
in my own mi? d ho v much was contemplated under
the **ct; whether
ou contemplated doing the same c l a s s of
bu 8 in e s s o r
The Secretary of tha Treasury:
have to b e "#o ~k <* <* out
?•**, Zar.non'
T
Of course, i t would
xperience.
as -oing to say that would ha** t o be
orke r i out in the same
ay a s t h i s
Secretary of the Treasury:
question of time.
The theory of t h e Act i s
to make
f a c i l i t y a s great a s p o s s i b l e through the
branches a s
e l l it through t h e parent bank.
xT. ilOn •
I S 3 6.
The Secretary of the Treasury:
Have you submitted all
your figures 9
Itr* Jannon:
That is
;11.
T just happened to put those
figures together.
The Secretary of
ask all
the Treasury:
the witn esses to testify
the country that
We are asking
in -^11 of the c i t i e s of
e intend to visit -.hat their ideas are
about the division of the country into
nd shall
these d i s t r i c t s .
v
Of course,
'e know their suggestions must bo very
I.y
tentati--^, but n% ^o It upon .the assumption that t h e
barkers p^-.icvl
\-e mo-e or l e s s familiar »ith ti
general course of Commorcial trins3ctiwn s, therefore they
may have id3&:
be of sone value,
thought of the ti
rAon c:
ou
country Into d i s -
t r i c t s , outside of the one you h'ave just de=t3
Mr. wsjinon*
'•ell ,
h?
c *i thoucht was that you would
have to have - - I am not cl<rv
v
ou would haye to
give Philadelphia one, and you may have to rive Boston one;
i,id "'e'tf York, 2h:
t« Louis; and one or two in the
far west, and one in the c^
T have r
ne
into the d?tnils as to the various divisions.
the couth 0
i Secretary of Agriculture:
"'". 2
You would have to
south or southwe
.
T *m nc* clear
to
Orleans^
Studied out
Of course,
for cotton.
c
ihether you sl.ould ro
c^lc3. h=tve to >-e
o the trend c:
v
evr Orleans i s naturally
[ "business.
e shipping point
Our Texas friends miy know be
want to have one.
re they
T ;ueea you can t e l l more abort t h a t
than anyone e l s e , J'r. Secretary.
sonetl in
Eut that was j u s t
t e n a t i v e solu-ior, on V o s e l i n e s , in my e n ..-ur.d.
has b£«n ri
:
* ••
ncu&.r
that you have got to keg? alonr l i n e s
of your time limit in reaching these places, especially on
t h i s check situation.
?he ^ec-etary of the Treasury:
On the theory ycu h=t^e
advanced, of accessibility and time, do you incline to the
vie
' i t it
ould be better to have twelve rather than
eight of these banks9
'onnon1.
">.
i*. Bight.
sta^*:
p
'o, T think you cor;ld probably get cJong
T should rftthof have eight than twelve, to
ith 9 a* least.
The Secretary of the Treasury:
You think it would be
bette** to ke $ the number do 'n belo*. the maximum*
liri
"^mon:
Yes, s i r , and then :*ou h^ve something to
work up to l i t e r on if ^ou find it necessary.
Th* Secre' try of the "^easury:
that o.::
!
Ts t 'iat on the theory
ional b:.nk3 vrould ccne in under the system,
and therefore the a
)le capital for the banks would be
insufficient
N
than eight strong banks, or
i s i t up 01 some theory thai
both or the State banks come
to create
in o*- r.q , you our-V C .
o :
T
.
bt.
number of it ate banks and
t r u s t companies v i l l come in, too.
The Secretary cf the Treasury:
accession o.
ship <
so t h e r e
-
;
1
Tf you had a very
. nJcs *
u s ' companies,
larger available capital than the
s alone could provide, i s it your id3a that
under those circumstance
I be better to
nore
uiks.
-«on:
r
o , T c- Id s ' . i l l ke<5> i t do^-n to e:
Get your capit l l . ^ e at "he start,
-e t h e whole -
so you can be able
y from these i n s t i t u t i o n s .
A
c
I would
kesp i t large so i s to give each section cf tn e country :.n
institution
r
hich can take care of their- wants.
if you have eight you
T think
a leeway, and if you want to
increase a s the time goes en, you can do so.
The Secretary of th e Treasury:
any suggestions to
Ur, Flannag r.,
efore thecoi
•
The Secretary of the Treasury:
you"* f u l l name and s*
Ur.
igan:
Will yoi; kindly give
aaking expsrienc^>
ent T
h any bank or banking Institution*
connect ed actively
T "as formerly t h e
^* of
tic
in
Lnia, and l a t e r on t h e P r e s i d e n t
of a bank in *»ew York : i A ; .
y of t h e T - e a s u r y :
A N a t i o n a l bank, vas :
nof
. ~*lannagan:
and a
Of a " i'ional bank in New York City
1 bank in
ir
irginia, too.
of l.he Treasury:
b sfo -
committees of
T believe you testified
:uee and Senate in ~efe**ence
to t h i s banking b i l l .
" - . "lannagan:
The S
or.
i
T did.
bary of the Treasury:
aibject.
And you have alao written
Have you given any thought to the division
of the country into d i s t r i c t s , as required by the Federal
Reserve 4ct, not l e s s than eight nor more than twelve*5
nnagan:
Only in a general way, *nd T cannot say
that T ha*re given th e subj ec
stucfcr at a l l .
T did not
icipate being called here this morning, and did not know
T would be u n t i l probably 15 minutes ago.
that subject, my tho'
to -hec
t€
I
But on
it the diff iculty presented
is the preponderane of capital in **ie
i t of the country, and especially in *'ew York
uestior
on a&ed this morning, in
.\r:: you* s*1 id that \i you put Ne« York a nd Boston toge.ei" you* practically rave stout C 40*, 000,000 of till
r
*
le
•
cap it* 1 6i tne country to tnis . d i s t r i c t , i t seems to me
..-,11 you v»ould consider, the question whetner i t is not
% desirable'hot
to establish .any one o*nk in New York City,
tut divide Ne.T York City, ?nd establish one b?nk in Loston ^nd" one in Philadelphia, dividing Xev; York City along
Ero°d S t r e c t , ior instance, running- dov.n Cedar to
v
illiam
»nd--up f e « r l , and then up Brqadffayf so ta»t yoi; can preserve tne ^veroge ol tne banks,
in one.
out concentrating a l l
Jiy idea i s . t h a t the l°v. conte.^i-l^tes preserving
•tfce independence of the sever*! reserve d i s t r i c t s , and th*.t
for
tnat reason several reserve b°nks vere O^med. /nd I
•C^Ui see tnat tne d l i i i c u l t y is in preserving ti.°t independence
% the sa^ie tiue not giving If
York the pre-
ponderance,
I would be very rl°d to consider tne question l ° t e r
and submit a p^per on the subject, II you desire me to do
so*
108
•Tne Secretary of tne Treasury:
to ~*ve t.^em.
Yes, we w i l l be very gl&tL
If you divide New York, "8 you suggest—
New York City cetwecr. Eoeton and Fnl3ftdal£J
• Sir. Flanoagaa: Yes.
The Secretary 01 tne Treasury:
^ould you not do very
gre?t violence to tne course of ordinary exchangee and
transactions nere in t~is great iin?nci«il center?
tfr. Jlannag^in:
I ^culd establish — in view of the
f*ct of txie btf^nch, I would est^tiisn at Boston and
Few York «nd 8 branch at Phil«del r nia and Hew York, have
two tr a r.~..ee, so tn«t i t is only divided wita a view of
dividing toi otpltal of tr*e c°nks and l e t t&ose branches
deal witu i t .
The Seciet^ry of tx^e Treasury:
Do you tnink ti-^t
ougnt t o c e t;^e determining factor?
iix* FlBnr.»--»n:
Tae c»i.it«»l?
The Secretary oi tae Treasury:
¥es, ti*e division oi *
| it«l?
Mr. Fl*»nnagan:
Ko;
I t~ink in view of tae f°ct tx*at the
Federal Peserve E^nk are not l i - i t e d ^ i n tae ?aount of
circulation tir^t t&ey e n issue, except by tne pa|.cr •
ie offered to tnec, ^rui tne gold :
rcial
rr#, tnnt
10
La immaterial. as : G . h e amount o f c a p i t a l ,
that.
I do n o ; a {Tee . . i t h v.h £ one witness baid h e r e
t h i s n o m i n e , That a bank ^ i i h a v ^ y s n a i l
capital
v»ould n . e c e s s a r i l y have i n f a*ior c r e c i t t o one with a
l a r c e r c a p i t a l , f o r t h e reason t h a t
the
you c o n s i d e r t h a t
Government i s a g u a r a n t o r on a l l of t h e n o t e s and
t h a t they a r e r n l i m i t e d in t h e aicount t h e y c a n i s s u e , except by t h e comrurcir. 1 demand.
The S e c r e t a r y of t h e Treasury:
/.nd t h e c o l d to be Kept
back o f i t ?
; r. Flannacan: Yes.
The s e c r e t a r y o
have you submit
B Treasui^y:
^ e l l , we v. i l l b e clad t o
any vie .8 you c a r e t o of f <r on t h o s e
p o i n t s , i f you . . i l l ^e food encu h t o do t h a t .
Colonel Bro%«n, would you l i . c e u
ive u s t h e b e n e f i t of
your views on t h i s question?
. Brow
I ^oulc l u e to, yes, sir.
rfT/
I 0 ? FFANiaii: ". BROW.
p feor^t^ry of whe Treasury:
km
i\e a liwtl<
i n : experience
ovtlire
Colonel,
o f your b u s i n e s s and b a- -
f o r t h e sa*e of t h e r e c o r d .
110
. B**own:
I have teen conn ect edv.it h ru llroads for
most of my buaiess life ?.nd b^ikinf institutions
in thedouth.
of
/.s Vice President of
larcely
the plant ©ystem
railways ^bracinc about £0 different
l i l t s , and
president o f th a PI ant Investnent Company of Connecticut,
.* easuiy:
x.he Cwast
That i s no* a p-»rt o f
" .
. ?n
. .
of t h e Atlantic Co«*£t:in5.
I
have ^een o. director in several Kew York tnast companies
and
R direc-or Lzj
re.
j
t t on 1«
bian-.
4*bockar Company
^ :\e c u x i i t t e e and also r e l a t e d to
i\j bar.
-u;ior.s.
am .
i s t h a t sufficient?
I
nbsr of tlie f i rn of Redmond & Con-
iraaaury:
jrd «.j
^.
tricts,
w ha\o
I h h er e , th e es * -
bli^lTienw o3 > c our.
Mo «, Colonel,
u# Hi
lei
.
and t h e division o f
. 1 2 no* l e s s than ei-jht d i s -
sl-all b » v->ry flad t o have ; c u r vlevs as t o
11 b« ul
o
^ s i r a b l e division
. . - *~ u-
-h respect
e country
to
T
-he East,
Ill
andmore particularly ».ith respect to .he conxUuous t e r r i tory to be sene d by a federal reserve ?ctnK, if one should
be established in whe Di -y of rev* yor...
t. :
I want to preface my remarks, Mr, Secre-
tary, by --.yirv
that I have read t h i s b i l l - u h a
deal of cars and
ie can
th e
time, and trying
creat
to adjust myself
>ns inpo *»*d by the b i l l , an c I start off v.ith
York c i ^ / , of QDU rse ,
;
is the
a l anc- logical place for a "federal peserve F>*i k.
• thlB b i l l has be en pasbed , asli btates,
t e r e r t o f conr.id-ciaL
case, r
de vbiopms nt, on a such be in;
. .: city Is
vel..
gddt i s
.
recojii2ed,
ba.
che
- de-
Therefore,
I
I *r. **'irLin va-y properly says, a l - aentiofl
York specifically,
t i t ifa a reterve center no^i
the bank cl
on che
and also based upon
. , and t h a t I think i£ an important
-or i;-.
iniiT
wo
rri-t . •
.\'r. P
.ill
in the, in-
I .uli be
though h .
he
n atu r-
I t aice
olc
Bt, comn ar cia lly.
f sel iv very i
fac
to
.
uiase bU>Jafrts.
J be btrved ty
|
!"u «, in relation
. I should, as
Qd i n f x t ] *.uuld have said i f
ot - - I b j l i ?J „ in having a part of i t
the
it
112
western p?rt of Connecticut, New Jersey, Pennsylvania
east of $- I w i l l take /ltoona as Mr. Cannon stated in
that, *nd I think that i s a good territory for a Federal
Reserve Bank for t h i s d i s t r i c t .
The Secretary of the Treasury:
Have you considered that,
Colonel, with specific reference to tne additional b*r*ke
that must be established throughout the country?
Mr. Erown:
caj-.fully.
I r^ve, s i r .
I have looked i t over rather
You ask me to specify the whole territory ° s
applied to a specific c i t y which I might mention.
Perhaps
I would not be prepared to go into that to-d?y, out I prepared to mention 8evtr*l c i t i e s , wnich, in my judga
would be entitled to tne Reserve Bank under tnie 1°*, ao
I interpret i t .
Fould you like to have me give taose?
The Secretary of tne Treasury:
Hi. Ero
I would tii-
Yes, c e r t Q i n l y .
aton, «s embracing the Hew
Fngl?nd territory, ^nd so iorti.. I would t^ink taenington
was a logical i-l^ce, put icul^rly in view of the f*ct tnat
i t i s the he
must
necessarily
rs of tne Fed-r°l P:s-rve £ c
keep in touch with tne wnole system.
Tne Secretary of the Treasury:
would you
attach to ^shington?
-Tell, wnet territory
113
Mr, Brown:
I would attack Mirylend, Del*w»re as I
look at i t on the northern zcne, and I would take in Virginia °nd "est Virginia.
I h«Y6 not tnougnt very nuch
beyond th«»t, I£r. Secretary, in *r*°t particular re spec t ,
because I n«d a tnougnt tnat was leading me further South
than tn»t.
I tnink tn»t r t l ° n t a , as I look «*t i t ,
is the
logical pl»ce for sucn *n i n s t i t u t i o n , particularly in
view of the importance of tne conmercipl development of
tx.e southeastern p»rt of tne United States, witiiin tae
l a s t etgnt or ten ye«re.
Tae SrcreV»ry c^
icultuie:
North Orolin* in tn«t c^se?
That would you do witn
You *re f*milior witn taat
whole section?
Mr. Brown: I aa quite i°!r.ili*r, yes, s i r .
nk that Norta Cprolin?. mig..
I should
ry easily be *tt e ched
to 7-«.8nington, in view of the f^ct tn?t tae tendency 01
the flow is Torth.
The Secretary of tne Treasury:
Colonel,
resume you realize
that witn Missouri, Fest Virg
Nortn Carolina as one d i s t r i c t ,
headquarters for tne c*nk,
Bind
-
(fll
mia and
"snington as tne
you would get a very l*»rge
capitalization?
Hr.
Erown:
I realize tn»t. I ^iu not want to ce i n t e r -
114
preted as beinr
specific about that d i s t r i c t , except in
so far as i t included rarylanJ and 7>elav»are.
The Secret iry of Aericulture:
. gro*«n:
Ne. ^rleans i t s e e m - t o n e i s logical.
The decree ary of the Treasury:
. Brov.n:
Atl«snta and \.hat?
CM ca
**hat other places?
I do not want to £ et beyond
ht, Mr* " cr*tary.
Boston, : T e- York, Vashin^on,
Atlanta, Ktv >rleans, Chicaco, Sen ?rancis»co.
The ^acrs^c-iry of
. ^.sury:
Yov have l e f t out d t .
Louit,°
m:
Ye § I am debating
I an dabaiiic between £t.
nine, I would ^u: in
.
Li and r*envei\
If you have
ouis and j>cnver bo
The oecrc^ary of the Treasury:
- .jix.
if you limit me to eicht,
»e do not limi*
io
You j\a.% e a l i a l l of twelve.
UToXi:
Bux I an in fayoi of whefoke.
e r than
the l a r ^ s r nunbf.. .
be secretary of
ana
i]
Lan<l ,.i.-
Cramsury:
taon,
aiid Vliglaifc and '"es t
Virginia beoaxia a i l s t r i c t — I
.tatively myw^lf —
quart r i o f
aaucl. a di
^ t h a t penn a&'lvania,
..'-a^inc» of course,
re v«oulri
Bt as that should be?
wh3 h gad-
. r^ro'-n:
Do you mean :he entire state of Pennsyl-
vania?
The -secretary of the Treasury:
oh, yes.
^ell,
practically .hs ..hole of Pennsylvania.
.. :
v.ay f re.
ern p
. 1 , 1 •*.ou]d prefer not to have i t that
poi
t viev..
i would rather see the east-
; f penn jvlvania e.ibracedin the
Yo rK district
on account o f th e n*pid f a c i l i t i e s of cettinc to and from
Tew York and sj
included in
forth.
I chink'th it can very propeiy be
- zone.
The .-'ecr i ny of \.he Treasury:
stuc^ of di4 b
pa^ you made any
capital in the different
districts,
.v? you : >rmed any "definit e conclusions r.s to the
division o f tha country into d i s t r i c t s , vrith reference
to :he banking capital
. !.
.:
? -?ecr^
1 hc.vi UQ
ould be available at each
t i i with me.
f t h e Tr
y:
enough t o s u b n i t what t o ' t h a C^
'"oili you be cood
- e - » with y o u r vieWs
ab.
. . -.C'-r.:
I w i l l , will
pi
y o f A riculxure:
30*re.
You miKht want t 0 make
alternative sucrose ions.
. *rc
Th
•:
p
ec r :?.ry of the Treasury:
U
,
Yes.
Yes;
submit them in
-xvej and c.lso v.i;h respect wo ei ..*., nine,
:vw or
}'r. Bro^n:
ve d i s t r i c t s .
Yes,
I
m ..lbo a believer, you iaio^, in
the principle c>u>w you can serve scce of *whese places by
.in ^ederal peserve Bank i n s t i t u t i o n .
ifora,
I believe in icee^inc vhenunber da«nt
p o i»si hi e.
Th
wo "be
ry of Aril culture:
of course , ther e i s r
sod d e d of insij»-enc3 on whe p a r t of feone?
I r . ~/j.-a*
I
|i
2 feelinr of l o -
^ride.
Ih:
:<*tv.ry of whe Tr easy ry:
Th r.~
MI« : V - , «e v
. udjournnent uo two o'clock.
•-
pon,
- L& '5 P.; . , . recess was taicen un ^il 2 ?.
117
APTLR RTCESS.
". 7
The Secretary cf
re try X
kindly stat? sor. ethir
ILLIS.
Mr. fftll§8j
yov.r --.
. i l l you
lence with these
financial and economic probleissf
.
illis:
.
mry Pa k?r
"illis.
I i
associate editor of the Journal of Cor~.erce of this city.
T
as secretary to the International Monetary Z
in 1097 and 1098 and I have oince then
of banking and cu~r#ncy
3ion
been a student
lu^stions and v/as asecciated
with the rTou3e Corjiittee, as ^xpe^t, during the process
frar.ing t h i s b i l l .
The Secretary oi Agriculture:
You are living in t h i s
City now?
. lis:
Yes.
I now live in Hew York, <n;o, as I
saic, I an associate editor of the -Journal of Corj~.srce.
The Secretary of the treasury:
conf ^ontin^, t h i s c
You of course kno'» the
.tee.
The o^estion nov. is
the division of the country into not less than eight nor
'e than twelve reserve d i s t r i c t s and the
establish-
lie
tnt of a reserve tan'-: in each one of t.-.ose dii
s.
We
sia 11 be very ~lad
r- t e l l us v;hat : o*
about vr
priate division of the country
ould be. an
r.k
Into l l s t r l c t s , particularly that part of the co'in*c . eojqprlses the
eastern s e c t i o n , and to
?d
• a3on.nption of the Tii-.iinus: number of c:
, "o
begin
Ifir,
•:
Is i t
our wish
"
Mid speak of
division of the country as a *vholef or ~ierelc-#
cf the s i z e
of "he "rew York d is t r i e
The Secretary of the Treasury:
deal w
to
^rhcle country, and with the !Jew York d i s -
*
Lct a l s o .
7e would like yo*-
Too my .
P« 71111s:
not ^^£-a**ed any f
11
;e %'r? Yo~k d i s t r i c t f i r s t .
lernen cf
atateme:
I
r
.
: *tee t T haire
is subject, havi
received the notification to be present from t*.:e a c t :
Chair r. , "ecretar;
itc , o 1 on l a s t Saturday.
The ee*!e~&l qpisstlon cf the nunber of banks to be
esta"
House
lat has en^ped the attention of the
iA tee
beginning, and U
nticn a^ci co
ing &
3I m
It devoted a £Teat deal of irrves.a 1**8: .
T think
:
of
the Committee was tr,at ir. establishing this system i t was
desirable to h»ve p e .s*ny reserve b^nks *6 the existing
banking capital
warrant,
resources of the country would reasonably
for establishing so many tnatxitxjc any Af tnem
would be we^k, or would have ordinarily
others, but establisning
9
to ?ppe?l to
s ir.=ny ~s the local conditions
of the country would allow *»nd yet have each institution
as far as possible a self-supporting independent entity.
How, the f i r s t provision wnicn was carried in the House
Bill, as you know, was for not less th?n 13 of these banks.
Before that time, the number nad been 15, in early drafts
of the B i l l .
That was cut to 13 after
I general s t a t i s -
tical comparison nad been .u°.de for taecfurpoee of d i s t r i c t ing tae country, in a
tentative sort of way, for it *as
felt th»t i t was not desirable to fix a ninlaun nuiber so
rge tnat i t would be d i t i i c u l t
in getting
adequate
capitalization, adequate banking resources, to many of
the d i s t r i c t s .
' t the e^zne tixe,
i t w? s thought absolutely
essential th«»t I&KBS their should be no attempt in the
Bill to designate Oil ^l^ces wnere Reserve E^nks v;cre to
be located.In quite ? number of tne Eills tn*t v,ere presented
in Congress, efforts wer
Bade to designate c i t i e s by ftaac
places .for ?«serve ?an'<s.
T^at idea was earl
3e; buJ that <?id n e t riea-
the House
had n o t been
ul a t ten
drav/n for the purpose of iayim
ad by
I ^* the s u b j e c t
.
r* ^ere
a country, In a
tentative «ay, Into these d i s t r i c t s , and fc-
fc
he -**-rose
of ascertaining approximately about what a ^ B should
grouped in each one of
WAS found that 7#ry
.
Tn drawi
->se rm.>s it
"eat difficulty i&s to be experienced,
inasmuch as it wa3 e~
izeu t m t the d i s t r i c t could
net cr should not follow state lines.
That ie to say, that
to include certain states as PUC
d i s t r i c t s would cause an iiarcence amcun. cf difficulty,
and that inasmuch as the s t a t i s t i c s in the 2on:
re
I in
er's
.able data wa3 almost \znitormXS
given V* s t a t e s , it was not possible to divide up very
- es into nev/ Groupings.
• i"ad at then "as t
con-
fter the Beserve Bi
Organization 2
,
Id be
necessary to rnake a very careful stu
Lpi ir. c-de~ that It
lines
ftlghi
found where to dra
2 in :
states it as observinc the convenience and cus*
.on
•
course
121
of business of the community and t
that necessitated
a rathe*" extensive analysts of domestic exchaiiee relationships on which, so far as we knew, there was no entirely
suff ic ient date. .
12
? second poiri
*
t was considered was that
I
Lty in laying oiY the a: 11 p.xbsbl;
inc.
trcubl
. :.-.c-=s .;
5 bdn.
\ere they should he - e loc
.
3c f c r a s l kne ,
,
«nytb
*ndu;.. or» b a l l o t cr
t ::ind
.l^c*3,
subject*
:e s e l e c t i o n o f
:cnver8at:cn3 that were h«d on
.
bhf places
tobeselec-
fcllc.j,
sub-
stantial 1
the L .
. .
the location
:
,
r* Y c . .
hoje 1, 2 And ! ,
.
?, in
; ago «*ni St. Louis,
although i t was f e l t , I
to a Reserve ?ank
each *as the
they had becorie central reserve c i t i e s , and
jtionably the points around which the existing
ba..
^d been jlpvelopr
Then fourthly,
-e credibly infcn.ed had for
sone ti-
.
a central
ve
il nature of things
Ltled to
3 a central benkinc and business
point fo
r
>
II.
. ,
a-*t of the
bably Hew Orleans.
Sixth,
3tonw
'
>. ~
Jinn at i .
ll
Bi jt*2ij
"•
-
..
t e n t a t i v e cccg
inth,
Eleventh,
\ obably Philadelphia*
: .ens a *
. ana cl
•ely• 1
r e s u l t of
t i a t l c s and t h e r e l a t i v e
drift
Ld be asce^rtaioed, and
all|
•
:
.
1
\ J -l-nt.i,
I
cf business* ac :'
w?4at
•
• >lfth4
.
or p o s s i b l y
" -••
" .. h, j
•
land,
aking pc
.
a d i c a t e about
probable
latrlbu
.
Labora the cr-
1 upon for the subc
. ' - - .
ir
. . . those.
ed
.
n?c
I t vaa recocniz-
.
.
'
Irregular,
. . . . n o t i c e , and disc
kly in siz^.
Now, JO cuch —
:
J:
, in
.
,
'-
in in area?
I t waa also rec:
.
:1;- ">
a,
son
pital in each
J.
...
I t o not ]
-•
•
I
at
3 than eight n
-. cc *ae would necesi
' p •
.
to the Senate, the
..
an
a
il-
l e s s than twelve -.ere
w i:
.inec upo0, end *
B
.•
the c-nte~ cf
r ch
i ;c
Mre d :
in
c
"re
-
. laces as
Jts«
He , 1
iitte?*nt phase
jubject.
I think i
.
till,
i-e turn
- the
I the 7ederal Re
tv
:
Act,
v
each of the^e ba;iks shcild
strcn ^, in
,
I f - ^ u » o - t i n c ir.
an to *l:e ?ederal Reserve Board
coiapnlsc
e a
.
*
thcrize
3>n the \anks and :o p«
rediacc n^s upon application, but it waa thought
that
/ould be dene only in tir.es of er.ergenc;*, and t
under o "din
r nc rial circ
several
:*ces the banks in *
.oulcl he able t o tal*e care of ther-
3elve3, and t
ei- relations with other banks,
^uld be
ch«
merely tlic ^e cf ex.onships,
but not
the
.
pos
..
t en
th€
... ,
•
. oc n j :
.
.
-no °^
_
n
a r c
ite a single centrdl bank
125
for the regional bank plan.
Then,
.hen that turned
out to be impossible, the effort was Dado to subte three cr not to exceed four of the regional
: . •*
'
- elve, as the case right "be,
^ed in the
^te d-if'.
;ible, t h e '
:ial draft of the t i l l <^nd in
~":en, when that turned out to be
i
od deal of discussion, I think,
based rpon the idea thttt in the final d i s t r i c t i n g
it
would be necessary to have one of the d i s t r i c t s greatly
overt
the cth«»rs in inupo *tanc e =uid excel then,not only
in ta
n
capital but also in the g?neral scope and pow-
ot the institution.
?ank rnd^
The Reserve Bank, or any Reserve
:s plan, is vested with the function,
subject
to the r*der_l Reserve ?oard, of acting as a clearing
house and then a provision in the b i l l indicates that
the Tede '
clearings,
Reserve *
's.
serve Board shall a^ange for national
.possibly designating sor.e one of the Federe.1
to act as a clearing house for <±11 the
No•-•, of coursei if scr^e one d i s t r i c t were to be
r.ade 30 large and tc include so much banking c a p i t a as
top all of the Others,
and if
i t then were to be
he function of ac;ing as a clearing house for the
125
others,
that banking d i s t r i c t with Its Federal Peserve
\k would
i c a l l y b« e cyn^jj. V-nk, =Jid the other
b^nklnj- institrtiona night becor.e sir.ply b-anches, per• l e s s closely connected with
a the ordi-
nary b -inch "bank, but in a tSood WUC senses, sinp
branches cf thoae le
iccdt=»d in the d i s -
t r i c t refe-*?d t c . I think thc:t haabeen the idea of r.any
of these 'he hr.ve c-.dvocatrd a very large d i s t r i c t , with
headquarV? *a ;n ffew Tc ';
^Jici expressing ny own ideas,
ely en the subject,
i t seems tc r.e that that i s out
of the
of harmony rith thi purpose- b i l l and that i t i s a proposal
.hich i s di -9C tl;- at v^icuice with th* theory upon
-e i 3 f -ctr.ed.
That would not be, of
0OU2°*vj a ^cod 'c.-.ocn for preventing the organization of
cne juch very large t j.nk or large d i s t r i c t , if
there
•f jor.e sound =uid -.nr.iistak -.tie considerations dictating such a course ; end the real question then sir.ir.ers
D tc thiai
A ~e
cut consideration
ny stch unnistak able and clear
.
one of these d i s -
ta
should be v=-._ ;
:°
r think nc .
|
,
: «r *o a l l of the
Isccnc-pticn -bout t h i s whole
~*~ s«er.s to ne to b - ':hia:
bdnks.
.
••
- balks in question
, "but in fact
I;
th*
I t"ha.Z in the' o Minary sense of the word,
but they'are
izdticns
rve holding Institutions
Their function is to held the ultimate reserve funds
of the country, to control those, t
ue currency and
grant rediscounts with these a* res?rverescurces.
under these conditions, it seems to rr.e, that the
capitalization of -..
~al tanks, of which a gocd deal
has bass said, is : relatively
• matter.
Theoretically
one can conceive of the©a tanks having been organized with
no
t£.l at all, or v.ith merely an initiation fee paid
in to cover organization expanses, by the several inetituti:
ici^atin? in *
. Capital ie a good thin ,
becausa it acts as a tuffer to guard against ressiele lose,
and aids the institution in getting started on a satisfactory t?si^. Put this, I think, Is 1
ble, 1
if
tha amount of reserve that i Q fcid in to the banks in
each
ict is sufficient to
adequate
off rith an
nrer, that the amount of the capitaliza-
tion is e relatival?
-
- c-.-.e
might let the caritalizat;.say, let it run do
*
, so to apeak, that is to
!
I
the spe
Bini-
muE mentioned in the till without feeling that in so docne was creating a nuatar of weak instituti
would be unatle to take care cf themselves/
tutions are i
t sir-
.at
If the insti-
^ans that tl
12
of reserve which the b i l l I
irsct:
o their is not sufficient,
the
f of iec.Iing
. s to tr:
1», it
~:-r-
*
is net sufficiently strong
Personal
,
.
could wip. *
•
to I
I
i tran ^r^ec 3
ia« rci- c :
• ly larger,
*
e t i l l remains ii I
1 as cccT^lscrily transfer
3 the Federal Reserve
,
ven if 1
number of
,
eli atle tc
i
zaticn of the
It
* I -s
,
s t a t e d , only
the ar
iooe l i e -
• to be conceded
int tc be urged
larger nurl°r of d i s t r i c t s .
-.li-
r, 12 or even 10, the
c a p i t a l would be low, i t i s
is a rcod t
?y
khat I
*
t that ii
t r i te, If you had the f^jll :
. .
do.
, to ce oonce
.
.
?ir neaber bej i
J
Eill conter.rlat38
Lyg •
I
L tc
nt requl
9eeas tc ma that t
It i?
reeei
very low, and alt
ral Resan
we-
ned.
- to c» that tl
-
Eanks mill ce
law
be F *
it i
req\iirer..3r.*
»no that
. . .
ve
12C
• from a gsc. a cne t
• sources, t * -t was nooMeat
t t *as
rrc.
ly
I - hc-ve
- ^afitalized and
relations
-an cc
.es
-dsr that this large,
»t
•
•
rational e
1 so on.
in contrcliir.gr
,
Cf ccur
*--3 rate cf discount
.
as the fact that the
juqt
- if it 1
3 \*3ry large tank, either
:
te
l-
c, a«5 scca have sugre
L to do all of
, ith e
that I
na: th»
i t ifl aot axerci
"lc.tss i^
" axerci=i3,
.
,
it:l,
that .-.:
I
•
-
/.es the
•
"-A
I
-
.•
UMtion* arA i t b&a te^n s t a t e d that
ropscjj I . -
^3
r
rvisj
re tl- * * i s B i l l cor.
ly male cf th
oder^t
B U B O:
.
•
. .
•• :
i t 83en.9 v
LM cf
t 1
issued
t any r e ' : r ^ i Raearvs E
' .:
..
ly
-,
or
is
resources of any one
• t a r that i s ent
se reserve banks*
• -. _• l y , I shoul
that is a
tupposs. Indiffer-
the t o i l e r s of these notea or to the
qui: .
13
ho are ir.-
In t h e i r cv^r. r.ir.ds whethsr the banks that i~sue
then •
• • ; - . .
are Eta
JOB
Ir other words, they
3fully prot
r issued b)
' :.- ~
-
, or directly
:r.
the Ocvanu: er.t
. •
t has 1
. • - - txh witl
2 to the quasticn cf for
asserted qyite r
very -
-
:
age, i t be:
.. t unless ycu had either a
r of 1 ^^e reserve banks,
fafrl.
ou
tfaJ
e,
;re would be great
nts cf foreign ex-
ch&nce,
irect.
..e flcr cf
between I
gold bacic ar.d forth
r3, that being undoubtedly
one Of the
\
bo 7 erf erred by the D
of the b i l l shows that i t oonteaqplates the
per
ly
nee cf thatfgroi
B aoting joint-
he surervi'
Pc^er is veeted in th
1
as cf rediscount "*
1 Reserve Poard.
3r?l Reserve Eoard tc regulate
*
{oalise their re
- in
133
various ways which I do not need to go into, and otherwise
to cc
..
:t as a unit} whenever such action is
necessaryfor the cer.eralpro tec tier, of the interests of the
country as against ofr.er countries.
Fourthly, it has been stated that unless you had some
such very large trnk as that here in New York City, it
02 unpo^sicle for such a tank to hold its own against
the vsry largis the seat.
trust co0r.7e.nies of which this city
3 «an.e thing has been said by those who
have desired to see Chicago practically the leading bank
of the system.
Now to that one must make exactly the
same reply, tut wit
:a variation, that these reserve
banks, and of course the one here in He* York, are not
intended to cordate with their member bar.ks in any ordinary
they .
sense, but thsix organizations of reserve holders, and
their stockholders are the meg.be r banks.
The reserve
bank, then, of this district, is intended in no sense to
be a competitor of its member banks or to contest with
them for business or to
~e their policies, whatever they
may fce; ^xxt, on the contrary,
is intended to be a co:
&60tl&g link between its ir.er.be r banks , acting in their
interest, and more than th£.t, is intended to act in the
13 3
i n t e r e s t of the whole l o c a l
_.
r s f s r s scxely to the stccKhcic:
- r s not :
fundeLnental res»r-
: ,
63
n .
ber hznts,
It
is
ir.
power of the eon
c n s
•'*
or to
3 re' •
Tn that view of the case it is diffic It to see why the
fact that such a bank had a *-ela*:i-*el;- snail capital - the fact that it had, let us say, r.ot
ori tfca
in this city - - shovld preve
fulfilling
fu-ctics.
As a r a t . e
- :
*20,0'V)f00'>
its
oi* iact if i t ha'-; a capital of
-
20,
i
t"a Lie '• i
tu;io .
ese-ves
to -*. , i
"-.e fact
-
e law provides for
'09 a.-* a :^ly strong i n s t i -
that i t s capital was s m i l e - than that
of, let us say, the National
others c-ha *
ht b«
or so^e
ne or t*fo
c tiered, "ould ^ot be of any
particular significanceovides :
•vhile those ; mnaaotior.s a*e c
•
at transactions,
1
i^ed by sone to be
of a .:atu~e that w i l l ;iecatMtrlly e
!t« v/ith the oper-
a t i o -.s of the n«BJ6#r barks, or of banks in feneral,
by no r.ea: s t
s tlmt such would "^s the case.
as hai oft at:
Tndeed,
, i t is h&>-^ to see how a
• etoc
te
e i : o^er. narkvt
fia..co
"ba
.1 hc« .
*->visic
s would ever
- a isacticrs tlmt
f or sevorel" -
the ii dlar operation! a :.. tra Ba<
it
ttltiTt with
ti
i-r^er
13
furnishes an outlet for such spare funds
5ank as may not
afford.
ecessary -e-diseaiz/ts to t"
'ibe:" ban>:s which
les the resc-~ve ban::,
act:
.e i sta
the i.
f its a
tounity fenera--
~s Boa~d o$ "H^ecto^s, and in
old era, i
,
re banking
:.":e 3ff ecti-e Its Policies v/hat-
ray be fo~
sources
reserve
^e at the time, for the purpose of
apply for then;
eve"
of
era 1 safeguarding of the r e -
e banking c
'ow i t scenes to
points that ha^e been
lity.
e that those a^e the principal
forward La favor of such a very
large sincle bank, cve^top;:ing a l l of the others, and
leaving them r e l a t :
ea in the amount of their
resources and capital,
aps also with a relatively
sna 11 area.
I t does not s ?e
e therefore tlmt such a pollt
as that vovld be either' caryi
this b i l l ^as
or desi r able-
,
eory upon vhich
a t i t would be at a l l necess
Tt certainly would not <ri-Te effect
regional reserve idea, and in njy opinion i"
to the
Id produce
a condition that would be decided!;/ less satisfacto**;' from
the standpoint of banking technique than t m t which would
156
"be created by a more equal division of the banking capital
between the several d i s t t c t s .
Coming d c o to the question of the size of the Mew
York d i s t r i c t as such, i t has teen suggested by a good many
people of l a t e , T believe,
- the~s s
- "be one bank
for the whole -A the eastern s t a t e s , or fo
the whole
lat ;.s the ceneral
t e r r i t o r y east cf the A'leghanaes.
idea, or one phase of i t , that T hare just been discussing.
As agains
;hat ithae been suggested that New England
be made a sepa-a;e d i s t r i c t , and that there be a southern
d i s t r i c t , possibly with hea:quarters a t Atlanta,
leaving
21 ew York as a very largo d i s t i c t i.jterven ing between
those.
Tt seems to ne the~e is pretty genera 1 agreement
upon the idea that the
constituted, a '
M
ew
ir.d di:
* is separately
.hat i t should include the so-called New
England s t a t e s and the northern part of Connecticut, and
tha*
lower part cf 2
should go ^o th« ' ew York
cticut nearest toflewYc
Lot,
T^ere seeias to be ?rc
that the •<
states tech i(
last em district i
wn as f
oie*&.
ee^e t , T *
i I elude a l l of the
, and should cc
,
as fa** north as "orth Carolina.
• ~ae~
.
of Agriculture:
'illis :
Including?
Tr.clading Alabama , Georgia, South Carolina,
and possi
olly
-
.,
be left
ou^ii I
Lhat
ir the die t r e t v/ith New Orleans.
B Se^^etary of Agriculture'
Including ^orth Carolina?
The S e c e t a r y of the Treas".-ry'
T
Ling
orth Carolina
or excluding i t .
p, ^ i l l i s
Including
rciina.
I
does not seem
to r\e tiiat thftt would be a desirable plan, but it seems to
me that the
hould intervene the^e s t i l l another d i s t r i c t
including possit^;
e s t a t e s cf West Virginia, Virginia,
Pennsylvania, ' a r ;
9 Delaware, and possibly a part
of *!ew York S t a t e .
Tn that even':
1 York d i s t r i c t would consist
simply of the 2
,
option cf Conn-
ecticut nearest to i t , and cf a por~ion of flew Jersey,
'h of Camden.
tte
the "
T am
the e:.
"ork d .
s of Pennsylvania.
B,
-
11
i t be
be extended s l i g h t l y
into
T:-^t is a n a t t e r on whic
"e detailed Icnovled^e of
T th:
1 3 8
Tn that case you Would have p r a c t i c a l l y the ^ew Ycrk
district
limited zo the City of
York and to i t s adjacent
country.
The Sec?-eta~y ^f the Treasury:
New Yor:-'
Row nuch of th<~
*e of
Id ; o'1 take in 0
Kr. ^ i l l i s :
Very l i t t l e
indeed; c .".
ie lower corner.
Tt might include - - though T should hardly t h i r k It ought
to include - - Al :
country dependent
, but
jht include Albany and the
Alban; •
That v/ould then throw western > ew Ycrk into a middle
western d i s t r i c t ,
i eluding probable
-ran, Ohio, one
p a r t of Pennsylvania , and as T say, westr n Vett Yor:
Just hor; to adjust tha l i n e s between that d i s t r i c t and the
other one cf which T hare s/oken, including Iferyland,
Delaware, ^es*
i n i a , Virginia and 9orth Carolina, T
am not able to say without a $ood d e a l more i n v e s t i g a t i o n .
You would then l^ave the problem of the Chicago d i s t r i c t
west of t h a t , and then after t h a t , of course, the problem
of the division of the whole country west of the Mississippi
River, which would have to be dor.e upon r a t h e r
p r i n c i p l e s , and would present quite a different
of problem.
different
type
i:
• nay be claimed - - in fact
I t is claimed by a
good n&\*y persons — "hat it is unwise ^o shut up the " ew
York banks to t h e i r own city p r a c t i c a l l y , and to a
s t r e t c h of country adjacent
does not seem to :ne *
hardship u on the "
to i t ,
little
. *riy such -vay.
i l l would i n f l i c t
It
the s l i g h t e s t
rk barks as sv.ch.
Unde~ this law the reserve noney which is to be trans
fe^~ed out of the vaults of existing banks, is
*,c Federal Feserve
.transferred
i--
York d i s t r i c t ,
event.
York
o »tt«r
so that eve.
transferred
if the
size of the V
'ork d i s t r i c t
n
£, the reserve money
to the Federal Fesc-
would be out of
f "hat d i s t r i c t
;he hands cf the existing banks.
would be shifted from them.
the City of
ew York alo/.e, the shift bei
be cariBd
out in twe
do
ik is nn La
I
e^eve^
. de to a
the**e, or whether tlmt shift
^*"ee
wr d i s t r i c t s , T
-?uestic .
• i:
on the vaults c:
Tt
ether that be done in
v
Federal Reserve Bank lor
It would be so
I
ie of the easte v
included
transferred
the
v
bant
I
.
• 'ie
^ . <s to those of the Federal
140
h reference to the status of New York, i t s present
connections extend a l l over the co.unty.
That i s , the ^ew
York tanks have cov espondents in every state of the Union.
Ever, if ; ou nade the Btw York d i s t r i c t
eastern s t a t e s , you
include a l l of the
Id s t i l l be cutting off nany banks
which :ow have cor-espcidents in this c i t y , just how nany
of those no one could say propably with the data a t present
available.
The sar.e thing would be true in different
degrees , according as yov made the size of the New York
district
:_ - ~er or smaller, but the effect would be j u s t
the same in either case.
1:
Bo*
i t h reference'to the question of ex-
change l e t us aee how t h a t i s influenced.
b i l l thr ^
Ifl ..: hing whatever to I -event e x i s t i n g banks
from goinc on
..
banks in New '
bill t
-
. e i r funds w i t h correspondent
t as they hav<= ccne heretofore- The
1
..--c -i?.
New York banks fc -
to keep such 'funds with
. d of *
.
a.*s and to go on,
,
pe "iod.
th? M i l further
ic
i s ."eci.ui
bankj thtt
.
.ances
Under t h i s
--c^s
ith
it cf r e j ^ r v e which
can continue to keep
;"k cc
desi**e a f t e - the e*id c:
»dftj
ly so
h^«=e year period*
:s M l
rea«rv
over,
In other
tly lessened retired
nta# thf
.. absolutely no reascn
."«lfttio*i3> i'^j between :*
k
oka and.
shorJL
a
th<
-
Ld i t prove that the
Federal P 3e.*ve
e
ffiuu
.-.ks in
'.
.
.).
of t
|
•
p
In c
,
'
the place or per-
tc I
B correspondent
. . ., -
-he icapcrtant
. undent cf the size
i
111 continue
142
to obtain, undoubtedly,
parts of the count
very i_rge deposits fron* other
, i
outside ci the dial
any parts of the country,
to which it belongs.
of the b i l l will be just the
The eff:
in that regard, whether
i
the size cf
".'ork i
net, nan?!:'-,
lative op*--
. ct i3 greatly
limited or
. sassoci ating the investnent and specu::cns and the ise of cipitai for these, froci
distincrl;* coir.erci al operations, and when that has
been done, tha inflvence on the banks of the syster. cf the
- beyond the mere difficulty or inconvenience of the
change of direction of business and
general **earrange-
nt cf-relationships that will occur under t h i s b i l l
and will c c c r no Batter wha* the size of the d i s t r i c t ,
is a relatively minor r.atter.
In general, then, gentler.^n,
that covers about the
ground thtt r have been thinking of in t h i s connection.
e 3-c^etd^y of *
-:
capital and the depc3its of
at would be the
the bank in New York, for
instance, ^ccto- ' i l l i s , with
ihe d i s t r i c t lir.it ed as ycu
have rag
1 VIllis:
The z*c
LliaJ
if
.
f the
t*t were decided upon?
! Ye3.
I have not figured t;
;t en a six per
143
cent basis.
I could net answer that offhand.
The Sec
.:
the Committee,
:
ill you submit to
at some time at your convenience, a map
division c: the country into districts, as you
hdV« :h*m in your mind, and a statement of the capital
to "be available for each one of the banks under the bill
end the reaerva it would carry?
!•• >"illis:
The 3
that,
Yes, with pleasure.
iry of theTreasv
would like to have
to you think of anything. Secretary Houston?
it Agriculture:
No.
He has answered all
the questions I had to ask.
The Secretary of the Treasury:
Willis,
Very well.
Doctor
e nuch obliged to you.
;:ATSMENT OF FRANK A. VAKDERLIP.
Ph«
cf
-easury:
be . c c
te f o r the record,
>n i s
Pc
-
Mr. Vanderlip, w i l l you
what your
i'Jid s c n e t h i n g o f your banking ex-
"?
:
I am p r e s i d e n t o f the n a t i o n a l City Bank.
n backing s i n c e 1901.
C
* of t3 9 ~"easury:
| you had p
144
expedience in the banking business?
•fr. yanderllp: :;o, s i r .
The Secretary of the Treasury:
.-. Vanderlip,
you are
fgpilla? fith the Federal Reserve Act, I presur.e?
^ lip:
.9 Secre*
duty devolcc
I a A the Jreaaur j
And you know the
n this comnittee, to divide the
into ru . less than eight no r nore than twelve
:cts?
of the Treasury:
And the location of a
re*-c~=tl -^e3^ %ve ?^nk in each one of ther. at jone coi>venient point?
. v«jdf ail :
-s.
••tary of the Treasury:
ve
The Connittes • ould be
i tc have your vie'vs as to what, for instanc ,
the district surrounding
be,
the City of New York should
the contiguous territory that should be served by a
Reserve ^ank, should one be locatedin the City of -ew
Yo -k.
\
'^anderlip:
I do not think that it is
at importance he
he predc
ttter of
the d i s t r i c t i s about New
ce of ;:ew York City itself
in the
siz* cf tta banking la luoh that the d i s t r i c t - i l l be a
•ge err in any
I wci:
^c 1 irge t h a t , in any event,
.
iz
cvld net tdke in a gre~t terri-
tory in addition tc
of f ..
I do net feel that -
-ni:*.l
..ce, a matter c^ principle
di 5*.
-? in .*-•» Yo *k i s a l a r g e one o r
.11 c n a .
:
vi-
;
rh*t cLip:
Have you <*ny d e f i n i t e
brac^dio that
I lidV? nc lefinl
heje di3':'icts at all*
cf the d
I •
- tricti
i as to the £eoI havs very definite
^vin w d i s t r i c t s
conditi.
.d de:..
•
with a
That would lead r.e,
ft s u g 2 e 3 ^ i ° a °^
U i to I
di^,
of
o,
d.
c~'ic\"ltvct.
.
.
'
culd c e v r d
a>
.
I h.:ve-
' cc
*tl 'A'
..;t
shoe-string
vide v a r i e t y
jrio r a t h e r
t c r.ake
ied the illuatration
-de^cl ^eaerva :- nk with
Orleans
naturally
ccn A i,
.
b with
' c ** .
.
demands
14-3
whe-e in that d i s t r i c t .
.
That t o rjy cind
i s the
Lpla which led n.e tc hope that there .ould be fewer
; which would lead r.e, now that there nust
be thi d
.
| t s t i l l tc
.iize i t *n
.:inc these district! Ion-; d i d t / i c t s that would take in
e. variety of conditions-
herwise, -rith 3uch a dis-
ct a3 suggested in He
Orleans, the thing is perfectly
vitable that that bank will have to call for help.
It im:3t be so.
I t c =nnot "be otherr/ise.
30j in any cd. ,
beoa-idit ion^ a^e the aat.e through-
cut the d i s t r i c t
- a denmd that i s of
cte
?nd ccr..e > at zhe s*i~
icctll:^ d.ll
tint
f"
at d i s t r i c t .
jecretary of the '£reasu — I
•
And i t * i l l be
?ov nuch irpo'tance
hfl accessibility of the headquarters
"b-jik tc dll p«ii*ti of the
dijfi
p:
id altogether oa how
the bnaa
:
es e. 7? established
::r. f'«ad6rlip:
inpc
nee. In
As suiting that branch-
B ' i l l p xvides.
. -
;
ttadh tc
event I would p
'^ank in the City where t h e he«
- uttla
. . .
I -s were ^ould
be vreated as a branch al^o.
nc : l:nc
I preaur-e that.
..
I do
rr.inds of the committee
... .
sretary of tl
y:
nt that the h adq
Don't you think that
*-?rs bank should have
a p-«tty oarefx*! eve ^i^ht and control and direction of
the breach banka as tc policy and iiscounts?
Sir. Vanderlip:
^le sto:T v;_
r>vi i]
ad con*:-cl
*his Itar, •>.
»r cv^
-
spells
tary.
if
nd control i t - i l l • ork,
i s a l a f e o t l v e lav;,
if v.-e do net,
the
et
although
i t i s f u l l of
t dangers.
:
Df 0OH 'oe : t vovld
nSfantly impossible to organize ft d i s t r i c t of zhe
BO rib a in STew YbTk here*
gard
«sticn of v e r s a t i l i t y of the territory con. .
related
-T York of
tance as
ok in t h i s DJ
Kr« " . . . . _ :
" cf .
le^ >
You do not re-
It
,
Uaq
.-.nee, end, as a
Co -k i : the United States no^e or
J of a vd iety of
cf
conditions
501 n -;• more than any oth*
0
uixik i ' i s neces .
to have l a
point,
eo-
.148
limits
graphical or to have r.xtrenely lar^e deposits in then
?t that*
tary of the Treasury:
;d situation;
do ;
ou feel about
I el a reserv? bank
e established at Boston?
. 7anderllp:
pc
As there must be ei&ht banks, T aup-
* toj although I "believe, an a patter of fact,
;;
Bnglsad could be perfectly veil jerved through
banks f ~c
as a headquarters*
There
ndoubtedL y be sor.e local p^ide which does not
have i t s ba^is, I believe,
the
in a true understanding of
Jitage of the head bank over a branch bank; but
ctve to select Boston as a
headquarters.
.The Secretary of th*>
lip,
f -c:
tc establish *
I
infer,
, that you t h i .
would be better
End ra mra3
ier this
b i l l than the r.axi
I
~
The Secretary of the Trea3U
jhould t
-:e.
Assur.ing that eig
were to be established, what ar
cities
^..
.
| as about the
\aadv 1 artery, or do yot*
149
Ceir
^ an o p i n i o n on t h a t ?
Kr*.7«nderlip:
?ration.
::0.
I h a v e n * t \ iven i t s u f f i c :
i f I rerc to dc t h a t , I thinJ
s^art a t t h e cthe^ end of t h e country,
it oivould
.and would g re
the P a c i f i c Coast about San Francisco and l e t t h a t
i u i t e a We.73 3&8t,
and probably then
reach
at C
Minneapolis —
:
. Vanderl
,
nver, I should think,
>e cn the edge of the n r ;
think the I
latrict.
iiatr
tc at least include
a l t o ^ ^ h e r , of cou.
would be
How about Denm
s
1 Id
I should
^ast so -
TT
tah, although that
- depend
, upon the cendiLions.
r*ver
-.ell located if zY.e racific Coast District
took in only Arizona anu
s^a "besides
the Tcicific
it States*
Th
it
f the
•
:
0 you o r nc t think
^eat ir.;:o^tenc c , to p r e s e r v e , so f a r as p o s s i b l e ,
in the G
. . . z a t i c n of t h e s e t a n k s , the normal course of
co:
a c t i o n s &nd banking exchange
Lp:
3 , 1 dc; =ind for that reason, for
instance, I "believe Hew Orleans would be b e t t e r served
with a bank at 3t. Louis than with a bank at &0K Orleans.
150
'ecretary
of
the Treasur. !
T:.e exchangee of
na and r>t. Loui* A»~C v ?ry letrge -iny^ay, a r e n ' t
th«
% Vanderlip:
V- *: La
T 9 3«cr«t«ry cf
he 7
:
In the ordinary course
cf "bi; sines
. Vanderlip:
x
Yes.
cf the Treasury:
n a c t i o n cf the count
tj
: tc whc/
Jud
Now,
as to the south-
, rbJit i s your view about
Id be the best arrangement t h e r e ,
the nc *Bftl course of exchanges?
. :
hcut having
the extent c
o iven
thoucht to : • ,
at the size of c
groups would b?, and sc en,
n
It had seemed to r.e that
Atlanta .vas a natural and proper place*
The s?c
:- of the Treaj
about ??nna:'lvania here,
southern
at do you think
-.
" . . ' l i p and Hew Jersey —
J«rst ,
ict cf Colunb.
laware and the Disi b l j West
r
..
ir-
ginla?
\
Vanderllp:
3
to BM
•i inevitcbl
have a ntmber 0:
the
diffic
3t
nks h«re,
geographic
tltli
tc<
..
c* ? i ; ?
ci
i l l have one or
c 1* y ? i n c i t e .
• 9
Now, t h i s d i s t r i c t
. h. one cr I z banks;
.coiks
could
but these
b« so lar~e> that the other banks
ffe •
.
1", if
1;-
*ijcn, and i t would seem to r.e de•.,
same aiz
z i: ke each d i s t r i c t
substantial-
I u : n ' t ' elieve that is p o s s i b l e .
:
You rr.<=an in the
matter cf b uik c a p i t a l ?
:
a 3ec
.
Yes. '
' cf the "reas
"djide *lii::
^1? In
And reserve?
Yes.
!
.
y\
I •; :
Of course the.t i s not
• cf this leanness cf sorr.e of the t e / ~ i -
tc ry?
k*r. Vr.ri -
!
.? See
f i
— ticn
-'iculture:
-r.v* d dive
3?cticn •
-'c , . ' is Dot**
Ld 3 •obai
.
--
Tc carry out your
of i n t e r e s t s in t h i s
tT« to have your lines run
.idle west section?
•
^sity in season if
. leuth.
.152
The Secretary cf the Treasury:
And you do not get
i t Fast and ^est?
r. Vanderlip:
You do not get i t East and West.
Ths Secretary of Agriculture:
But you get a variety
cf industrial and agricultural conditions?
Mr. Vanderlip:
If youcan stretch over industrial and
*icultural conditions, and include both in you- disfcj hen you have accomplished a desirable thing;
but i t i s certainly of great inportance to get your discts so cut that they will have t h i s variety.
The Secretary of Agriculture:
Seasonal as well as
industrial?
. ' r anderlip:
The 3ec -
of
the Treasury:
That presents an a l -
ncst urioclvable problt .
Kerllp:
r think
The Secretary of the
* ..
I
hat you are facing*
cause it
is net
podoible to adjust sorr.e cf the3e d i s t r i c t s or erect them
in such a wa:r that you would £et
a diversification of
ind?st"y and e.£ ri culture?
"r.
*randerlip:
The 3ec
I'o, i t i s net.
y cf the Treasury:
Particularly with re-
153
spect to t:
*ltory v.-est of the Missiisstppi River;
and with
ast of it you have got a p~e-
.inanc« of Industry and other forns of activity than
": cult D "e.
"r. 7anderlip:
Yea. rt i3 one of the r.ost difficult
blems that a mind
The 3?c^
ever engaged in, I thin!:.
of the Treasury:
The powers of the
Federal Reserve fcoard under this b i l l will result
in d
sifcjit and control of these units,
he
; ctnd it is very likely, if that is w#ll handled,
as :*ou suggest,
the difficulties you ap prehend will be
eve
. *randerli;
r believe almost anything good i3
possible in the hands of r.en of experience and courage
who will cive the proper administration to the thine.
The Sacretary of the Treasur; :
lir.
7'iat i3 true of every
business, that we must have good nenager.ent?
^nderlip: Yes.
The S a cretary of the Treasur
int?lli^ent di a c t i o n .
Honest nanagement and
Do you think of anything £ore,
"ouston?
The S® reta^y of Agriculture:
.
r
anderlip:
ffo,
I think not.
If you want any technical
inforr.dtion
154
about
flov. of checks, coll •©•tons «nd things of
it kind,
tllar
r have brought a few men with me who are
th t h a t .
Jh6 rjecretary of the Tremmwr, \
.
\ would be very g l a d ,
-arderlip, i f you «'ould submit t o the (forjr.ittee sone
T-t£tior» on th 2t subject as the r e s u l t of your exnro,
if tho?
B
form ol
id to
file
ould prepare something in
f
with us,
we would be very
:t.
, " .iderlip:
e S e c r e t - v cf
"
• i
.-o.
Thank you, ?(r. 7wider-
OP WALTER E.
3?cr^
:f the !
- ~>ew, 2rou are the
3 i i e n t of the Corn 7!xchangf Bank?
~ew: Yes.
• e t« v cf the : ^e
111 you kindly give
the record, a b r i e f out<
f you '
°xperff»nce?
sen an officer of the bank ever
-
.
ust
five ;
ago.
I have been an exscvtive officer
of t t e barJ: since I 'as 24 years old; abou*
if the Treasury-
A3 ycu are young yet,
that does not give us any l i n e on the length of your
exp
ce.
(or:
The f3
I say about 25 years.
try of the Treasury:
Lnft understand you.
T beg your pardon.
Mr. Pr
I
, what is the capital
the Cc ~n -xchange ".auk?
. "rew:
The Cec
" - e million dolla:"s.
y of t h e Treasury:
Hew r.any branches have
•
- :
32
The Sao
f the Treasury s
bat are you combined
d«i.csits nc
r:
-t about *64,000,000.
- of the Treasury:
:
-
, about '7,3,000,000.
The ^ecret^ry of the treasury:
ikof cct
•:
And ^ross?
"
The Co-n Exchange
ok?
Yes.
•
,
I will
•Obl«a confronting
the Cor.: ;
^ 1 divide the country
156
into net less than eight nor more than 12 districts?
Secretary cf the Treasury:
And to establish or cr-
a reserve tank in each one of those d i s t r i c t s ,
selection of
•
he b=jik s may
Ded at the ncr.ent
of such banks?
Of
have branches; but we are coni t h the selection of headquarters
as veil as the division of the country into districts.
/:
Yes , s-
eretary of the ^reas^
:
xu any well-
defined id«as about what the New York district should con, provided a reserve bank should be locatedin the
ro k?
:
I have not given very much thought to i t
..
al
. ,
ut baaed en your eight region-
nd censiderin,
t there -Guld be one central
r.
:
:., /hi ch, i f t
li
ban,
i s v?
-nment is&oing to
portant to have, the
t h i s section should be located in New York with
a branch a t Beaten cJid a branch at Philadelphia, to serve
a l l of ;*<=wrnglan& and a l l cf Tew Y-Ivani a and T
"ew 'J*
The Secretary of the Trea&vry:
Mr, Frew:
And lew Jersey?
And New Jer~3y, yes, sir.
The Secretary cf k{ Lc .;i!re: that did you I
ia
the Washington District?
Kr. Frew:
w&-
ton, Maryland and V'eet Virginia, Vir-
ginia, Forth Carolina, South Carolina, Georgia and ?1: rida.
The Secretary of the Treasury:
t of banking :
Have you figured the
t tha
t of New
York would have in the district ae outlined by you?
kr. Frew:
I have not, no, sir .
The Secratr.ry of the Treasury:
Dc
realize that that
would result in giving to the ban}, in New York, praotically
the available working capital ~~:r the reserve
* :e country?
*:
I si:
that is 90.
Secretary of the Treasury:
ag seven banks?
' hat
DUld you give the
There would b2 very little cari-
lining fot tfce seven.
Kr. frewt
I surrose that was taken I I
when the sight was decided on;
3iderat:
that the eieht was located
158
9
IT. Vr.
\
Lcui3, C
'
_.
o
in
lee
•
159
J Secretary cf the-Treasury:
i c s , c.
at
Frew:
•
:t
have, have
Would you t e geed enough
re such a ^tater/.er.t for the C<
it
-
To, I have r.ct.
2 Secrete.ry of the Treasury:
to |
' - &0t r r e r a r e i any
c a p i t a l i s a t i o n and the resources
ika un:.2r 1
Kr.
Tci
- t e e , and ac
- , givir.g ar. outline of these sur-estions, so
w» ccv
UXi 1
icre i t i..
:
i Secret
would t s
. rrete
I rcu]
forir..
3 very clcd t o .
I
Treasure:
i~3 to havs a reserve
Hew Er. k r . Frew:
t Boston for the
*.rict?
I hardly think i t i s necessary, if you have
a branch rlth ' r c e r T.cvvers.
Be you or not think i t
I t seams tc
'he l o g i c a l
oob
EC9tC:.
: 3 jUSt ES " 2 1 1 .
Tr^r
:
.
t covers the
?.«
frei iurj
•
-••
• :
I
. •
state your
tional Msociat:
1
Credit
I.
sret&ry of the Treasury:
n2Q9 outside of that wor>,
i.r. Trssc:
Tha
of the T;
:
IT.
Lre t j ?.
.
ycu
3tt
Vei
tock quite a
. :eci.\iss our Associ&tion
i t e i n t e r e s t i c i t s pa^sa^e.
! 3 Sac retire
? Treasury:
Cotx.ittee i s &tt
Ycu
problem the
tc l e a l with, tl
ccunt
nor
. Tregro?
-ith the Federal Rase:-
^. Trego:
zed in buei-
Secretary — no, tl t tr.kes v
fcary
familiar
/re
.vision of the
"_"-- I mean not less than ei^ht,
-
{
:
car.ks, r l t h the e s t a b l i s h sh one of the
diet:
-.8 abcut
.
.
' definite
ot
rticui^rly t' is aaet3
such
I cf the ccurtry,
Mr. Tre^c:
"oensfit of our thought
as resulting ~rci cur a«3sociaticnal WCT
trad3 divi
districts,
cf fr
As tc the
ry, that is V
an idantific^tion pt cercantila intarest^.
icns,
--,.••
n.e rrsn.ise that by stating cur association is fj
conviction that thsra e
Resarve 3ankt
t
*hsn eight Federal
ie tnc^rtion of the naw system.
Now,
161
there are about
leione in the country as
related tc-trade Int t
f 5t "
, and cur study cane frcrr. the
".re the largest ~c.
nation, and our I
r
. -
on in the
- e-tend?
9 Atlantic to
the Pacific, and frcr the Qulf to the Dominion,
••e cluster-
I te different trade i n t e r e s t s •
:
real ge:
B I tould enumerate thei ,
..ical bov
y etfted
ise ccvld not te -definitely cr ar-
it
t had th-
bllst the
* .a thoroi
i I have
ivs to It,
*
-t as follows*
We :*ouid designate the iorth Atlantic, which could rur. frr
either the Ches?
-th Carclir.: boundary, and
the South Atlantic, rv
that torder to the Gulf. .
., ve . • - t .3 central, v.irh ie west of a line
.St£*te ar
-
..
•
extei.c tc
"?lc i:
•" I
-
in,
3 Gulf,
7 e Booretary of
'
:
&c
t
t exta
to about Keni
The
southwardly?
, Tregot
Gulf *:.cv
a«
1
*
-
I
" ncrth
Lief ti
' r at gt. Lev i s ; rs far
Oulf
• in Texas,
162
SG tc i- lir.s atcut mldwav in
Lcfc rurs
•
the Western bou
3 Nebraska.
f^rt. dr. *est,
I:
, '
Then *e ha-
, Colcrc.c'c
.." " •
c •CUtfc of Colcrrc'.c.
•-)CO w
^
i t cf .th3 farther ^est t
ry,
isional
,
-se are th*
rfl lines as
livi—
^ior.s cf the I
-f trc.de intsrecf t
I
:
B trssd urr.
state
I Po.?i:':r,
ific,
£-» 1
of
ry.
;.3i:, is that; ^ u ^ e s t . ice cf *Tttl
l
38e
rent di^trict=;?
- : It is \
li
,
-^retf^ry. Te have
oe, in cr J er tc
j 'cur-
.
t
: *
-
.
t, «o 1
-.
-^
. -.-
is
= their DC
irci&l relA-
a rued.
t oa the I t l
tic tc
163
tv.c : : - : I .. ,
Nor*.
. rause there i s the New England, the far
.. * l9< t.. t Central, ert
forth c
.
Lt . ..t be in Baking a distribution
cf sis/.t, to oonsoli
ffsst i~-~c c.
Atlantic.
'
The Sec
I
•
kiddle Vest and the farther
. •
re d i s t r i c t to the
••
• •:
c.n
.
*
r. Trego, would you mii.d .
•
th one cf these for.v.s —
LetrictQ — th
• cur trade,
of the srcbl
t MB frorr the
Lota :rcur Association rossesc
-
dietri:t~ - -
snoufl districtB
• • -.
experience
1
ting then which cf those
lcces rhere you think the headquarters
ought to
Mr. I
Proa Delaware to
>i&l point of view.
: fhat is c-
l i t , Secretary, cecause v.e
have cur nork located in about 93 c i t i e s , and i t would be
Lffioult t<
te a rreferenc? cf one over ar.cther.
- ry of tha Treasury:
P e l l , I BUB speaking of
- *.ive importance, that is a l l , en account of tl
extant e
Lr ooi
iroial and business r.ctivi* .
:
great oonfl
in the branches a
e cities to su
*
ir civic
f
164
a Secretary :: -'. Tracsur-:
'" 2II, -cu ?&n indicate
s branches ought to te ir. the districts.
.
I 7.ill V
•
cf t
sut .it it
it, ti
ry:
.
,
s "be^t I CE-r..
o that and
^hall be vary glad to have
55
Are there a y* -entlenien here v/ho care to be heard on
I proposition?
TiT so, the committee would "be ve^y
pleased to hear them.
~.
-.^shall*
T h&ve something to say on the subject,
if by chance a l e t t e r which T sent to Vr. Secretary Houston
on Saturday, reached
- ,
.cussi
is preposition.
Tt
was a long l e t t e " c: . : -3 air six pages, and if i t did
reach him T could discuss i t now.
The Secretary of Agriculture:
Mr, "arshal'U
at any t :
•
Yes, I looked that o^er.
T would be glad to ta3k i t over v.: •
ou
! . s (ftimrenient for you.
The Secretary of *
"easury:
Do ; ou want to
testify
or do you j u s t ^ant to have your l e t t e r put in the record?
Mr. ' a r s h & l l :
ould rather you both should have a
chance to look ove~ the l e t t e r a/id see whether you think
se of the ..fitter should be discussed, and in that
case I
'
-'••
iscuss it .
t tc
T would not
ies or the gentlemen
u less
-hoy t h i k I
r'.-••:•' b i c o r s i d e r e d .
I : : ::o-;id
i > i t over a b :
.
: :
3 • a c i ^ ' : I would l i k e to add to
. if i - i s <
-
:.
. - T y of the Treasury:
t o r , v.c c-r. n
Yes. I was going to
r you now or loiter.
y,
Perhaps l a .ter on
w=mt to come b»ck to the 8t«nd, *»nd there nay be
8*.m© questions I v n t to n 3k you, but I ti*mk I w i l l w*it,
Lec^usewe m^y w*nt to cover some other phase of the
ring w i l l ce °djourned now u n t i l to-morrow
*.t ten o ' c l o c k .
( .
ZT., at w.15 o'cloc
adjourned to Tuesday, -
.
. , tae ne«ring
ry 6 t h , 1914, a t 1O:CX) ' . .
@FedFRASER