View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

STENOGRAPHER'S MINUTES

THE RESERVE BANK
ORGANIZATION COMMITTEE

"FEDERAL RESERVE DISTRICT DIVISIONS AND LOCATION
OF FEDERAL RESERVE BANKS AND HEAD OFFICES."

vs.

At
Dale.




Seattle,

Wash.
January

29,

1914

Law Reporting Company, Official Stenographers
1 16 BROADWAY,— NEW YORK
TELEPHONE. 282O RECTOR

B

2c.5O
S e a t t l e , "/ash., January 29, 1014.
iiet pursuant t o adjournment at 9;00 A. u.

THE SECRETARY 0? TEL TREASURY.
TIC SECRETARY Q? AGRICULTURE.
APP2ARAUCES:
Ernest C. Uagner, S e e t t l e , '^ash., appeardnfe for The
Bank oi C a l i f o r n i a .
J. H. Bloedel, S e a t t l e , *7ash., appearing for Bloedel
Donoven Lumber i^llls*
0. L. k i l l a r , S e a t t l e , '/ash., appearing for the
S e a t t l e Business College .
Jamas D. Hoge , S e a t t l e ,

r

/ash., appearing for Barry

Club and others*
Thos. H. Brewer, Spokane, ~.'ash.
h. '..-. Durham, Spokane, wash.
Qordoh C. Cor b a l l y , Spokano , 7ash.
D« !»•• Twohy, Spokane, ; .;a6h., appearing for Spokane t 7t
Sdwin T* Co man, Spokane, ""ash., appearing for the
Sxchange national Bank*




B

2351

Eugene F- v/ilson, Tacoma, vash., and
T». H. Pringle , Tacoma, 7ash. t appearing for the
Tacoma Clearing House.
A. Ii. Titlow, Tacoma, "^ash., and
George Hilton Savage, Tacoma, "Vash. t appearing for
Tacoma Commercial Club and Chamber of Commerce.
?. \u Tinkel, Coeur d'Alane , Idaho,
A. H. H e l l e r , './eisar, Idaho.
T. J. Humbird, Sandpoint, Idaho,
'.7m. Thompson, Lewiston, Idaho, a l l appearing in beh
of Idaho.
Victor A. Eoeder, Bellingham, Vaah., for the
Bellingham National Bank.
Miles C. uoore, './alia '7alla, 7ash. f appearing for
tha Baker Boyer National Bank.
William HcCush, Bellingham, 7/ash., and
C. J. Lord, Olympia, '.Tash., appearing in behalf of
Seattle,

Jash.
F. b . Lusk, Missoula, Mont., appearing for the Fir-

National Bank of Hissoula.
A. 0. Johnson f Helena, Mont., appearing for the
Helena Clearing House Association.




B

2352

Zephin, Job, Butt3, Mont*, appearing for the Butte
National Bank.
David Jf Cliurles, 3utte, Mont., appearing for 3utte
"bankers and Butte Chamber of Commerce.
M. A. .<hite , Hamilton, Mont., appearing for Eamilton
Chamber of Commerce , and Hamilton banks.




2J53

The Secretary oi the Treasury:

Tha Federal Reserve Act

requires t h i s Committee to divide the country into not le
than eight nor more than tv/9lve Federal Reserve M s t r i c t s
and to locate in each one of them the headquarters oi a
Federal Reserve Bank*

In doing this work, the Aot expres

provides that the d i s t r i c t shall be apportioned with due
regard t o the convenience and customary course of business
and shall not necessarily be cotenninuas with any state oi
states.

The problem before the Committee i s , very largely

an economic one, almost wholly so; and v/hat the Committee
seeks are such facts as w i l l enable i t to determine, as
required by the Act, what is the best arrangensnt or what
i s the best division of the country to serve the convanie:.
and customary course of business*
Tha time which the COmnittea has at i t s disposal is
neoessarily limited, and as a great many people want to b.
heard, we have found as we go along that i t is better to
have each of the c i t i e s represented by a certaub number w
may speak for it and represent i t s claim, and that course
w i l l be pursuet?

here.

W are obliged to suggest that ^
e

not oratory that we want, but f a c t s , and we would like to
have the witnesses conittna themselves, so far as practiia




£

aov.^istsr

23 fj/L

to a statement of those things which w i l l be useful to the
Conciittee in learning something about the normal course of
trade and business in thasa respective c i t i e s and in theso
respective

districts.

1 see that Seattle has presented here a l i s t of names of
gentlemen who wista to be heard, and ths f i r s t
the Governor of tte s t a t e , Governor Lister.

on the l i s t 1
Ue shall be

very slad to hear from you, Sovernor.
STATSHDHT

Oi HOG. SRliEST LIoTER, QOVJ^BOH O TIC ST AIL 0.
F

'/ASEIliaTOB.
The Secretary of the Treasury;

Governor, you may proceec"

to make any utat-jznent 3 oo. desira.
?
GOT. l i s t e r :

Secretary LicAdoo and Secretary Houston, I

f e e l sure that 1 ^L echoia5 the unanlnous sentiment of the
people of t h i s particular t e r r i t o r y w ^ n I say that i t i s
thair desire that a regional bank be located i n the northw.
2 p o s s i b l y may cover aore f u l l y the l i n e s of the northwest
r a t i o n a l bank than that of the claims of any particular c i t
and I hope i n i o i n g thEt, that I w i l l not to any degree
depart from the d e s i r e s of t h i s Concittee.
The west welcomes the passage of the Currency B i l l .




Vf
te

B-G

•' •

Gov. l i s t e r

2355

a l s o f o e l that the proper course has "been pursued in
deciding upon a number rather than "but one "bank, one c s n t r a l
bank in preference to the number. And f e e l i n g that way, we
d e s i r e to present the claims of the northwest d i s t r i c t for
the l o c a t i o n of a bank in t h i s d i s t r i c t .
THien T speak of tho no-thsrest d i s t r i c t s , T - e f e r to
four s t a t e s , the S t a t e s of Tdaho,

T

"ontana, Oregon and

7ashiiJgton; and coupled with that combination of s t a t e s
would a l s o be the Territory of Alaska, i f i t decided to take
advantage of t h i s b i l l , "/hich, without doubt, would be the
c a s e . Regardless of t h a t , hovevsr, the "business i n t e r e s t s of
the two d i s t r i c t s are so interr/oven that the advantage would
be g~eat to the d i s t r i c t of Alaska, in our opinion, i f a
bank were located in "his p a r t i c u l a r

district,

I t i s not k.io*'n by some that the P a c i f i c Northwest area
of which T have spoken, covers approximately one-eighth of
the area of "he United S t a t e s .

The d i s t r i c t

Including

Alaska, in rou,jd f i g u r e s , i s . almost Oi:e-fourth of the area.
This information

r

' i l l be given in more d e t a i l e d shape for

the Comiittee to take along with i t for future considera t i o n , so that in the use of f i g u r e s T s h a l l not get doim
to the very c l o s e p o i n t s .



B

Gov, .u3? i j .-•

) t h e i rv.ti.c4.-V" v'-i-u.ii 33 rcr. •: 3 La :>nc 'aucu i n . . r v r

t?V
t'ly

255'

. c - ^ ' i c z i ro * **ir> *t t^c r.cryu.wes"i ie

i« a r-».-j«i*# -^ u"1 t o r i *•••»anc j u riiifc

. ; ' t re .i<.eb + ^ a A ro..ii»nc.rcly

lOoO a'_. »r >••. L' .j-.^i. «.\.v~. w *
"
=
.^twjir

fp

i - i:-iv
<

i'cr i n s t a n c e , aac f'

reasouc t h a t

.' \ . r k -

t r i ; i g t n a t aTJt>ui -

i s slow3r i n \h±s

t h r cities-, or I.<-.~d-u

I1 a.: re aic a nrjutar

«f

r

>i cj"j.-sa. i;.ce ir'.staucc

g r e a t e r be^weari Kana^: C i t ^ 11 i. *^v; .>rk.
service

r.cui.fod i n tae

t v o J?.C.LO i s . j u i t o t'n. \.

r o q u i r e d z-i 1 he minaj. \Lf o^ rai'-. • e t v e . i
City,

oie -fart tr..*.?. i t

.'n *:n. v i t .1 ^ .•. o; r . s a - r l e . i i L T./'orA.

yecrxi ;\:19? '*iri.r-.i;t

h a n d l i n g • ' ! l^r.il

' +

fcrtioulax

"Tt o^-i

ic

fr.-ii.

oviaj'ia.

One m a t t e r t h a t migLt " e eta.;. c.?rjr. i a M.me «-; * on .ntr.
b
.•?
that too, is

the faot

that

froTi tiic ^ n«":^l d . aT e 3.1"! i t s

r o a o h i n g back *cc LT;r "Vork end t h e o t h e r e n t e r s W f? nd a
5
network of raT.iray;
this

point

'I'.-blit- i n ':ur wostorn :.. 1 ...ict

and £*.J T r a r o i s o o , ;.- .:.. .

and tliaT. runnin^ ^ c .r.
taiEca-3
with tn^t

u\e'eric

--

J
I

Jhinl: " hot ^r^
•

•,it;

.n j o a r c c . r i i

ocn b^ vcad:Vly s:eii t y ':he C^;T5iiti.et.

^ at "cli^

;

;lic fcoae'eus. r1 --13 foi tl*- on^uiro

ccast i e g i o ^ r i l b<*?ik ^ovid n:v




au'. C-A 'Line o± :a5.1roa'

ti.i d i s t i n c t tlirougli a moi;.n-

3an P r a n c i s c c l o o t . t i o n es

tha l i n e

rec^en

ax kivji.*-, '.n^ s ^ r v i c j

j. ^
tTat

:

-._ :,r2>; V-CJILW LS i r
c>.c ao.tfcvTect

dictricrc

piHu.
B

- - %6&ir~

Gov. Lister

feols would " e t o i t s "best advantage, and would "best handle
b
the •business of the northwest.
Another po^nt in connection with the location of a northwest regional bank rather than one Pacific Coast bank, and
3 think one t o consider, i s not only the present day conditions, HOA tat aleo the rapid increase that w i l l naturally
In this northwestern district.

Aad to ind^oate to the

Committee that thought, I think w have but to call attention
e
to what has occurred in the past.

The increase in this

great d i s t r i c t has been rapid, and without doubt you w i l l
consider that as one of the elemonts in deciding upon the
districts ta be formed and the lines of those distriats for
regional banks.
Take the entire district that we are now speaking t o ,
it8 population was 2,500,00a approximately in 1910, having
almost doubled since 1900,

3 speak of that to 6how the

development of this particular district»
And another point along that lisa that might Just bring
faro&bly to the minds of the Cocmlttee the rapid development
of the west, is tho fact that just a l i t t l e over 30 years
ago> 2 rairember the c i t y we eis now $p baring a population of
but approximately 4*003 people, known as the "Sawdust town11




Ill I I: I ,

B

Gov. L i s t e r

, l ^ g 1 ^ 4

Z358~^~*

of the Pugat Sound district, and yet today, even under the
canons of 1910, w find a population excluding 237,000
e
people.

That indicates, I think, the growth of the western

country and its development along those lines.
Speaking of the total population of this particular
district 3 a speaking of, the State of 7/ashington has
m
approximately half of that population.

Washington also has

the densest population of any of the Pacific Coast states,
as wili be shown by accurate figures furnisted you for your
consideration

at some future time.

W also can show the
e

largest per oapita of wealth-producing capacity in this
particular district.
In relation to the reasons for the location of a regional
bank in this d i s t r i c t , I might say that cur resources are
of a most varied character.

W have in the entire district
e

approximately 158,000 farms valued at over $1,800,00^,000
aocording to the reports, covering that particular alone.
Of t h i s , one-third is in Washington.
t

3n ten years it has

doubled or has increased the farm valuation two and a half
time8.

The state of Washington nore than maintains flts

proportion of that by snowing a gain of three and a half
time Be The product of this particular district is approxi-




Til

. , •

,,

B

•

rately

Gov. Lister

$190,000,000*

I

«.

|;(

S359

The increase in ten years has been

approximately 194 per cent.

In Washington the produot

amounts in round figures to* $74,000,000, with an increase
£35 per oent in ten years time.
The d i s t r i c t , although the state of Washington is the
most heavily s e t t l e d of the northwest, is "but a sparsely
s e t t l e d d i s t r i c t , yet 2 think the Secretaries w i l l agree
with me that it ie a country of great p o s s i b i l i t i e s and
a country having room for many, many more people than we n
have.
In the matter of other resources we have hire timber
exceeding i n value and quantity that remaining in any othe
part of the United States.

The cut per annum is approxi-

mately seven b i l l i o n f e e t , whioh amounts to approximately
one-sixth of the total lumber out-put of the United State e
Otf t h i s seven b i l l i o n feet the state of Washington cuts
approximately four b i l l i o n , one-tenth of the cut of the
entire United_States.

And in our state is man-afactured

approximately 65 per cent of a l l of the shingles used in t
United St at a s .

»

Ajbrig manufacturing l i n e s we have but a new country ar
yet we are developing rapidly.




B

G y Lister
<w
I might speak of the different

2.360
factories in detail;

however, 3 do not feel that the Committee would care to
have m take up their time in doting that.
o

W do mane

facture everything from the smallsr articles, such as
shoes, up to battle ships, and the United States now has
in i t s navy the Battleship Nebraska, built in the yards
cf this city, 1 think the record of whioh has not been at
a l l a record that would injure the reputation of this
city as a manufacturing point.
3n the matter of possible development of water
power, 1 know there is no d i s t r i c t in the United States of
Creator

p o s s i b i l i t i e s along that lino.

A estinato has
n

been made that there is approximately 12,000,000 potential
horse power that can bo developed in this district* Vo arc
J
developing each year new power propositions, a l l of which
tends to assist along almost every lina of industry. XI a al!
realize that electric power is th9 power that enables communities to develop along manufacturing l i n e s .
In minerals, this d i s t r i c t i s rich in a l l l i n o s , from
coal to geld. The total output in A O was nearly
9 9
#76,000,000. Montana, principally In previous metals and
oopper, amounted to $55,000,000.




B

Gcv. Lister

2361

Another point hot generally known, " y cur own people
b
even, i s the fact that over 55 par cent of the coal mined
on the Pacific Coast is mined within a radius of 1OQ mile*
of the point we are now s i t t i n g , over 55 per ce nt of the
coal» The output of Alaska in gold and copper wes approximately $20,0QasG00.5n the matter of f i s h e r i e s , the state
of Washington and Alaska had an output of approximately
$30,0^0,000 during the l a s t year. The output of the state
of T/ashAngton was "by far the greater proportion of that.
That, in a degree, i s but in i t s infancy.

The state of

Washington has taken and i s continuing to take particular
interest in the davelopnent of i t s fishing industry. Today
we have Z& f i s h hatcheries in oparation under the control
of the s tat a, and the United

States Government also has

some f i s h hatcheries in the s t a t e .

This line is being

improved upon eaoh year and cannot but result in a greater
production of fish from the wators of Puge t Sound and
vioinity.

The pack of the stfcte of Washington in salmon

alone during the year just passed was approximately two
million oases of salmon*
One point, wa beliove, i s in favor of the location of
a regional bark in t h i s d i s t r i c t i s the faot of the handlir




3

G'-.v. l i s t e r

2562

of the foieign ccjimerce. \!Q have here e magnificent "body
»
of

ttater.

The foreign commerce of the Pacific Dorthwcst

exceeds that of t h : state of Caliiornia.

Four-fifths of

the foreign com-e rca of the Pacific Northwest is handled
through Tuget Sound.

The growth has been exceedingly heavy

in t h i s d i s t r i c t , and with the oornplotion of the Panama
Canal without doubt vyill continue to rapidly increase*.
W have running into t h i s particular d i s t r i c t four transe
continental lines of railway e.s a ^ i n s t

on: connecting t h i s

point TAth the state of California, v/i.th San Prancisco in
fiaxx&gthc state of California. The net tonnage of vessels
in foreign trad a on xugot Sound i s second, only t o th-..t of t h
Port 01 Ue\; York.

IhLt -k = r o o r d s v:iil
t<

E.1S<:

shov:t '-axiC i t

will be furn^ihod to you.
The domestic commerc-2 of tha Pacific Coast, I her illy
feel it i s nccossary to go i n t o , as that will be covarod
by others better abl^: t o handle it ti^n I- The Seattle
ti:
Chamber of Commerce and the Clearing House Association of
t h i s oity have prepared ? mE. e r of m^pc that v?ill £ hov; to
• i rb
>r: .
you the oondition from a cup standpoint. Oftentimes a map
C - r . . . i

i ?.".

.-•.'.

•

• • • • • -

••••'•;-'

• • • A

- •

'

:

.

••

•

-

••

very clearly and quickly indicates a point that 15 minutes
innii:
of conversation v?oula hardly 3&l:o clear.




.

.

.

-

'

.

.

-

(

.

.

.

,

•

f

•

IiC'«. 'Ji Q 0 3 i.'

"•

' \ *'

1 " *•"

B

Grov L i s t e r

2o€3

•

There is os* TL.rtioular point 7. desire t c call to your
attjntS.on hue , :\:ic. what is the length of the Coast Line,
bJ£inr»i.ng at tho ncrtharn oour..da~y cf Alaska ani reaching
dov/n t ; the; Rcut horn bounded cf California.
map.)

(Frcducing

I think tho map ehoira thai more clearly than any

voids could express.

Here vrc ha^c tho northern oo-anlary

of Alaska, and I thj.nl: it ie ret nocassary to say that the
ragioaal bank business ci Alaska vjould of necessity bo
handlQd through a Uorthvcst orn bank, if on2 7;ere located ir
tiw ilorthwest. Ejrc we s t c r t in on t h : r.cale mapviith the
cluut l*ne of Alaska.

Vo Ktich h:re tho city of Seattle.
/

Vie go on down and COIL? to tlic southern "border of the stato
of California. Th- point I desire to particularly

call

your attention to is the fact that this shoves tJut ?an
Francisco would tJ located almost on the- extreme scut hern
border of the Pacific Coast -ins3
The bacretary cf ths Treasury;

That is an accurate nap

is it , Gove rnor?
Ciov. Lister: That is en accurate nnp, made up for
this purpose, and it will be furnished you.
The Seoretary oi" the ri1reasil.ry:
Gov. ijiotcr:




Pra^vn to scale?

Drawn to scarce, and the information will

B

Gov. Lister

2.564

be furnished you, giving the miles along the lino. I feel
that p ifldp of ''hi t kV d brings the matter out cl early, and
.
: n
possibly -yotld be o± some value in making your decision on
t h i s point.
In connection with t h i s , and alm-st in conclusion, I
do si re to say that as chief executive of the state of Vashington, fueling that I know i t s resources and i t s business
conditions possibly as well as one could know then, and I
cannot but fsol that the proper location for a regional bank
in the'Northwest district would be in the city of Seattle.
T7hila th2 point might be mado that the city of Seattle i s on
the cntremc west of That txic district would bo,we cannot but
83e that we aro going ^o have a lar^e business from our
northwestern possessions, the territory of Alaska, and that
the commerce of a district is naturally handled at the
aoaport cities.Y/o might take the same position in relation
to tho ciwy of New York. Uew York is the natural point
for handling th3 business of what v/ill be the particular
d i s t r i c t there, being on the coast l i n e . I feel that tho
eame condition exists with relation to the city of Seattle..
That is all that I care to say in relation to the particular
c i t y location. I wantad rather to cover the general




B

.

Gov. .bister

;

• '

2365

proposition.
In connection with this matter, 3 have had correspondence with Governor Strong of Alaska. It was the Governor
intention t o be present at this time, " u he found it woul
bt
be impossible, end 1 de3ire, i f I mxy be aliovzed, to read
a l e t tor at this time, received by myself from Governor
Strong.
The Secretary... of the Treasury:

Yes, you may read the

letter.
Gov.Lister:




The l e t t e r is as follows:

*

Gov L i s t e r

£366

TERRITORY OF ALASKA
Governor's

Office,

Juneau,

January 2 2 , 1 9 1 4 .
-96-

Honorable Ernest

Lister,

Governor 'Vashington,
Olympi a t 7as hingt o n.
Dear Governor:
I r e g r e t e x c e e d i n g l y t h a t I w i l l be unable t o attar,
tho meeting of Governors c a l l e d by y o u f o r January 29th
t o d i s c u s s t h e matter o± r e g i o n a l banks f o r the P a c i f i c
Northwest under t h e new currency law.
R e c e n t l y t h e revenue laws passed by t h e Alaska L e g i s l a t u r e have been i n v a l i d a t e d by t h e C i r c u i t Court of Appeals
and I am c o n f r o n t e d by t h a probable n e o e s s i t y of c a l l i n g
an extra session of the Legislature, and this prevents m
e
from liaving the Territory at this time.
In m opinion one of the regional banks should be
y
located

at Seattle and in this matter I a speaking as an
m

Alaskan and I baliave that on this question I voice the
sentiment of a great majority of the Alaska people. Alaska
necessarily has a deep interest in this question and should




B

Gov. Lister

2357

be givon ciiiRiaerf:tK<n Ar. the application of tho Thanking an
currency lav*,

i " 3sast. 73 T . > c= at of the trade e.u5.
V > v

commerce of J:hQ Territory i s through that port and oa*
norchants, miners and business men generally have close
businaps relations with Seattle.

The trade snd commerce of

Alaska i s inoreasirg ?nd it will continue to increase
indefinitely with the development of tho Territory. Import tant nininp: developments are under v/ay in the

different

geographical soctions; industrial enterprises are increasing
in number; agricultural possibilities ar6 being inquired
into-, and with a hopo for the cpenin^; of the interior ceuntr,
by moans of railroads F.nd wagon

r^ads, together with the

development of our coal mines, a treoandous impetus will be
given to the Territory p s material development along permanent l i n e s .
Tha above otstemonts embody a few of the reasons why
Alaska should be considered in the operation of the currency
Iaw3. and i t i s m belief that Ale ska r s interests in that
y
particular wouii be best subserTod by tho naming of Seattle
as a federal reserve city in view of tha intimate business
relations sustained by tr3 people of tho Territory with
that city*




Coy, Lister

wi'cJi rcnnvtf a r ^ a ranges

£<538

it' r y o c n s i d e r a t i o n ,

T r.rr .

F :i n z& ::e 17 your s ,
(Bignad) J . F . A* S t r o n g .
G-ove m o r .

In addition xo thi^ l e t t e r :1s also a l e t t e r rsccivGd
by the Freservo Bank Qr£an\iP.tlcn CcmiLittee of tb3 Seattle
Cb&nbor of Con?ir?ro6 fx'ou ^o^crnor Strong, and if I night bo
allowed t o , 1 would I4.ke to present that to the CnnLTiJte^
"
?
as one of the oxhiMcn In tir's hearing.
The Secretary oi t'10 Treasury:

Lot both of these be

ice orpcrated in the record, :.£ y^ii lilie y Govcr/io.rQov. juister:

Yes, T sheuid like t o have them so incor-

porated.
(The l e t t o r above ::efer : :. to :.s a^ f e l l a s : )




ii

Jov. l i s t e r

£j$9

TIR7.ITCR', 0: .UASL'.i
Sovernor's O f i i c o ,
June u,

January 22, 1*14.
-96-

The Reserve Bank Organization Committee,
C/o S e a t t l e Chamber oi Commerce,
S e a t t l e , '.ashin^ton.
Sentlamen:
1 beg leevo to cddree. you b r i e f l y , as an Alaska, in
an end^cvor t o point out to you a-few reasons why Alaska
should be considered in the application of the new banking
and currency law.
In a l l i t s r e l a t i o n s with the United States

roper,

f i n a n c i a l l y , economically and p o l i t i c a l l y , Alaska occupies a
p e c u l i a r p o s i t i o n by reason of i t s geographical s i t u a t i o n ,
the immensity of the Territory, i t s d i v e r s i f i e d rj sour c o s ,
and i t s conx^rutivo i s o l a t i o n from tlie outside canters of
trade and commerce.

The wealth produced by the Territory

8Ince i t was acquired by the United S t a t e s , and which has
b:on added to thf.t of the netion, agJ r£ 5ataoK
of milliontj of d o l l a r s .

sevoral hundred

It has -11 bc^n tt.Von from the s o i l

or ths s e a ; notwithstanding a l l d i f f i c u l t i e s which any people



B

Jov. Lister

2o>70

must f^ce in the dcvelopmsnt of a new country, due t o l e g i s lative handicaps, euch as inadequate laws and economic* and
other conditions, the commerce of th» Territory has increased, i s increasing and -.Till continue to increase? with t i
d3vclopment of ths great mineral and other natural resourced
with which i t

abounds-

I t s resources are widely distributed

and their development i s nov; commanding attention in the
difierent {geographical sections or the Territory.
Th3 volume of merchandise shipments, including precious
metals and copper, between i*leislia and the United States
ani between tut

Territory and foreign countries, as ia bhown

by the report 01 tu* jov?*nor oi Alaska lor the fiscal y^ur
l y l ^ , was the 1-r'jost in the history of the Territory.

It

asoaedod the t o t a l oi 1(J12 by v*3,O2c ,01w», the :p:and t o t t l
for the year being ^67,150,57V, as a.^inst ^64,1^2,506 in
1912.

Those figures ire quoted in order to &h v: the
: o.

incr-asing cont-oroe H the Territory and to emphasize the
necessity oi Alaska bein^ given consideration in the applioation of tLe banking and currency law.
needs Xlx benefits tlx.t r i l l

The Territory

be derived from i t s operation

Just £.s much and porh£ ps nore thLn sonic sections of ths
United bt^ViB, for the r^aso^s th-t have oeen briefly




B

^ov.^ister

£.371

sketched or indicated abov».
Alaska is potentially th? richest stor3house of natural
resources in America.

This fact has been demonstrated by

actual pvoupocting and development and i s

confirmed by tha

numerous o f i i o i a l r:rorts of i t s miii3ralogiccl and other
rasourcos for the fast 15 years.

It i s a generally accepted

belief that the entire Territory ia nor entering upon a ne.7
era of devolopment, which \7ill double i t s prosent commercial
business .vithin the next 5 years.

Its mineral output will

be more than doublod within the same period and -Tith the
opening up of the coal f i e l d s to commercial dev^lopmant,
which is confidantly erpjeted, and th^ construction of a
system of ri.ilroade from the coast to the interior,the productive capacity of the inland country v?ill be vastly i n creased by ti-.e opening to development of no~: regions tributary the rot o. If thjn it be admitted that Alaska i s a vast
8torjhou8a of these natural resources .v/hich the rest of the
V7orld neodu and demands, i t saernc t o n e tlict present and
future re^uirementa of the Territory a u such as to deserve
your serious attention to the end th<-t the Territory and i t s
pooplo shell not be da rived of the advantages which they




3

Oov i,igt cr

believe will

ZolZ

accrac i'rom the operation of the new banking

and currency lav?.
Permit m iurther t o point out for your consideration in
o
viov? of tha close butincos relations axistinc between Alaska
and the c i t y of Seattle (as indicated by the volume! of commercial end other business trimsacted annually),th?

selection

of thiit c i t y as a federal rjserve center w-buld best sorts

all

parts of Alaska.
2 hc.vc the honor t o b:, T«ntl3men,
R3bfecti\illy yours,
(Signed)

J.I'.A.Stron^,
Jove *n rss*

In addition to thf.t, 1 h; v. l . t t . r s

frcn aovJi-nors

Hoynes and ".eat, oi Oragon, indicatiur th t Titey pvrsonully
favor the iJoi-thwest Regional 3anlc I \anx t o make that clear.
The Sco. o;ary of the Treasury:
Oov iiiuter:

A i:ortfa7jst B^gionsl 3ank?

A tfort h-.vctst Hegionui Bank.

1 ~t?.nt t o nakc

th..t position clut.r, and I think the Conoaittoe understands
it.




B

Oov. Lister

2J7o

The Secretary oi tiu Treasury:

They did not name the

city?
uov. Li6ter:

Hot naming the c i t y .

2 might, in conclusion, say t h i s :

In this

connection

I have talked with a

lar.se number ol thJ state banicrs of the Stato 02 "ashington. those i: ho ero ope rs/cicg hinke under the State Laws.
f
T w b&nk-jrti operating s~,,\,~ sun?s take just axactly the b
h
&
interest in t h i s me£surj theft i s taken by those operating
national b?.nls, anc\ there is no doubt in m mind but that
y
thot,j bents and bunkers will t&u-c &dvgntage of the opportunity to become ounberu <i ch« Hagionsk Rassrva 3ank to
the same ortont as \7ill tiic national bankers ?f this d i s trict.
The So ore t ury of Agriculture:

DOSL

ths law permit them

aft pr^udnt to subacribj?
Gnv.juiBtw»r:

In 'elation to that CuC'-c r, there it a clos

question in tlu lc*'1 of this state , as \u the- caae cf other
s t a t e s , & I undw.ratand i t . I mi;;ht add to -cl^t, a ;;d VJT ,
a
O
that the State B-inl- Sramincrof

the state of ".asa-'.r^t^s

Tiouli r t i s c no objection •# hat a vc r t o th3 scrtc
•

Danl.s hold-

ing Hebjrvo Bant ctockjanu in taking th^t posit ion,tho ?ta*
^acL ^:amincr would do it knowing thdt it had my ho arty




divio<^r-? , ; •.•.;. ;;

. ; ;.; ^

-c~ as fully as that njxt^r

ca

be ^ .. /? i cd.
Til. f.ocrsckry

> t h i Treasury: la the Stdtc 3anl: Zizdzine
i

hvr;, Jov. Bnor. the authority to \7hich such e question uou!
bo referred?
-:ov jui3tcr:

ijL .

The Saordt-ry ox ti;-j T r ; a u i i y

And hit decision r/culo b:

final?
lister:

VO .
T V

His l i o i s i " n would b^: i'in.d.
»

Ik. Soor^tcxy of t h : Treasury:

Ilae |je ^iven £.ny official

axpr.*ssion oi opinion yet on t:.&t?
^ov. ^ i s t ? r : H has not
?
2 h-x;

t

v7iv^n

t h i t out

:r might say th.it

horever, ouch an enprcci^n frcm him, given m;

shortly beforj leaving Olynpia on thic trj.j . H ifc in t;.3
«
c i t y , i i th€ Coccixtce dueiro to hi ~x i rom hin, and I
would bo very glad indJ^d t o iiavw the Corxiittc^ ask that
tueetion of h i e
2he &.<orct&ry oi tto Treasury.

I

ould thini. i t v.culd be

nocosrary for him, i^rhtps, to -.ivs some cffici&l
ion for the 5U*<l';nce
Gov. i*ibt:r:

Of

thj e t a t 3 bt\nhs.

U Btan:.8 rs^dy to Co it
e

The becr^tary o^ the Treasury:




ozjr-jss-

JX toy line .

Ti*?y v-ou^-d naturtJ.ly want

3

aov. dieter

:

*

'

2^75
( ' •

that before taking any action.
Gov. Lister:

The position is t h i s , that i f any amendment

is necessary to our law to make the natter more clear f th6r.
i s not any question that at the first session of the Legislature to be held that matter v/ould be so amended.
The Secretary of the Treasury:
Gov. Lister;

When i s the next session?

In January of the coming year. That i s

about a l l , gentleman.
The Sec. atary of the Treasury:
Governor,

JQ thank you very much,

\7ill you be good enough to s i t with us hero?
/

V/e should be very glad to have you hear the evidence.
Gov. Lister:

Thanl; you, I will* Do you want to h?ar the

Bank Examiner nov on that one point? Ea has just come in.
The Secretary of the Treasury:

Hay 3 ask, M Backus, are
r

you dize cting the program for Seattle?
kr Backus:

I a s Chairman of tha CoHcittee, but we have

no e ot program.
The Secretary oi the Treasury:

3 Snean \7ho i s

controlling

or suggesting the <urran^ment of tlx.e witnesses?
lir Backus:

W made up s l i t t l e l i s t , and I think i t
e

v?ao handed to you.




j.

-

The Secretary cf the Treasury:

I s t h i s the order in

which yciz wish us t o hear the of?
Mr Eackus:

Yes.

The Secretary of the Treasury:

Hr Behrends, of Juneau,

i s hare on the l i s t . I s e e , and we w i l l hear f r o n him now.

STATELuSNT O B. M, BIER21IDS.
F
The Secretary of tha Treasury:

Mr Behrends, w i l l you

state your f u l l name, and occupation and residence?
Mr Behrendc:
mar chant." * •. " •
•

B. LI. Behrends, Juneau, Alaska, Banker and
' • '

The S e c r e t a r y of tha Treasury:

Will you speak louder so

that the audience? can hear you.
Mr Behrends:
I can.

3 am not an orator, tut I w i l l do the "best

My remarks w i l l bo very b r i e f .

I have l i v e d i n

Alaska and hav« nado i t my horns, vanter and summer, since
1887, during which time I am s a t i s f i e d that 75 per cent

of

the b u s i n e s s t r a n s a c t e d i n our country has been done vvith
so
Seattle.
I t i s geographically l o c a t e d / a s to make i t
t r i b u t a r y to our great country.
Seattle

For i n s t a n c e , we have from

t o Alaska, I think, 26 steamboats i n the y e a r , t h a t

i s operating a l l the t i m e , most of which make tv;o t r i p s per




B

B. K. Bahrends.
2377

month.

An Alaska b enter Cc. n have r e p l i e s and havo his

receipt on return r.tearoer —
The Secretary cf the Treasury:

How long dees it tska by

f a s t 8taame& from Seattle t o June an?
Mr Bahrends:

About three days,£:£om three t o three and a

h a l f ; so that on the ten day schodule, these boats going
on a tan day schedule , YJQ can have our returns by return
mail.
Another matter i s the oa"ble.

Y/e f:^nd that i f v;e need

money, that i s , naed gold, and i t i s two o'clock ^n the
afternoon, we can cable that same day t o Seattle to send us
on that boat leaving that evening such an amount of money awe may want.

The sano thing holds true i n every respect in

commerce betiwen S e a t t l e and our great country of Alaska.
I could give hundreds of reasons, perhars, but I wish t o ma*,
my statement b r i e f .

Governor Strong, whose l e t t e r I

have heard raad, has s t a t e d it aboutn

as it i s , as an old

resident of that count ry .
Tba Secretary of Agriculture:

How many points i n Alaska

are there from which the trade comes to t h i s country?




Mr Behrends;

Oh, I think from eve ry point i n Alaska.

B

B. Ii. Behrends.

2*J78

I do not know i f any point that docs not. Taks Home, 1'or
instance , it has direct steamer service every sunnar, and
there is no other city in the Unitod States ^hich has any
steamer service to tht-.t particular place.
The Secretary of the Treasury-.

You scan Seattle is the

only one which hac steamship connection?
ur Bohrjnds:

It has the only direct staariiship connection

v/ith a l l these places.

I think there is a flaet of stcarars

Operating out of San Francisco, but they bo long to the
Alaska Packers Association, and they are their ovrn steanors,
but u l l other steamship lines leave Seattle for Alaska.
The Secretary o± the Treasury:

Your point is that the

bulk of the Alaska trade a l l focuses on Seattle, in this
c ouct ry?
iir Bchr^nds:

Zr.actly.

The Secretary of the Treasury:

And very l i t t l e

of it goes

clsc\7h:re.
ILr Bchrcnds:

Very l i t t l e

of i t gots clsev;horc.

The Secretary oi th. Treasury: That is all", thank you,
itr Buhrcnds.




i*r Backus, vc vrill hear from you-i5cl^.

S7

B

M. P. Baciius.

2J79

STJimiDNT OF H. F- BACKUS.
The Secretary of the Treasury:

Ur Baclrus, you may state

your f u l l nane, and occupation.
kr Backus:

li. F. Backus; president, national Bank of

Comaerca, S o a t t l s .
lir Secretary, I would say that the Governor hac —
Th. Secretary of Agriculture:

Pardon nc ,. "but have you a

map t h s t you ere going to present?
lar Backus:

I uas 30 ing to c a l l a t t e n t i o n to that map, but

not £ s representing the d i s t r i c t that v/c expected t o cover.
The Secretary of the Treasury:

Have you a nap of tha

d i s t r i c t you propose?
*-r Backus:

I have no spue i s 1 rcep of i t prep are d r but I

would say that uc o^pects i to ask that Oregon, "ashington,
Idaho and Uontana be included i n the d i s t r i c t .
The Socretary of the Treasury:
iir Bdckuc
i*r Backus:

I see.

You can procoed,

You liner: the problem confronting us?
I h^v* prepared a staternent, Mr Secretary,

but Governor L i s t e r has so f u l l y COTC red the subject that
thdrc i? r e a l l y l i t t l e l e f t . This chart v/ould show v/hat V e
7
expected t o include i n tho d i s t r i c t ; those four s t a t e s are
what we had hoped might be included.




B

11. r. Backus

2380

The Secretary ol the Treasury:

And you address your

argument to that district?
hr Backus:

Yes.

Uov7, as you your sol f stated this

morning, the d i s t r i c t s shall be apportioned with due regard
to the convenience and customary course of "business.
It is our contention that e. district for a Federal
Reserve Banl: should be created in the Ilorthv/cst, be-cause i f
the entire Pacific Coast country from British Coluabift to
llexico v/cr: included in on: district it would not be "an
apportionment ~ith due regard to convenience and the customary course of business".

This jtatein.nt v/ould be true

w 7 n i- no consideration whatever v/ere ~iven to Alaska. And
"c
although Ala si-a is excluded from the territory to b3 d i s tricted, it comprises an empire cc^ual in size to about onef i f t h of a l l the states of the Union.

And to direct your

attention graphically t o tho magnitude of that d i s t r i c t , I
would say that tho oncyclopedia shov® that i f th" entire
population of uhe world, every nan, wooan and child on the
face of the globe were ftercdod into Alaska, there ..ould bo
less than five to an acre.

w feel that that great
e

country should be considered in establishing a d i s t r i c t ,
i t s noeds,




and the needs of the people and business houses
.

\

^--^_ ^ . B

•

_

M. ?. Backr.s

.

•

•

2381

and barks dealing with that t e r r i t o r y
Tranppcr^-8iLxoij_Xac3LXit.ia^ jshOTiJil a l s o " o c o n s i d e r e d .
b

Rapid and easy communication with a l l partc cf the. d i s t r i c t
are one of the re a I re neat s set forth by the Conuitteo.
m

As

a previGuo witnass has just t e s t i f i e d , a l l the steamship
l i n e s , with tho exception of the steamers operated by cng
privcte corporation, ccna t c Pi^-et S^und.

And the general

mov3nent of coTnciOdit i e s , bv.riness transactions and transfer

.

of funds and exchangeB of credits with that country mist bo
taken into cotisideration.
All of the naila pcing t o Alaska are forwarded frczi
Seattle-

75 per cant of the Commerce of ^las^a centers

hare en Puget Sound#

And I think right here it might be

woU t o say to the Conmittoe that we treat Puget Sound as
one great harbor, of which Soeittle e.nd Taccica may bo conBidored tho centra,

^nd Taooraa bains only 2S miles av:ay

from us, and boing in parfoot ecoord with. U3 in tho dasixe to
have a norttx7ost d:l3trict crafted, and TC have the Federal
I
Roserve Bank located a t SeaW.e, we have in a few instances
coneoliactad the figures of £ecoma and F>eatt?.e in prsparing
our s t a t i s t i c s , be^a*a?.e they axo v.Utaally one c i t y .

The

same might be said elao cf a?.jirpia and cf Evarett £jad of




B

M. P. . ^ ! : ^

Bellir^b/siah-

2382

Al'x i-h:?3'< j.l-i-e.? --a I^gst Sound are centred

about r c a t t l e , a?x. a'i'.'. c.f thern T?ithou. u ozoeption ore anxious
t o have the a 1st.riot c r e a t e , and t c have the bank loss.ted
at S~?.ttlo. eltkr/rcgh v< h°vc r.ofc added anv of the figures of
?»
an;: out of t oni ;;3.ac? iL tr.y ii^tenoj except those of
Tecoma*
Ir » , w ? f oen. t tat c oDT-: r.ie :icc a^C " ha CUE t onary o= iirs 3
Iw
t
c
of business nragt. " ;
N

CCDUIA:

red :ic5:« -^j tL .v^fororxfl to the

groat ejid const art 17 >.ncref.si:^^ coaascrco r.'ith the Orient,
and in that connecti.on tho i n t a r n a t i o n a l scope of those
T he 3 s4: a"bli s he d clist c a cd t r 2 nd
m

Po do real Ro se rv«? 2*u lie •

of businoss i n t h i s regard ic fiiiOT;n " y the faot that more
b
mail for Oriental countries i s dis pat chad fron th3 post
office

of Soattla

'i,har. from a-iy otlio r c i t y or post

on the Pacific Coast, i n d u e Inc ^a^ zrrainJs 00 ,

office

Why?

Because the d i ^ t i n c e , ut»asu.rel oitho:: i*3 railGB cr horrs, ^s
l e s c , and the freqacnty of sorrico ip jrai^ter.

This sliov/s

tha trend of the e stp.LliBh-sd o.^nner.s of ousiness.
The Secretary of the Treaffii*^:

H w *nany steamship lines
e

are operating from •• eatt?.e to t b : 'irien'!;?
Mr Baclms:

I canrxt

t h i s , there are f i f t y




4
V

va you tho number, "but I can say

eight

kvu-;..^hip

lines operating from

B

'

&* i\ Backus

236o

t h i s pcrc of iVrttlc alone, and they include such lines as
tho Royal I^ail, Inc Hamburg-American, the llippon Yuscn
Keisha, the Ocean Steamship Company, th3 Osaka Shosen
Kaisha, the American-Hawaiian, the Great Uorthorn, the
Bluo Funnel, the Kosmos, the Harrison and East Asiatic
companies,

liony of the so companies have established their

shipping offices for the entire Pacific Coast in Seattle.
Liany of these steamers operacc not only to the Orient "but
down tho coast of South America to Europe, and practically
to all points of the v.orld, to say nothing of the tramp
steaners that cone here.

H077, it certainly could not bs

said to conserve t h : interests of these s r £ et steamship
linos and their pstrons, not only her: but all over the
"i7orld» to locate one Paderal Reserve Bank on this coast, and
that 1000 milo3 av/ay frcm their headquarters.

That is our

feeling.
Dow then, V,Q have noxt to consider the increase :'.n
oozane roa \:ith 3 r i t i s h Columbia, which is a v^ ry large factor
It c.-rtainly ^ould not suit their convenience t o have 000
bank located at San Prabcisco, and attempt to transfer the
business transacted uith Vancouver ana. V-'.ctcr-'.a and ?r5,-aoc
Rupert right ovor Soettlc to San Trancisco.




It

S>?::.E

to us

B

K. F. 3ackus

• 238^- -

that ear>h a tir'rt.r would be absurd.
And I wiqh to

C UH
O T

ct Gorernor Lister~in one respect:

H Edld there were icur trans-continental roads operating
e
into Seattle et gToeent.

3 call attention to the fact that

there are five, tnojuiing the Canadian Pacific, which not
only operates trains "but a line of stsamors also Into
Seattle, caking ths f i f t h trans-continaiital l i n e , taken with
the Great Northern, E or them Pacific, Chicago. Milwaukee &
St. Pa'il end the Unicn pacific, or the Oregon-Washington
Railroad & navigation Company.

2OYJ5

the Grand frur& Pacific

and the Canadian UorthcrL ara oxpantad t o complete their
line8 during this year.

Tho Grand Trunk Pacif53 is alno

already operating -ts l* Q of staaiaars botnocn Prince "Rupert
fD
and Seattle , e.xA of coarse the vo3ums of "business v;itli
Briti3h Coluntia Trill vastly increase as soon as these tv;o
now trans-continental lines connect up with thair Trsatern
terminal.

?hat busiuoss aust be taksn into considera-lor;.

T

. e feel also that th^t is certain t o grow, not only on
V

ROCOUU-

of the added transportation f a c i l i t i e s s but because of the
recent reduction in tariff
having an effect
and Pugat Sov-nd.




r a t e s , which i s already

on the commerce between British Oclir^ria

V.

ii. F. Backuc

£.385

This, v 2 think, shows rhat you a-skod f o r , <he_^crtablish0d
*
custon and trend of business.

It cones here to Puget Sound

and 30c s f:~om lie re to British Columbia.
The Secretary of the Treasury:

If that i s a l l you have to

eay on the trjnd 01 business in the suggested d i s t r i c t , lap
Backus, 1 vould like to ask you e few questions nov; \. ith
respect t o other portions of i t vihichyou have not touched.
If yoiir argurrnt i s going t o take i n th? trend of business
in Montana, Idaho and Oregon, then I shall defer the cues- •
t i o n s u n t i l you f i n i s h .
ILx Baokus:

1 v:ill be very glad t o answer such questions

as I can.
Thj Socretary of the Treasury:
up with you now.
district?

Or I would lik? t o take i t

?7hcre does the business go through this

Lot us take iiontana, for exanple; whore i s the

natural trend of business thoro, i s i t eastward or wost.v^e?
Up Backus:

I suppose most of it v:ould go castvjai-d from

Montana.
The Secretary of the TrcaauT-y:

To what c i t i e s -.;ovjd c'-pt

go?
UP Backus:

2 fancy Hitoneapolis ard St PauL lsrgojy.

Tho Soorstary of the Treasury:




And the c oar so of oxehan,r£

B

k. I1. Backus

'

2386

i s that way a l s o , bank:\ng exchange?
kr Backus:

I suppose eo, because tha prodicts of Montana

are mostly sold in the e a s t .
The Sooretary of the Treasury:

They are mostly marketed

i n the east?
ilr Bee Iras:

Yes.

The Secretary of the Treasury:
Mr Backus:

Eow about Idaho?

That i s eold t o e l e s s e r extent, I should s a y ,

of Idaho. I do not mean t o s t y that there i s not a large
oonmeroe a l s o coning westward from those two s t a t e s .

There

i s , and bank accounts ara kept here in S e a t t l e ; we have account
both in Idaho and L-ontana;

but I should s a y the majority

of the business of Montana would nat-irally go a a s t .
The Secretary of the Treasury:
Mr Backus:

H *f about Idaho?
ot

To a l o s s e x t e n t , that would be t r u e . 7}-..c

bus inass of Southern Iclaho would probably more 7arg3l7 go
to Portland than t o S e a t t l e , becauoe tha r a i l connection •>.,,
better.
Tte So^rpt^.ry of. the Tivarur^:

Aivl t s ! ^ O-rcrr.n Vi.-jRlf.,

would the natural o-^rrsa of business tfcroughent Om^n

fi^w

towards S e a t t l e or J:^> I c ^ i a n f ?
Mr Baolnz:




l^tur-ally, I shored s a y , the majority of I-ho

ill

B

fcu

j?. Backus

I :

^ &^P

business of Oregon would go t o Portland. It i s the onlygreat c i t y in that s t a t e ,

Our business, of c o u r s e , i e divided

among three c i t i e s , Tacocaa, Seattle and Spokane.
The Secretary of the Treasury:

How, you spoke of tte bank

balances or bank accounts which are kept here in S e a t t l e .
Seettle is a reserve city?
lir Backus:

Yes.

v '

The Secretary of the Treasury:

What inducement do you

hold out for these acoounts; what interest rate do you allow
on bank ba?-ances?
M Backus:
x

Two per cent.

The Secretary of the Treasury:
ions^f
M Backus:
r

H w about check c o l l e c t o
-

W charge in almost every case en the
o

c:l]action

of checks .
The Secretary of the Treasury:
Mr Bac kus :

You do charge?

Ye s s ir .

The Secretary of the Treasury:

There is no free chec^

colle ctior/*5
Mr Backus:

Ho sir*.

K would qualify tbat 3tat9moia^ fco

t h i s extant, that whora b rf * koep balances with +hc Vanl«
p -c ?
of S e a t t l e , nal-lns ths aocouut a valuable one at ill,




"•

B

Li. jo. Backus

Eobd

u s u a l l y accept t h e i r out of town ctecks a t par.

In a great

many instances we charge the banks with the actual cost to
o u r s e l v e s , "but wherever we are able t o c o l l e c t at par wo
credit our correspondent at par.
The Secretary of the Treasury:

To what extent do S e a t t l e

banks hold the reserves of Ilontana banks?
kr Backus:

I am unable t o ansv?er t h a t .

The Secretary of the Treasury: Have you any data at a l l ?
I suppose you could furnish us vzith a statement showing how
many of the Montana banks keep thoir reserves here?
Mr Backus:

I do not think any statement of that kind

has been prepared.
Tha Secretary of the Treasury:

I t could be, I suppose,

without much d i f f i c u l t y ?
Mr Backus:

I suppose we could get at that approximately.

The Secretary of the Treasury:

I should be glad i f you

would have that done and submit i t t o the Committee. Hew,
take the same thing with respect t o Idaho, how many cf the
Idaho banks keep reserves ^n-Seettle?

I am speaki^s cf

national banks now.
Mr Backus:

I could not answer you.

The Secretary of the Treasury:




And Oregon?

B

-.

• M. P. Backus

hr 3aclrcs:

"

2.389

Or t h a t . I know that we a l l have, that is

a l l the larger national banks at l e a s t , have a good many
accounts from Oregon and a less number probably from Idaho,
and a s t i l l loss number fron Montana, but we a l l have
accounts•
The Secretary of the Treasury:

I should like you t o give

the Committee a statement showing what amount of balances
are kept here by the "banks of these three s t a t e s , Montana,
Idaho and Oregon, national banks, showing just h w they
o
distribute

it.

Mr Backus:

Mr Latins r is going to come on a l i t t l e

l a t o r , and I think he can give you some information on that
subject.
Tte Secretary of the Treasury;

If you have any witness

who i s informed on t h i s point, I will take it up l a t e r .
idr Backus:

That censs mere within th3 scope of whs.t he

was to spsak of, but I do not know what data he has aocumulated.

'

**

The Secretary of the Treasury;

XIh$r<* do the Ssattls

v

&ck3

keep t h e i r reserves?
Mr BaoVa3:

Chiofly in Esw Ycrk and Chicago.

The Secretary of. the Treasury:




And how do you dlvi^a

\t?

v

G •
vr« E a c k u s :

. P. Eackus

2390

o f c o u r s e , sone i n S t . L o u i s .

The Secretary of the Treasury:

What percentage of the

reserves i s kept in Chicago?
vr.

Backus:

.

T could only give an estimate of that.

Judging from m own business, T should say that probably 60
y
per cent of the reserves are kept in Uew York, perhaps 30 pe
cent in Chicago, and 10 per cent in St. Louis.
The Secretary of the Treasury:

'Vhat i s the norrjal course

of exchange in business as betv^een Seattle an d other parts
of the country?

Tt

i s mostly in v/hat direction, the bulk

of your exchange a.id business transactions from this t e r r i tory here, vhere do they go.
Vr.

Eackus:

It i s east and west.

The Secretary of the Treasury:

Ts it more with *'inr:eapoli

and St. Paul, for instance, than with Chicago?
•**!*• Eackus:

lJo, more with Chicago,

The Secretary of the Treaairy:

And more with Chicago than

with ^ew York City?
*rr.

Eackus:

" o, more with > e York City,
<w

The Sec- etary of the Treasury:
exchanges*
Mr. Backus:




Yes.

You are speaking of bankin,

G

M F, Backus
.
The Secretary of the Treasury:

2-591
T an speaking of "business

and conire:-c£»
Kr» Backus: 0h ; pardon me; T diould cay more with Chicago.
The Secretary of the Treasury:

More with Chicago.

T a
m

speaking of a31 sorts of commodities, "both those "brought in
and those sent out.
Mr. EackuE: You are speaking of shipments of goods?
The Secretary of the Treasury:

yes,

a

^-l character of

product and ccnrnoditj:os; ±3 i t more with Chicago than any
other city?
Kr. Eackus* Measured in dollars and cent3. or in carloads'1
The Secretary of the Treasury:

Well, T should eay in

value, of course.
Mr. Backas^ T should say Chicago. Minneapolis &xA St.
Louis also have a very

large business with us, "because they

are groat "buyers of lumber there- T ne f i s h products are roany
of them sent around oy v e s s e l , and they ran into money pret\
f a s t and they would in that case, cf course, go through Uev/
York either to Chicago or Minneapolis ; and some to Charlestc
The Secretary of tho Treasury: Considering "bank exchange,
you say that your exchanges are more with UPW York than wit}.
Chicago?




<
*

J\ P. Backus
iir. Eackus:

2392

Yes, s i r .

The Secretary of the Treasury:

^ e l l , that would seen to

"be i l l o g i c a l , would i t not, if the larger amount of trade
and intercourse i s with Chicago tha.: with >e York?
iw
»'r. Eackus^

Yes, sir*.

The Secretary of the Treasury:

formally your exchange

would follow the course of business.

H w do you account
o

for the larger amount of exchange in *'ew York, l-'r. "Eackus?
}£r. Eackus:

Partly " y the very thing that this "bill is
b

intended to correct,

?

Y , Secretary; the fact that w can
e

use our money in " e? Yor1: to some better advantage than we
Mx
can in Chicago.
The Secretary of the T r easury :

Exactly.

j ^ i s an

a r t i f i c i a l condition as i t no'v exists.
*fr. Eackus:

That is t^ue.

The Secretary of the Treasury:

Tn v iew of the fact that

under this b i l l , after the establishment of these barks
there ".'ill be a parring of exchange between the different
Federal Reserve Eanks and you w i l l not find the same necessity for having *'sw Yorkexchange as you -:o^ have - - and
T am taking another phase of the question no1.?— for instance
suppose a Regional Bank were established here in Seattle;




0

.

ir

.

7 . Eackus
T

2393

Seattle exchange would pass at par everywhere in the country
Mr. Backus*

T realize i t .

The Secretary of the Treasury:

Just exactly as '-ew York

exchange does now, a :d sometimes it commands a premium.

Do

you rot think that w i l l be a tremendous corrective of this
a r t i f i c i a l oo idition?
}fr. Backus:

I do; y e s , sir*

The Secretary of the Treasury:

And that i t -rill tend to

re-establish a normality of conditionsas between these
different sections of the cou try, in the matter of exchanged
Mr. Backus:

Undoubtedly.

The Secretary of the Treasury:

.' "v
It will not be necessary,

when that happens, to keep exchange balances in " e ; York
Nv
or Chicago, or these other central reserve c i t i e s to the
extent that you do now.
Mr. Backus:

T suppose we may keep 10 or 15 per cent as

much in " e York asve do nov:.
Mw
The Secretary of the Treasury:

Suppose, on the other ha-id

you have a system of clearances between these banks by "/hich
there i s a settlement of daily balances; you would riot find
the same necessity for keeping large exchange balaces somevhere e l s e , would you?




G

U. F. Backus
Mr. Backus:

" i.
No

,

2594

.

.

The Secretary of the Treasury:

Transfers would be

effectuated quickly, and to that extent there would be a

"

correctivo of another a r t i f i c i a l condition that obtains now.
Mr. Backus: The advantages are very patent and numerous.
The Secretary of the Treasury: When i t comes down to the
r e l a t i o n s between Seattle and San -orancisco, to what extent
have you intimata commercial and financial relations -with
San Francisco?
Mr. Eackus: To what extent?
age of business and - -

Does that mean the percent; *v

' .

' *

The Secretary of t h e Treasury: Tn a general way, T would ••
l i k e to get an idea of the extent of your business relationsMr. Backus: Oh, we have intimate relations and transact
considerable business with San Francisco o T would say that
25 years ago 75 per cent of a l l the business of the western
s t a t e s here, the Pacific Coast s t a t e s , you might say, was
transacted with San Francisco,

T venture at the present

time i t would not amount to 10 per cent.

The tendency has

been j u s t the other way, because 25 years ago t h i s was a
l i t t l e unimportant city and San Francisco commanded the
e n t i r e trade of the Pacific Coast, except




that held by

ff

M. Po Eackus

2395

•

Po~tland, and Portland prstty n e a i l y dominated OregDn and
"'ashington in the natte* of trade, of s e l l i n g goods, a.-jd
S e a t t l e at that time amounted to nothing.
The Secretary of the Treasury:

iflow, Mr. Backus, with your

knowledge of the course of "business, and of exchange, in
so f a r as exchanges r e f l e c t the normal course of business,
and t r e a t i n g i t in that l i g h t , and a l s o dismissing a l l
considerations of l o c a l pride ar p r e s t i g e , a*:d looking at
t h i s problem s o l e l y from the standpoint of the cammo:. and
general i n t e r e s t in the establishment here of an i n t e r r e l a t e d cystem which v / i l l serve in the highest degree the
purpose for which t h i s a c t was passed; and assuming again
that a headquarters bank was not established in S e a t t l e ,
what would bo S e a t t l e ' s second choice for the location of a
Federal Reserve Eank; what would best serve the course of
business and exchange here of any c i t y in the country, that
i s within s t r i k i n g distan ce of S e a t t l e .

...

Mr. Eackus: That i s very d i f f i c u l t for me to answer.
The Secretary of the Treasury:

Would i t be Mtnn-

e a p o l i s - S t . Paul?
Mr. Backus:

I had r.o second choice —

The Secretary of the Treasury:




Eut we must have second

G

la. F. Backus

2396

choices , because \3re. i j ^ problem, which, has t u be corj-sfidere
in the light yl ffio&E,

Vm if Seattle did not have R head-

quarters bank of i t s own and had to "be cor.-nee ted with a
Federal Reserve Eank located in some other accessible? c i t y ,
which v:ould be the best city in this country, dismissing
Seattle for the moment, with which you could be connected?
What would best suit the convenience of business and the
customary course of t*-ade and exchange?
Mr. Backus:

Tf we had r.one located in the "-orthwest?

The Secretary of the Treasury:
Mr. Backus*.

yes,

'

In that case. San IVancisco«

The Secretary of the Treasury:

SE.II

SVe-ncisco would be

best?
Mr. Backus:

Eecause i t i3 within easier reach, the time

i s much shorter than i t would be to any ether placo*
The Secretary of the Treasury:

i t would be shorter than

to Minneapolis and St. Paul, for instance?
Mr. Backus:

Yes.

The Secretary of the Treasury:

H w much shorter?
o

MT. Backus: Ch, the mail service to Minneapolis is about
three days, and to San yrancisco practically two days.
The Secretary of the Treasury: You know, I!r. Eackus, that




G

IL I\ Eackv.s

259?

/
the "bill -•enui-es, th~. ^edeval Reserve Eanks to locate tranche
in theee Cr'f c.~\:.< iii: trices?
vr* Baokus:

Yes, s i r .

The Secretary of the Treasury: And that wherever the main
office of the "bank might be, assuming that you had a "branch
in Seattle, you vould, of course, get a l l the f a c i l i t i e s
of the headquarters "baiik*
^•r. Backus:

T do not agree

r

ith you, ~"r* Secretary.

The Secretary of the Treasury:
Hr# Backus:

W y not?
h

I have had a good deal of experience, and T

have never yet known a "branch that could give the service
that the parent bank did,

Further than that, if you will

pardon me, T "believe i t is the iiitent of this "bill to create
s t a b i l i t y . " o the importance of this Northwest d i s t r i c t
Mw
i s so rapidly growing that

i t must be necessary to have a

bank here within a few years, if not immediately.

>o —
=w

The Secretary of the Treasury: Let m explain one feature
e
of the b i l l before you proceed, in order that you may understand t h i s point.

Tf a Federal Reserve Eank wero located

at Seattle, coniprising the territory you have suggested,
the Act then requires that the banks in this d i s t r i c t

shall

be divided into three classes according to capitalization,




0

jr. Fo Backus

:

2398

and that e&.ch of t h ^ a classes sha 11 -select tv/o directors,
which would ->y>.k(-> DIM di-ectcrtj of the Reserve Bank, Those
six directors so chosen would necessarily represent
district.

this

They would not a l l be Seattle men,necessarily;

thoy would be scattered over the d i s t r i c t , a:id be from
Montana, Tdaho, Oregon and Washington; so that you would not
have a distinctively local Eoard operating the headquarters
bank here.

In addition to those six the Government, through

the Federal Reserve Eoard, choses three more, which makes
nine*

^OTT on the other hand, if the headquarters bank rrere

somewhsre else and the directors vrould " e chosen, three by
b
the Federal Reserve Board and four by the Reserve Bank of the
district, necessarily the brar.ch would have a smaller
sphere of influence. T mean to say i t would be more localized,
"because at Seattle, for instance, i t would have attached to
i t the banks within this immediate locality; and the directors
.jrould, therefore, be more local in character an d v/ould k/:o^
more about the l o c a l needs, and therefore you would get more
of a local administration through a branch than you would
through the headquarters bank i t s e l f .

T am merely explaining

t h i s that you may understand the scops and purpose of the
Act.




1

•

• »

G

M P, Backus
.
Mr, Backus:

2399

T follow you.

The Secretary of the Treasury:

^ow, necessarily on the

"broad questions of policy, the headquarters "bank would
prevail; "but upon the pu~ely local discounts and matters
v.'hich came ordinarily and customarily "before the local Eoarc
for attention or action, the local Eoard vrould undoubtedly
determine.

Telegraph f a c i l i t i e s are good throughout America

between a l l these c i t i e s , and in many cases telephonic
communication i s good,
^)ow many people who discuss this problem do not seem to
understand that the "branch "banks in any case will " e estabb
lished, and that the purpose of the Act i s to bring these
f a c i l i t i e s through the headquarters of the main bank and
the branch banks into intimate connection with trade and
commerce throughout the d i s t r i c t , "l w with that underfo
standing of the mechanism of the law and i t s operation T
should be very glad if you would t e l l me why you think that
a Reserve Bank located even at San -nrancisco and with a
branch here, would not Yery effectively serve the needs of
t h i s community* And l e t m say here, as a warning to everye
body, that the questions which are asked by the Comnittea
do not indicate any opinion nor ev en a trend of thought or.




C~

M. ?. Backus

the part of the Committee.

2400

W have to 3 take the opposite
e

view always, to bring out the argument, and nc sifdificance
therefore, must be atiched to these questions.
Mr. Backus*

T base m opinion, as T said, upon a good
y

ina y yea"s of experience.

A local bank is established here,

for exarnple, by the Canadian Eank of Commerce, a local
branch.

They have a very excellent man as manager, one in

whom I am sure the banlr has great confidencet and who T r o
*h
is very ati e to take care of t h e i r business —
The Secretary of the Treasury: They have no local Eoard?
Kr. Backus*

They have no local Eoard.

Questions of

importance coming to that bank must be referred to headquarters.

\'ow l e t m ask you, ;>rr. Secretary, would ,iot a
e

question of an important and large loan coming before the
local Board, have to v,e referred to the parent bafck, we
will assume i t was located a t San T?rajcisco?
The Secretary of the Treasury:

T do not think that

..ecessar^ly would follow: You must remember that the op erations of these Federal peserve Banks or their functions, are c
a very limited character.
banks of this d i s t r i c t .

They hold the reserves of the
They are not banks of deposit and

discount in the ordinary sense; they do not deal with




G

}U P. Backus

2401

individuals.
Mr. Eackus:

T clii.-k T understand that fully., but what 7

had in mind was re-discounts by the nember banks.
The Secretary of the Treasury:

T am coming to t h a t /

These ~e-discour.'ts are based upon a certain classriof specified paper* under the Act, eligible paper, and they a.e made
upon endorsement of the member banks, of course, and upon
t h e i r application,

^ow unquestionably a local Eoard of

Directors - - the federal reserve Eoard has the power to
issue the necessary regulations governing the relations
between the branch and headquarters bankjt, and very naturally
a local Eoa^-d of seven men here ir- Seattle vrould be competent
to pass upon the paper presented by sone member bank for r e discount, a.id

u;questionably they would have sufficient

authority to a c t with a great deal of promptitude upon
matters of that sort coming before them*
Mr. Eackus:

Suppose that a branch were located in Seat .le,

how extensive a t e r r i t o r y v/ould that coTar?
The Secretary of the Tre?.su~y:
we are not trying to figure out.

frsll,

thut is the thing

you presented a t e r r i t o r y

covering Vonta a, Tdaho, Oregon a.^d Washii-gton.




< • •
*

.

}Fr. Eackus-

K. P . Backu3

2402

p o r a Reserve Bank.

The S e c r e t a r y of t h e T r e a s u r y :
v r . Eackus'.

.

For a p e s e r v e Eank,

And >jot f o r a "branch,,

The S e c r e t a r y of t h e T r e a s u r y :

Have you any f i g u r e s

showing what t h e c a p i t a l and r e s o u r c e s of t h a t "bank would 1c
b a s e d upon t h e minimum of th.3 n a t i o n a l b a n k s , f o r i n s t a n c e ,
as constituting the membership?
Mr. Backus'•

Tt would not be posable to secure a sub-

scription of four millions of dollars from the national
banks alone on the basis cf six per cent of their capital
and surplus.
The Secretary of the Treasury:

What would you get?

lfr# Backus: But T count! on a very large percentage of the
state barks within the district joiring the district*
Mr. La timer:

$86,000,000, ir>cludirg state banks«

The Secretary of the Treasury:

Tn considering this

question we cannot consider p.iiything but the actual capital
which wa know can be depended upon.

What is the aggregate

national bank c a p i t a l of this d i s t r i c t ?
M# Backus:
f

I have i t hers somewheres Vr# Secretary, but

if T nay just interject a statement which has just been
handed m —
e




G

M. P. Backus
T P Latimsr:
C*

240-5

$4-3,700,311.

The Secretary of the Treasury:

Then you would only have

a c a p i t a l of about two ar.d a half million*
Mr. Latimer:

And s t a t e "banks $29>5773000.

The Secretary of the Treasury:

That would give you

$2,500,000 c a p i t a l fo*- a Federal Reserve Eank< 7/hat would
i t s resources "be, what would i t hold in reserves?

What is

the t o t a l n a t i o n a l bank deposits in the d i s t r i c t ?
v r . La timer:

You mean reiser Tes with, other "banks?

The Secretary of the Treasury:

Yes, what reserves v/ould

t h i s bank hold?
Hr, Eackus:

The t o t a l deposits of the d i s t r i c t ?

The Secretary of the Traarury-

Taiie the national banks

alone.
Kr. Backus:
be

The t o t a l dsposi"!:t< in the four states would

> 0453,613,000,
The Secretary of the Trosriiry.'

T2^t ±3 state and natio--al,

T wanted i t for the nations.! bsnkp onDy.
Kr* Backus:

About $265?OCO^OOC.

I am giving you

those in the s t a t e , now.
The Secretary of the Treasury:
>fr# Backus*.




These are what?

The s t a t e bank deposits,

G

M, P, Backus
The Secretary

2-^04

c:T t h e Treasury:

You mean the t o t a l of the

n a t i o n a l "b^.nl: dtirouite in there four
?!ro B^otus*

. •.

"No, that w^s in rcu^d njpnbir-a the t o t a l of

the stnte "bmV depositB C

You v ^ a t t h * ritvUonrU "bar>.£?

The Secretai-y of the Treasury:
M5-^ Backus:

tfiatoa?

-fii* r/ttional. han*fs«,

Ala cut .?r:j6?OCO^OOO5 ir."round n'Jtr&eroc. j

The Secretary of the Tre^€unr«

1'>^"t wciill gi^e you.

resources of probably :}X2rC00,0C0*

X mean ynu T0\iId hold
•

'

in this tank in reserroa at out Jla^OCQ^CCO.
'

•

•

'

.

•

licv,'Sjr* •
'

•

•

•

•

.

.

'

'

'

.

'

"

.

Backus, T7hat i s th.4.s di3-uricy. ia il. f largely a "borrc»iT|nS • V
'

•

district?
Jfr# Backus t

.

*.••»••••

> r ' : - ' .

y £

>

,.
Ye 3, sir,,-

"
.

•
*

•

•

-

The Secretary of th3 r2r~&.'s^ry: Y^i;; caretantl^ .need iPtmey
here, do you not?

T mean thrwgh I'tiio dl?3trict the• demand

for loans i s always 1-irge, if? i t ndt7
1IT# E&cfcus?

T do notthin!r cc, ni;:re tlit-n oth^r T7esteni

d i s t r i c t s , anj-whare ^&gt of U.- grmr-t cities,.
The Secretary or the Trcasyiy;

U a'i nrt malring any coni-

parisoii^; I only want to i'i-ia cut (tfhaS ihe character of the
d i s t r i c t 3?., i t i s esaontially a ifttrritfiug d i s t r i c t , i3 i t
net?

,

Hr# Ba.?tos: Yes, and i t jupt gjfji.te the purpoise of this




G

? „ 3?, £-clr.i3
£

2.4-05

Act ir. this- r s a p e c t , t h a t the recourses of the dj s t r i c t
a r e so varied t h a t *-* havft ro ^eaKo^?a3h i3iiia;::d here at a IL,
The demand 35 500c. here fn«: year rr;r.d.,
The Se?retary of the Trassu^/:

n- c~ur-?es the Act

provides t h a t you maet ha vs a nininrim capit^Hzar.i :»TI of
$4,000,000, so t>9.t t h i s we Til*?, rjot r.crrply Tith 4"-he previsions?
of t h e Acie
l°ot if w? reiser9, vpon the national "banks

Mr, Backus:
alone.

The Secretary of the Treapjrj"?T. Backus:

T iinclsr^tandr

But if you include the s t a t e banks, there

would be e;iff5.c ient csp^tal. tc provr.de the ?4-a000,000.
The Secretary of the Treasury:

rf

cevrvs,

"nlnsr the

:h>3 s t a t ? "ba:-1:-

connnittee had aspurancen in f ^ a - i c e that

would inake up the rub scrip tier, s, the:"? T/R 7/ould have to r e l y >
wholly up en the actual ^mb s c r i p t ion r ss6.a> ^hich would be
from the n a t i o n a l "banfc«c
Mrf Eackur-: Pardra :aar T thin",: not.
would allo'y i t ,
be obtained.

•
-f the Cr-mznitteo

'' tlrlri: large i:iil iv idura r ub s c r i p t ion 3 could
>"

I c e r t a i n l y would be quite-, w i l l i n g tc take

the raaximum amount allowed to any one individual myself.
Th« Secretary of the Tres.sv.ry: W«llr you knov/ the Act was




not £e?ig:ied co c'eX::"berarely create Lanks of
cs^itali^a^jCii vpo.i tiie "back s - ^ a c r ^ t i S x i ^

inefficient
and i t

i s only

where i n 3 r a t i o n a l banks -"ail to oc:-ie in ar.d provide the
mi.iir.'JiiL ca.pLtal required
i s to D "esoi'ted t o ,
a

?

wte/ tlisAc* t h a t .the fjuHe^r-e.ti^e

30 chat the "orrnitte,e i s ocunrl for the

timo "f-si?ig to dj.sv3gt.yd tr:?.t phase cf i t vjr.it 11 we imor
wiisther the National "ca^:r a^e going; to r a i s e ';he Eu"bscription.,
vr r

Backu? •

t iR prst.ty v?^l^ s e t t l e d that the natfonal

"banks w i l l cone i n . "hut \ Velieve tbe 3tete banks v;ill come
alcr.g r i g h t a f t e r

therj»

The Secretary of th^ Treasury: Y ^ S , OUT, up to the present
we ha^Te ?ict a.:y cert-am k^o-'fled^s o.f that,,

•^^77 do "cu

think a D n embracing t h i s t e r r i t o r y , v* th eo ?Ta&.li a.
&k
r
c a p i t a l ar: d re^ou:*c :s, could rare :?or the norn**! ar,-J Tis'ial
denards of t h i s
Mr. Backus:

diotriot?
^ i t h a 2atn:.:aira c a r l t a l of ^4 ? 000,000 r whlrh

muTu "be B * eart^od er;y«r.iyv
Wb
The Jv*. . *<:.-. ry o - ' tlic
1
>rra Packus:




in t h l e

-,:.•:<>

T "Mn'i r o , and T t h i n > ^ach yoer io would

"b« tfttte-^ cible t o do t o .
rapidly

'w,-^-

couiitjy.

_ . ...le t h e rsiiv^roec g^ov EO
—

G

Tc F. Eackas
i

2407

The Secretary of the Treasury: The very fact that you. are
growing so rapidly means that the strain upon the "bank
capital i s necessarily great a l l the time.
?5r. Backus'

The strain upon the "bank capital is nothing

now to what i t was 20 years ago.
The Secretary of the Treasury:

Well, naturally i t would

not be.
"•ir* Eackusi

^he "banking capital has increased more and

in a greater ratio than that of the business.

W e T came
hn

he e the current rate of interest was one per cent a month.
Especially favored customers were allowed to borrow at ten
per cent, if they carried handsome balances, but one per
cent each month was considered the regular banking rate.
The Secretary of the Treasury:

That has a familiar sound

to me, because T used to live in the south*
Kr. Backus' flow, wh^t I wished to i l l u s t r a t e was the
growth of the banking capital and the increase in the ability
of the banks to take care of their customers. Today T do
not believe that the average rate of interest of the banks
of the State of Washington would be higher than six an* onehalf per cent*

lew that, in the face of the moat rapid

growth of any section of the eitire union*




To show, for

•'H i t

«

G

I t I , Bsckus

24-C-3

i c a t ' ^ n c e ? r-ofr -;* a r e going a l o n g , cur c l e a r i n g s in 3,004- in
t h e City

-' «=:--••

• : - ~ ; '223,000,000; t h i s p a s t y e a r ,1913,

t h e : ' were y664,COO,000, an i n c r e a s e of j u s t a t o u t 3oO ver
cen + i - ten y e a r s .
The S e c r e t a r y of t h e Trearury:

How.

Trr*

BaciaiB, those

stat?.c:tt-?«j s r e very i n t s r o f r t i n g , and a r e very rcr:ar>a"ble,
and v/e a r e r a t h e r f a n i l i a r w i t h them.

But c o n s i d e r i n g t h e

requirementc of t h e Act, a"bout hs.ving due regard, to conv e n i e n c e and t h e cu^tcmary courses of "business w i t h t h e s e
d i s t r i c t , ? , do you r o t thirJc i t would "be doing cor.siderabl e
v i o l e n c a t o t h e cu3toB&ry c o u r s e s of b u s i n e s s to r e q u i r e
of Mont aba, i f the t r e n d of her t r a d e and cenraerce i«

east-

ward, to rev erne h e r s e l f westward?
Mr. Backus:

TiTell —

The S e c r e t a r y cf /agriculture*

Telegrams were read t o us

in a n o t h e r c i t y , a t Chicago> i n d i c a t i n g t h a t 80 per cent of
t h e "be.ii^s t h e r e p r e f e r r e d St9 Paul and Vi:r.:eapolis, a n i t h e
o t h e r 20 p r r cent Chicago s on t h e ground t h a t t h e i r t r a d e wa
e a s t w a r d , pud t h e y would n e t wp.nt to r e f e r e e t h e i r

exchangee

?ir0 T,ac)nis# Well e T am unaTale to say -tfnat ^ e p e r c e n t a g e
of "busijiops going: e a s t caiC west from Kc-itar.a i?o T suggested
Koirisna &H a p a r t of tho distrj.ct "beca:73e i t seemed




G

M. ?. Eackus

geographically to f i t

?^09

i:- -vith the ' orthv/est. .

The Secretary ci' the Treasury: Tell, geographically, you
se~, while of course we "'a^t :o have a l l possible • egard to
geography, at the saie tine the provisions of the Act are
mandatory with respect o the course of "business aud genera
o
convenience, por instance, the Act says that^the d i s t r i c t
shall be apportioned; i t is not discretionary with the
Committee; i t shall be apportioned with due regard to the
convenience and customary course of business.
jnrm Backus:

* o / you also have laid down as one of your
°v

cardinal principles that you will consider geographical
cOiTveiiie^c e, involving transportation f a c i l i t i e s , and so
forth.
The Secretary of the Treasury: In so far, of course, as
that relates to the fundamental which the Act prescribes
here, the customary course of "business, naturally we do
regard that.
J'r. Eackus:

T also r:ant to suggest to your Honorable

body that in my judgment the opening of the Panama Canal
will change the course of business of Montana Yery largely,
as well as of Tdaho and Washington.
The Secretary of the Treasury: So far as the Panama Canal




G

^

M P. Backus
»

2410

i s concerned', Jlr. Backus, everybody seems to think that
going to " e an Aladdin's Lampc
b

is

W have had the Panama
e

Canal argument presented to us in every city we have v i s i t e d
in this country (laughter); and at St, Louis tine other day
they urged i t upon us with great force as changing the
coiiditions at St, Louis, while Kansas City had the same
argument, and so did Denver.
Kr. Backus:

T b e l i e v e i t is unnecessary for m to suggest
e

jro you that no c i t y in the union w i l l be affected " y i t more
b
than this city on Puget Sound.
The Secretary of Agriculture:
going to contest that with you.

T think l^ew Orleans i s
They think they are the

ones who are going to " e affected more greatly*
b
Mr. Backus:

I should think distinctly Uew Orleans would

c ame n ext.
The Secretary of the Treasury:

And 5?an Prancieco w i l l

have a few things to say on that.
}fl% Backus:

Yes, San prancisco i s in the same class.

Those three c i t i e s w i l l derive more "benefit, in m judgnssit,
y
unless possibly Houston, Texas3 might be included.
The Secretary of the Trea4£U*y:

T think San vrsnoi^oo

ought to be generous enough to ci»fi^^«i^i^i^^^t^^aa^^^




0

>£• P." Backus

2411

art of double cinch on Alaska, but T do not think she wuld
be willing to concede tha t you would have anything like the
same sort of a cinch on the Panama Canal*
IT, Backus:

T have just been handed this memorandum from

the Assistant Postmaster*

^here were dispatched from San

Francisco during the year 1913, 57 mails for the Orient
and 17 for Australia.

Prom Puget Sound there were 104

dispatches to the Orient and 13 for Australia.

In other

wordB, we sent nearly twice as many mails to the Orient as
San Francisco.

That rather indicates the natural trend

of business, i t seems to me.
The Secretary of Agriculture'*
t h i s other point,

Let us not get away from

W e we were in Denver they had a d i s hn

t r i c t ±n which they included Montana, and when ws asksd
them whether they had any warrant for i t , they said no, the:
just did i t because i t f i t t e d in geographically.
Mr.Backus:

probably that io why we did i t .

The Secretary of Agriculture:

Koritara seaafl to f i t

in

I
very pleasantly geographically with a l l these d i s t r i c t s ,
"but what we want to knew i s where her trad-9-£fr83 and what
connection would be in the interact of her indu^rtrlee and
business.




l*rv "Rsor-juj'

^€1?.^ T **oul& suggost tZiis, vfr,

that, a ^crtlwept
left

diptrict

S3cret,i:-y.

should "be rree.ted and t h a t : o IDS ;."••

to the wjsdcm of yourcelYss tc solect t h e - ^ e ^ r i t o r y . - ' '

and 7
Tt i s i.tt a- a l l necessary, as

T

. .'
x

understaxid/read

law. t h a t t h e boundaries of t h i s d i s t r i c t

phall

h?

.

i';

•':• ' i " :

n

:e co•• '

tenniiiUs T»-ith those of a^y rf the s t a t e s . I "believe ohere
i s c te""iwor:vr so TP t,t up he^o t h a t you can ca^ve out cf
i
if

it.^^.

V: sh.B.12. sec-r. ;.7ise to ;/cu to dc sc r i '"or-thTrest d i s t r i c t .

T ser no reason why. if

it

wv^r^ r.eoessary. a portion of

Wyoming or ever of ^'o^the^ Oalif^-r'ia might :?ot " o tacked
b
on t c i t .
great

All t h a t T -ifh '. ) imp:-ess nyo>: you i s t l a t

orthwest,

i-.cludi: g A.la£l:a, v i t h the trcme.-dcv.s

volume of foreign "business v:Mt \rr. hav. j : "/hich i s l e w d
grow - • a.jd a& T sai^l, h r e

a-. - f : v e

ope^-atiiig trai-is i.'":to S e a t t l e
58 d i f f e r e n t

the

to

«ra -s -co., t i . e.. ta I : oads

ey^ry day, v/herS they ^set

steamship li.ics f-^urn t h i s po. • 5.1o.-:e — uc~r

t h a t i s commence t h a t c* . o l "bi set r.-ide <- orep-looked,
v
a^d t h i s M i l
cont^e^ce.

Tt

i s 3 3pp-cift..i">

l:oxr;.-!do' *- .?CLf?,
:3

providos fov the nst^X:.s.bji-r.t o:° ^ra inLcs J I

the "ba.^kp i.i for?\£r

cv^rfri

jr.

The S e c r e t a r y - - t h e r:--?? 1-..^y:
5f
selvsn




.

ic.-y.^-

c tha

V- i .iituta* 'j&.r:^ ;-:i'>-iI

G

H. P. Eackus
Mr. Esckus:

ves.

The E3c-ewary of

2415

Tt a'iso provides for discount - tile Treasury:

-put i t s purpose is more

to take ca^e of our domestic situation, a.id incidentally,
of cou""B9, of tho foreign situation.
Jfr. Eackus: But i t i s our situation, when we are dealing
with foreign countries;

/e are to be accommodated,

1 ad we

h&ve tremendous transactions with these foreign countries.
T grant you that the "bill i s not intended to take care of
Alaska or British Columbiay or of Ohii>a, Japa..:•,. or Australia,
but i t i s intended to take care of

the people who are

dealing rrith those various coui:t)*ies, and the bai?ks and
"busiess houses*
The Sacretary of the Treasury:

Tt

i s intended to take

care of eve^y kind of co*Tme^cef foreign and domestic, so
far as i t i s possible
}TT. Eacku8!

:o do i t .

Yes, s i r .

The Secretary of the Treasury:

'-ow, for that ve^t pur-

pose, dismissing as I said bofor-e, merely local co sideratio,:8, v/hich of course ^he Comii :tee nust air/ays disregard,
purely local ones, T mean, what C .oc affect
o

L

,he problem,

the interests of the '-ovthwest w i l l be best served by the
or^a lizabior: of a ba^ik of sufficie.it power to enable i t to




G

?!. P. Backus

2414

takft earn of the interest s cf the *\jcrthwest.

That is

f indmne : cally the chj.r,g the Committee has got to consider,
and ^hiio organizing a "bank o~ such power, we must liaTe
:
regard to the convenience and customary course of business
throughout th.ts section*

That i s our problem^ and v:e ask

these questions because we ^ant to get .just as much light
an T:e car? a 'i d as 11a£y fac t s as v/e can which T i 11 elucidate
7
i t for us.
Tho Sec^etRry of Agriculture:

Tt

^vas clearly the

intent ion of Cong^ers that ti^o courtry chould be so'laixLout
that eRch of these banks . in rjormal times, r/ould "be" independent and r;ot normally depe dent. H ?f ne are t-ying to
o,
discover ho^r to do that; a.:£ fu^themio-'e, rro can. ot lay out
ar.y one of these d i s t r i c t s v.rithout rofereiice to the others.
The Secretary of the Treasury:

They are inter-relat ed

u n i t s , coordinated through the federal Reserve Bank# and
must be as far as possible self-contained.
2£r. Backus:

You have talier. the ver^r word out of icy mouth,

they are coordinated.

The b i l l provides for not less than

eight nor more than twelve Psderal Ha servo Banks, and i t
provides for a Federal Reserve Bear*.. T "btOJ.eve i t w^s tho




f

G

3:-. : \ . jsaeT^s

.

2£1*

i r t t r v t c f - i : i « A r , t t h a t the 3V3.er=-Jl- RS^-GTVe Jjo&rti -eliOTJLlrl soe
thft r.a-a-'v "b-:?\, i:- f.iot., *m? t ^ a t t-'ne s o - c a l l e d ' li'oo e~* ?
_
Reier-*j
parfi.:t

P«:;kc a~e t o u c h e s cf
>^«V f u r

stM:j:o:*+.

s a i d , ~i\ese va'rio:.z

Vv.--;3 a < t.lie;»r &1I loci: t o thd
d

A- 1 •y.r.rV i t v«s Senator O-'/^a
f.

r e s e r v o i r s a r c a l l "p^^-

Tlis , s c c r o t a r y or A5"-"icv-ture:

tose^her*

Y ^ S . Vat th'^re a:-e or.ly

e i g h t o- t~o?ve o"' th^zn; tliO^ &ro . OG ii £,ht r-y ':vvj.-3 ^ I r s
ar.ot.^e^".
"T.

v h a t i.3 cnly £. euverviBrry £card7«»I1, T call1, t.ir-.e ?ed£•"*«.! P3 3onre Bobn*c. the

".-acK-s*.

purs.i^ of nl?

the o t h e r s .

The Fec'-elary : i
t h e ifiair;

Lef-r*w you g&t a - a y f-*c:Ti

TUflstio.v, 'vhs.t v* vent t c ^•:or- i ^ , ca.i ; cu d Dvclop

h e r 3 c: d i s t r i c t
timej.

\cr -JCULSU:veJ

BVCII

a& 3rou have 3aid out v h i e h ,

cil.'. "bs sc?f - rci'f i o i o:: t; z ^d d i c c . d l r , do^r *,;**.+

ar^a'i^PTie io S6**vc- t h j ^ C G : ir.te-e.cts
t r a d e a s i« i s ^^tabl-« t ^ e ^
J*~. Laciois:
nc doiitt
all

i*-j nor^nal

Aiir-re'-irg ."xrst il.e .'.v? 1 ;
i r no T'.cl

"h^ b*2 8:".^e33 ir» t h e " -y~^'-"s-rr,

y e a - J . of




0"^

2 ^ ki.ud, -•*..'
Qy

'

';hc cor!" e::i°:--o s of

.cda'1' r l o i ^ u : * ^ ! I.i.'ee-,

.hat t h i s ~>3.~k v o j j i ,

disoni^itino*

^c

I have

jf.iue.s, tskt* e r e

T

'-.-':'-? i ^ T c y

^ - rs.-1 a
:

^i^stiu^,

P-^.L.OOUH,

uf

3i":-,"> -•-«?i,.« ^0

< t l u;<vi 'zv co. - v

25 p e r

&

M, ?, B^kus

c«:* r s a a r r e .

2-116

TTnde;- the prcTtsicng of tlie^Xe^-lair -rro-Tri 11

o r V }<•• -•.• CL»ry;r i* #
. ••*

/ . ^^ ^

T

« a , r 25 .? er oT;n t , -v, m-'e

ac'iJ^llr/ c i r * ; o d 55> tecD.ute *.e have had

a

o Ico-.p ^laviiAo i*i

a-i.i Lcr. •«,•, \/hurfj t h ^ *.'ore ^eally oi - J u£;e ;o vs}
JO

":vt f:: r

the p-Lu-pcro " f nalcir.g 3ellectior.s«
>
The Sao ctftry of AgriouJlturo: Tlie sams rta tene/at r^r
li? a?,o~lio:- c i t y ,

rue.

^hat the "banks had to ro-discoiuit Tory

l i t t l e ancl took care of the d i s t r i c t in "cr-nal tiiuss, a:^.d
yet

ihe "ep^etontativcg of la>*ge "ouBinnss i n t e r e s t B o.ning

nnii:" millions of dollars vorth of "business a^nv.alli' in -he
de^elopner.t of th&t sectio*:, t e s t i f i e d

that the " a - c co*'.ld
b yJ F

not taiie care of them and they were co-:3ta.i~Iy,dependent, en
eastern caiilrs to finance t h e i r s.v-cip~ines a^d to rc-llscoun'.
t h e i r riaper,

" OZ
NT

going or in t h i s

i s there iiot a Tf^st deal of d e ' ^ I o ^ n ^ t

section that tha ta^ks in tiiis

sect ion

cannot take care of?
Th^ f?ec*"e*ary of the Tre.'ii^r;-*.
\rr. Backus:

Ar-1 Lc ijot fiji&rce.,

Uo, s i r ; on the cortrr-..^. * H r.^e "ery > T T Q
T

Tsuy^'s of eastern coiiafcrciHl pap^''»

"i r M^k c a r r i e s ?.n

arerage of prooably a KiL'-ior. dollri^j of

that ;oc-.;oer as so:*t

of secondary r e s e r v e , aiid T kio*: of other large tapirs r.*hich




G

M P# Backus
»

- &Cf

do likewise.
The Secretary of Agriculture:

To v/Iiftt. extent "would ;r*u

s&y thene four scates rrhicli you have indicated are d-3p *d2Jt
or .10'cdependent or. eastern capital?
J£r. BacJcus: You are referring to the tanking business?
The Secretary of Agriculture:
Mr. Eaclois:

ves#

I do :ict think they a:-e at a l l . 1 do not know

of a.x-* bank in ihe City of Sea-tie that "borrows anything in
the

ffibt.

Til3 Secretary of tiio Treasury:

T purcliasing -his paper
n

vhlch you "*ef er-*ed to as part of your secondary reserve,
to v/iiat extent does that

"educe you* a b i l i t y to take care of

local needs; to Trhat extent do you decli.ie to take local
pape^,
*rr* Backus:

7e do not decline, ff ve had to, re Trovld

not purchase this paper,

v

/e are able to take care of a l l

the legitimate l o c a l needs in Seattle.
The Secretary of the Treasury:

/

Tn order to clear up a

mis&pprehersion in your mind, in th£ btate&ent you ?Tade i
xnOLieut aso, where you said you looksd upon the ?edo>nl
Reserve Beard as a central " a k and these rsssrvoirs we~e
bn
piped together through chat Board, you must -enieir.'ber that




G

f>A
2

K. To Backus

C

the only time that the Federal Be serve Board can compel nix*
of these "banks to re-discourt for another is in t i n -r or
emergency, end then only upon the affirmative vote ~'i

f

re-

members of the federal nese^ve Board; so that you carpet
rely — i t would not be sound for this Committee to deliberately organise weak units upon the :heory that they can be
bolstered up by the Federal Reserve Board constantly.
J!r. Eackus:

I believe sincerel:' that a Federal peserve

Bank, with a capital of four million dollars, would take care
of the northwest in anything like ordinary tines. l e t us go
back for a morient to the panic of 1907°

Tf W could have
®

drawn our money in this d i s t r i c t from Chicago,

* S
MW

York and

St. Louis, we would not have knotrn there was a panic ir:
existence,

^ojditions were a l l right out

here, "out our

reserves we^e simply tied up and v/e were helpless.
The Secretary of the Treasury: ^he State of TTontana has
not been heard frori, but T understand there are a number of
representatives here today, and of course we w i l l hear what
they have to say; but assume that Montana makes out a case
that i t would v i o l a t e the customary course of business if
8h3 T7ere forced ^est-'a^d, and suppose Idaho did the same




Q

}U F# Backus

2^.-?

thirsg; then what would you put irr':o the Washington d i ^ ^ i o .
or the Iorthwesb District?

7hat *rculd "be the alterr??^: r^o,

what ^ould "be homcgenoous territory hsre for t h i s 3 t s t i c s 7
vx\ Backus:

of course, ary te-vitory that you ni;-:i.

s e l e c t would probably r a i s e some objection, I faiicy you ha r e
met with ":hat sort of objection in other places*
The Sec-elary

of

chu T:"3asury:

*»pontana i s a tremendously

popul ar s t a t e , apparently, a*id aa iy people are contesting
for her.
?fr. Backus:

7e a l l \'aA:t her.

The Secretary of *ha Treasury:

But if she would be an

unwilling "bride, or refuses to "be a bride at a l l , and
therefore you have to look elsewhere. *:;hat v/ould you say
would be the most homogeneous a l t e r n a t i v e t e ^ i t o r y here.
Mr. Backus:
fornia,

perhaps part of Wyoming, or " o^thern Cali-

or both, and T presume both would proirptly object —

The Secretary of t?ie Treasury: pardon m a moment.
e

T

say, assuming t h a t Tdaho also made o'~t a case against
attached noi-tl-restr/ard; of course, then you c OMIC. iOt jv:'ip
ove~ that state and take in "/yoming.
tv/o s t a t e s for

VO\J excluding those

the pu-pose of t h i s :^ypothetic:;I iu3stio.; ;

what would you embrace in this *••o-thvrest t e r r i t o r y , or




G

r... ?. Backus

* 24,1'

wliat territory here vrould you take that would seem homogeneous "o :rou, -:o iiieet the situation.
t
Mr. Backus:

You cut out a l l that is adjacent, anc! 7-^

cannot juirp over a territory to get to another, aud v;e
certainly could not claim to take in a l l of California, -for
T grant that i t is important that a "bank ^e located in San
PranCisco, without question.

Tt

is the older and the largei

and more important place on the Pacific Joast, although T
do not "believe that it will continue to "be.
The Secretary of the Treasury:

^o^r assuming that Cali-

fornia a id the pacific Slope was inaugurated into one dist r i c t , sir.ce you have made that suggestion; rrould you x ot
get a pretty strong uuit here, \?ith a combination of "bank ir.f.
resources and with a combination of diversified te-— itory,
T mean both physically and industrially and agriculturally
that would be a ve r y effective ar) d sirong d i s t r i c t ?
YZT. Bac}oi8:

Yes>

sir

» there is

s gainsaying that
o

fact.

But 1 take i t you vant to establish these "banks permanently,
you want s t a b i l i t y .

There is i-o dou^t in my mind that the

northwest, will have to have one of these banks v/ithin a few
yea^s. Ts i t not "better to locate i t now, have it




settled

'• t . " '

3a. P% Backus

2421

and f i x the s t a b i l i t y cf the whole system, evsn though the
bank "be not very strong at firdA?

T do not "believe t i n t

any of the Committee doubt for a moment tha t tils fero.rth Is
going to continue at l e a s t as i t has here, after tha cpeni.np
of t h e Canal, and a f t e r the government starts in and comp l e t e s i t s r a i l r o a d and opens up Alaska so we can "begin to
get ocms ofrthe r e a l development of that country.

That -.Ye

have had has been a mere b a g a t e l l e to what ^re expect.
The Secretary of the Treasury:

With the future of t h i s

country, s s p a c i a l l y a s i t was outlined to us l a s t night, T
gather v/hat you want i s the service of strength and not the
s e r v i c e of weakness,
73% Eackusl T7e are w i l l i n g to take our chances on the
s e r v i c e of wealcr.ess with the prospective growth ahead of u s ,
because every
w i l l join t h i s

.-atio^al bank a n d p r o t a b l y evory s t a t e bank
system.

The Secretary of the ri?reasu.ry:

Tet me say in that connect-

ion that tlie Act ~equi"es the d i v i s i o j of the countiy into
not l e s s than eight nor liicre than tv/elve Pederal Reserve
d i s t r i c t s , ^iow -/hatever the decision of t h i s Conmittee may
b e , suppose i t rvere the mi.-jimum, co i l l u s t a t e the poiut
o n l y , the f e d e r a l Keserve Board has the power a t any time




0

H. P. Backus

2422

to -eadjust these districts and i f the growth of tho country
j u s t i f i e s i t , i t can later on establish and rearrange these
l i n e s and create more districts up to the maximum; and 2ie
pu-pose of the Ac t i s to have just that sort of

flexibility,

tfe thank you, XT. Backus, unless you have something eloe you
want to submit,
Mr, Backus:

T do not suppose you care to hear about the

v/ate~ co-Jime-ce 6f Seattle?
The Socratary of the Treasury:

W would be glad to have
e

that s t a t i s t i c a l ir.foraatioi:, a.:d i t raay be filed with the
stenographer and go i.. :o the record,
l!r. Eackus:

And the private ba::k statistics,and so forth?

The Secretary of the Treasury: I would like to ask a
question of you, as dhairaai" of "he Clearing House Association, before you leave the stand. The Act provides, in
Section 13, amonfr other things: "Upon the indorsement of
any of i t s member ba^ks, v/ith a raiver of demail d, notice and
protest b;* such baiik, a::y federal reserve -Bai.k may discou^it
notes, drafts, ard b i l l s of exchange arising out of actual
commercial transactions; that i s , notes, drafts, and b i l l s
of exchange issued or dravm for agricultural,

industrial,

or comuiercial purposes, or the procec-ds of ^vhich have been




G

M. 3?. Baclnzs

2^2"

used, or are to "be usedD for such purposes,,, the Fedsre.A
Reserve Soard to ha73 the rfght to determine or def.ir*3 the
character of the paper thus eligible for d?.BC0o.nt0 withirt
the nearing of this Act?"
M w a proper definition of coaraarcial paper 3s contemo
plation of thia provision of Hie Act, i s a very important
ens, and we are asking the Clearing Kou3ec in these

different

c i t i e s , and alec the different

commercial todies interested

In t h i s very important sutject e

to consider that provision

of the Act, and to f i l e a "brief with the Connie tee at the
e a r l i e s t possible date, giving t h e i r ideas as to *Jhat i s a
proper definition cf commercial paper,

^ e should "be glad
7

also to have you suggest at the same time, wi12i a view to a
standardization of notss and "bills of exchange and acceptances, your ideas as to what thoss forms should "be; and
wherever you have soma specific local conditions, where you
have a special character of paper that is current in this
community, for iiistance, like c a t t l e paper in Denver or
Kansas City, if you have a::y s?3cial conditions of that
sort, " e "?ould like to have you srrggsst the forms of notes
w
and "bills of exchange v;hich would cover those peculiar
transactionet




That may "be fils d with the Committee within

K. JS1. laaVus

0

^

242^

the r.^yit two or three,^eks, 3 arid if ym will "be .gocd eccugh
tr- e ] -v thvc

G T .'
O T-

thought,

Y^

^D-ld appreciate it : .

YTo Bsckruj^: Oir?. yoa bay you v;ould grre me a rrav'^sci cory?
The Secrocary of the Treasury; Yes, ?he stenographer will
write t h a t question out for you as T have prcpounc-sd ^.x.- Tn
Section l6 of the A^t i t i s also provided that "the federal
Hes'Jrve 3o^xd siiall make and promulgate from time to time
regulations governiag ths transfer of fuads and charges
therefor among yedera?- Reserve Eanks and their "branches,
and ia&y a'«i i t 3 flisc

i'iDr exe^c".se the fu--:ctions of a

Clearl--^ Kcuse for L'ich Federal Reserve Banks, or may designate a 3?e<?.eral P.sse/'ve B a ^ to exercise such function, and
may also -squire each such "ba.rk to exercise the functions
0^ ?. Ol3Et"i'.ig Hous3 fo"*- itp in^iVer "ba-iks."
Voi that r e l a t e s to t?ie Clearing House fui-ction to ^Yhich
1 alluded a short whil3 ago, *?s should "be very glad indeed
if your Clearing House would £ive that careful thought and
submit to us any suggestions in the foiTi cf a "brief

that

w i l l enable us to cc-isider the mitter ?.3 scon as the 2?3deral
Reserve Board is organized,

T hand you a copy of the Act,

and I have narked the t^c sect.ions- on pag?s 14 ami; 19«




0

H, F. Backus

"

242?

I jr. Stenographer, sec that those questions are submitted tu ":% Backus,
J'r. Baoiais*

T desire to present to the Or^a-izatio^

Orfiiiiiittec an album

vr

hich --rc have had p"-~~pa"ed, sliov:i;jg

various raaps and photographic nape, caitai^iiis wsLAy s t a t i s t i c s trhich r/e did^iot "a."t to take up jtour time " y giTi.is
b
you, "but v/hicli wc *7ould irant tc hav a you accept a.:d 11I3.
The Sac "eta-y of

:he x-easui-y:

xot i t "be filed as a^

exhibit to "y« Eackus' tcstimo..:-'.
*"r. Backus:

T "boIieT" a l l the Taps v- have prepared a^s
/~

absolutely authc:.tic.

".ost of t/.cu havo be.:n copied frou

goYC" nme.it charts or naps of Various ki^ds. T tha.ik you.
(The album a- d naps a^OT: -ofa^^ed «o '.r-3^e filed as
exhibits -0 - r . Backus1 teatimo*cr. )
(The memo-'aiidum submitte^. " y "r.Backus i s cts rollo.'si )
b
:

AJT - Sectiou 2.

"Districts sh^ll "be appo-:ic.jod v;ioh duo "ega-d to
cOiiveiiieiice and custoina~y course ox "busi ess".
20':i T T 1 JiULlS.
Y 3P
1.

""'ill co aider Geographical Co-venie/icc, involvii.g

t'*a:»3i'Ortacio-; f a c i l i t i e s aid easy comau*.icatio , *-rich a l l
p a r t s of t."i« d i s t r i c t " .




G

K. J-. Eackas

241:6

2- " 7 r lll co 3J.der T dust- : a l and ^i2mer-cial Development
and iieedr x' cajh fsotiton, which involves consideration of
general aoverierrb of cozr-.odit: es and business t-"ar:sact?.or.s
within tho d i s t r i c t , a,:d transfer of funds and exchanges of
credits- "
R

• 3»
-

^*.1L1 CO.Irider

established ou3tcm and trend of

busiiiees as doveUcped " y prese.it syst-^in of bank reserves and
b
checking accounts x x x To promote "bunLiess coi-'veriieuce
and normal ncveno/vts of trade x x x

plains of a l l

cities

w i l l "be co sidered on meritsr "

A d i s t r i c t for a Federal p3serve Ea;.-k should "be created
in the "orth^cst because if the

as t i r e Pacific Coast country

from Mexico to British Columbia T?ere included in o.ie d i s trict it

rr

ould

ot "be han apportiO'jmei:t T7ith due regard co

co-ivenio.ice and the customary course of "business11, as
provided by rhc federal R;s rvo Act.
first

"N'or v/ould i t meet the

"primary'" factor laid dora by this Comnitte-^, to vrit,

"Geographical convenience x x x involving easy coiiriUiricatior vrith a l l parts of the d i s t r i c t . "
This stat an&it r-fould be t-ue erei if

.o co sideration

whatever were given to Alaska uhieh, although excluded from




'""TK--

IL P. Backus

the t e r r i t o r y

.242f^^

t^rTje^jii.Birri./tired^xyongi^^

in size to about one-fifth of a l l the States of the Union.
So vast, indeed, i s i t s extent that if ev ay m ! ^on&ti and
a%
child on the face of the globe were herded within i t s
"boundaries there would be l e s s than five to an acre.

This

great country is at least about to " e developed and come
b
into i t s own.

The Federal Government i s about to build a

railroad for that purpose, a.jd "due regard to the conweaience
and custouary course of business" of i t s people and i t s
coiamerce, pres3i:t a.vd prospective, must be exercised,
"Transportation f a c i l i t i e s , rapid aid easy communication
with a l l parts of the district" must not be overlooked. The
"general movement of commodities, business transactions and
transfer of funds and exchanges of credits1* with this great
domain must not be disregarded in determining the boundaries
of the di strict o.i which i t r/ill be compelled to depend for
bank service. This, not only for best serving the people,
business and banks of A.laska, but also the banks and business
concerns located within the district and having dealings
with Ala ska •
All mails for Alaska are forwarded from Seattle.

Seventy

two per cent of a l l the commerce with Alaska goes froia or



G

?:. P. Baskus

2428

comes from Puget Soundy the only important item going elsewhere "being the fish p-oduct of the Alaska Packers' Association, a corporation owned in and operated from San
Prancisco.
Right here i t raay "be well to call attention to the fact
that for a l l practical pu-poses collected with this hearing
Seattle a.:d Pu^st Sound may "be considered as sy "Onymous
terms, Pu~et Sound "beir-g a l l one great har"bor with Seattle
and Tacoma combined as the ce t^al poirit.

Seattle and

Tacoraa are only twenty-eight miles apart as the crow f l i e s ,
and beiiig in perfect accord in the desire to have a ' o~thwesteni District cheated with a Bank located at Seattle, Liay
"be considered one city.

Tn compiling s t a t i s t i c s we have

iii some instances combined the figures of the two.
"Convenience a^d customary course of "business" must "be
considered r.ext v.rith-reference to the g^eat a.-id co,:st antly
increasing com-nerce with the Orient and likev/iso the
international scope of :he Federal peserve Banks.

T^e

"estaH ished custom and trend of "business" in this regard
is shown " y the fact that mo^e mail for Oriental countries
b
is dispatched from Seattle than any other Post office on the
Pacific Coast, including San "^rar-cisco, "because the distance




•>.^,

t I

0

M F. Eackus
«

2429

measured either in miles or hours is less and frequency of
service greater, showing the natural trend and established
channels of business.
The net tonnage of vessels entering a^d clearing from
Puget Sound i s more than double that of any other port on th
Pacific Coast, including San _,ranciscoe

Could i t possibly

be "with due regard, to convenience and the customary
course of business" - - 7ould it provide "rapid and easy
communicatio-i according to established custom and trend of
business" to locate the only reserve bank on this entire
Coast a thousand miles distant from the seat of this commerce
Tlve great transcontinental railways are operating
trains arery day in the year to Seattle, "-here they meet
f i f t y sight steamsliip li;-es v:hich operate from the po?-t of
t h i s city, including such great companies as the Poyal " a i l ,
the Hamburg-American, the Nippon Yusen Kcdsha, the Ocean
Steamship Company, the Osaka Shosen Kaisha, the AmericanHawaiian, the Srsat Northern, th e Elue [Funnel, the TCosmos,
theHar-ison and East Asiatic Compa. ies.
compaiies iiav e

?& y of these
! n

established their supervising traffic

offices

for the entire Pacific Coa.t at Seattle. Vould i t conserve
t h e i - convenience a^d that of their agencies i:: seac:le, in




1r.

:. T> Backus
P.

-

24-50

thB ><orthwest, and a l l o-^er the world, to have one d i s t r i c t
bank only, and that operated from San wancisco?
Then,

what of the rapidly growing business interchanged

with B r i t i s h Columbia?

Would i t "be convenient and along

the customary course of "business and normal movements of
trade to undertake to transfer the business interchanged
with Vancouver, Victoria aid Prince Pupert to San -qiraacisco?
Tuo ::3w t^ansco i t i ent&l li.*es, the Canadian Northern and
the G~a*?d Tr-'irA Pacific, - ' i l l be opened to Vancouver and
pr-l.ce rupert t h i s year,

^he ara.,.& Trurk

Pacific already

operates steamers to Seattle arri the Canadian Pacific
operates both trains and steamers.

All indicative of

"established custom a.jd traud of ousi?essM, "/hicli is bound
to increase tremendous^ ^ r ith the adve...t of the _ < : railway
i ?;
Ii*.e8 and "because of

:1B sce^tly reduced ta.*-iff r a t e s .

Thils i t uiust be kept iii iii-.cl that r ^ i a r a l neserve Eanks
are .iot established for tho espjcial benefit of British
Columbia or Oriental countries, they are designed to serve
the banking and business interests

located withiii the d i s -

t r i c t and T^hich "finance the movement of ccmr^dities ar;d
har.die transfers of fv.r.ds a . c exchanges 0:: c-edits 11 for these
countries. The promotion of for'ei^i trade also is one of




G

K. ?, Backus

•

2431

the most important functions the nev/ Institutions are in tended to perform, and there can "be ,;O doubt that commerce rri th
South America, Australia and the Orie.it will be greatly
stimulated by their establishment on this 3oast.
To i l l u s t r a t e the value of this foreign business, T v/ill
say that in the midst of the panic of 1907, when i t ms
impossible to get money on any ordinary security*-, the National
Bank of Commerce of Seattle sold a half millipn dollars of
forei^i b i l l s dra^m against flour shipments to the Orient
without the slightest

difficulty.

The water comuerce of Seattle alone for the year ending
November 50, 1913, amounted to 3124,000,000.

393,000

passengers embarked and debarked here l a s t year for foreign
and Alaskan ports, and mo~e than 3,100,000 for local points,
a t o t a l of 3,485,000 altogether inbound and outbound from
this ore "Port.

This commerce aid travel suggest at least

"established custom and trend of business". .
The shortest distance a^d most natural route from any
port in the United States to Alaska, to British Columbia, and
to Oriental countries, is from Puget Sound, This certainly
affects

and involves consideration of "the general movement

of commodities". Everyone concedes that one federal t?eserve



0

H. P, Eackus

2432

Bank should " e located at San ^rancisco, so notwithstanding
b
that the tonnage of Puget Sound exceeds that of San I rancisco, we w i l l dismiss any consideration of that point. The
only other important port on the Coast handling foreign
"business i s the Columbia Fiver,
To shov; the comparative growth of foreign commerce at
Puget Sour?d aAid at the Columbia River, attention is invited
to a comparison of thirty years ago and now: #&£ (Figures
from United^States Customs Office,)
Tn 1884 the foreign commerce of the Columbia
River amounted, in ev en thousands, to

$7,700,000.

That of Puget Sound to

$2,100,000.

(Columbia River 3-1/2 times greater)
In 1913 the foreign coianerce of ^he Columbia
River amounted to
That of Puget Sound amounted to

$ 16,900,000.
5114,000,000.

(Puget Sound nearly seven times greater)
This growth of foreign comnercs of Puget Sound from
1900 to 1913 i s th-ee thousand per cent - - of Oregon one
hundred and f i f t y per cent.
This shows the natural trend of business as clearly as
anything can.



G

X P. Backus
L

2433

^hat reason i s there to doubt that the same ratio of
growth w i l l continue?

The percentage of growth for 1913

over 1909 on Puget Sound was 116.2 per cent, the percentage
for the Columbia Piver 3 > 9 P©r cent.
The line of the Oregon Railroad c: "I'avigatior, ^oape. -y was
opened i.: 1683, giving the same do"/r.-grade haul to the mouth
of the Columbia River about which much will be heard later
on in connection with the ^'orth Eank Road, rrhich parallels
it.

The 1'o-th ?ank Road was completed in 1909,

The sub-

sequent increase in foreign comnerc e i s l e s s tna?.i )4,500,000
as compared with 0^1,000,000 on Pu?et Sou.d.
James J.

Or.s of T;r.

K i l l ' s characteristic epigrams i s as follows:

"•phe trouble with the Columbia fiver i s that i t s bottom is
too near the -op".
I am now going to ask - ou to look at the heavy blue line
marked on this map of the ^est, cutting off from the rest of
the country the states of Oregon, Washington, Tdaho, Montana,
Wyoming, *'orth Dakota and South Dakota, a territory equal
in extent to nearly Oi?e-fifth of the United States, exclusive
of Alaska.

I ask /ou, also, to bear in mind that Alaska,

lying to the north and vjest of the described territory,

is

a l s o equal in size to about o;;e-fifth of the e^-ti--e U ited



0

M P. Backus
.

States.

2454

Thus we have northwest of the lines shown, more

than one-fourth of a l l the Continental United States,
including Alaska, which for convenience T ^rill c a l l a Northwest d i s t r i c t .

Seven entire states, "besides Alaska, are

embraced in this d i s t r i c t .

The report of the Comptroller of

the Currency shows that the State of "rashir.gton leads a l l of
these ixi amount of Capital Stock, Individual Deposits,
amounts due to Banks, Loa.is, Total pesou-ces and l i a b i l i t i e s *
And t h i s same statement might also " e made to i.iclude Utah,
b
Colorado, Arizona and ^ew "rexico«
The deposits of the United States Government are greater
In the P.anks of Washington than in any other state west of
the ?!ississippi Fiver, excepting Texas,

presumably they

are kept where needed.
If the savings ba^ik deposits of Washington, which are
larger than those of any other state West of the Mississippi
lUver except Towar,, Minnesota and California, be eliminated
from individual deposits, i t w i l l s t i l l outrank any state
lying >'orth a^d ^est of the boundaries shov/n on the map.
In the seven states making up part of this great northwest d i s t r i c t , there are but four Beserve c i t i e s , three of
which are in the State of ~rashingto.i, and the city of



G

M P. Backus
.

2435

Seattle, in banking capital, surplus, deposits, loans,
resources and l i a b i l i t i e s , as well as clearings, exceeds
the other two combined.

The year 1913 was one of depression,

clearings of the whole country decreased about 3 per cent,
but those of Seattle increased 10 percent and established
a new high water nark.
This indicates the steady growth of this particular
section of the country and is indicative of the natural trend
of "business, which will increase by leaps and bounds under
the stimulus of railway constructions and general development in Alaska, a.jd the opening of the Panama Canal.
The establishment of one Eank only on this Coast, located
a t San __rancisco, would doubtless leave, not alone this
city " u Tacoma a.id Spokane also, more remote from one of
bt
the federal ^aserve Banks than any othe~ equally important
commercial city in the Uni6n. K ot certainly promotive of
"geographical convenience or rapid and easy communication".
Again, to 6ecu e the greatest posable efficiency fo^* the
new system must be the earnest desire alike o.f t h i s committee
and the banks, and to insure this efficiency
desirable that the Federal

p eserve

i t is extremely

Banks be located a t

financial and commercial centers where the most diversified



G

!£• P. Backus

2436

Industries are financed and distributed, oo as to equalize
"borrowing demands.

There i s no city in the Union of the

same size which so fully meets this requirement as Seattle.
I t is comparable in this regard to "Jw York,
•e

^ere is

brought and distributed the output of the ouly important coal
mines on the Coast from British Columbia to Mexico.

The

State of Washington cuts ten per cent of a l l the lumber and
sixty-five per cent of a l l the shingles produced in the
United States.

The amount and value of fish and fish

products stored, shipped and financed from Puget Sound are
overwhelmingly greater than from any other center in the
world.
The manufacture of flou~ at Tacoma and Seattle exceeds
that of any other city on this coast.

™ e same statement
h

i s true ~egardiig exports of rvheat and flour (reducing
barrels of flour to bushels of wheat).

From here very

largely are financed and shipped the products of the
agricultural a.-.d horticultural d i s t r i c t s lying east of the
Cascade Mountains, To Puget Sound come the shipments of
supplies for Alaska, which produces l i t t l e and consumes
m uch,

nere are the United States Assay office and the

United States >»avy Yard.



T 1913 the United States
n

0

M P. Backus
.

2437

Quartermaster disbursed over three million dollars in'
Seattle, and $341,OOO only in Oregon,

Here is the leading

manufacturing centre of the Pacific Coast north of San
•nrancisco.

Here, also,

:he largest population, the largest

customs - e c e i p t s , the largest Internal Revenue receipts, the
largest Post Office receipts, the largest commerce.

^Tiere

e l s e , except in *»w York, can " e found such diversity of
se
b
industries 9 The-e else would a Federal Reserve Bank be
assured of

such distribition of "bo-rowing demands,

there

else could i t be located to so promote foreign trade and
commerc e.
Fifty-five years ago Lincoln's g^eat secretary of ^ar,
«fa. H. Seward, then s e ^ a t o r from the Umpire State, said in
the United States Senate "The Pacific Ocean will become the
chief theat-e of events in the T/Orld»s great hereafter".
Prophetic vords these.'
7e ,ost respectfully urge that, in view pf the great
extent of territory to be served, of the great diversity
of industries to be provided for, on account of geographical
convenience and splendid transportation f a c i l i t i e s , on
account of industrial and commercial development, and
general movement of commodities, in order to make easy the



G

M P. Eackus
*

2438

transfer of funds and exchanges of credits, in order to
protect established customs and trend of "business, in order
to promote convenience and normal movements of commercial,
that you lay out a Federal reserve district in the great
Northwest, embracing the four states of Oregon, Washington,
Idaho and }fo±itar)a, and that you establish a federal Reserve
Bank at Seattle which we "believe i s in a l l respects best
calculated to meet the requirements of the district
described, always keeping AlaskaTs needs in view.
W f e e l that one Earik at San .^-aflcisco ig
e

insufficient,

while to locate a second one at any other Coast point than
Seattle *?ould no more be with due regard to convenience and
customary course of business tha.i to locate i t at some
inland point huridre^s of ~ i l es from the commerce i t

is

designed to co se~ve and promote, and */hich would be
a nparable only to locating a bank at Rochester or buffalo
o
instead of '-err York : i t y .




0

E. T. Wilson.

2439

STATEtaiT OP H G b E T. TTLSOH.
U E»
The Secretary of Agriculture:

?Ir. T/ilsor., w i l l you give

your f u l l name, residence and occupation?
Mr. ^ i l s o r :

Euegene T. Wilson; vice-president of the

S a t i c i a l Bank of Tacoiim.
The Secretary of A g r i c u l t u r e :

You know the problem that

the Committee i s confronted with?
Mr,

-llsoi::

Yes, s i r .

The Secretary of Agriculture:

"re would be very glad to

have any a d d i t i o n a l l i g h t that you can throw on i t .
Mr. 711 son:

Mr. Secretary, T *7as s e l e c t e d , with two other

members of the Clearing House Association of Tacoma, to cane
OTer he e and s t ^ t e wliy Tacocn is anxious for S e a t t l e to be
s e l e c t e d as the l o c a t i o n for a Regional Reserve Bank.

That

T h a r e to aajr T s h a l l say very "briefly, and deal mostly in
f i g u r e s , with a l i t t l e comment on some of the questions askoc.
Ilr. Backus regarding Yontana.
Tn t h e f i r s t p l a c e , the distance between v;harres, by
water, from Tacoim to S e a t t l e , i s 26 miles.

Mr. Backus'

estimate of 28 miles i s taken from the business c e n t r e s , or
a l i t t l e further.
transportation.



The two c i t i e s a r e connected by water
Tvro l a r g e steamers t h a t were brought around

G

E.T. "filson

2440

the "lorn, from the C-reat Lakes, give an every other hour
service "between the towns.

The five

trans-continental

railroads entering Seattle also enter Tacoma.

T a menm

tioning this to show the importance of Tacoma1 s endorsement
of Seattle, and not to encumber your records with s t a t i s t i c s
or statalenta T-rhich have already beai made.
Puget Sound is one customs d i s t r i c t , rrith the principal
port of entry at Seattle, and Tacoma is a su"b-port.

Tt has

1200 miles of shore l i n e , including, of course, the indent a t i o n , i n l e t s , and so forth, of deep water.

There i s not

a bar or a rock to obstruct navigation in the v/hole of
Puget Sound.

There are no "bar-bound stormbound vessels

attenptirg to go out or to enter Puget Sound, and vessels
of the greatest depth of draft from a l l parts of the world,
of course, participate in this Puget Sou^d commerce.

These

s t a t i s t i c s I am giving you are taken from the report of the
Deputy Master at Tacoma, and are authentic.

T have no

sympathy with any exaggerated figures that may be produced
for the purpose of influencing the committee.

The truth is

sufficient.
The foreign shipments from Tacoma last year, 1913, were
$23,608,501.




The Coastwise shipments were §11,804,14-8; a

G

E, T. Wilsoii

2441

t o t a l of export "business of $35,412,649.
The foreign receipts at the Tacoma port were $22,332,316,
and the Coastwise receipts were 511,343,188; a t o t a l of
shipping receipts of .$33,675,504, or a grand t o t a l of

069,038,153.
Included in the above was merchandise of almost every
character.

There were a l i t t l e over a million and a half

"barrels of flour,

four and a half million bushels of wheat,

over 142 million feet of lumber, nearly eighty-eight thousand
bales of cotton, a l i t t l e over 151,000 tons of coal,
$2,949,896 of machinery; smelter products, 02,866,187; there
were -5335,012 of automobiles included in this; condensed
milk, $223,414; and many other articles that are too numerous
to mention.

This i s a l l water business and does not include

the ~ail shipments to the interior.
The deep sea arrivals at the Po:*t of Tacoma were l6lO
during that year, a/id the departures were 6l6. The registered
ton age of those vessels was 6,371,742 tons and the cargo
ton.iage was 1,646,373 tons.
I t is a well known fact that the Clearing House reports
do not always give a true indication of the business of a
city.




Those are multiplied largely where there are more

G

E. T. Wilson

2442 '

banks than in another town doing a like amount of "business.
So that in addition to our Clearing House reports, our banks
in Tacoma, which number Ouly seven within the city proper,
have adopted a system of reporting the actual business
transactions each day.

Tho se transactions do not include

charges and cashier's check accounts, certified checks or
accounts which constitute a resource, yet the bank transactions for Tacoma for 1913> excluding a l l of those charges
to resources, like b i l l s receivable, reserve banks and everything of that kind, were $547,093,851.

The combined clear-

ings of Tacoma and Seattle, which are practically one city
for the purpose of this discussion, were ^798,312,904.
You r vill probably hear in some of the other c i t i e s that
you v i s i t that Puget Sound is separated from the eastern
pa^t of the country by an impassable ran.^e of mountains,
and that certain water grade railroads and river traffic

is

apt to ca~ry a l l of the business from the eastern part of the
state to another city.

I want to say in connection with

that, that before the Northern Pacific and the Great Ivor them
railroads were constructed, before Seattle had any real
camiunication whatever with the eastern part of this state,
i t s population was 7,000 and the population of Portland at




C
-

B. T. Wilson

that time was 40,000.

2445

Since then the Ivor them Pacific,

Great iMorthera, Milwaukee and the Canadian Pacific have come
in from the east, and the 0. V. R. & Hr from the southwest.
Before the water grade road, the "North Eank Road from
Spokane to Portland was "built, the only outlet that the
Puget Sound c i t i e s had was across this so-called impassable
mountain b a r r i e r .

Yet during that time, according to the

census of 19^0, Portland increased to 207,000 people, and
Tacoma increased from a sawmill town and with 7,000 people
In Seattle, to 320,000 people.

So t h a t the mountains are

not so impassable as they may seemThe question was asked Oxie of the other witnesses, T
think }fr. Eackus, as to the service of a part of Oregon, in
the case of the organization of a Regional peserve Bank in
the Northwest.

For a great nany years I was employed under

the Eureau of the Currency, in fact, to make i t exact, for
eighteen and a half years T was with the department; and in
a l l of m examinations in Oregon i have never found a bank
y
south of the Siskiyou Mountains which did not prefer to do
i t s business in San Francisco.

So there is a part in the

southern part of Oregon, six counties in fact, with
$1,070,000 c a p i t a l and surplus, and $5,000,000 of deposits,




G

E. T. V/ilson

2444

whose natural trend i s southward, although they are in
Oregon.

They have to cross the Siskiyou ?Tountains to get

to Portland.
Some questions were asked regarding Montana.

T lived in

Montana a number of years, and during a l l of this time of
W

Bertiee with the 3ureau of the Currency T made bank

examinations throughout that state, and for six years I was
in Helena, and started in under Mr. Echols and in this particular position liquidated a couple of "banks and served for
six years "before T f i n a l l y got them wound up, and T have
some knowledge of *"ontana conditions.

T went to Montana

when T \/as a boy, and the v/hole country was buffalo country
east of Bozcman.

T saw i t develop into a stock country

with c a t t l e on thousands of miles of bunch grass.

Recently,

through the efforts of the railroad companies largely, these
ranges are being cut up and agricultural pursuits conducted
in l i e u .

"During the stock raising days, ••"ontana's natural

narket was eastward.

Their c a t t l e were shipped to the

packing houses in St. Paul, Omaha, Kansas City and Chicago,
and the business of 'Tontana up to the present time, as was
said, i s largely eastward.
here i s ;»ot large.




Their business with the Coast

3ut :iow that those ranges are being cut

G

E. T. Wilson

2445

up into farms and agricultural products are to be produced
rather than stock, the natural trend of that class of
products ./ill be to the nearest sea coast.
Taking Billings, v/hich is about the centre of the state,
and which is the last toT7n except one nhere there are banking f a c i l i t i e s to any great extent going eastward, the
distance from Billings to the Atlantic Coast is 2200 miles,
and the distance from Billings to Puget Sound is 1000 miles.
They are plowing up that nhole country, they are shipping
grain in here nov/; and a representative of one of the largest
grain purchasing companies on the coast, ^rith business houses
in Portland, Eacoma and Seattle, told m day before yestere
day that he had just seen a lot of Montana grain sold in
Seattle, shipped he~e in bulk, for three cents a bushel more
than was paid for Eastern Washington grain in sacks; the
millers demanding it to mix with our softer wheat.

And in

ngr opinion, with a l l due respect to ny friends in Montana,
when that country is developed and wheat growing becomes
more of a factor in the development of the s t a t e , their
natural business will be in this direction rather than
towards the Atlantic Coast.

They cannot ship grain by long

r a i l hauls over very many miles.




T mention that because it

G

E. T. Wilson

2446

was brought out in the other testimony.
The Secretary of Agriculture-

It ought uot to be im-

possible to discover the present direction of commodities
in Montana - Mr. Wilson:

I think they are principally east now.

The Secretary of Agriculture:

And the growth in either

direction for the l a s t five or ten years.
M . Wilson:
T

The development of agriculture in Montana has

only been of recent character.
much grain as yet.

They have not begun to raise

I think i t i s only in the last six or

seven years.
The Secretary of Agriculture:

Is it your judgment that

violence would be done to the present course of trade to
direct Montana '.vestvTard, or v/ould i t be better to connect it
eastward?
Mr. Wilson:

T think i t would be to their advantage for

the immediate present to do their business towards the east;
but T a s a t i s f i e d , from the fact that their cattle ranges
m
are being plowed up, for the reasons stated, that before
very long their business would naturally come to the Sound.
The Secretary of Agriculture^
Mr. ^ i l s o i :




Tfriat about Idaho?

Northern Idaho i s a mineral country, with

0

E. T. Wilson

some orchards and farms.

2447

Northern Idaho ought really to be

a part of Washington; it is a panhandle which "belongs to
this s t a t e .

Southern Idaho is a fruit and stock country.

1 think most of the Southern Tdaho "business comes down the
Columbia ^iver to Portland, although some of i t comes here.
The Secretary of Agriculture:

You think i t does not go

to Denv er ?
Jir. Wilson:

?o.

Around Eoise and southeastern Tdaho,

around Pocatello and other towns around there, they have
considerable business with Salt Lake City, but when T was on
the road they had very l i t t l e business with Denver.
The Secretary of Agriculture:

Did you have anything else

you wanted to add?
vr. Wilson^
fact,

I wanted to call attention to one further

that in the establishment of Regional Reserve Banks

on the Pacific Coast i t should be remembered that vessels
leaving Puget Sound for Japan can make the t r i p in about
four days l e s s than from San Francisco.

That is by reason

of following the Great " •-•

In doing so they

pretty nearly touch Alaska.
Great Circle.

Circle.

They go north and follow the

And as business is developing with the

Orient, T think that that will be considerable of a factor.




G

E. T. Wilson

2448

W of Tacoma f e e l that if a Regional Reserve Eank i s to be
e
established in the Northwest, we prefer it at Seattle,
The Secretary of Agriculture:

Suppose we should dis-

cover, ??r. Wilson, that the people of Montana insist on
having their state connected with some district with headwould " e
b
quarters toward the east; then do you think i t / f e a s i b l e to
establish a district here in the I-orthv/est at present.
>5r# Wilson:
difficult

^7ith Montana eliminated it would be very

to find sufficient adjacent territory to justify

the organization of a peserve Bank, and in that event a
"branch v/ould have to be located.
The Secretary of Agriculture:

Of course, with these

changes which you think are taking place, ev 91 if we should
find it impossible to make a d i s t r i c t v^ith Seattle as headquarters, the situation ^vould be dealt with in the future
as the conditions demand, T imagine.

What would be your

judgment as to the desirability of establishing a Regional
Bank here at this time with the relatively limited banking
power that it apparently would start out with?
><r. Wilson:

Well, it would seem from the Act as read by

Secretary McAdoo, that you are required to have a certain
capitalization in order to locate a Regional Reserve Eank,




G

E. T. Wilson

•>•.•

2449

and without Montana you would not have that capital.

The

question answers i t s e l f .
The Secretary of Agriculture:

Suppose now i t i s found to

be an impossibility to establish this district with a parent
bank at Seattle, what in your judgment would be the best
centre?
Mr. Wilson:

?or a Regional peserve Eank?

The Secretary of Agriculture:
Mr. Wilson:

San prancisco.

The Secretary of Agriculture:
Mr. Wilson:

yes.

Yes.

For this section?

The Question was asked Mr. Backus, T

think, in regard to the amount of business done in St. Paul.
Tacoma does not do as much business proportionately with
St. Paul as Seattle does, and T think that in our bank, and
we have the larger bank in Tacoma, about a l l the business
we have with St. Paul i s with the Northern Pacific Railroad
accounts,

We are the depository for their stations in

certain d i s t r i c t s , and we have a limited balance to carry,
and remittances in excess of deposits constitute most of our
business with St. Paul, although there is a l i t t l e lumber
sent there.
The Secretary of Agriculture:




Are your banking and

0

E. T. Wilson

2450

business relations more intimate with San Francisco than with
any one of these eastern cities?
}&. Wilson:

7e do a great deal more "business with Chicago

and ftew York than with San prancisco; and what T mean by that
is that New York and Chicago exchange i s current the world
over, and the demand for drafts on those c i t i e s requires us
to keep very large balances there.

W do not keep so large
e

balances in San Francisco, but nearly all of our Asiatic
business i s done through that city, because we have no branch
connections in the Orient.
The Secretary of Agriculture:

Waiving the banking aspect

for the moment, and taking your business people, with which
of the c i t i e s are their dealings more directly?
J'r. Wilson:

'Vhere they purchase their goods?

The Secretary of Agriculture:
Mr. Wilson:

Yes.

T r m the east largely.
?o

There is considerable
cities
stuff bought ixi San ^rancisco, but the Northwest are
getting to that stage where they are more or l e s s rivals
of San Francisco in their simple way, and our merchants
buy largely in the east, although we have a great Coastwise
trade with California in timber and ^heat and there are
quite a good nany lines of vessels that run between Puget




0

E. T. Wilson

Sound and the California ports.

2451
Tt would be impossible for

m to t e l l what the aggregate amount would be, but T think
e
that our wholesale merchants purchase most of their goods
east.

Formerly, as ' r r. Eackus said, San Francisco was the

r e a l metropolis of the west, and Portland had the whole
Northwest, before these towns became as large a s they are,
but business has changed.
The Secretary of Agriculture:

T a business way, you think
n

these states are m e intimate with Chicago, St. Paul and
o
Minneapolis, than with San Francisco.
Mr. Wilson^

" o with Minneapolis and St. Paul.
Ht

The Secretary of Agriculture:
Mr. Wilson:

Or Chicago and flew York.

Chicago and flew York, of course.

T the
n

next place. Chicago and 2 ew York, under the old law, are
3
central reserve c i t i e s , and we have to keep our reserves
there.
The Secretary of Agriculture:

T a not thinking so much
m

now of that as T a of the business relation, the relations
m
of the business men in the distribution ,0 f supplies and
commodities.
Mr. Wilson:

I do not think there i s any question but what

we have more business with the east than we do with Cali-




G

E T. Wilson
o

2452
I

fornia in a "business way, putting i t that way.

Our social

r e l a t i o n s , of course, are a great deal more intimate with
California, because a g^eat many of our people spend their
winters there and have winter homes in California.
The Secretary of the Treasury:

With the parring of

exchanges "between these reserve "banks will not the i\>ecessity
for your keeping such bala.ces in Chicago and ^ew York Yery
largely disappear?
Mr. Wilson:

Yes, T think so.

The Secretary of the Treasury:

As you say, Ver:i York and

Chicago exchange passes current everywhere, and that i s true.
Mr. Wilson:

Yes.

The Secretary of the Treasury:

Under t h i s new system, if

the exchange in t h i s d i s t r i c t passes at par everywhere, you
would not, of course, have

u

Jie same necessity for keeping

'balances there.
M " Wilson;
*.

^o, that is tnie.

The Secretary of the Treasury:

And to that extent this

system w i l l tend to restore normality of conditions very
greatly, w i l l i t not?
Mr. Wilson:

Yes, i t w i l l have another advantage, i t will

release in our "bank over $7,000,000 which i s now tied up and




G

E. To Wilson

24^3

which w i l l " e available for use in this l o c a l i t y .
b
T^e Secretary of the Treasury:

H w far i s i t from Tacoma
o

to San T»rancisco?
Mr. Wilson:

I think that the distance from Portland to

San Francisco i s 77° miles, and i t is 140 miles from Portland
to Tacoma, 9 1 0 miles by r a i l .
The Secretary of the Treanury:

About 1000 miles from

S e a t t l e , then?
Mr. Wilson:

Yes.

The Secretary of the Treasury:

Have you long distance

telephone connection with San Francisco?
Mr, Wilson:
not sure*

I do not thi < that we have direct, I a
k
m

I have never used i t and rev er have had occasion

to use i t .
The Secretary of the Treasury:

H w about that, Mr.
o

Backus?
Mr, Backus:
i s not.

Theoretically there i s , but practically there

Tt w i l l not work.

Mr. Wilson:

(Laughter)

T believe i t i s pos ible that the telephonic

connections go around by Salt Lake City, but I a not sure
m
whether it goes around direct or not.
Mr. Backus:




It does now*

0

E. T, Wilson
Mr. Wilson:

24-54

T have never had occasion to use i t , .

The Secretary of the Treasury:

of course, the distance

"being only 1000 miles, i t is perfectly practicable to establ i s h a long distance telephonic communication which would be
satisfactory,
Mr, Wilson*.

Yes. X have kr.own of long distance conver-

sations between Helena and San -prancisco, which went around
the other way#
The Secretary of the Treasury:

That i s a l l , thank you.

Mr. Latimer,
STATEMENT OP U. H. LATTMER.
The S e c r e t a r y of t h e Treasury:

You may s t a t e your

full

name and occupation?
v r . Latimer:

P r e s i d e n t of t h e Dexter-Horton n a t i o n a l Eank

of this city.
The Secretary of the Treasury:

And also of the Dexter-

Horton Trust & Savings Eank, I see.
Mr. Latimer:

I a not president of i t , but T a one of
m
m

the directors and large stockholders in i t .
The Secretary of the Treasury:

"Jow, ?!r. Latimer, you

have heard the ground we have already covered.




W should be
e

G

K H Latimer
«

2455

very glad if you would give us any new light or additional
facts,

so that we will not cover the same ground.

Mr. Latimer*

I was going to say that so much ground has

"been covered that I do

ot know whether you will care to hea

t h i s which I have prepared.
The Secretary of the Treasury:

W would be gUad to hear
e

from you in extenso, but there are so many to be heard and
the time at our disposal is so limited that we shall have tc
ask you to confine yourself to pertinent facts.
Mr. Latimer:

T should like to answer one or two of the

questions propounded to ?£r. Backus, in reference to the
national banks only in Oregon,? Ion tana, Idaho and Washington.
In answer to that, the deposits of Washington are
$111,933,959; in Oregon §71,163,605; Montana 339,200,079;
Tdaho $20,614,087; a t o t a l in the four states of $242,911,72
The Secretary of the Treasury:

And have you the national

banking c a p i t a l , capital and surplus, T mean, and no t tindivided p r o f i t s .
Mr. Latimer:

The capital, independent of state banks?

The Secretary of the Treasury:

Yes, national banking

capital and surplus, excluding undividied p r o f i t s .
Mr. Latimer:




The capital of the national ban ks in

0

M H. Latimer
.

Washington, $17,252,170.

and surplus.

That includes surplus?

That includes surplus.

The Secretary of the Treasury:
Mr. Latimer:

24-56

Oregon —

The Secretary of the Treasury:
Mr- Latimer:

•

Eut not undivided profits ;

Eut not undivided profits.

That is capital

Oregon $13,737,330; Montana $7,828,700; Idaho

$4,882,111; a t o t a l for the four states of $43,700,311.
The Secretary of the Treasury:
Mr. Latimer:

^ow will you proceed?

You also asked the question of Mr. Eackus as

to the reserves carried.-with national banks in the Northwest.
in Washington; this is with the reserve c i t i e s , you understand.

There are three reserve c i t i e s in Washington and

only one in Oregon.
The Secretary of the Treasury:

I understand.

T was asking

Mr. Eackus to give the hanks in Washington which carry their
reserves in Seattle, and the same as to Montana, Oregon and
Idaho.
Mr. Latimer:
states.

I have the t o t a l reserves for the three

T think I have the other s t a t i s t i c s , but I cannot

put m hand on them now.
y
The Secretary of the Treasury:
then*




You can supply those l a t e r

G

ft.
Mr. Latimer:

H. IAtimer.

2<57

Vould you care for the totals for the states?

The Secretary of the Treasury:
at the same time you can give i t .

yes, we have i t here, but
T wanted the distribution

of these reserves; that was the more important point, showing T/hat contribution of reserves in Washington is made " y
b
these different
Mr. Latimer*.

states.
I think this would, to some extent, answer

that question.

Washington $15,967,224.

The Secretary of the Treasury:

Pow is this national banks

only?
Mr» Latimer:

"National banks only, carried with the reserve

cities.
The Secretary of the Treasury:

These are a l l national

bank reserves?
1£T. Latimer:

yes.

Oregon $10,013,4-4-6; Montana

?2,882,319; Idaho $1,465,995; a total in the four states of

030,328,982.
The Secretary of the Treasury:

You have not the figures

for Seattle alone, to show whatoproportion of that goes to
Seattle?
Mr. Latimer:

I do not believe I have for the moment, but

I think I can supply it to you.




G

B. H, Latimer.
The Secretary of the Treasury:

24-58
If yoti w i l l , and they can

" e put in the record,
b
}£r. Latimer:

Yes, I have i t right here.

The Secretary of the Treasury:

T know what your t o t a l

reserves are, "because I have the Comptroller * s figures, "but
I wanted to see how they were distributed.
VT* latimer:

Portland 511,184,132.

The Secretary of the Treasury:
Mr. Latimer:

How do you mean, Portland?

peserves carried in Portland -f--; by other

"banks.
The Secretary of the Treasury:

I understand, "but what I

want i s the reserves car ied in Seattle by the "banks of these
different s t a t e s , distributed by states.
Mr. Latimer:

Oh, by these different states distributed

by states?
The Secretary of the Treasury:
Mr. Latimer:

Yes.

T do not believe T have those figures.

I

could give you the totals car ied in Portland, Seattle and
Spokane —
The Secretary of the Treasury:
while.

You can supply that later.

That would not be worth
You understand what I

want, how much of the reserves of Montana national bankB are




G

U. K. Latimer

.

2459

carried in Seattle, the same question as to Oregon and Idaho*
i£r. Latimer:

Would the capital and surplus of the banks

of Portland, Seattle and Tacoma be of interest to you?
The Secretary of the Treasury:

W have that.
e

The aggre-

gate for the d i s t r i c t i s a l l sre want, and you have given us
that.
Mr. Latimer:

T think i t would not be amiss for m to give
e

you, although T believe some figures were given by Mr.
Backus or the £over or, T have forgotten which, but I will
singly c a l l attention to the increase in volume of banking
deposits in the City of Seattle.
of the c i t y were #3,372,0000

In I896 the total deposits

In 1903 they had increased to

$23,575,000.

O October 21st, 1913, they had increased to
n

$81,5331000.

Portland, in I896, at which time our deposits

were 53,372,000, had approximately $25,000,000,

W are
e

unable to get accurate figures on that, for the reason that
at that time the foreign and state banks did not report, but
those are the most accurate figures we are abl e to obtain.
However, since I898, since the passage of the State Banking
Law in the state, we can get accurate figures.

Portland's

figures in I898 had increased to $47,000,000.

You w i l l

observe that in 1896 their deposits were practically eight




G

• V. H. Latimer

times theBe of Seattle.

246o

Under the last call of 1913

S e a t t l e ' s deposits had increased to $81,677,573, whereas
Portland's were $74,194,378.

You will thus see that

Seattle had passed her in the race.
Tt would also be of interest, no doubt, to give you the
clearings as shown for the last few years of those c i t i e s .
T w i l l try to make this "brief and only give you a portion of
them.

In I896 the clearings of the Portland Clearing

House

were $62,408,893.52.

The Secretary of the Treasury:
Mr. Latimer:

$627,818,010.31.

What i s i t today?
At the same time the

clearings of Seattle were $28,3H,6l6 as against nearly
•63,000,000 for Portland.

Today Seattle's clearings are

5664,857,448; that i s for the year 1913, T should have said,
as against $627,fil8,010 for Portland.
I w i l l just give you the totals of the clearings of the
two c i t i e s since 1905*
The Secretary of the Treasiry:

The object is to show that

as between Portland and Seattle, t h i s would be the place for
the "bank.
Mr. Latimer:

That i s the point exactly.

The total

clearings since I905 of the City of Seattle are




0

rl. H. Latimer

246l

$4,702,329,592, as against Portland #3,878,069,116.

You

w i l l see that we have led than by practically a "billion
dollars •
The Secretary of the Treasury:
Mr. Latimer:

In " a k
bn

clearings?

T bank clearings.
n

The Secretary of the Treasury:

What aro the conditions?

Does Portland attract reserve accounts at a l l " y a different
b
rate of interest and by a different system of check collection or different inducements from those offered by Seattle?
M * Latimer"
r

practically the same.

The Secretary of the Treasury:
Mr. Latimer:

practically the same.

Eut, Mr. Secretary, it would probably not be

amiss to call to your attention that for many years before
we had transportation, Portland and San Francisco were the
only financial centres on the Coast.
The Secretary of the Treasury:

y e s , I understand that,

but I a speaking more of the clearings a s of today.
m

T want

to find how far those reflect the normal, abnormal or
artificial

conditions.

Mr. Latimer:

That i s why T have given them for nine years

so as to take i t past any boom period of any section.
The Secretary of the Treasury:




T a not speaking so much
m

G

V. H. Latimer

24-62

of the " o m period as of the a r t i f i c i a l condition created
bo
by certain inducements or temptations held out to "banks to
make deposits in these respective c i t i e s .
Mr. Latimer:

Both c i t i e s pay two per cent on "bank "balances.

The Secretary of the Treasury:

You are on the same basis

in respect to that.
Mr. Latimer^

practically on the same basis c

The Secretary of the Treasury:

And the same a s to check

collections?
Mr. Latimer:

practically the same.

They may have some

l i t t l e variations in their Clearing House rules, but they are
practically the same.
The Secretary of the Treasury:

Suppose you were not a

reserve city, to what extent would your bank clearances be
affected?
Mr. Latimer:

Tf we were not a reserve city?

The Secretary of the Treasury:
Mr. Latimer:
question*

Yes.

Tt would be pretty hard to answer that

I do not know.

The Secretary of the Treasury:

To the extent that you

carry reserves that are induced by interest rates and
certain advantages in the way of check collections you are




G

T . H. Latimer
U

2463

creating an a r t i f i c i a l condition, are you not?
VSr* Latimer:

y e s , s i r , to a certain extent.

The Secretary of the Treasury:

You do not attach so much

importance to these "bank clearances for that reason; they
vary so much in various c i t i e s "because they hold out a l l
these inducements to get accounts with member "banks.
Jir» Latimer:

However, a s compared with eastern i n s t i -

t u t i o n s l i k e New York, Chicago and St. Louis, our proport i o n s would be r e l a t i v e l y small.
The Secretary of the Treasury:

Yes, you are far l e s s

a r t i f i c i a l in the west than they are in the east, T admit
that.
Mr. Latimer:
u a l accounts.

Our transactions are more with small individThat i s evidenced by t h e number of accounts.

You might take the l a r g e s t bank in >Tew Yorlgdand i t probably
would have no more accountdoon i t s books than some of the
l a r g e s t ba:;ks here 01? the coast.
The Secretary of the Treasury:

Ard of course that w i l l

"be remedied by t h e operation of t h i s Act e v e n t u a l l y .
Mr. Latimer:

^0 doubt.

Tn point of population,

would i t be of i n t e r e s t to give you a f &? s t a t i s t i c s on that
simply to show again the r e l a t i v e growth —



0

19. H. Latimer
The Secretary of the Treasury:

2464T think we have had the

population already£
Mr. Latimer:

Only for the d i s t r i c t , T "believe.

The Secretary of Agriculture:

Give it to us for three

periods,
Mr. Latimer:

yes.

I w i l l begin with 1870, and take the

U. S. figures.
The Secretary of the Treasury:

That is a long way back

for the Secretary and myself to think, but we can try.
Mr. Latimer:

At that time Seattle had a population of

1107 people; Portland had 8,293, which was relatively 7-^/5
as large as Seattle.

San Francisco at that time had

149,473, in other words, San Francisco was practically 127
times larger than the City of Seattle.
The Secretary of Agriculture'
Mr. latimer:

T I89O Seattle had 42,837 people.
n

The Secretary of the Treasury:
Mr. Latimer:

" o for 1890?
Nw

These are census figures?

These are government census figures.

Portland had 46,385; and you will notice that Portland had
dropped from 7 - ^ 5

to

1-

V 5 times that of Seattle.

San

Francisco had 298,997 : or reduced from 127 down to 7 times
the size of Seattle.




Dow the last census, for 1910, Seattle

G

3 . H. Latimer

2465

had 237,194- and Portland had 207,214.
had then

You will notice we

assed Portia id " y a considerable majority, in
b

other words, we v/ere 1-1/7 times as large as Portland.
San ^rancisco had 416,912.

In other words, she had teen

reduced in that period from 127 times the size of Seattle
to 1-5/4.
The Secretary of Agriculture:

Does that include a l l the

suburbs?
Kr. latimer:

0 .ly that f-iven " y the Government census,
b

embraced in the city limits.
The Secretary of Agriculture:
?*t* Latimer:

What is the area of Seattle

About 74 ziiles.

The Secretary of Agriculture:

And in suburbs, on the

outside?
? T . Latimer:

Qjzite a number,

?e have not yet taken them

in, but hope to before the next census.
The Secretary of Agriculture:

D you k > w rhat the area
o
o

of San Francisco is?
Vr» Latimer:

T do not-

The Secretary of the Treasury:
lir* Latimer:
figures.




A:;d of Portland?

T square miles T could rot give you those
n

G

•-». H. Latimsr
The Secretary of the Treasury:

2466
T imagine those gentlemen

w i l l be able to inform us on that point when we get there.
jrr. Latimer-

No doubt.

T would say

to your Committee

that copies of a l l these charts will be furnished you.

T

think those are in the book Mr6 Eackus has just handed you.
The Secretary of Agriculture',
Mr. Latimer:

yes.

And I w i l l not take your time to attempt to

quote any figures from them, except to show in point
of population the concentration in the particular d i s t r i c t
of Puget Sound as compared with Portland, Oregon, and other
sections of the suggested d i s t r i c t .
The. Secretary of the Treasury:

Tf you can give us three

copies of these exhibits we should like to have them.

Can

you supply them?
Mr. Latimer:

That can be done.

The Secretary of the Treasury:
handsomely bound.

They need not be so

W w i l l take this as the original. I mean
e

we do not want to put you to any unnecessary expense.

All

we want i s the data.
Mr. Latimer*

Tt might be interesting to your Committee to

glance for a moment at the relative tonnage out of San
Tren cisco and Seattle, again merely to show the growth.



G,

K. H. Latimer

2467

Before we had a trans-continental l i n e , which was only a few
years aga , we had no foreign business - The Secretary of the Treasury:

I think i t would be "better

to put those in the record, because i t is difficult

for us

to carry them in our minds^
The Secretary of Agriculture:

T should like to hear them.

The Secretary of the Treasury:

G ahead, then.
o

Just give

the t o t a l s .
Mr, Latimer:

I w i l l only give you 1912, so as not to

"burden you with the figures.

The tonnage out of Puget

Sound, which means Seattle and Tacoma taken together, was
2,498,150 tons; that was incoming tonnage.
San Francisco had 928,289 tons.

The same year

You will see we had passed

them by a considerable najority.
The Secretary of the Treasury:

What was the outgoing

tonnage?
Mr. Latimer:

The outgoing tonnage for the same year from

Puget Sound was 2,857 ? 8l8 tons as against San Francisco's
3^569,317 tons, so we exceeded them.
The Secretary of the Treasury:

That included the whole of

Puget Sound?
Mr. Latimer:



Included the whole of Puget Sound.

G

K H Latimer
«
^r. Back us '•

2468

Tt is one Qustoms d i s t r i c t .

The Secretary of the Treasury:

yes, T understand.

Secretary of the Treasury, T have had that fact

As

impressed

upon m a good many times, that i t is one Customs d i s t r i c t ,
e
^ot by you, T mean, but in the course of business.

Can you

give the separate figures for Seattle?
Mr, Latimer.

T have not those before me.

Mr. Vilson gave

you a part of those, as far as Tacoma was concerned, and T
am simply giving you the totals for the di3trict.
The Secretary of Agriculture:

That is the shipping to a l l

parts of the world, i s i t ?
Mr. Latimer'

That is tak&n

from the Governments Customs

figures.
The Secretary of the Treasury:

If you would not be

shocked by a l i t t l e divorce proceeding, suppose you separate
the figures for Seattle, and l e t us see how they apply to
your city alone, as contras ted with San Francisco, instead
of taking the whole of Puget Sound.

W would like to see
e

how large Seattle is relatively.
>fr. Latiner-

T should like to call attention that a l l

this time Portland was a reserve city and we were not, so
their figures would be largely increased by that advantage.



G

K H. Latimer

24-69

T am speaking now of the s t a t i s t i c s quoted as betw-een Seattle
and Portland.
The Secretary of Agriculture*.

What i s the le.ogth of

Puget Sound?
Mr. Latimer*

About 100 miles, from extremes.

The Secretary of the Treasury:

You have Everett,

seattle

and what other towns?
Mr. Latimer:

Eellingham, Everett, Seattle, Tacoma,

Olympia, Sheldon and Port Townsend.
The Secretary of the Treasury:

I o if you can give us the
Mw

figures for Seattle alone, we should like to see them.
Mr. Latimer:

W w i l l furbish them.
e

The Secretary of the Treasury:

Have you anything e l s e ,

Mr. Latimer?
Mr* Latimer:

Just one moment.

When you reach Portland

tomorrow, undoubtedly you w i l l be shown a very elaborate map
tending to convince you that portland controls the entire
trade of Southeastern Washington, and as far north a s
Alberta and a s far south as the boundary l i n e of southern
Oregon, and so on —
The Secretary of the Treasury:
the worst.



You want to prepare us for

"JH.-11*

Gr

X JLLatimer
vr. Latimer:

2470

T want to prepare you for the worst.

By

this :nap and the figures Ttfiich they will furbish you they
w i l l attempt to convince you that a l l that trade i s tributary
to Portland, by reason of a down grade haul.

However, we

would like to c a l l your attention, again speaking of the
years which Portland had to develop and entrench herself
in that trade before ve had a chance at i t , and the inroads
we have made since we began, the tonnage out of Puget Sound
in wheat and flour in 1900, which was about the begin, ing of
our attempt to securing that business; Seattle handled
3,566,719 bushels of wheat and 1,037,583 barrels of flour.
This reduced to wheat v/ould mean 8;235>847 bushels.

T will

only give you 1912 now, which i s the latest s t a t i s t i c s which
we have available.

During that same period Portland handled

8,995,544 bushela of wheat and 792,416 barrels of flour,
which reduced to wheat, would mean 12?521,416 bushels as
against our 8,000,000*
pretty fast,

You will notice we had made inroads

For 1912 those figures have changed, and I

am only giving you the totals, and for Puget Sound Seattle
had increased to 15,234,343 bushels as against Portland's
10,299,308 bushels.
The Secretary of Agriculture:



You must have a good many

G

K H. Latimer

2471

distribution houses here in the city,
Mr. Latimer:

Yes,

sir.

The Secretary of Agriculture:

Would not there " e some
b

way for you to- have prepared for us individual maps or
composite maps showing the area and extent of distribution
from t h i s city?
The Secretary of the Treasury:
The Secretary of Agriculture:

And commodities*
Yes, showing to what extent

this is a distributing centre for certain territory.
vr. Latimer:

I think that can be done.

The Secretary of Agriculture:

For instance, in St. Louis,

great hardware houses like the Simmons Hardware Company,
the Shepley Hardware Company and some of the shoe houses
prepared us maps, shaded off from the city, showing the
percentage of business in different s t a t e s , indicating the
volume in that way; and then in Chicago they prepared a
composite map shov/ing the density of their trade over a
given area.

Tf this city could do that and give us also

some hint of the territorj' from which i t draws' i t s trade,
i t would t e l l us more in a fer«r seconds than any statement
of s t a t i s t i c s would, and show i t very vividly and save a
great deal of time.



G

M H, Latimer
.
Mr. Latimer:

2472

?.&\ Hadley, can you t e l l me whether the

Chamber has anything prepared of tha t kind at this time?
Mr. Hadley:

W have charts showing the distribution of
e

agriculture in certain ways, but not as to the distribution
as a whole.
The Secretary of the Treasury:

If you w i l l take that up

and have such a map sent to us, we would be glad to have i t .
The Secretary of Agriculture:

You w i l l have anywhere from

two to three weeks to do that in.
The Secretary of the Treasury:
The Secretary of Agriculture:

And send i t to Washington.
That w i l l save a great deal

of d e t a i l statement here.
Mr. latimer:

T think T have covered the

exhibits and

s t a t i s t i c s which T wished to present to you.
The Secretary of the Treasury:

T should like to ask you

one question before you leave the stand.

You have been

drawing some comparisons between geattle and Portland.

"o
Nw

are we to understand tha t your argument would be directed
against a bank at Portland, if you did not have one at
Seattle?
l.fr. Latimer:

No, not necessarily.

M prime object in
y

speaking, the others having covered the d i s t r i c t



question

G

M. H Latfcner
o

2473

quite fully, was to show more conclusively the location at
Seattle to be the logical one to "best serve and most conveniently serve the l^orthwesto
The Secretary of the Treasury:

The d i s t r i c t could "be

substantially served as well, I presume, from Portland as
from S e a t t l e , as a practical question, could i t not?

That

i s a tough question to put to a Seattle man, but T would
like your honest view.
Mr. Latimer:

W do not think so, and i t would not "be as
e

convenient to a very large proportion of the t e r r i t o r y , on
account of the Milwaukee and the Northern Pacific and the
Great * or them and the Canadian pacific bringing large
•
volumes of business here that coulfi. be better served a day
or two earlier than they could at Portland,

Likewise the

Alaskan i n t e r e s t s which Mr. Eehrends spoke about, which
could be served very much better,,
The Secretary of the Treasury:
Mr* Latimer:

Here

a r e

That is a l l , thank you.

copies of the s t a t i s t i c s T have

given.
The Secretary of the Treasury:

Let them be filed as

exhibits to -»rr. Latimer ! s testimony.
(The papers were filed as exhibits to Mr. Latimer»s



G

0. E* Peatody.

2474

t e s t imony.)
The Secretary of the Treasury:

I s Mr. Peabody present.

STATirfe'T OP C A L S E. PEABODY.
H RE
The Secretary of the Treasury:

You may s t a t e your

full

name, residence and occupation?
Hr. Peabody:

Charles E. Peabody, Chairman of the Board o:

Directors of the Puget Sound Navigation Company, S e a t t l e ,
Washington.
The Secretary of the Treasury:

You kaov the problem

t h a t we are wrestling with, and you have heard the f a c t s
which have been given thus f a r .

Can you give us any new

or a d d i t i o n a l f a c t s which would shed l i g h t on the problem,
Mr. Pea body:

I do not think that i s within m power.
y

I

think you have had a l l the s t a t i s t i c s t h a t you are e n t i t l e d

to.
The Secretary of the Treasury:

Well, r/e have had a l l tha

Tte can digest, perhaps.
Mr. Peabody:

T shall be very glad indeed, to answer any

questions you see f i t

to put, but unfortunately I

TELB

asked to appear before this Committee u n t i l half past

not
five

last night, and as I dined with you gentlemen at half past



G

C. E. Peabody

2475

s i x T have not had time to prepare any*
The Secretary of the Treasury:

You mean by t h a t that you

had a strenuous evening?
?4r. Peabody*

V ot at a l l .

The Secretary of

T had a very enjoyable one.

the Treasury:

Yours i s a domestic steam-

ship company?
Mr. Peabody:

Coastwise and domestic.

The Secretary of the Treasury:

Do you operate up to

Alaska?
Mr. Peabody:

T did up to two years ago.

The Secretary of the Treasury:

How long doe sit take to

go from S e a t t l e to Juneau?
Mr. Peabody:

Three days.

The Secretary of the Treasury:

How frequent i s the

service?
Mr. Peabody:

About 45 trips a month during the summer,

and 27 during the winter.
The Secretary of the Treasury:

Do you operate l i n e s to

San Francisco?
Hr. Peabody:

^0.

The Secretary of the Treasury 1
?*r. Peabody:



To, s i r .

Or to Portland?

G

C. E. Peabody

2476

The Secretary of the Treasury:

Outside of the Alaskan

lines, where do you operate?
Mr. Peabody:

Locally on Puget Sound.

The Secretary of Agriculture:

D you not operate to
o

Alaska now?
Mr. Pe£ody:

Uot

U to two years ago .
p

T resigned two

years ago, "but the line is s t i l l operating.
The Secretary of Agriculture:

T

7hat has "been the increase

of shipping from Alaska?
Mr. Peabody:

Since when?

The Secretary of Agriculture:
Mr. Peabody:

Since five or six years ago.

The trade has not materially increased in

five or six years.

Take i t for the l a s t 20 years, when T

started in there were two small boats which handled the
entire business of that country, and today there are 27
Tessels in operation betweai Puget Sound and Alaska ports,
not including the British boats out of Vancouver.
The Secretary of Agriculture:

Eut not much increase in the

last five or six years?
Mr. Peabody:

"No, s i r , about the same tonnage in the

Alaska trade that there was five years ag> .
The Secretary of Agriculture:



They are waiting for the

G

C. E. Pea body

2477

doors to "be unlocked.
Kr. Peabody:
happen.

Well, they are waiting for something to

j t i s time.

The Secretary of the Treasury:

Tt begins to look l i k e i t

was going to happen,
Vr. Peabody:

T think so.

The Secretary of the Treasury:

That i s a l l , thank you.

Ts Mr. Lord, of Olympia, here.
STATELIEST OF C. J. LOfD.
The Secretary of the Treasury:

Mr. Lo-d, you may state

your residence and occupation, and your f u l l name,
Mr. l o r d :

C. J. Lord, Olympia, president of Capital

"-ational Bank

of Olympia.

The Secretary of the Treasury:

T presume you want to say

that Olympia would l i k e to be attached to S e a t t l e , i f we
have a regional bank here.
Mr, Lord:

Yes, we would l i k e to be attached to S e a t t l e ,

because our commercial r e l a t i o n s are with S e a t t l e .
The Secretary of the Treasury:

Do you represent the

Clearing House there?
Mr. Lord:



^e have iot a Slearing House, but I represent

C
-

C. J. Lord

24-78

the city in this particular hearing,

T might say for the

benefit of the Committee, in discussing the question of the
location of the bank in the

orthwest, if ore i s here, that

01ympiafs business relations with Seattle are seven times
as large as with Portland or any other city outside of iSew
York, or possibly Chicago.

But our -elatiors with San

Francisco are very limited, and likewise with Portland.
The Secretary of the Treasury:

What would be your second

choice if Seattle were not chosen for the .nain office of the
bank.
Mr. lord:

Taere, in the northwest district?

The Secretary of the Treasury:
Pacific Coast, or anywhere

Tn a district on the

that you might be attached; for

instance, would you prefer to be attached to San -nrancisco
or St. Paul a/sd Minneapolis?
Mr. Lord:

W have not any need for St. Paul and Minneapol.
e

The Secretary of Agricul :ure*.

They included you in their

district.
Mr. Lord:

T presume so, from what T have learned.

But,

Mr. Secretary, v/e in the Northwest are more concerned in
obtaining a "orthwest district than v/e are in the location
of the bank among the two or three c i t i e s v/hich are entitled



yrjT—-

G

C. J. Lord

'

2^79

to i t in the Northwest.
The Secretary of the Treasury:

W are rather inclined to
e

think that has been impressed upon us Yeiry forcibly thus far;
but what we are getting at i s , if you di d not have a peserve
Bank in Seattle, v/hat city would be the second choice, the
more normal place to put i t , outside of Seattle?
Jfr. lord:

Well, either Chicago or San Francisco*

The Secretary of the Treasury:
Francisco.
MT. Lord:
T take i t if

Either Chicago or San

Which do you prefer?
I a assuming that i s not a Northwest d i s t r i c t .
m
there is a Northwest district

established,

Seattle i s the logical place for i t .
The Secretary of the Treasury:

yes, we understand that

that i s your view, but we are speaking of a second choice.
T am beginning to be able to grasp that.
Mr. Lord:

(Laughter)

T have been impressed with your question and

with the thought tha t Montana and Idaho may seek to be
separated from this "Northwest d i s t r i c t , or in other words,
they may want to be attached somewhere else.
to me as the t a i l wagging the dog.

That appeals

Tt appeals to me that

to divorce them from the Northwest d i s t r i c t , because they
may have a desire to go somewhere else, i s accommodating a



G

C. J. Lord

2480

very few people as compared with the greater 11113r of
1111e
people in the northwest.
The Secretary of the Treasury:

That i s not the question.

I t i s the mandatory provision of the law which compels us
to regard the convenience and customary course of "business
in layi/g out the d i s t r i c t .
}'r. lord*

O a few people or a l l the people?
f

The Secretary of the Treasury:

The law says we shall, in

organizing the country into d i s t r i c t s , have dne regardto
convenience and the customary course of "busine ss in these
several d i s t r i c t s .
}^r. Lord:

^ow, **r. Secretary, the idea T want to impress,

not flippantly but earnestly, is t h i s , that in this Northwestern d i s t r i c t we have here in this s t a t e , for instance,
a population in 1910 of 1,141,000 people, as compared with
Tdaho 325,000 and v*ontana 300,000o

" o the thought that is
Nw

in m mind i s , '.-'hen you take Oregon and Washington and say
y
that ^e shall not "be given a Regional Bank in the Northwest
because

ontana and Tdaho may have a t--end of business that

at the present time is running eastward, that they would
prefer to go eastward, that you are crippling the big Northwest by saying to those people, Follow your natural trend



C
-

C. J. lord

2481

and go somewhere else.
The Secretary of Agriculture-

Just hew would that be

crippling t h i s section?
The Secretary of the Treasury:
that would cripple

Tt does not follow that

it,

The Secretary of Agriculture:

You have to have a bank to

which you would "be attached which would have an exact proportion of your capital and rese"nres,
Mr. Lord:

Yes.

The Secretary of Agriculture:

A d every part of the
n

d i s t r i c t would be served.
}*r. Lord:

T take i t that the centres of population cut

some figure in service, a; d that

... to serve this d i s t r i c t ,

covering an area, including those two s t a t e s , of £71,000
square miles, should be served from the centres of population
>o if you divorce those two states from us, you cut down
iw
our banking capital to an extent that i t is difficult

to

raise the amount of capital that we require in this Northwest
The Secretary of the Treasury:
Mr. lord:

That is not the question.

T may be mistaken in the idea.

The Secretary of the Treasury:

The whole problem i s to

divide the country so that every part of i t will be served,



G

C. J. Lord

2482

and at the same time t i n t due regardshaH " e given to the
b
convenience and customary courses of "business in the d i s t r i c t s to be createdc
Mr. Lord:

T understand that,

The Secretary of the Treasury:

Tt may "be that we can

create a d i s t r i c t out here that will give you a l l the
f a c i l i t i e s you require, and yet comply with the requirements
of the Act.

That i s what we are here to find out.

T do

not know, you speak of divorcing Montana said Tdaho from
Oregon an d Washington; they may not admit that they have
"been married to you yet; and we have to find out about that.
Mr. Lord-'

That may be true, but they admit that the drift

of their trade is east and west, principally east, and when
you attach them to some ether d i s t r i c t ,

if a t a l l , it takes

away from the natural d i s t r i c t that would l i e in the "Northwest.
The Secretary of the Treasury:
Mr. Lord:

Geographically you mean?

Geographically, just tha t much capital.

Vow

if you consider Alaska in connection with this territory on
the Pacific Coast — I take i t there is to be a d i s t r i c t on
the Pacific Coast, that goes probably without saying.
The Secretary of the Treasury:



Well, vre are trying to

C
-

0. J. Lord

2483

find out about that now.
Mr. lord-

Tf there i s :o "be such a dist ict on the

Pacific Coast, a/id only one, if you include Alaska and
Alaska's needs, if you take into consideration the growth
of this

orthwest as compared with the Southwest, then T a
m

ready to say to you, gentlecieii, in m humble opinion, while
y
i t may differ from the opinion commonly and ordinarily
expressed or. that subject, that the •-orthwest is the logical
location for that bank.

Tt will serve a greater number of

people in a radius of the same t e r r i t o r y , with the same
number of square miles, thar- will the southv/est, in m
y
judgment.
The Secretary of Agriculture:

Thai either San Francisco

or Jos An,~eles?
yr. lord*.

T thirjk so.

T thirjk that the logical location

should be in the ' orthwest somewhere.
The Secretary of Agriculture:
The Secretary of the Treasury:




W thank you.
e
!Ir. Dorr.

G

C. ~/. Dorr

2484

sTArarnw o? JHAJIIES "r.
The Secretary cf the Treasury:

DORR.

You may stafcte your full

name, '~r. Oorr, a jd r/ha i you represent?
I£r. Do"r*

Charles

fishi.-.g i n t e r e s t s ,

7

. Do:~r.

T a asked to -eprese-.t the
m

T

ir. Secretary.

Hay T " e permitted to
b

make a short statement?
The Secretary of the Treasury:

Tf you please, a,d if

there are s t a t i s t i c s , ve shor.ld prefer to have them filed
rrith the Secretary as exhibits,

We have them in this

record here already, as T understand it*
Iir. Do^r:

T have some figures in the concrete v/hich T

v/ill ask to have filed or hand to the Oonrcittee.
T v;ish to state generally that the fishing industry which
is involved in the few remarks that T a to make is a unique,
m
regional and tributary i r d u s t ^

';o Seattle and to the Puget

Souiid count;"y, tv reason of the fact that the e..tire salmon
pack of the world i s contiguous to t h i s Vorthwest coast,
ba^ri.ig only a very snail element of the pack which occurs
in Russia, on the other side of the S t r a i t s ,
The volume of business, taking the year 1915 as the
b a s i s , which T may add i s the largest year that has ever been




*RM-'-

C
-

J*~

J. 7/. Dorr

2485

racorded, has produced a valuation of the finished product
of some :?38,000,000.
The Sec rtary of the Treasury: 1913, did you say?
FT* Dorr:

1913, yes; that i s the calendar year just

closed.
The Secretary of the Treasury:

Ts that principally of

the salmon industry?
Mr. Dorr*

That is e.tire3y the sainoii industry in the

canned form, "but does jot i : elude the other fo~ms of cured
fish, such as mild cured, salt and the l i k e , v:hich also runs
i.:to large ino*.ey.

T a dealing just now with the ca-tied
m

salmon only.
This valuation is divided "between Alaska
almost equally.

nd Puget Sound

Set rye en $13,000,000 a.id $14-,000,000 of the

finished prtdluct casie rrom each d i s t r i c t ,

aid the remainder

of 7aahiijgto/ , "-'hich is

equal division

SUBII,

nake S the

almost perfect, and that divisioi: i s , as T stated, "between
^15,000,000 a d

a4,000,000 in each d i s t r i c t .

The value of the finislied product or. the Colu:n"bia River,
and the "balance of Orego-, cou'ting the Columbia River a l l
in the Oregon d i s t r i c t , is a l i t t l e over "•2,000,000, 'making
a t o t a l of p^acticalOy $4-0,000,000 in the United States.




d

d. "7. Dorr

.

The Secretary of the Treasury:

2486
Where do you get the

bulk of the salmon?
Kr. Dorr:

Prom hasre north.

The Secretary of the Treasury:
Kr, Dorr:

Prom Puget Sound?

Prom Puget Sound north-

The Secretary of the Treasury:

The Columbia Kiver

produces a relatively snail part?
Mr. Dorr:

Very small.

The Columbia Fiver and

tributary t e r r i t o r y produced l a s t year about '52,000,000 of
finished product.

That, by the T/ay, is a higher priced

product than the average, so the voluiae of the business is
much smaller than the figures would indicate.
British Columbia produced l a s t year a l i t t l e less than
09,000,000 of f L ished product.
The Secretary of the Treasury:

What is the point you want

to make particularly with these figures?
Vr. D r:
o

The p o i : t T wish to ~:ake i s the amount of money

^hich i s required to finance and c a r y on t h i s business*
The Secretary of the Treasury'':

^There do you get that

money, is i t rotten here?
Mr. Dorr:

Ve got $13,000,000 of that money irs Puget

Sound; r*e got from the eastern banks



^IOOOJOOO;

v/e got from

G

C . Wr D o r r

2A-&?-X+/f~f

the Portland banlis $1,250,000, and we got from the San
Francisco banks $6s250,000, making a grand t o t a l of
$24,250,000,

These are estimates, of course.

T am not able

to give you exact figures, but they are as nearly approximate as can be obtained.
The Secretary of Agriculture:
outside this
Mr. Dorri

You get $9,000,000 from

section?
That i s for the service of this entire industry

along the Coast, excluding British Columbia, T mean the
American part of i t .
The Secretary of Agriculture:

W y do you go outside of
h

this section?
Mr. Dorr:

Because the banks he-e have not been able to

supply a sufficient

amount of money for some of these larger

corporations or companies..
The Secretary of the Treasury:
outside of this d i s t r i c t .

You get about $9,000,000

Just read those figures again.

Prom San Francisco how much?
J!r. Dorr:

1 do not mean to say t h a t we get this money

from San wane is co.

I mean to say that the companies that

operate out of San Francisco draw upon their local banks
for say $6,250,000.



The companies that T am referring to

G

C. W Dorr
.

2489

t h a t are financed here require or did receive l a s t year
substantially $16,000,000 of temporary loans.
The Secretary of the Treasury:
Mr. Dorr:

Exactly, T understand.

Of that §16,500,000, $13,500,000 came from

Puget Sound "banks, largely from Seattle and mostly from
S e a t t l e , with some from the other banks nearby.

Then there

was an approximate amount of $3,000,000 in addition for the
l o c a l companies operating out of here, that had to be
"borrowed from eastern banks, because, to answer your
question a l i t t l e more clearly, the l o c a l banks here were
not in a position to accommodate these fishing companies to
the extent tha t they required.
The Secretary of Agriculture:

I t was stated here some

time ago that the banks here did not have to re-discount.
I s t h a t because they simply do not undertake more than they
can handle?
Mr, Dorr:

I do not know as to that.

The Secretary of Agriculture'

And cannot accommodate the

business?
Mr. Dorr:
answer i t .

T do not know as to t h a t , and T am unable to
Bfct with this particular money that T a
m

speaking about, T understand the loans weremade direct from



G

0. */, Dorr

2.4-90

eastern "banks, without any connection with the local banks
at a l l .

The necessity for these accommodations comes from

the -nature of the business.

T the f i r s t place, i t is an
n

annual business, like the wheat crop,
The Secretary of the Treasury:

You have a seasonal

dema nd.
Mr. Do~r:

W have a seasonal demand and a seasonal crop.
e

The Secretary of the Treasury:

What period of the year

does that cover?
Mr. Do~r:

The outfitting in the north, it is necessary

that i t begin ea3~ly in the calendar year, a;id at that time
extending, we will say, over a period of three months,
perhaps one third the value of the output i s required in
loans that are extended during the season.
The Secretary of the Treasury:

TTell, what months of the

year does ihis operation cover?
]?r. Dorr:

Commencing in ths spring.

The Secretary of the Treasury:
i£r.

DOT?

outfitting.

t

Vhat month?

In February and ?rarch and April, the early
I a speaking now of the most remote portions
m

of the country t h a t are covered by theee operations; and
In the Puget Sound d i s t r i c t the early advances are wanted



Gr

C. W Dorr
.

p r e t t y nearly as soon as
The Secretary of the Treasury:
that paper?
Mr. Dorr:

2491
those T have mentioned.
What is the character of

Tt i s a special character of paper, i s i t not?
The bank paper?

The Secretary of the Treasury-

Yes, the bank paper that

you make, now i s i t secured, in other words.
Mr. Dorr:

The early advances are generally made without

any security, ??r. Secretary.
The Secretary of the Treasury:

O the ci edit of the
n

compan ies?
Mr. Do**r*

O the credit of the companies,
n

The Secretary of the Treasury: Upon such c o l l a t e r a l or —
Mr. Dorr:

O such c o l l a t e r a l as they may be able to
n

supply to satisfy the banks*
The Secretary of the Treasury:

Have you any character of

paper secured by warehouse receipts for goods in storage,
I mean after they are canned?
Mr. Dorr*

Yes, T am cor.iig to that next0

After the pack

i s up or partly upon, loans are made on salmon in v/arehouse
and in t r a n s i t .
The Secretary of the Treasuryb i l l s of lading, you mean?



That i s , drafts

against

G

C. 'if. Dorr
Mr- Dorr:

period«>

2492

Yes> that is part of i t , during the shipping

The proportion of this amount that was used last

year might " e divided between the outfitting period which T
b
have estimated required five million dollars, that is from
this part, and the following disbursements which were largely
loaned upon the finished product, either stored in "warehouse
or in t r a n s i t , of eight million or eight and a half million
dollars.

T think that is about a fair proportion of each

year»s necessities.
The Secretary of the Treasury:

Ts the business growing

every year?
Mr. Dorr:

Yes, sir.

That is the largest year that has

ever been known.
The Secretary of the Treasury:

Is there a ready sale

for the product?
yr. Do^r:

There seems to be a very ready sale for canned

salmon, particularly since the price of meats has been so
high, canned salmon has taken the place of meat as a cheaper
a r t i c l e of food.
The Secretary of the Treasury:

You do not have to carry

the stuff long in the warehouses?
Mr. Dorr:



Well, they are not requiring very big stocks

G

C. V Dorr
»

2493

to be carried over now, T am glad to say, but there have
been periods in the past where they have had to carry i t
over into the succeeding year, and perhaps a second year,'
but in the year 1913 —
The Secretary of the Treasury:

Tc i t generally an easily
f

liquidated crop?
Mrv Dorr*

Yes, s i r .

The Secretary of the Treasury:
Mr. Dorr-:

Tt is?

Yes, s i r ; and i t is a non-perishable crop.

The Secretary of the Treasury:

And the paper is regarded

by the banks with favor?
Mr, Dorr:

Oh, yes, i t i s a very favorable

KKIZ?

security,

t h a t i s , a f t e r i t is in the finished product, in the cane
Of course, on salt salmon - The Secretary of the Treasury:

Eefore you catch him i t

i s not so very s t a b l e .
Mr. Dorr:
and the

Eefore you catch him i t i s not so .very stable,
.

smoked or salt salmon.is not so stable.

I wish also to state right at t h i s point that while
B r i t i s h Columbia has hitherto been cut off from us, and we
have been cut off from them, with regard to t h i s fishing
business, by the prior existing t a r i f f laws, since the duty



(J

o , V . Dorr
7

2-4-94

h a s "been removed frcm f i s h , we may p e r h a p s e x p e c t some
"business to " e interchanged from that side that has not "been
b
the case "before.
H w T want to call your attention for just a moment, if
o
I nay, to a l i t t l e more of this statistical matter, just the
important points.

The number of companies tha t are engaged

in thi s "business I find to be 83.
occupied and used in 1913 were 103.
tributary to Seattle.

The number of plants
Those are entirely

The Portland proportion is 24 com-

panies to 31 plants; San Francisco ! s proportion i s 9 companies to 24 plants*
158 plants*

The total is 116 companies operating

" o 63 per cent of those outfit here and are
Nw

financed here, or would be financed here if the f a c i l i t i e s
of the local banks would permit, but this is their headquarters, I am speaking now of the Puget Sound generally
and not Seattle exclusively; while 8 per cent buy probably
in Portland and 29 per cent probably in San Francisco.
Aside from the canned salmon business we have a fleet of
87 power schooners and 5 steamers engaged in the halibut
business, running out of this port.
Before mentioning that, however, T would like to call
attention to the fact that there are some forty odd million



G

Co W. Dorr

2495

d o l l a r s i n v e s t e d in permanent improvements in the canned
salmon "business, i t "being an i n - s h o r e "business, and the
c a n n e r i e s have to "be construe ted on l a n d , arid with t h o s e
and the equipment, i n c l u d i n g the f l e e t of v e s s e l s , i t makes
something ovev~ $40,000,000 which i s actuality i n v e s t e d .
The investment in t h e halibut b u s i n e s s i s something l i k e
$2,500,000.

Xhe number of men employed in the h a l i b u t

b u s i n e s s i s 1234, a comparatively small number, while the
number employed in t h e salmon b u s i n e s s i s rome 27>000 or
28.000..
The S e c r e t a r y of the Treasury:

Vow as to those d i v i s i o n s ,

T suggest t h a t you simply f i l e them w i t h the r e c o r d , because
t h e f ina/icia 1 a s p e c t s of i t a r e the more important ones from
our v ievpoint

?

and you have covered t h a t very w e l l .

You

s e e , our t i m e i s g e t t i n g s h o r t , and T should l i k e you to
f i l e t h a t a s an e x h i b i t to your testimony.

We thank you.

FURTHER STATE-ON T OP M. P. EACKUS.
Mr. Backus:

May T say one word in explanation of Mr.

D o r r T s s t a t e m e n t , which may give r i s e to a misapprehension?
He r e f e r r e d t o t h e f a c t t h a t about $3,000,000 of t h i s money
eaiae from t h e e a s t .



That i s explained by two s t a t e m e n t s .

G

II. F t Eaakus

2496

One of t h e l a r g e companies operating here is ovjned in
Chicago, which furnishes most of t h e i r own capital*

Further-

more, t h e balance of th e money could e a s i l y be furnished here
if

i t were not for the r e s t r i c t i o n s of the n a t i o n a l Eanking

Act compel l i n g us to keep our loans within ten per cent of
our c a p i t a l and surplus*

There would be no trouble here in

financing a l l the f i s h business*
The Secretary of the Treasury:
t h a t San Francisco
Mr. Bac kus:

Even with the six million

furnishes?

The s i x million t h a t San Francisco

furnishes

i s to the Alaska packers 1 Association, which i s owned in
and operated from San Francisco and has nothing to do with
our l o c a l companies up hereo
STATE^I&T OF EX-GOV. MILES C, MOORE.
The S e c r e t a r y of the Treasury:

Governor ? f oore r w i l l you

p l e a s e s t a t e your f u l l name, residence and occupation?
Mr. Moore:

Miles C- Iloore, President of the Eaker-Eoyer

National Bari a t Walla Walla, Washington,
The Secretary of t h e Treasury:
of the T e r r i t o r y of Washington?
Mr. Hoore:



Yes.

You were former Governor

G

Kiles C Iloore
»
The Secretary of the Treasury:

24^7
You know our problem. Tf

you can shed any light on i t , we would "be glad to hear from
you.
Mr, ?foo**e:

I assume that you are trying to solve this

problem with reference to what would cont-ibute to the
greatest good to the greatest number of American

citizens,

and that you are not influenced by any representations that
take into consideration the selfish interests of any
community.

T came over here hoping to a s s i s t in sone small

way in the solution of the problems before you.

I come

from the grain growing section in Southeastern Washington,
grain and fruits

Some of our grain is marketed in Portland

and some i s marketed in Seattle and Tacomae

Our business

relations with Portland have been long continued and very
close*

Prom the earliest

times we have been bound together

by strong social and commercial t i e s ,
flow you asked M* Backus what he thought the logical
r
boundaries of t h i s d i s t r i c t should be.

T would say i t shoul«

be the old Oregon country, v/hich comprised Oregon, Washingto:
Idaho and the western part of Montana,

That logically would

belong to this d i s t r i c t .
In a goieralway, I think the people of any given state



G

Hi lea C H ore
o o

24-98

or district ought to be allowed to express their preferences
and decide to which d i s t r i c t they would prefer to " e attache
b
The Secretary of Agriculture:

K w far east would that
o

extend into Montana?
Ifr. Moore:

To the summit of the Rocky Mountains, just eas

of Missou2tao
The Secretary of Agriculture: ftot beyond Helena?
Mr. Voore:

I'o.

There are three states which are bound

together by common interests, and5 we thin-,;, by common
destiny.

You ki.ov/

how many people occupy i t , and the ratio

of increase in this state, which was 120 per cert in the ten
years between 1900 ar-d 1910.

W think that in an equitable
e

division of territory that the pacific Northwest should be
created into a Regional Eank d i s t r i c t .
The Secretary of the Treasury:

What have you to say,

Governor, as to the small amount of available capital which,
under the Act, that bank would have i f we divided it as you
have just suggested.
Mr. Vioore'

Well, T realize there are some d i f f i c u l t i e s to

be encountered there, but T think perhaps by reason of our
geographical

isolation from other business centres, that

we stould have i t here, and i f



there could be private

G

Miles C, Hoc re
J

24-99

subscriptions to help that out, that might obviate i t .
The Secretary of the Treasury:

^ow as a banker, do you

not think i t would be better to organize a d i s t r i c t here,
making it as homogenuous as possible, that would give you
the requisite banking strength a^d power to take care of thit
growing country, instead of organizing a weak bank that woulc*
have to be looked after constantly in the parental sort of
way by the federal t>eserve Board, perhaps calling into
operation at various times the emergency powers conferred
upon that Eoardc
Mr. Moore:

^ e l l , T recognize the necessity of having a

strong bank, although T think i t i s true and these bankers
will generally agree with me, that the banks of t h i s district
I have been describing are not borrowing banks.

Our deposits

take care of the necessities of our people very largely,, Our
"borrowings are chiefly on buildings and farm loans that come
from the east, a considerable portion of i t .
do not borrow as a rule 0

But our banks

The bank T a connected with,
m

which is the oldest in the state, has neve- borrowed any
money.
The Secretary of the Treasury:

Have there not been times

when you might have borrowed for the purpose of helping your



G

Miles 0. Moore

2500

customers.
Ifi-.Moored

Possibly, but under the imperfect mechanism of

the old system we di d not feel like taking any chances.
The Secretary of the Treasury:

Yes, precisely.

You did

not care to " e put in the position of having to re-discount.
b
Mr. Moore:

^ct we never dido

The Secretary of the Treasury:

A certain amount of cdium

attaches to that.
M * lToore*.
r

I listened with a certain amount of interest

to what you said about that l a s t night and hope it has
changed.

T think bankers are overrating possibly the

importance of having a Regional Bank in any city,

T do not

know to what extent a Regional Bank w i l l compete for
"busHness, but there are certain linesof business they must
take up, like the grain business and things of that sort,
so T believe the advantages which w i l l flow w i l l be to the
smaller banks which lack capital, and they can re-discount
and loan again and have sort of a revolving fund.

The

larger and stronger banks will not derive much advantage
from i t .
M personal feeling i s one of security from the fact
y
that we have a bett gr system than we have been operating




G

Miles C Moore
c

2501

under in the years gone "by, and if we had to "borrow some
money, we might even have to gc to Chicago or U w York to
e
borrow i t .

So I do not regard it as of very great import-

ance that we should have a Regional Eank, but as long as we
banking
have the/capital here to take care of the "business, we
should have one.

And I think that has been shown to you by

the testimony, that they are able to take care of i t ,
I listened with some interest to the explanation about
the borrowings of the fishing and canning people, because
that was new to me.

1 supposed i t had been financed here.

But the explanation i s they a r s owned in the east, and
probably get lower rates there than here0

^e get along

very well wit'-.out borrowing money, except for buildings and
constructing railroads.

But fcr current purposes our funds

are aarple to take care of the needs of the situation. That
i s m view of the situation.
y
I would like to say, however, that if there i s to be a
Regional Bank, i t ought to be where the largest volume of
business i s , a t some great trade centre, like Seattle.

As

far as our community i s concerned, we could be acceptably
served by Spokane or Portland or Seattle,
The Secretai-y of the Treasury:



H w about San Francisco?
o

3

Miles Or Moore
Mr. Moore'

Our trade relations with San wancisco are not

•very intimate in recent years,
a l l there.

25-02

"n the early days i t was
I

W are practically as near Chicago as we are
e

San prancisco.
The Secretary of Agriculture:

H w intimate are they with
o

St t Paul and ^inneapolic?
Mr, Moore:

W have not much trade with those c i t i e s .
e

The Secretary of the Treasury:

What would " e your second
b

choice, assuming you d i d not have a bank in one of the three
c i t i e s you have mentioned up here in the extreme Northwest,
and had to have one somewhere else., what would " e your sec one
b
choice?
Mr. Moore:

T would say San prancisco, although T have not

any very good reason for Baying so.
The Secretary cf Agriculture^

(Laughter)

This section has just begun

to grow, has i t not?
Mr. Moore:

Out here?

The Secretary of Agriculture:
lft*» ISoorv'

Well, yee.

Yes,

T have watched i t for 5° years,

and i t grow very slowly until the railroadscame, but i t has
grown very rapidly in recent years,
what Governor Lister says.



I want to concur in

I agree with him that Washingtc

0

Miles C, Moore

2503

is the greatest state in the union, after watching i t for
50 yearsj and T am only sorry you could not spend much more
time in going over t h i s great state, which is washed by the
great Pacific Ocean, on the shores of v/hich live half the
human race.
to the ocean.

Secretary Houston spoke about being too close
W think
e

that i s one of our greatest

assets,

and the ships go in constant procession out of the Straits
of I'uca to a l l the races of the world, and entering into
trade relations with them.
The Secretary of Agriculture'
were too close to i t .

T do not think T said you

I was just speaking of i t s being the

centre of the surrounding country.
Mr. Moore:

Yes, that is right, the horizon comes down a t

an equal distance.

Our wheat shipments from what we caXL

the Inland Empire in eastern Oregon, Washington and Idaho,
amount to something like 60,000,000 to 70,000,000 bushels,
and i t comes here*
I would like to say something in reference to Montana.
I t recently began shipping grain this way.

And the market

for a good deal of our flour i s in the Orient now, so T
think you might reasonably expect that a great deal of that
grain will come here*




0

Miles C Moore
«
The Secretary of Agriculture:

2504
You say you ship your farm

products to the west?
Mr, Moore:

yes^ s i r .

The Secretary of Agriculture:
Mr. ^oore:

Yes,

Almost whol3y?

sir.

The Secretary of Agriculture:

D you have much c a t t l e in
o

your section?
Mr. Moore:

l*ot very many in our immediate section.

In

northern Washington there are some range c a t t l e .
The Secretary of Agriculture:

Where do the cattle go

from that d i s t r i c t ?
Mr. Moore:

They are

marketed chief3y here and in Port-

land*
The Secretary of Agriculture:

Do you use the river much

for marketing your products?
Mr. Hoore:

^o, not yet.

The river w i l l be open next

year, "but i t i s a rapid shallow stream and i t w i l l operate
more as a regulator than as a carrier.
The Secretary of the Treasury:
Ts Mr. Bloedel present.




W thank you, Governor.
e

G

Je H. E l o e d e l .

250:'

STATEMENT OP J". JL ELOEDEL.
The Secretary of the Treasury:

Give your f u l l name and

occupation, p l e a s e .
Mr. E l o e d e l :

J. K. E l o e d e l , lumberman.

The S e c r e t a r y of the Treasury:
Mr. E l o e d e l :

The Eloedel-Donovan Lumber M i l l s .

The S e c r e t a r y of the Treasury:
Mr. B l o e d e l :

Y/hat i s your firm?

Eellingham.

Located where?
T would l i k e to add j u s t a

f«w s t a t i s t i c s in round numbers, not any designated f i g u r e s .
The S e c r e t a r y of t h e Treasury:

We w i l l take them in round

numbers.
?Ir. E l o e d e l :

T w i l l g i v e them in round numbers so t h a t

they w i l l be understandable without d i g e s t i n g a l l t h e f i g u r e s
and T w i l l do t h a t in order to lay a foundation a s t o the
magnitude of the i n d u s t r y , and t h e r e i n show the n e c e s s i t y
for a proper f i n a n c i n g of tfcat i n d u s t r y .
district
The
described by Mr. Eackus contains

one-half

of the remaining timber of the United S t a t e s ; the State of
Washington c o n t a i n s 400,000,000,000 of f e e t of timber;
S t a t e of Oregon about 600,000,000,000

of timber.

The State

of Washington produces in rouild numbers 4 , 0 0 0 , 0 0 0 , 0 0 0




the

G

J. H. Eloedel

—

' >250b

annually, amounting in value to approximately $90,000,000,
when coupled with the products which come from lumber, such
as shingles anc- sundry wood products.

The annual amount

distributed in wages for ther lumber camps i s 530,000,000,
and the number of men employed, in the last year, when the
industry was not as prosperous as at other times, was about
47,000.

These figures - -

The Secretary of Agricultre:
Mr. Bloedel:

T the State of Washington?
n

T the State of Washington.
n

These figures

are taken from the Industrial Insurance Commission's e s t i mate.

The State of Washington produces over one-half,

to

be accurate four-sevenths of the lumber produced in this
regional d i s t r i c t w&ich T have just mentioned.

The City

of Seattle i s the central - The Secretary of the Treasury:

Xet m ask you there,
e

at the present rate how long will i t take to exhaust the
supply?
l'x» Bloedel:

The timber which l i e s in this regional

d i s t r i c t I have just described will last the United States,
at i t s present rate of consumption, providing that a l l
lumber of all other d i s t r i c t s be eliminated, you understand,
only drawing on this d i s t r i c t , a matter of 70 years.




If,

G

J. H. Eloedel

2507

however, it " e calculated on the "basis of its present prob
duction, it could not " e exhausted for over 200 years.
b

The

tumber in the State of Washington may last, at its present
rate of production, over 100 years, and in Oregon over 300.
The industry has not reached its zenith, it is only in its
primary stage, in the begiming.

The t:~act of country

which is covered " y timber ranges fr om just east of the
b
Cascades to the Tacifio Ocean, and from Alaska south ii:to
northern California.
The Secretary of the Treasury:

Tell us something about

the method of financing this lumber crop.
Mr. Eloedel:

As T hav^ said, the amount involved annually

is about 590,000,000.
The Secretary of Agriculture:
Mr. Bloedel-

That is in this

state?

That is in this state*

The Secretary of Agriculture:

What would it be for the

four states?
Mr. Eloedel:

Por the four states it would amount to

about 3150,000j000. •
The Secretary of Agriculture:

That is the annual oper-

ation?
Mr. Eloedel:




That is the annual operation, the value of

G

Jo K. Eloedel

2*08

the manufactured product.
The Secretary of the Treasury:

Is that the annual turn?

OTer?

Mr. EloedelBir.

That would " e the annual turn-over, yes,
b

"'ow the way of financing is "brought a"bout through

three separate stages, so to say.

yhe fir£t

i s the build-

ing of the plant and the owning of the timber lands.

Every

plant must have some nucleus of timber lands in order to
justify the expenditure for the plant.

The next is the

logging operation or the producing of the rough timber in
the shape of the raw log to be sawedo
requires often a large amount of
t r a c t of timber.

The f i r s t

operation

capital to buy a large

It is financed sometimes by what i s called

the floating of timls* bonds-

'Jot much of that i s done in

t h i s country as yet, but that is do^e locally by our o n
w
banks and the credit of our o n individuals.
w

The next

stage is financed entirely by our local banks, that is the
producing of logs.

The timber i s cut in the woods and put

into the waterways for towing to the mills to be manufactured.

That necessitates an expenditure in the neigh-

bor hood of 56,00 to *8.00 per 1000 feet board measure on
the logs, for the labor and material entering into the




G

J. H. Eloedel

2509

production.
The Secretary of the Treasury:

H w do you finance that
o

stage, where the company has not sufficient funds i t s e l f
and has to borrow?
Mr. Bloedel:

That i s usually fimanced on the open credit

of the manufacturer or producer, either on his own credit
or on collateral such as the logs or such other personal
collateral as he may have.
The Secretary of the Treasury:
point T want light ato uto

That i s exactly the

Where the logs themselves are

used as security fb r the loan, how i s that accomplished?
Mr. Bloedel:

Tt is usually accomplished in the ordinary

form, the way personal property i s handled, in the way of - The Secretary of the Treasury:
Mr. Bloedel:

of & chattel mortgage.

Of a chattel mortgage or assignment of a

b i l l of sale or the credit of the individual backed by the
knowledge that he has the l o g s on hand.
The Secretary of the Treasury:

T was go\ng to ask, how do

3O identify the logs?
0U
Mr. Eloedel:
a brand such a s

The brand i s marked on the end of the log,
v

, B, or any brand which is recorded.

The Secretary of the Treasury:




Some sort of a water
r

G

J9 Ho Eloedel

2510

storage^ T presumec
Mru Eloedel:

Yes, and that identifies the logs as the

property of the man "branding the logs.
The Secretary of the Treasury:

Ts that generally regarded

as a g4(bd class of commercial paper?
Mr* Eloedel*

Yes, sir.

The Secretary of the Treasury:
Mr. Eloedel:

Uoe

Ts it difficult to sell?

It i s very largely "based, however, on

the credit of the individual, and not so much on the actual
security back of i t .
The Secretary of the Treasury:
Mr. Eloedel:

That i s the main thing.

The Secretary of the Treasury:
Mr, Eloedel:

That i s the main thing?

At that stage?

At that stage.

The Secretary of Agriculture-

It is the responsibility

of the individual?
Mr. Eloedel:

jt i s the responsibility of the individual.

At the next stage, however, it is "based rather differently,
that i s the manufacturing stage or production of the actual
lumber from the log*

That requires greater financing than

the previous stages, except the financing of the timber.
The Secretary of Agriculture:




What would be the

G

J. H. Bloedel

2511

respective amounts of those respective stages?
Mr. Eloedei:

The ownership of the timber represents $2.00

to $2.5° Per thousand feet.
The Secretary of the Treasury:

What percentage would that

be, 25 Per cent?
Mr. Eloedei:

That would be about five per cent of the

actual selling value.

^o, i t v/ill represent2Q per cent.

The Secretary of the Treasury:

T am not a lumber man, but

I thought you were getting i t pretty cheap.
??r. Eloedei:
ly.

Yes, it represents 20 per cent } approximate-

The next i s the production of the log, wlich repre-

sents from :$6e 00 to ^8.00 per thousand, according to the
s t a t e of the market.

The next stage i s the manufacture of

the lumber, which represents in cost to the manufacturer
about ^>5'00 P e r thousand, depending upon the locality,
the cost ranging between $12.00 and §15.00, according to the
l o c a l i t y and kind of lumber he produces.
flow then, the manufacturing stage requires f i r s t ,

to

produce the payrolls semi-monthly, next to s e l l the lumber
and wait for the return of the money.

The intermediate

stage i s carried on by larger concerns, such as seasoning
the lumber and manufacturing and piling i t in the mill yards




0

J. H Bloedel
o

2512

for the purpose of seasoning, which "betters the quality
and also reduces the shipping weight.

Our largest market

here i s found in the agricultural s t a t e s , the states west
of the Mississippi River e
The Secretary of the Treasury*.
}»r. Eloedel:

Which, for instance?

>'orth and South Dakota are our "best cus-

tomers; San Francisco i s next; Montana is getting tc be a
large customer; Towa, Minnesota and Kansas are in rank as T
have mentioned them; and some of our products are finding a
market east.

W hope, on the completion of the Panama
e

Canal, that Aladdin ' s Lamp which you mentioned, that i t is
going to open on the Atlantic seaboard a very much greater
market than we have had heretofore.

The City of >ew York

consumes within i t s e l f and i t s environments about two
"billion feet annually, and we hope that within a few years,
within five years at the outside, *re can find an additional
market for at least 500,000,000 feet of dumber.

That has

to be financed, because i t has to be in transit a matter of
25 days, and the ordinary custom of the trade is to give

'*

them about 60 days time for the payment of their account.
flow T want to go back to the manufacturing end and i l l u s t r a t e how i t i s necessary to finance i t .




The manufacturer,

G

J. H. Eloedel

2513

after he has manufactured the lumber and met h i s payrolls,
is confronted with the fact that he has to grant an average
of 60 days time in the selling of his lumber.

The larger

ones, of course, arrange for that financing, but the smaller
one are obliged to take their b i l l s or invoices, with the
b i l l of lading of a car of lumber or shingles attached, and
make a draft dated 60 days ahead upon the customer, and
discount i t at the local bank.
a~e located

The manufacturing plants

a l l the way from the northern boundary of

Washington to the boundary of California/ and there is
particular section favored.

no

The local bank does the

larger part of that, depending on t h i s , however, that the
Cuty of Seattle supplies f i r s t the machinery and the men,
and that their product naturally comes into the City of
Seattle for the purpose of being sold, not to be used here
but to be shipped.
The Secretary of the Treasury:

D :>ou mean you draw at
o

60 days sight, b i l l of lading attached?
Mr. Bloedeli

That

is the custom of the

smaller plants.

The larger ones carry open accountso
The Secretary of the Treasury:
at 60 days,




v

You draw on the customer

.ill of lading attached?

G

J. H, Bioedel
Mr. Eloedei:

•

2514

Yes., sir.

The Secretary of the Treasury:

And that is discounted by

a local bank?
Mr, Eloedei:

That is discounted by a local bank.

The Secretary of the Treasury:

And the customer has to

make h i s arrangement at the other end to- get that b i l l of
lading*
Mr. Eloedei:

He accepts the draflt and gets the b i l l of

l a d g. examines the car and unloads it and in 60 day&p^ys
the draft,

If

E'i should care to tak e advantage of

cash discounts; two per cant is offered fcr cash within a
few day3 , after he has examined the c?.r5 and that s e t t l e s
the transaction.
The Secretary of the Treasury:

What kind of paper do you

create where you do not draw against the consigneee
Mr, Eloedei:

The ordinary commercial paper, what we call

prime commercial saper*

That i s arranged for by the

larger and more sub stantial manufacturers.
The Secretary of the Treasury:

What is "hat, a note at

hand or a 60 day note '
Mr, Eloedei'

I t is more a note at hand ordinarily, but

i t must be considered that the business i s a seasonal




G

J. K. Eloedel

2515

"business, i t does not continue in the same volume the year
around.

The lumber markets ?:e have are i-- the northern
•..

s t a t e s , where the winter season shuts i t
The Secretary of the Treasury:

off.

There you sell to a

customer on 60 days time and you do not draw on him with a
b i l l of lading attached, hot/ co you finance t h i t operation
when you have not got the money and hare to borrow?
Mr. Eloedel:

" e borrow money on our
V

ote of hand from

our l o c a l bank u n t i l that account i s paid.
The Secretary of the Treasury:
Mr. Eloedel:

D you pledge the account?
o

fn some instances, not a l l of i t .

The Secretary of the Treasury:

So that the character-

i s t i c s of the operation are preserved absolutely, T mean
i t i a apparent that i t i s a commercial transaction based
upon actual values.
V

Y. Eloedel:

ves, s i r .

Sometimes the assignment of the

account i s made direct to the bank and sometimes i t i s not.
When the personal credit of the borrower enters into i t ,
i t i s r.ot so.
The Secretary of the Treasury:

Where i t i s

sufficient,

but how i s i t done otherwise.
I4r. Bloedei:




The assignment of the account or b i l l of

G

J. H. Eloedel

2516

lading i s made.
The Secretary of the Treasury:

Is that popular paper,

do the "baiilcs take that regularly?
?!r\ Eloedel:
we have had

Yes,

s i r , they do.

The only diffficulty

in that matter i s that *jhen financial

depressions come about our banks are :?ot able to ta tec care
of the volume of paper which i s offered, and our business
suffers accordingly*
The Secretary of the Treasury:

H w do you finance the
o

bulk of the business which you have just described, the
$90,000,000

of>

business which i s done here in a year in

the lumber industry.
^r/ Eloedel:

The business i s financed in the local banks

located nearest the place of production, a l l the way from
the Canadian boundary l i n e to northern California, with
this thought in mi id, that the big c i t i e s

are the natural

centres from -hich the largest proportion is drawn. Seattle
draws a l l the section west of the Cascades ar,d north of the
Columbia Fiver.
The Secretary of the Treasury:
Mr. Eloedel:




Does she take care of it?

She i s able to take care 01 i t in normal

G

J. H. Eloedel

2517

times, but in times of depression she has not "been able to
take care of i t -

For instance, this year there has been

rather a depression in the lumber business, and the result
has been the closing of many mills in November and December,
which are now about to open again.

The three or four

months in the winter season they have no market and have to
p i l e out the lumber, but the banks discouraged any new
loan 8 or any advances l a s t f a l l , so the result was a shutdown and the throwing out of employment of a lot of men,
Tf we had had ample opportunities for re-discount,

that

could have been avoided.
The Secretary of Agricukture:

You spoke of a seasonal

demand. What is the largest seasonal demand?
?9r. Eloedel:

T the spring months.
n

The Secretary of the Treasury:
?Ir. Eloedel:

^Thich months?

April and May are the largest shipping

months*
The Secretary of Agriculture:

5*or how many years, say

the l a s t four or five years, have the l o c a l banks been able
to take care of the business entirely, or have you had to
go outside every year.
Mr. Eloedel:




Our credit has not been well enough estab-

G

Jo K. Eloedel

2518

lished to go outside to any great extent, and we have not
gone outside to any great extent.
fact.

T want to imp-ess that

The industry i s one cf smaller manufacturers whose

credit does net go beyond their l o c a l environment to any
extent.
The Secretary of the Treasury:
ment u n t i l 2:3^, and

W will take an adjourne

ou may resume at

2'50.

Whereupon, at 12:45 o'clock P. M. a recess was taken
u n t i l 2:30 o'clock P. M
.




0

J". H. B&oedel

2519

AFTER REOESS.

2:30 P . r .

FURTHER STATEMENT O J. H. BLOEDKL.
F
The Secretary of the Treasury:

You may proceed, Mr.

Bloedel.
Mr. E l o e d e l :

T want to add that the timber business has

many r a m i f i c a t i o n s *

The l a r g e s t item of our lumber business

i s our domestic consumption.

Our car shipments from here

t o p o i n t s east of 1he Rocky Mountains amount to approximately 135,000 carloads per y e a r .

Of that T should say

about 34,000 carloads are s h i n g l e s and the balance i s lumber.
And in r e f e r e n c e t o the c r e d i t s on the car shipping b u s i n e s s ,
i t i s necessarily largely a business of credits.
domestic business i s very largely a credit business.

The
W are
e

shipping into the agricultural districts and selling to the
r e t a i l lumber lan in those districts, and he sells largely
to the farmer.

The city i s not so large a consumer of

lumber as the countrjr, and he has to trust them more or
lees until the crops move.
for extensions,

That necessitates his asking

from time to time, from the people he buys

from on the ooast, and it makes it often necessary for us
to cafry our retailers over a season, and in times of bad




G

J. H. Bloedel

2520

crops and crop failures in certain sections we have to
car y them over for a year.

I rofer now to the

strong

lumber r.an who can carry these open accounts.
The other branch of the lumber business is the coastwise and foreign lumber business.

California i s a large

cnsumer, and this i s not a seasonal business for the
reason that California consumes
year round.

lumber more or less the

The foreign business i s also a considerable

factor, and that fe not a seasonal business.

That moves more

or less the year round, in the winter time as well as in
the summer time; but our agricultural business i s necessarily a seasonal business, as the farmer cannot build in
midwinter, but builds from about Jjarch 1st to November 1st.
The other branch of the lumber industry which i s r:ext
in importance to lumber itself is shingles.

The average

annual value of the shingle product i s about $15,000,000.
The shingle business i s very largely conducted by small
operators, men employing from 40 to 5°

men

located in some 500 different l o c a l i t i e s .

«

They are
There are some

520 plants, T believe, that are called independent shingle
mills, between the boundary li.ie and Portland.

They

produce annually an average of perhaps 100 carloads.




T say

G

J. H. Eloedel

2521

an average; they do not run the year rou-id, but can produce
an average of 100 carloads of shingles a year.

Their

business is small, aod they look to the local "bankers to
finance them, because the
their local conditions.

local banker is acquainted with
There has arisen, O: account of

the smallness of their operations and the lack of immediate
realization on their product, the necessity for what is
called the middleman or jobber or broker who, while himself
not a producer, finds a narket and finances those little
men.

Those men are largely located here in Seattle and

Tacoma , and do their business on bills of lading and
assigned accounts with their local banks.

These are the

men who, in turn, act as a banker, so to say, for the little
mill mail wheij he canoot get the facilities which he needs
immediately around him.
The Secretary of Agriculture:

To what extent is this

district here capable of handling that business?
The Secretary of the Treasury:
Mr. Bloedei:

Financing it?

T think i • is amply able to finance this
;

business when it has a more liquid credit than it has had,
when we are not up against the conditions we were last fall,
when our badker friends told us thAt money was tight, and




0

J. H, 51oedel

2522

we were obliged to curtail our operations because credit
was not easy •
The Secretary of Agriculture :

i s much of t h i s business

financed outside of this section?
Mr. Eloedel:

Some of i t i s .

M o n firm does some
y w

financing in the east, on what i s called commercial paper.
There are not many who do that; i t i s only the strong ones
who are able to do that.

Most of i t is done here and T

venture the assertion that on Puget Sound the largest
proportion of the paper held by banks, whether notes of
hand, secured or unsecured or drafts witth b i l l s of lading
attached, i s on lumber paper, or paper connected with the
lumber industry.
The Secretary of the Treasury:

To what extent did you

find restriction of credits l a s t fall?
M Bloedei:
r

To a very great extent.

T think it pre-

vented the operation of many plants which would otherwise
have operated and employed labor and piled up their lumber,
i f they had been atie to get a reasonable credit on that
lumber.

Not that the security was not good, because

lumber i s gdod security for i t s cost, or a proportion of
i t s coct, at any rate.




But i t was considered thit motfey

C
-

J. K. Bloedel

2523

was tight and rates were high and the conditions were such
generally that we were discouraged from going i*;to that
venture purely for the sake of piling i t up*
The Secretary of the Treasury:

To what extent

did that cut down normal "business?
Kr. Bloedel:
20 per cent.

Any?

T think i t cut down normal "business about
-ow T wa: t to touch on the question of paper.

There has arisen in the course of the trade what we call
logging paper.

About one-third to one-half of the mills

operating in the state produce their lumber on tidewater,
and buy their logs from the logger or the second stage of
operations that T explained before.

Tr. the case of the

tidewater mills, the logger is usually an independent operator.

T the case of the interior m i l l s located av/ay from
n

the tidewater, the logger and the mill nan are the same
thing, as a rule, but a t tidewater the mills buy logs Yery
largely in the open market.

They give usually what is

called a 60 day acceptance, and t h i s paper, being two-name
paper, is readily used by our banks and floated.

There i s

a considerable volume of that business at times, and at
other times there is not,
" o the foreign business amounts to appr6ximately
Mw



G

J. H. Bloedel

2524

57,000,000 per year, that i s the foreign business in
exports; aid that i s largely done on l e t t e r s of credit
issued on London.

Our o^n packers are able to finance

that readily through their local "banks or their eastern
correspondents or their San ^raucisco correspondents.
> o then I wanted to touch on just one poijt, on the
Jw
development of our local "business in the future. I stated
before what we were only in our infancy so far as the
development of this industry is concerned.

W have the
e

natural raw material and i t is a great resource.
"been, however,

W have
e

hampered with the market, and that Aladdin!s

lamp you referred to this morning, the Panama Canal, i s
going to give us a market on the Atlantic seaboard from
point8 north of Norfolk to Eoston and in England and on
the Continent.

Tt shortens that distance approximately

6000 miles, and enables us to deliver lumber for less money
than lumber i s now sold for in HewYork City,

^e feel

certain that in time we can develop that trade to large
proportions.
There i s t h i s further point, that on the west coast
the large volume of bulky movement of freight is from the
Puget Sound d i s t r i c t a.id not from California.



Lumber is

G

J. K. ?,loedel

2525

the great product of this section, a:d i t i s a bulky
commodity and moves

in shiploads.

The ships which w i l l use

the Panama Canal from the Atlantic seaboard to the Pacific
w i l l fi..d very few cargo loads from California p o i n t s ,
because t h e i r production i s not a bulky production; i t

is

f r u i t s , a g r i c u l t u r a l products, wines and so on, but i t

is

not in q u a n t i t i e s

to load a ship.

7e on Puget Sound have

the resources -o load vessels in f u l l cargoes and the
movement in t h i s direction w i l l be large.
The Secretary of the Treasury:

le tha.^k you, Yr. Bloedel.

How we w i l l hear f^om Vr. Hartman.
STATE*iE T 0? JOK:' P. H K 2A
A TI X
The Secretary of t h e Treasury:

Mr. Hartman, you may

give your f u l l name, residence and occupation?
*Tr. Hartman:

John P. Hartma . , S e a t t l e .

By profession T

am ao attorney.
I have for some years given more than half m time
y
l a r g e l y to a g r i c u l t u r e , farming here in t h i s s t a t e , and
working with t h e farmer in trying to solve some of the
marketing problems.

And on t h e i r behalf, and in that

capacity, and as i t a p p l i e s to banking operations, T come



G

J. P, Hartman

.

2526

"before you this afternoon.
The larger c^ops of t h i s Northwest d i s t r i c t , take
the territory which was suggested by i+r. Backus, our grain,
f r u i t s , hay, dairy products and similar kinds which you
find v/here those grow.

The grain has been touched on

prett"' well " y Governor ' oore, and T do :-ot think T need to
b
say much about that.

I k-jow that

when T f i r s t we.it to

Montana 33 years ago they were growing some grain the^e
and usibg i t mostly in the Territory.

They traded then

eastward, but as the years have gone, and as I have watched
that development, their trade is trending more and more
westward, aod w i l l , as things develop, come more and more
to the -jest, because their wheat is coming here, much of i t ,
and a great deal of their live stock; not all of i t ,
probably not the proportion, but they are ser.ding more and
more to these markets, because the demand for c a t t l e , sheep
and hogs in t h i s district'exceeds the supply,that is both
in Washington and Oregor, and we even have to draw some of
i t from as far east as • ebraska.
of hogs.

Particularly is that true

But as the alfalfa te—itory increases, the

amount of hogs and c a t t l e is inc-uasing a l l the time, both
in t h i s s t a t e , ? o tana, Idaho and in Oregon.
5
One of the principal crops and one of the valuable
crops T e have here is apples, and that is needing the
7
 assistance


of larger baking operations.

The product in

G

J. P. Hartman

2527

this state is an average of about 12,000,000 boxes, understanding "that a "box here i s two-thirds of a bushel, or
about five boxes to the barrel, if you take the barrel unit.
The crop of Oregon has gone as much as 6,000,000.
The Secretary of the Treasury:
vr. Hartman:

What is i t s money value?

This year the farmer obtained from "I1.20
v

to Jl.25 for the early apples, to a s high as }l,65-

y o n
w

average was not far from 51*55 P©r ^ox at the railway
station, that i s , i t was worth that.
The Secretary cf the Treasury:
aggregate value?

What does that

lake the

I did not catch the aggregate number of

boxes,
Mr, Hartman:
safe

T this state, say, 10,000,000 boxes, to be
n

and 5,000,000 in Oregon, and T should say 4,000,000

in Idaho; ard in the rest of the western country, and
apples are some 1,500,000 to 2,000,000 in Colorado.

That

comprises very largely the apple d i s t r i c t of these high
grade western apples.
The Secretary of Agriculture:
Mr. Hartinan:

%ere do they go?

The best of the crop goes to England and

Germny;

What we call our Extra Fancies and mai.y of the

Fancies.

The F i r s t s , that i s the third grade, largely to




G

J. P. Hartinan

> e York.
Jw

2528

The Fourths, or the seconds, as they are called,

at Chicago and west thereof through the Mississippi Valley.
The proportion of the Extra Fancies is probably 50 or 60
pe~ cent, so that the Fancies and Extra Fancies are nearly
75 per cent of the growth of those that we ship.

W have
e

a large loss in the apples that will not, in value, quite
"bear the transportation charge to these high class rnarkets,
and that i s one thing T th^nk has a "bearing on this

subject.

A careful estimate of the crop two years ago, in 1912,
which was a large one, showed that we probably had
7,000,000 boxes in this state alone of those that had a
l i t t l e speck, where they had been stung by an insect or
mi^ht have rubbed against a limb or where they might have
l e f t the apples grow too close together and they rubbed
against each other; they are good apples, perfectly wholesome and as good apples as the others, but they do not look
as well and will

A:ot

work into the grades.

Tf those apples

could be worked up into some product or dried, i t would save
a great deal of good food stuff for the people of the
country, but they are not able to stand the transportation
charge, and we are not organized, and we need that
encouragement, so that we can u t i l i z e this part of our




G

J. P. Hartman

product.

2529

Our competition in apples, about the only place

is Tasmania, and they are produced at the opposite season to
what they are herec
The Secretary of the Treasury:

Addressing ourselves more

particularly to this problem, which is one of finance, to
vrhat extent is your argument going to demonstrate the
desirability of t h i s district as a Federal Reserve d i s t r i c t
and the

location of the bank at Seattle itself.

Mr. Hartman:

The most valuable part of this crop, the

best part of i t , i s with foreign countries.

With the

coming of the Canal ^e expect then to send our apples fey
refrigerator boats through the Canal direct to the old
country.

And vre need ample banking arrangements here, not

in San Francisco or Chicago or anywhere else, but our
arrangements here, that we may send the crops direct and
save what otherwise would be a shave that would be taken
off of the crop if sent through H w York or San ^rancisco,
e
for instance, because the local dealer, if he handled i t and
financed i t there, would expect to get some commission for
attending to the business.

Tt is a saving io the producer

of the country, and i t is an advantage to the financial
operations in going direct from t h i s coast through the Canal




G

J. P. Hartman

2530

to the places of consumption, for these refrigerator "boats
would "bring up here the tropical fruits of the south, such
as "bananas, and could get a load of apples "back.
The Secretary of the Treasury:

Well, those f a c i l i t i e s

might, of course, " e supplied through a branch of a bank
b
established in the d i s t r i c t , for instance, as T have
explained before.

" o the point that we desire to be
^w

informed on is this:

What superior reason i s there for

locating a bank, assuming that w can locate a d i s t r i c t ,
e
what prevailing reason i s there for putting the headquarters
of that bank in Seattle as against Portland, for instan ce,
or San Francisco, if that were in the d i s t r i c t .
Mr. Hartman:

That involves, jfrm Secretary, some com-

parison, a thing that T always hesitate and dislike to do,
because comparisons always are odius and ought not to be
indulged in except when abaalutely necessary.
The Secretary of the Treasury:

Well, they are necessary

in this case.
Mr. Hsrtman:

The larger part of this apple crop, and

there are other f r u i t s , pears, cherries, berries, and so on,
the larger proportion cf i t , because of the larger district
that can be farmed in this character of product, is tribu-




G

J. P. Hartman

2531

tary to this city or to the Puret Sound, and here are
already considerable storage warehouses for

refrigeration,

and more are being built> particularly " y this county, and
b
i t i s where the apples will be stored and shipped when they
ought to be sold and put on the market, and for that reason
there is a necessity of having the funds and the bank with
which you can deal directly and quickly, close at hand,
rather than have to take i t up with somebody at some other
point.
The Secretary of Agriculture-'

Just a moment. You realize

t h a t your i n i t i a l dealings will be with the sametibnks that
you are now dealing with,
Mr. Hartman:

Yes, theoretically, Kr. Secretary.

T have

been dealing, though, in Canada, for T have done some
business there for a good many years, with the home bank
at times, and with the branch ba::k at other times, and T
have seen the d i f f i c u l t i e s - The Secretary of Agriculture:
understand.

T do not think you quite

These federal peserve Banks are not going to

deal with you, they are iiot going to compete with existing
banks .
Mr. Hartnan:




To, but in the end I t amounts to that.

G

J, P, Hartman

I have studied the b i l l .

2532

That i s , the local tank will do

the financing, and i t i s going to get some assistance from
the federal peserve Bank; and the federal peserve Bank, we
w i l l say, i s at Chicago, if you please, and the branch i s
here; the fellows charged with the prime responsibility
are in Chicago, and they have to be consulted in large
transactions.

W know that i s practical and usual, and
e

i s to be e j e c t e d .
The Secretary of the Treasury:

Some parts of the district

have got to be served by branch banks; you cannot have a
headquarters everywhere, and every city makes that same
argument.
Mr, Hartnan:

T know they 'rrould.

The Secretary of the Treasury:

But i t i s not a conclusive

one at a l l .
Mr, Hartman:

^ot necessarily.

The Secretary of the Treasury:

And the Canadian System

does not afford the slightest analogy, because here we have
the branch banks organized with local boards of directors,
and the Canadian banks do the ordinary commercial business
r'hich these banks, of course, do not do.

Vow the question,

therefore, which conerns this Committee is T;hat superior




G

J. P. Hartman

2533

advantage has one city over another for the headquarters of
the d i s t r i c t , and that, again, is governed by the mandatory
provisions of the Act, which compels us to consider convenience and the customary courses of trade and commerce,
Mr. Hartman:

Well, there i s more trade tributary to

t h i s point here, ino~e trade

that expects to be served

and has a right to be served and i s being served here than
any other city in this Northwest.
The Secretary of Agriculture*

D you know Tdaho, the
o

fanning conditions, their extent a.:d other conditions?
Mr. Hartman:
yes,

T have been in there a great deal with them,

sir.

The Secretary of Agriculture:
Mr. Hartman:

*There does that trade go?

Their c a t t l e mostly go east; their sheep

almost entirely, although

T

'r. Frye probably could give you

that better than T, because we gei more of our sheep in
Montana; their fruit goesin that direction; they ship some
of their potatoes west, although they do iiOt grow many.
Their fruit

is ^ot yet a large factor, but I think their

sheep entirely

go east.

The Secretary of
lf

r. hartman:




Agriculture:

Aid Montana?

3Iontana i s shipping more and mo~e west, and

G

J. V: Hartman

2J34

as t h e i r population increases their trade t h i s way increases
a l l the time.
The Secretary of the Treasury:
that?

Have you a.iy figures on

You see, these assertions do not give us any light

on the question.
Mr. Hartinan:

Have you any figures ?
I have no figures, "out one of the heavy-

growers at Eureka told me he was shipping 20 per cent of
his flock west and the rest

east.

The Secretary of the Treasury:

Eut you and T are both

lawyers, and we know t h a t sort of hearsay evidence is not
worth much,
Mr» jrartxnan:

T am talking about the man who shipped them

himself.
The Secretary of the Treasury:

But the--e i s no data.

IThat we requine here are some >"eal facts that show the
course of trade.
•"•r, Hartman:

T have not those and T do not know about

those, but I know what some of them have told me.

The

Chamber of Commerce, T think, is prepared to t e l l how
im.ny come in here and where they come from,

T kr.ow Mr.

Hadley has that information at hand and knows where they do
come from, and while I have some of that data in m own
y



G

J, P, Hartman

office,

2535

T did ,ot cone here prepared, understanding that

that would be necessary.
population that deal here.

T do know something about the
W deal a great deal with the
e

north, British Columbia as well as Alaska, and there are
some 900,000 people no:-th of here and some 450,000 to
500,000 east of here tributary to here.
The Secretary of the Treasury:

Yes, we have gone over

that data, and we do not want to cover the same ground, if
you w i l l excuse us, because there are so us y other parts of
the country to " e heard f~onu
b

Spokane and the Jlontana

delegation have not been heard f"om yet, a^d we are giving
Seattle an undue amou.t of time, and must see if we can ot
give these other gertlemen a chance.
Vr. Hartmao:

I have some figures*

T do *ot know whether

you care to have them f i l e d or rot.
The Secretary of the Treasury:

Tf you w i l l be good

enough to f i l e them as exhibits, that may be done.
ilr. Hartman:

T would be glad to f i l e this.

T have not

said much about the dairy business nor hay and some other
products.
The Secretary of Agriculture:

The only other thing of

importance would be for you lo gather for us and submit them,



G

J. P. Kartnai

2536

facts as to '.'here t h i s trade goes, how i t is related a,~d
financed.
><r. Kartiaa ,:

The dairy product is over '15,000,000,

financed largely through this city.

The condensed inilk

business i s financed here entirely for that which is car-ied
on in t h i s s t a t e ar.d Oregon; the headquarters i s here.

The

same people have plant sin the east, but the branch on this
coast i s financed here.

The hay crop of our state and the

potato crop are e ti~ely financed here, that is ^ot shipped
east.
T di d want to give o-e furthe" fact.

The tonnage r a t e ,

and T will use lumber as a basis, i s in the neighborhood of
say A 2 » 00 a to- to ~e York, and to Chicago :$17.00 or
>5
-w
*l8.00.

Through the Canal, by way of the water, that same

product, whatever i t i s ,

r

hether potatoes or lumbo , can

go to Vew York for '^7.00 or 38.00 a ton, and to " e Orleans,
Nw
Kansas City or St. Louis fo- }8.00 or $9.00 a ton.

And

that i s co doubt what the St. Lnuis people had in mind when
they said the Canal will help them.
cuts off

Tt will help them.

the r a i l haul a.id gives us a water haul which, is

a cheap one, and takes the heavy weight products l i k e we
have here, our agriculture and particularly lumber, and



It

(r

J , P . Hartman

2537

enables thsm 60 reach those points, and we need the best
of banking f a c i l i t i e s for th£t purpose.
T thank you, ge tlernen.
(The memora idum submitted by ?:r. Hartman is as follows-')
January 29 th, 1914.
Hon. William ?!cAdo0 , Chairnan,
Seattle, ?/ash.
Dear t*rm Secretary:
Agreeable to m promise, T will now give you m reasons
y
y
orally expressed wvy I regard the City of Seattle the most
impo tant point for a regional bank in the torthwest part of
the United States,

vlie City of Seattle is the most impor-

tant t^ade center l»orth of San -nrancisco on this Coast, a.rA
co-.'sidering the future l e l i e v e i t will be =qual to San
Fraijcisco in every respect, and will lead a l l other c i t i e s
in the * orthsrest.
r

The contest must, as T take i t , " e
b

/aged betwser Portlaid and Seattle.

While comparisons are

odious, T must of necessity make them, to give you the facts
upon which a f i n a l conclusion must be based.
Trade r e l a t i o n , trade extension, and general commercial
expansion and development are the governi < principles v/hich
g
T take i t v/ill go far towards determining the location of



G

J . P . H&rtcaii

such abank.

The t r a d e r e l a t i o n , of course-, involves more

t r u l y a g r i c u l t u r e tha--: anything e l s e next.

2538

Manufacturing comes

T am keeping t h e s e t h i n g s in mind.

ADJACENT POPULATION.
Under t h i s head, T w i l l consider t h e t r a d e population
t r i b u t a r y , a c c o r d i n g t o t h e b e s t information v/hich T can
o b t a i n , t o S e a t t l e and P o r t l a n d , t a k i n g in each i n s t a n c e
Portland first.
POKTLAVD TFADE POPULATTOfl.
The p o p u l a t i o n , i n c l u d i n g t h e City of P o r t l a n d and to
t h e South and Vest, i s about 4-50,000 people; to the Bast,
i n c l u d i n g P o r t l a n d , about 200,000 people; and t o the >'orth,
which i s a l l in t h e S t a t e o f S a shiii g ton , about 100,000 t o
T
125,000 p e o p l e .

This t r a d e does not r e a c h S e a t t l e .

Fev: deep sea v e s s e l s p l y i n g i n t h e w o r l d ' s t r a d e , p a r t i c u l a r l y t h e O r i e n t , e n t e r P o r t l a n d Harbor.

Vessels whose

d r a f t exceeds twenty-fou^ f e e t can not with safety pass t h e
Columbia F i v e r b a r .

This may b e improved.

The F e d e r a l

Governme-t h a s spent m i l l i o n s upon t h e work, but t h e b a r r i e r
h a s n o t been removed.
P o r t l a n d h a s no O r i e n t a l t r a d e , save f l o u r , and has no
trade relation with Alaska, and in fact sells scarcely




G

J. p. Kartman

2539

anything

at

a l l ^orth of Centralia and Chehalis in Wash-

ington.

Tn the Gray's Harbor country, she has some trade,

but l e s s than S e a t t l e .

Portland p r e t t y well controls the

Walla Walla d i s t r i c t , but scarcely crosses the Snake River.
Eastern Oregon she divides somewhat with Salt Lake City, and
w i l l d i v i d e that more now since the Interstate Commerce
decision changing the i n t e r i o r r a t e s .
SEATTLE TRADE POPULATION.
The trade population of S e a t t l e and to the South and
West i::eluding S e a t t l e , i s f u l l y 500,000 people.

The trade

population to the East the- eof, excluding S e a t t l e , i s about
400,000.

The t -ade population to the 2-orth, excluding

S e a t t l e , but including E r i t i s h Columbia and Alaska, i s about
900,000.

We are already seAiding considerable of our manu-

factured producjr to Japan, Chiiia, and seeding considerable
of i t to the P h i l i p p i n e s , in competition with San -Francisco,
and t h i s trade w i l l increase, for one reason because there
a r e many S e a t t l e i t e s in the Orient, and they are a l l
partisan.

We f u r n i s h

most of the hay that goes to the

Orient, and much of the f r u i t .

We have a good business in

a l l the towns East of the Mountains, even in Spokane, save
g r o c e r i e s aui hardv/are, and reach into "Montana as far a s



G

J. P. Ha?-tman

2540

Eut we*
B r i t i s h dolt- cia i s grov/iiig ver^: r a p i d l y , a.x.d i s
coxistai? l y buying more from our merchants and manufactubers.
Our r e l a t i o n w i t h t h a t Province i s most c o r d i a l , and p a r t i e u
l a r l y do we do a l a r g e exchange banking busixiess wi^h them.
Alaska t r a d e s almost e x c l u s i v e l y in t h i s tovm.
"banks in Alaska have t h e i r o u t s i d e p r i n c i p a l

The

agents h e r e .

The Alaskan in every kind of t r a d e comes f i r s t in S e a t t l e ,
azd ma-^y of them keep t h e i r backing accounts here.
JO:DPARATT^ CROP VAI-UES.
The g r a i " crop of Oregon, Yrhich i n c l u d e s T7heat, o a t s ,
and b a - l e y , i s valued an u a l l y a t about 325,000,000.
fruit

c^op i s under ) l 0 , 0 0 0 , 0 0 0 .

The

And t h e hay crop, while

f i g u r e s a^e -?ot a t ha.id t h a t can "be " e l i e d upon, ssenis to
be about o n e - t h i r d to o-e-iialf of t h a t of t h e S t a t e of
7ashin(rtor>.

The d a i r y product i s not l a r g e in Oregon, or

in e i t h e r s t a t e to:-' tha t m a t t e - , but in time rrill

become

a u o s t impo>-taiit a g r i c u l t u r a l f e a t u r e in the two s t a t e s ,
for c o n d i t i o n s f o - producing High c l a s s d a i r y product a r e
ideal.
In "fashi g t o n , the an. u a l grairi c r o p , including wheat,
,oats a-id b a r l e y , exceeds $50,000,000,



and for the p r e s e n t

Gr

J. P. Hartnaii

year has run above ^60,000,000.

2541
The fruit crop including

apples, peaches, aaid berries averages about $25,000,000 per
year.

About half of the high class apples produced in the

Tntemiourttain and Pacific Coast country comes from the State
of "Washington, a :d the remainder from Oregon, Idaho, and
Colorado.

v/ithin ten jsars, apple bearing acreage of the

state w i l l be increased about fourfold.

The new orchards

which w i l l cone in bearing w i l l make this addition.

The

bank exchange business of the fruit and grain i s carried on
almost exclusively in t h i s city.
The tree fruit bearing districts of Oregon can not be
increased very muc^, because the available ground i s largely
covered.
T the Yakima Valley of Washington, there i s now pron
vided with water f o - irrigation about 160,000 acres.

By

what i s k*:own as the new high line canal ditch, this will be
increased to about 400,000 acres, a l l of which w i l l be
available for apples ar.d hay and general dairy farming,
in the p^-opo-tion of about one for apples and three for
dairying a..d hay.

T the Wenatchee country, the ground
n

provided with irrigation is about 70,000 acres.

The new

Quincy project now under way w i l l provide 400,000 or more




0

J. P. Hartman

acres with water.
best.

2542

The soil in this district i s of the very

The W X a ^7alla and Spokane districts have a large
aL

fruit acreage, which will " e increased.
b
Hay production i s not very carefully figured out, "but
the annual crop is worth more than $15,000,000, v/hich i s
largely produced in the Pu^et Sound basin and Yakima Valley
districts.

This crop i s rapidly increasing.

The dairy p o s s i b i l i t i e s in this a t i t e are most inviting,
but the industry i s in i t s infancy.

The present production

i s confined almost exclusively to the Puget Sound basin.
an .ual

worth i s now about £10,000,000.

The

^e have six large

milk condensing establishments sending their products a l l
over the state, Eritish Northwest, a^d Alaska, in cargo
l o t s to the Orient, and to the states East of us, particularly the . on tana districts.
Host of our flour i s exported to the Orient from the
six flouring m i l l s in t h i s city.

^e export l i t t l e or no

wheat.
All of these industries and development calL for bank
exchange arrangements which reach a l l over the world, particularly the fruit and grain business, coupled with the
other n&tters hereinafter referred to, shows great demand




0

J. P, 'Hartman "

~*^: -——«—-—2543__

for a r e g i o n a l "bank hers, so that" the-exchange

relations

throughout the United S t a t e s and the world may "be readily
had.
COAL.
The S t a t e o f Oregon p r o d u c e s no c o a l , w h i l e t h e annual
o u t p u t of t h i s s t a t e , which i s m o s t l y • e p r e s e n t e d "by l a b o r ,
i s valued a t about ^15,000,000, and t h a t of B r i t i s h Columbia,
which t r a d e s with u s , at about the same.

The c o a l industry-

i s r a p i d l y developing, as the s t a t e i n c r e a s e s in population
and the trade r e l a t i o n s expand.
thr/

The coal of Alaska under

i s e law j u s t passed for r a i l r o a d b u i l d i n g , v / i l l become

an important f a c t o r increasing bank demands.
G L PfODUOTTOX
OD
Alaska a*id the Yukon Territory, s i n c e the d i s c o v e r i e s
i.i the susimer of 1897, have sent to the S e a t t l e Assay Office
about *300,000,000 of t h i s metal,

p r a c t i c a l l y a l l the gold

comes h e r e , for here the merchant t r a d e s .
ion nor, with the b e ^ e f i c i e n t law passed

The gold productT

vill i n c r e a s e , as

w i l l the population of Alaska and the t-ade extension of
that territory.

The gold p^oductio.u of Alaska, and t h a t

t-ade relation

extension, i s one of the s t r o n g e s t f a c t o r s

de~m *ding t h a t the r e g i o n a l bank be a t S e a t t l e , rather than




G

J. P. Kartman

2544

at any other Northwest port.
LIPPER TfADE.
3 V m the best s t a t i s t i c s obtained, the lumber productJo
ion of Oregon does :ot seem to have ever exceeded 555,000,000
per annum and i s more nearly $20,0005000.

The value of

the manufactured lumber at the mill in this state during
the past ten years has run from §35,000,000 to J?5,000,000,
and the average being about )50,000,000 per an um.

Nearly

a l l their lumber i s sent interstate or rail shipments.
Puget Sound having fine deep water f a c i l i t i e s , open to
a l l ships of the ^orld at a l l times, and having on i t s
shores the best merchantable timber knotfn in the world, has
enabled the state to export about one-half of a l l the
product, the other half going inland by rail.
i s the cei.'tBc- of t h i s important industry.
owner l i v e s .

Seattle

Here the mill

He~e i s zhe manufacturer who nakes the mill

machinery and does a31 the repairing.

Prom this town the

trade radiates a id covers the important c i t i e s to the

v

orth,

the "rest a?d the ^uthwest in t h i s business.
OP.TTTvTAI TRADE.
Tn some l i n o s , p a r t i c u l a r l y f l o u r , f i s h , a.id lumber,
we h a v e d e v e l o p e d a l a r g e export t r a d e to ;he O r i e n t .




The

Gr

J. P* Hartman

2545

opportunity e x i s t s for largely increasing that trade, but
the best of banking f a c i l i t i e s are necessary to accomplish
t h i s advance.
SHTPPU'g PACTLTTTES,
So far as r a i l shipments are concerned, there i s very
m i t t l e difference between the two towns.

Seattle has the

Chicago, "llnaukee & St. Paul Kailroad in addition to the
roads serving Portland.

When i t comes to trade with Alaska

and the Orient , shipping f a c i l i t i e s arc very much in favor of
S e a t t l e over aiy other town in the ?orthwest.
7TSH:
Cured fish products, and a comparatively small amount
of fresh f i s h shipped in refrigerator are

sent from the

Columbia River, a t a value of about $4,000,000 per year.
A considerable portion of t M s value i s fish put up on
t h i s side.

The cur 3d f i s h product of Washington and

Alaska exceeds J,20,000,000 t h i s year.

The fishermen l i v e

h e r e , and the o u t f i t t i n g i s done in t h i s c i t y .

Much fresh

f i s h i s shipped the year around, principally h a l i b u t ,
through a large concern in t h i s city.

U goes largely to

the Eastern s t a t e s , and i s found in fine condition as far
a s the Boston market at a l l seasons of the year.




G

J. P. Hartman

254o

P0t73R COST.
Manufacturing i s increasing in ihe

ovthwest.

cost of producing por/er i s an important factor.
i s manufacturing, "banks of course are needed.

The
Where there

Coal i s

cheaper on Puget Sound than on the Columbia ^iver by at
l e a s t *1.50 per ton.

The City :f Portland i s served alone

by private hydro-electric power corporations.

At Seattle,

the Sto-.e-^etester combination, in plants developed and
developing, ca^ produce about 200,000 H.P.
Seattle,

The City of

in i t s municipal plant at Oedar Elver, has now

developed more than 20,000 H. P*, and when the plant is
ultimately completed w i l l reach r.ea:-ly 5°> 00O j - h i l e it

is

preparing to develop other f i e l d s , condemnation being
directed therefor.

This has made the cost of power cheaper

here than in any other c i t y on the Coast, save Tacoma, where
the conditions are :hs same.

The municipal plant of Tacoma

ha8 do.>e much to reduce the rate there, a«.d correspondingly
has increased i t s manufacturing enterprise.

The relations

between Tacoma and Seattle are c l o s e , and the development of
the one i s the development of the other.
CO'.y'CLUDT'JG STATTSTTJS.
The P o p u l a t i o n of Oregon i s approximately 7 5 0 , 0 0 0 , o f




G

J. P. Hartaan

2547

Washington 1 , 5 0 0 , 0 0 0 , and of the Panhandle of Idaho 100,000_
of the Western h a l f of T'ontana 250,000, of B r i t i s h Columbia
and Alaska approximately 800,000.

The natural and the

r e a l trade c e n t r e and d i s t r i b u t i n g point of t h i s e n t i r e
territory i s Seattlec

^ e s i d e s , S e a t t l e i s from two tc

t h r e e days c l o s e r t o Japanese and Chinese ports than any
of the other a v a i l a b l e P a c i f i c Coastvtrade p o r t s .

On the

f u r t h e r s i d e of the p a c i f i c we are trading with approximately 5 0 0 > 0 ° 0 » 0 0 0 people.

The A t l a n t i c Coast has developed

something l i k e ten c i t i e s of the s i z e ar.d larger than
Seattle,

in trading on the further s i d e of the A t l a n t i c

w i t h 2 2 5 , 0 0 0 , 0 0 0 people.

The only p o r t s we have on the

Westerly pa^t of the United S t a t e s are San Diego, San Pedro,
San -prarrcisco, Columbia F i v e r , and Puget Sound.

Three of

t h e s e , San Diego, San 7 r a n c i s c o , and Puget Sound, a r e open
t o the ships of the vrorld under a l l c o n d i t i o n s , at a l l
t i m e s , and without any dar:ger whatever of entering under any
s t r e s s of weather.

These f i g u r e s and f a c t s must be given

c a r e f u l c o n s i d e r a t i o n in determining the important

question

submitted by The Congressto your Commission.
CO' CLUSTO:>.
What T have said above concerning Portlaixi i s not with




G

J. P. Hartiaan

2548

the intention of reflecting upon that city.

Tt i s a strong,

commercial tov.-n, with a splendid American citizenship.

Its

commercial attainment, however, i s not equal to that of
Seattle,

nor do T believe i t ever will be»

I have nany

good friends there, and do a considerable business with
the city and i t s people-

T what T have said, T have tried
n

to divorce myself from partisanship, and reach conclusions
based alone upon ^incontrovertible facts.
Mr. Hartman:

T would like to make this suggestion.

figures to a certain extent are comparisons.

The

T did iiot put

them up with the object of being odiouo, but T saw no other
way of getting what T had to put before you.

I have the

kindest feelings for the City of Portland.
STATEMENT OF DANIEL KELSHER.
The Secretary o f t h e Treasury:
now, Yr. Keleher.

W w i l l hear from you
e

^ i l l you give your f u l l name and

occupatiOxi?
Mr. K e l e h e r :

T am a p r a c t i c i n g lawyer and i n t e r e s t e d

a good deal in banking here a s a stockholder and member of
the Executive Jommittees of banks here.

I have been a very

c l o s e student of t h i s b i l l from i t s inception.




} make t h i s

G

D. Xeleher

2549

statement simply for the purpose, that while I appreciate
you only want a statement of the exact facts here, if T
should make a statement which "herders on the line "between
an opinion on those facts, and the facts, you will understand me.
The Secretary of the Treasury:

Have you s t a t i s t i c a l

information?
Mr. Keleher:

>J

o, I have very l i t t l e .

The Secretary of the Treasury:

I was going to say,

any s t a t i s t i c s , we think, had "better " e filed as exhibits.
b
Vr. Keleher:
statistics.

^o, T have nothing at a l l in the way of

T want to say, just as an opening, you

gentlemen made a statement this mom ing that I think was a
l i t t l e modest, or not "broad enough.

You said you had a

duty to perform in selecting these regional d i s t r i c t s , but
tWfct there was a "board over you that was going to change
those things.

I differ with you a l i t t l e , and i t i s on

principle —
The Secretary of the Treasury:

"No, the Board has the

right of review, T said.
Mr. Keleher:




The right of review, T mean.

T make this

G

Da Keleher

2550

statement, and T think i t is a fact v/hich will be borne
out in history, that what you men do as a Board of Or^nization here is going to be a lasting thing,
l a s t for 50 years«

Tt i s going to

The d i s t r i c t s that you select will be

d i s t r i c t s that are permanent.

Eecause, if there is anything

in banking business which is necessary and essential, it is
s t a b i l i t y , s t a b i l i t y in the way of doing business, with due
regard to the convenient

and customary course.

As a western man, now, I say t h i s :

That we differ from

the east a great deal in the way that these banks should be
instituted, the division of them.

I recognize the contest

that went on between the proponents of one big bank, a
central bank, a.id these regional banks.
wanted the regional banks.

W of the west
e

W wanted to be independent.
e

W wanted the d i s t r i c t s established and wanted more than
e
the eastern men wanted.

W do not want four or eight,
e

we want the maximum, and we think we ought to have it from
the inception of the jurisdiction of this Federal Reserve
Baard.

W ought to have the maximum started at twelve.
e

Something was said, and a question was asked t h i s
morning by you, Jtre Secretary, as to whether the bank
proposed in the d i s t r i c t we suggest cf the four states here




G

D. Keleher

would not be a weak "bank.

2551

I say no weak bank can be estab-

lished in this district, never mind what i t s territorial
boundary i s .

A bank of three or four millions would, in

m opinion, be just as strong for the district that has only
y
that amount of business to do, as the •f w York bank with
te
f i f t y million, just as strong.

Tf we establish a district

with four millions of capital here in these four states and
the business can be conducted by the member banks of these
states to take care of a l l the busi-ess of the four states,
that i s a strong bank, just as strong as the bank they will
have in the City of ^ew York.
The Secretary of Agriculture.:

Eut that is the real

question, i s i t not, whether i t w i l l or not?
Mr. Keleher:

I do not believe there i s much question

about i t .
The Secretary of Agriculture:

For instance, you could

establish one in Georgia to which your principal would
apply, but Georgia i s nominally a borrowing state, and any
tank established there would be dependent.
Mr. p-eleher:

? r answer to that i s that these four states
$

are not bor-owing states.
The Secretary of Agriculture:



That i s w h a t T a asking.
m

G

D, Keleher
Mr, Keleher:

2$$2

They are not "borrowing states, and T

speak from m experience in banking.
y

T give half m time
y

to i t now; T a on the discount committee of the largest
m
bank here, of three, and on the executive committee of four
banks, and T think T a a l i t t l e familiar with that, and T
m
would speak along that line.
GDrnmunity.

W are not a borrowing
e

These four states can conduct the business,

with t h i s system established by the $ew Currency E i l l , and
care for a l l the business, present and future, of this
growing d i s t r i c t , in m opinion.
y

In the past we have

borrowed very l i t t l e , i t i s v e T rare that v/e borrow east;
i t i s very seldom, i t i s a rare occurrence.

Tt i s true

that occasionally a big fish company like the one spoken of
t h i s morning, with headquarters and owned in Chicago, is
financed there, but that i s a local affair.

That i s not

bo? rowing money there*
$ow dividing your d i s t r i c t s with due regard to the
convenient and customary course of trade here, this i s a
fundamental thing which you men should take into consideration.

The l i n e s established today for that line of

business are east a d west, not north and south. The
bufeiness i s directly east and west.



In the olden days wfcen

G

D. Keleher

2553

T came here it was north and south.
business had to be do.ie by boatse

The reason was, our
San Francisco first

the headquarters, and second Portland,,
cut across here this changed altogether.

When the railroads
Our relations

with San Francisco commercially are comparatively email.
And while T would venture to say that five out of six backers
today in this district, if put the question "There, if you
do not have a bank in Seattle, would you rather have it, in
San Trancisco or Chicago", while fi^e out of six of them
would say San Francisco, I believ e that five out of six of
them if they would corisider carefully and lay aside local
preferences and local pride because they are all coast men,
would not say San Francisco but would say Chicago, -necause
the lioe of business is not north and south with us any
longer, it is east and west.

And if they <vould lay aside

that Pacific Coast pride, they vrould say they would rather
do business in Chicago and have

the head bank there, if we

were to be a branch bank*
"Now take your east and west lines, and see what it means.
When most of us in this room came to this country we had no
east and west line of traffic in this tier of states that
we have named here.




Today we have five parallel lines

Gr

B. Keleher

2554

running across.

The result i s that i f you take eastern

y.oizta.iia, for example, if a man living in northeastern
Montana ^are asked if he would do business with a city that
had a Regional Bank, if i t was in the southeast corner of
?'o.otana , 200 miles away, he would say no, T would rather do
business in Chicago, 1200 miles away6

Tt i s in the course

of business.
The Secretary of the Treasury:

You understand, of course,

Mr. Keleher, that the inauguration of this system does not
mean any alteration in :he ordinary course of transactions
between banks and the ordinary course of commence.
"rr. rele 1 er:

Vo.

The Secretary of the Treasury:

Those transactions proceed

as usual.
^r.

yeleher:

Yes.

The Sec'-etar- of the Treasury:

Here is a bank which is

intended to hold a part of the reserves of this district,
or whatever district may "be established, a - that bank will
.d
have relatio.-iS «/ith the member banks of the district.
Mr. Keleher: Yes.
Hie Secretary of the Treasury:

V w the argument you are
o

making has more relation to the ordinary transactions as



G

D. releher

2^55

they now proceed, and it does not touch the question of
what would "be a proper homogenuous district tor this
organization, in contemplation of Ihe Act, and as to-which
city in that d i s t r i c t would "be the "best place to put the
headquarters of the bank.
v

r . Teleher:

Well, T ain trying to meet that and answer

that from your viewpoint.

That was leading up to a state-

ment T was goi.^g to make here, as

to how t h i s current of
shipping
"business, T mean "business transactiois,/gofes back and forth,

"because that i s the foundation of what follows, banking and
the pay for the goods; the shipping of the goods back and
forth, that is taking place more and more in those l i : e s
east and we^t.

And while you gentlemen intimated this

morning that you had heard enough of the Panama Canal in the
other c i t i e s , there is a suggestion T ?rant to .nake there on
that poi»it that T do not believe has occurred to you —
The Secretary of the Treasury:

Y

° u are mistaken in your

asaimption that we said we had heard enough,

^e said, on

the other hand, that each city was making the same claim
that the Panama Canal was goi^g to be more or less of an
Aladdtn's lamp for each city.
The Secretary of Agriculture :




That was rather facetious.
Intended to be facetious.

G

B. Keleher
The Secretary of the Treasury:

2556
Yes, i t was intended to

be facetious.
:&\ Keleher:

Now, speaking along that l i n e , as to the

establishment of a d i s t r i c t with tfcat in mind, something
has "been said today of what we hoped in the way of shipping
goods from this Sound through the Canal to ttew York. There
i s another thing you must "bear in mind, "because i t i s right
on us now; i t i s not a matter of speculation; the Canal
i s going to be operated this year and business is going to
flow through i t .

Has i t been suggested to you, as to not

only the current of business from here to the Atlantic
seaboard through the Canal, but through the Canal here and
into the interior?

T other words, how much new business
n

and how much id that new current east and west to be increased by t h i s f a c t , that v/hen this Canal is opened, goods
w i l l be shipped to the Coast here from the Atlantic seaboard
and re-shipped to the interior.

Of course, that i s going

to happen.
The Secretary of the Treasury:

Of course, that question

has been presented, and that of course depends upon the
railroad rates.




G

D Keleher
»
Mr. Keleher:

2557

Yes.

The Secretary of the Treasury:

A.,d as to what combi-

nation of railroad and water rates is going to be the
cheapest, and how far the scope of that influence is going
to extend i s a question.
Mr. Keleher:

That i s a

question-

f a c t , a:jd maybe i t borders on opinion*
make i t mostly a fact.

It i s a question of
Railroad men would

T a goi-'g to make a statement
m

which w i l l be astounding to you, and T believe i t to be a
statement of fact, as coming from a most experienced railroad
man*

He made i t to me, and T could not comprehend it and T

aslced him to repeat i t , because I told him T was going to
repeat i t .

He i s a traffic man and v;as connected v/ith the

Northern Pacific for 20 years, and receiver of i t in the
nineties and has spent f i f t y years in railroad traffic in
the west.

He made the statement to m and said he would
e

base his reputation upon i t , that when the Canal i s opened
they w i l l ship a certain class of bulky goods from ^lew York
City to St. Paul and a l l other Jiissouri Hiver points through
the Port of Seattle.

H w that i s an
o

astounding statement,

and i t appaled me, and T argued i t out with him from a lay
standpoint as against a traffic man'B standpoint, but he




G

D T^eleher
*

2558

says i t i s going to happen and happen immediately*

T says,

" do iTot care for that, give me v/est of Dakota, give me
T
west of Nebraska".

He says, "Yes, we will go further".

T said how i s i t possible, a.nd he made a st at on ait which
does not seem clear to me y e t , but he i s positive of i t .
He says that the water rate w i l l be so nominal practically
as compared with the rail-oad rate that i t i s not a factor,
and that they can ship these goods a l l the way
back in with a certainty to the Dakotas.

around and

Tf that i s so r

he say8, the tine has come now when these eastern and
western traffic men ar<! not going to look to the east,
they are going to look to the west, to the
west.

port of the

How you w i l l say they are going to make that same

argument in San Francisco, Los Angeles and

San Diego.

Yes,

they w i l l come to them, but the boats thaifc land at San
Diego , their cargoes v i l l not go to Monta*3a or the Dakotas,
but east from there, and in San Francisco they ^ i l l go east
from there.

To reach the region of the Dakotas and Montana

they w i l l come to the po**ts of Puget Soiud and ship across
here.
I say that the dujty devolving upon you i s greater, I
b e l i e v e , that you men even anticipate.




T think i t i s a

G

D, Keleher

permanent thing.

2559

The great problem in m mind that you
y

are going to have to solve here, to give us what we ask
for, i s the question T/hich has "been suggested, have we
sufficient capital to establish a Regional Bank in the
district we say we are entitled to and ought to have.
i t i s a close question.
alone, we have not.

And

Tf you take the national bavjks

But i t i s not f a i r , if t h i s Board

please, to assume that only the national banks will come in.
That (jiestion was discussed in

the enactment of this b i l l ,

ard i t i s to be assumed that the state banks will come in.
In COAJSideriiig that — this i s the one territory of a l l the
eight or twelve you will establish and i t seems to m that
e
t h i s question i s coming most home to you.

W have here the
e

large geographical position and the comparatively small
capital position, and it seens to m that you should
e
endeavor to accommodate us in this district with the small
capital, if s t a t i s t i c s bear out the fact that tkat capital
w i l l be sufficient

to conduct the business of t h i s d i s t r i c t .

The Secretary of the Treasury:
W w i l l now hear from Montana.
e

Thank you, Kr. Keleher.
Is Mr. Johnson here?

If

you have a n y s t a t i s t i c s , Mr. Keleher, you say f i l e them.
Mr. TCeleher:




There i s one statement I would like to make

G

A*, C. Johnson

2j6Q

in regard to the British Columbia business.

W have up
e

here Vancouver and Victoria, and the volume of business i s
t e r r i f i c and competition is keen*

I ky-ow the volume of

buainess done with the neighboring c i t i e s , 1^0 miles away.
They sent us f i v e millions of money last year, and they
sent us approximately the saiae amount this year, and that i s
only for one small bank here.
The Secretary of the Treasury:

Yes, our attention has

been called to that intercourse.
STATErO&'T OP A. C. JOKI SO •:••.
The S e c r e t a r y o f t h e Treasury:

l!r, Johnson, w i l l you

s t a t e your f u l l name, r e s i d e n c e and o c c u p a t i o n ,
Kr. Johnson:

A. C. Johnson, v i c e - p r e s i d e n t , American

N a t i o n a l Bank, Helena.

I represent

t h e Helena C l e a r i n g

House A s s o c i a t i o n .
The S e c r e t a r y o f t h e Treasury:
M*\ Johnson:

You know our problem.

T do.

The S e c r e t a r y of t h e Treasury:

The q u e s t i o n i s , i f a

d i s t r i c t i s o r g a n i z e d h e r e , where Montana ought t o b e p u t ,
and we should l i k e t o have your v i e w s on t h a t ,
Mr. Johnson:




T w i l l say t h a t matter was d i s c u s s e d by our

G

A. C. Johnson

2jSl

people in a general way at home there at Helena, and as we
would meet other packers throughout the state, and then the
sugrestion was made that the Helena Clearing House Asso-

'

elation take a pole of the ba.iks of the state and send a
l e t t e r to each "bank t> express their vieT7s on this particular
matter.

That was done, ar.d we got the returns practically

from a l l

except six of the National "banks, arid most of the

state "banks, about 80 p er cent of the state "banks, T guess.
The Secretary of Agriculture:

What was the nature of that

inquiry?
The Secretary of the Treasury:

Have you a copy of the

letter?
!£r. Johnson:

Yes.

^he nature of the inquiry —

The Secretary of the Treasury:

l e t us have a copy of the

l e t t e r sent to the "banks,for the f i l e s .
(The paper was f i l e d . )
The Secretary of the Treasury:

Vl

ame of bank, location,

capital and surplus; do you have the largest amount of
banking business with eastern points or Pacific Coast points?
Eastern points.

What percentage:

East 98; West 2.

Upon

which of the above mexitior.ed points, east or west, do you
chiefly depend for exchange transfers?




Upon which do jcu

G

A. 2L Johnson

256 2

chiefly depend for currency shipments?

Please indicate

your first, second and third choice between Twin Cities and
Chicago, Denver or Pacific Coast for a Federal Reserve
Bank,

That is from the Anaconda National Eank?

Kr. Johnson: Yes.
The Secretary of the Treasury:

That is the character of

the inquiries?
Mr, Johnson: Yes,
The Secretary of the Treasury:

Have you the replies

received from a l l the banks?
Kr. Johnson:

T have«

The Secretary of the Treasury:

Will you f i l e them as

exhibits?
Kr. Johnson:

I will.

(The papers ware

accordingly f i l e d , )

The Secretary of the Treasury:

Wliat was the result of

this poll ?
Mr. Johnson:
second choice.

In this summary T put down the f i r s t and
Of the 53 national banks, 44 banks reported

a 3 fir3t choice Twin Cities, with capital and surplus of
•6,663,500.
of

A

»l 189 500.




Chicago seven banks with a capital and surplus
Spokane, one bank with a capital and

G

A. C. Jdbnson

surplus of $150,000.

2563

The Pacific Coast, one "bank with a

capital and surplus of §31,000.

That is the f i r s t choice.

Second choice, ofthe national hanks, Chicago comes
f i r s t with 37 banks voting, with a capital and surplus

of

$6,205,000; Twin C i t i e s , six "banks, with capital and surplus
of $870,5 00 ; Spokane, three banks, with capital and surplus
of $146,000; Seattle or Twin Cities, one bank, with capital
and surplus of *>150,0005

Ho choice for second choice, six

banks with a capital and surplus of §662,500.

That makes a

t o t a l capital and surplus of §8,034,000,
The Secretary of the Treasury:

H w many national banks
o

in the st at e?
?!r. Johnson:

59*

The Secretary of the Treasury:

Prom how many did you

receive replies?
Mr. Johnson:

53, six banks not voting, having a capital

of 5175,000.
The Secretary of Agriculture:

Did you canvass the state

banks?
Mr. Johnson:

Yes.

The Secretary of Agriculture:
Mr. Johnson:




Shall T read i t ?

Will you give us that.

G

A, 2. Johnson
The Secretary of the Treasury:
Mr.- Johnson:

"believe; T have

-

2564

Tf you please,

There are 202 state and private "banks, T
not got justthe number, "but

the ones

reporting were 144 state "banks and 14 private banks.
For f i r s t choice, Tv/in Cities, 126 banks with capital
and surplus of $7,089.170..
Chicag) , 8 banks, with capital and surplus of $415,000,
Spokane, 9 "banks, capital and surplus of #367,000.
Spokane orSeattle, one bank, capital and surplis §25,750*
Seattle, one bank, capital and surplus $20,000.
Pacific Coast, two banks, capital and surplus $241,500,,
Denver, 4- banks, capital and surplus $122,500,
Portland, one bank, c a p i t a l and surplus of $25,000.
Helena, two banks> capital and surplus of $59>O°°»
Helena or Spokane, one bank, capital, and surplus of
$40,000.
" o choice, three banks, capital and surplus ?>301,000,
N
Making a t o t a l of 158 banks with £8,70?,920.
•

The Secretary of the Treasury:

Let those recapitulations

or sunmiaries be filed with the stenographer.
Kr. Johnsont

Yes.

For second choice:

Chicago, 67 banks, with capital and surplus of



Gr

A. 0, Johnson

2565

$4,960,750.

I

Twin Cities, 16 banks, with capital and surplus of
5582,000.
Pacific Coast, 19 banks, capital a : d surplus of

554-5,500*
Denver, 12 "banks, with capital and surplus ^357,500.
N w T get fou~ of them "bracketted, Spokane 4, Seattle
o

2,

Portland 1, and 5utte 1, with a capital of ;|439,O7O.
Bo choice for second, 36 banks with a capital of
$1,821,100.

Total 58,705,920.

The Secretary of the Treasury:

E w long have you lived
o

in Montana?
Hr. Johnson:

35 years.

The Secretary of the Treasury:

Are you familiar with the

whole state?
Jar. Jolinson:

I thiiilc so, fairly well,

I have been there

for 35 years, in active business.
The Secretary of fthe Treasury:

Where does the State of

Montana do most of i t s business, at what points?
Ur. Johnson:

Well, i t is eastward.

The Secretary of the Treasury:
Mr.Johnson:



Yes, s i r .

Eastward?

(J

A. oo Johnson
The Secretary of the Treasury:

25^6
More with the Twin Cities

than anywhere else?
Mr. Johnson:

Well, T should say i t is evenly divided

between the Twin Cities and Chicago, and quite a "bit of i t
in vew York.
The Secretary of the Treasury:

You are speaking of the

banking business?
!&• Johnson:
• •

Banking business.

The Secretary of the Treasury:

T am speaking of commod-

ities?
Mr. Johnson:

That is largely eastward.

Our wool a l l

goes east; the bulk of our c a t t l e and sheep go east.

For

the l a s t few years there has been some of i t gone westward.
Our mine products a l l go east.
The Secretary of the Treasury:

D you think i t would do
o

violence to the customry course of business if you were
attached to a d i s t r i c t to the ^est of you?
Mr. Johnson:

T absolutely do.

Tt would reverse a l l our

order 01 business.
The Secretary of the Treasury:
Ur. Johnson:

Your exchangs movements?

Our exchange movements.

These srjoae replies

w i l l show you that stronger than 90 per cent say that t h e i r



Or

A. J. Johnson

2567

"business is eastward; in fact i t will average more than Jihat.
The Sec etary of the Treasury:

Wkat i s the time "between

Helena and " .'in-.eapoli s?
T^r. Johnson:

Only a"bout 30 hours.

The Secretary of the Treasury:

Have you had opportunity

to discuss t h i s question with soiiie of the representative
business nen in the state, outside of the "banking interests.
Mr. Johnson:

Yes, s i r , m partner in thebusiness is
y

interested in the mercantile business a l l over the state,
former Senator Power, and his business i s largely buying
and shipping east.

O course, he has shipped some c a t t l e
f

west.
The Secretary of Agriculture:

Should you say that the

movement r e s t is increasing?
Mr. Johnson:

Yes, T could*

T think i t i s increasing

some.
The Secretary of Agriculture:

Ts i t increasing relatively

to the eastern movement.
TJ*. John so .-S Yes.
-i

O course, the west has not been
f

much of anything to us up to a f e / years ago, but it
v

is

commencing no*?, vthere they are shipping some cattle over
here, and in fact they have gone out of the c a t t l e business



Gr

A. 2. Johnson

'

over here to a large extent*

2568

Our wool a l l goes east, and

sheep a^d c a t t l e .
" l w we are essentially a "borrowing community; that i s ,
bo
we are a new community, and we will "be for some time to
come.

To s h o w ^ u the progress inade in the line of agri-

culture, t h i s may £ive you a "better idea.

T will just read

here f~om a l i t t l e trade journal, v/hich was information
gotten from our ilontana secretary:

"Four years ago along

the lines of the Or eat Northern in *%forthern lion tan a there
were twelve grain elevators.

Today there are reported to

"be 280 grain elevators along exactly the same stretches of
road, and more building just as fast as material arrives on
the ground",

Il w that is one railroad, "rr. Secretary,
fo

and -here aretwo other railroads where i t will ;iot apply as
strong, "but they are doing the same thingo
The Secretary of Agriculture:

Have you something you

would l i k e to f i l e with the reporter, !ir. Johnson?
Kr. Johiiso.?:

TTell, I ha^e here a "book giving the s t a t i s -

t i c s of lroiita:ia , gotten out by the Bureau of Agriculture,
Labor ar*d Industry.

This nay be something that you can

get certaii: information from.
almost.



Tt has everything in there,

The cattle shipped out of the state in 1912 were

Cr

A. C. Johnson

2569

188,000 head.
The Secretary of Agriculture:

Does i t give where that

goes?
l!r. Johnson:

Which, the cattle?

The Secretary of Agriculture:
Mr. Johnson:

Yes.

Well, T do not know.

The Secretary of Agriculture: tfe can discover i t , if

it

i s there.
]&". Johnson:

Thei*e i s the valuation of the state for 1913!

and thiB took w i l l give 1911 and 1912.
The Secretary of Agriculture:

Let that " e f i l e d as an
b

exhibit to the testimony of Mr. Johnson.
(The "book was accordingly filed. )
Mr. Johrson:

T got this the day before T l e f t , range

c a t t l e 157,000 head - The Secretary of Agriculture:

Just f i l e those, as we

cannot *-emeviiber those details.
The Secretary of the Treasury:
here?
Hr. Charles:




Yes.

Ts Mr. Charles, of Sutte,

G

25r/0

D. J". Charles
STATE ENT 0? D, Jo CKA.KLEB,
The Secretary of the Treasury:

Mr. Charles, w i l l you

s t a t e your f u l l name and occupation?
Jlr. Charles:

D- J". Charles, president of the Miners

Savings Eank and Trust Company; and up to Tuesday night I
was President of the Butt e Chamber of Commerce.
The Secretary of t h e Treasury:
organization, ha^e

Do you represent any

you any c r e d e n t i a l s , T jaean, from the

Clearing House or other "bodies.
Mr. Charles:

T have a l e t t e r from the Chamber of Commerce,

Mr. Secretary,
The Secretary of the Treasury:

Just f i l e i t with the

reporter.
The Secretary of Agriculture:
}!r. Charles«

Is that a resolution?

T^ i s a l e t t e r of recommendation, that T am

the chosen representative of the Butte Chamber of Commerce.
The Secretary of the Treasury:
representing that Chamber?
Mr. Johnson:

Yes.

(The paper i s as f o l l o w s : )




Tt i s your credentials as

G

D. J . C h a r l e s

2571

CHAIIBER OF COMMERCE
Lewisohn B u i l d i n g ,
B u t t e , Montana,
January 26th, 1914.
TO

T-:or:

TT : AY CO-.CER:.::

The Bearer, Vx* David J. Charles, President of the
Eutte Chamber of Commerce aud President of the Miners
Savings Baftk <c Trust Compan2r, has been selected as the
S
representative of the Butte

Bankers to/appear "before the

Regional Bank Organization Committe in connection with the
location for a Regional Bank in the Northwest, and this
l e t t e r shall be taken as his credentials.
Respectfully,
Butte Chamber of Commerce.
Charles Rustin, Secretary,
The Secretary of the Treasury:

What i s the view of your

community there as to the d i s t r i c t to which Montana should
be attached?
Mr, Charles:

^e have seven banks in the City df Butte,

five state institutions and two national banks.

At a con-

ference two or three evenings ago before T started west,
five out of the seven voted in favor of being connected



f

G

D. jr. Charles

2572

with the Twin Cit i e s as f i r s t choice and Chicago as the
second choice.

There was a division between t"© of the

officers of one bank as being connected with the eastern
banks, and one of the banks voted for the west-

T would

say s i x out of the seven wished to be included with the Twin
Vs

JJities for first

choice, and the same number of Chicago as

second choice.
The Secretary of the Treasury:

What was the position of

the two national banks?
Mr, Charles:

Twin Cities first

and Chicago second.

The Secretary of the Treasury:

Both national banks

favored that ?
?uT. Charles:

Both national banks favored that.

Mr.

Job, who i s connected with the Silver Bow National Bank, is
here and w i l l speak for himself*
The Secretary of the Treasury:

What 4s the view of the

Chamber of Commerce of Butte on t h i s subject?

You repre-

sent them?
Mr. Charles:
and entirely.

That matter was l e f t to the bankers, alone
All the banks are represented in the Eutte

Chamber of Commerce as members, and that matter was turned




G

t>. J. Charles

2573

over to the Bankers bureau for their action.
The Secretary of Agriculture:

What i s your time to

Minneapolis?
Hr. Charles:

T would say about 30 or 36 hours.

T am

not p o s i t i v e as to that.
The Secretary of Agriculture:
Mr.oharles*.

And to the coasts

24 hours from Eutte to Seattle.

The Secretary of Agriculture:

Your reasons are in gsaeral

the same as those given " y Mr. Johnson?b
Mr. Charles:

They are, yes, sir.

The Secretary of Agriculture:
?3r. Charles:

T do.

You endorse that position?

T understand that the Chamber of

Commerce at Helena canvassed the

entire state, and our

Chamber of Commerce took for granted that their canvass was
a true or.e and l e t i t reit at that, so gar as the state
generally i s concerned.

However, our position at Eutte is

almost unanimously in accord with the action taken throughout the state.
The Secretary of the Treasury:
Mr, Job,




That i s a l l , thank you.

E. J o b .

2574-

STATEMENT Or E. JOB.
The Secretary of the Treasury:

Please state your name,

residence a. d occupation?
llr. Job:

Eplin Job, assistant cashier of the Silver E w
o

National Bank.
The Secretary of the Treasury:

D you concur in the views
o

expressed " y Hr. Oharles?
b
Kr. Job:

Certainly, T do.

The Secretary of the Treaairy:

You are a l l in accord with

the sentiment about being attached to St. Paul or the Twin
Cities as the first
Mr. Job:

Yes,

choice?

sir.

The Secretary of the Treasury:

The course of business

and exchanges i s mostly eastward.
Mr. Job:

Mostly eastward.

T/ie Secretary of Agriculture:

Bo you notice any growth

in your business westward?
Mr.Job:

A l i t t l e , but not much.

The Secretary of Agriculture:

Tt is growing a l i t t l e .

At another city we had the

suggestion that Montana be attached to a d i s t r i c t centering
in Denver.




Would that do much violence to your trade and

IL A. White

2575

course of business?
> % Jo"b:
•
&

W do not have much "business through Denver .
e

The Secretary of Agriculture:

You endorse the sentiments

of the previous witness?
KT. Jo"b:

I do a:dorse them.

The Secretary

ofthe Treasury:

Mr. White, of Hamilton,

Hontana.
STATE1KST OP ?.!. A. '^HTTE.
The Secretary of the Treasury:

Mr. White, w i l l you

p l e a s e give your f u l l name, residence and occupation?
Mr. White:

M. Ac White, Hamilton, Montana; President of

the Ravalli County Eank cf Hamilton*
The Secretary of the Treasury:
Kr. White:

Yes, s i r .

The Secretary of the Treasury:
Mr. White:

Yours i s a state "bank?

What i s i t s capital?

$50,000.

The Secretary of the Treasury:

Are state "banks in

Montana permitted to j o i n the f e d e r a l reserve system?
Kr. White:

I t i s a question, >5r. Secretary, as to whether

we are or not.
The Secretary of the Treasury:



A question of l e g a l right?

G

-:. A. White
Mr. White:

2576

A question of legal right, yes,

The Secretary of the Treasury:

sir.

Has i t been referred to

the Attorney General yet?
73r. "'hite:

T t ink not.

W refer-ed i t to our attorney,
e

and he reported that we could iiot hold stock in another
corporation.
Tha Secretary of the Treasury:

Tt i s lack of power, you

think.
Mr. Thite:

Yes.

The Secretary of the Treasury:

:vot that i t i s prohibited,

"but that i t i s not expressly conferred.
Mr. White:

That i s i t . .

The Secretary of the Treasury:

What i s your view about

the d i s t r i c t to which Koritana should " e attached?
b
""r. White!

* h n asked for a vote by the Helena Chamber
Ve

of Commerce "-re voted Spokane f i r s t and Twin Cities second.
The Secretary of the Treasury:
that part of the state?

What i s the sentiment of

T see you are on the extreme western

border.
Mr. Whitet

Yes, sir; within ?0 miles of Missou&a.

The Secretary of Agriculture:

Ts the volume of your

business eastward, the greater part of it?



G

M. A White
*
Mr. White:

2577

yes, s i r , our items are pri.-jc ipally eastward.

The Secretary of Agriculture'-

Where do you keep your

accounts?
: r r, White:

ISew York, Chicago and : T n tana proper.
o

The Secretary of the Treasury:

W y do you prefer Spokane
h

first?
Mr. Thite:

Prom a geographical point of view.

The Secretary of the Treasury:

Regardless of the exchange

situation or the movement of commodities?
Mr. Thite:

Tt "being nearer to Hamilton than any of the

other large c i t i e s .

Tt i s probably a selfish point of view.

Tf we were to join the organization we could f a c i l i t a t e our
business f a c i l i t i e s for doiiig business with Spokane rather
than the Twin Cities.
The Secretary of the Treasury:

H w far are you from
o

Spokane?
i*r. White:

12 hours.

The Secretary of Agriculture*.

Are your financial relations

at present very large with Spokane?
Mr. White:

~vo, we have no correspondents at Spokane and

do very l i t t i e business there.
The Secretary of the Treasury: That i s a l l , thank you.




G

3\ S. Lusk

2578

Is 13% Lusk, of l a s s o u l a , here?
STATEIENT 0? ERA*iK S. LUSK.
The Secretary of the Treasury:

Will you state jraur

f u l l name, residence and occupation?
Kr. Lusk:

Prank S, Lusk, President F i r s t National Bank,

Missoula, Montana,
The Secretary of the* Treasury:

Do you represent anything

e l s e than your 4wn bank, Mr* Lusk?
Mr. Lusk:

I represent the Chamber of Commerce and also

have a l e t t e r as representing the President of the Montana
State Bankers Association, and T come d i r e c t l y from a
conference with the President and Secretary and a bankers
committee*
The Secretary of the Treasury:
Mr» Lusk:

Of what?

Of the Montana State Eaiikers Association.

The Secretary of the Treasury:

What i s the view of those

gentlemen on t h i s question?
Mr. Lusk:

They are unanimous, so far as their wish to

do business w i t h the east at the Twin C i t i e s f i r A of a l l
i s concerned.

I do not think there was an exception.

are divided a s io the second choice.



They

Some of them are very

?. S. lusk
strong for Spokane.

2579

I myself an strong for Spokane,

"because we are only 12 hours away, as second choice, and
because T believe i t i s a Yery good thing to have your
Regional Bank as close at home as you can have i t .
The Secretary of the Treasury:

You concur in the views

these other gentlemen have expressed about the movement of
trade and commerce, and of exchange?
Mr. Lusk:

Absolutely,

I a
m interested in Denver.

T

have lived there a great/deal of m l i f e and have lots of
y
friends there, but Denver i s simply out of the question, so
far as Montana i s concerned.

Arid as far as Montana i s

concerned, Seattle and this Pacific Coast i s out of the
question.

ffe

do not deal en the Pacific Coast in any way,

shape or manner.

T l i v e at ^'issoula, on t*ie west side of

the Hocky Mountain range.

It has been suggested here this

morning that the main range of the Rocky Mountains should
be the dividing l i n e , which would take in Eutte, Missoula,
Kalispel and Hamilton, that }.!r. White has just spoken for,
and a number of others.

T do not believe that we want

Montana divided, if we can help i t , not until we can have i t
divided and made into two states, by annexing part of Idaho
some day*




f
y

3*. S« Lusk
The Secretary of Agriculture:
Mr, Lusk:

M-

You would take that?

Oh, we would, gladly.

The Secretary of Agriculture:
^

2580

Have you any resolutions

you wish to present?
Jc Lusk:
f%
of Commerce.

T think they ^vere f i l e d here by the Chamber
T/was away.

The Secretary of Agriculture:

W received one communie

cation in Chicago,
m

Kr. Lusk:

B

The Secretary of Agriculture:
Mr. Lusk:

That i s the telegram?
Yes.

That i s the telegram, and T have a copy of that,

and T do ?:ot think that has been f i l e d and been made a
matter of record.
The Secretary of Agriculture:
Mr. Lusk:

Tt has not.

T "rould like to f i l e i t at this time.

The Secretary of Agriculture:

That i s , i t has been

referred to indirectly, but not by Montana people.
Mr. Lusk:

Yes,

(The telegram i s as follows:)
Helena, Mont., Jan. 17th, 1914.
"Replies received to inquiries from national banks in
Montana representing total capital and surplus of eight
million dollars show that eighty per cent



select Twin

G '••

F. S. Lusk

2581

C i t i e s and twenty per cent s e l e c t Chicago a s f i r s t choice
for l o c a t i o n of federal reserve bank; no other c i t i e s
mentioned,

Por second choice eight per cent s e l e c t Chicago

and thirteen per cent s e l e c t Twin C i t i e s ; a l l other points
seven per cent.

Replies from state banks of Montana

representing c a p i t a l and surplus ten million dollars expressing f i r s t choice for location of reserve bank, eightythree per cent s e l e c t Twin C i t i e s , nine per cent P a c i f i c
Coast, f i v e per cent Chicago, three pe^ cent Denver, and
for second choice, sixty-four per cent s e l e c t Chicago, eight
per cent s e l e c t Twin C i t i e s , s i x per cent s e l e c t Pacific
Coast, four per cent s s l e c t Denver, eighteen per cent no
choice.

Helena Clearing House Association.

The Secretary of the Treasury:

W v/ill hear now from
e

Hr. Durham, of Spokane,
STATIT1E T OP ELSOU 7, DUHHAK.
The Secretary of the Treasury:

State your f u l l name,

residence andoccupation?
Mr. Durhan:

E lson W. Durham, contributing editor of

the Spokesman-Review.
Gentlemen of the Organization Committee, Mr, Brewer and




0

E. W Durham
.

2582

1 have "been delegated "by the Clearing House Association of
Spokane and the Chamber of Coircnerce to represent them in
a plea for the formation of these four northwestern s t a t e s
into a reserve d i s t r i c t and for the location of the Reserve
Bank at Spokane.
The Secretary cf the Treasury:

When you say these four

s t a t e s , you mean Oregon, Washington, Montana and Idaho?
?lr, Durham:

Yes.

W feel t h a t to attach these four
e

s t a t e s or ai-y p a r t of them to San Francisco would not only
do violence to the natural trend of business and the financ i a l connections, "but would subject t h i s part of the new
system to a severe and unnecessary s t r a i n in the c r i t i c a l ,
foriiative period of i t s existence.

W "believe t h a t , "because
e

there is very l i t t l e i d e n t i t y of idea or i d e n t i t y of thought
between the southwest of the Pacific Coast and the Northwest
of the Pacific Coast.
W a r e connected by a single li.:e of railway, and that
e
a branch of the Southern P a c i f i c , between Portland and San
Francisco, extending for much the greater p a r t of the
distance.

If we were connected with San Prancisco, railway

connections being at Portland, there would be no d i r e c t l i n e .
The me r e fact that there come into the Spokane gateway six



Gr

1. V . Durham
7

2J83

t - a s-conti,:e:ital systems which diverge from there across
t h e States of orego;: and Washington, i s p r e t t y conclusive
proof t h a t the overwhelming volume of "business, as has been
s t a t e d here so often, i s e a s t and west and not north and
south.
T sometimes think,

v

r.

Secretaries, that i t has "been

a p r e v a i l i n g sin of the American people to worship the
f e t i c h of greatness and "bigness, and t h a t psychological
trait

is l a r g e l y responsible for

great t r u s t s .

the building up of the

T e have erroneously assumed that because a
T

thing i s big i t i s necessarily st~or:g.

Tf we reflect

a moment we k.-ow that a man who has ?20,000, if he i s
p r a c t i c a l a..d b u s i n e s s l i k e , may be e s s e n t i a l l y sounde*- in
a business way than a man t h a t may be exploiting on the
b a s i s of m i l l i o n s .

So i t i s

!

ot a question of magnitude

in the determination of your ^rcat problem he*-e, i t seems
to u s , so much as the fundamental questioi:, and T e recognize
v
t h a t i t i s v i t a l , that rre should be able to form a reserve
d i s t - ict of these four s t a t e s that w i l l be sufficient
f i n a n c i a l l y unto themselves, a^d w i l l have

sufficient

v a r i e t y of resourcas so chat thers will be a liquid movement
of i t s products exter,di::-g seasonally ovev the entire year.




G

E. V. Durham

.

2584

'Ve doubt if another region of the United States o uld
o
show a like variety of resources*

«e w i l l "begin here in
f

the early sprirjg with the trool clip,

yon tan a produces one

eighth of that of the United States, ard the four states a
fourth*

That v/ould "be followed immediately " y the spring
b

movement of l i v e stock to market.
The Secretary of the Treasury:

That immediately —
SThat is the direction of

tliat movement?
"**r. Durham:

The l i v e stock movement i s largely to the

e a s t , but the growing tendency i s to the Test.
The Secretary of Agriculture:
Mr. Dur2iam:

To what extent?

Tr. .Brewer, who v;ill follow me, has more

definite data, but T may say that one packing house in
Spokane t h i s past year bought of ?!o::tana live stock
$1,500,000 worth.

Considerable of i t goes to Portland as

w e l l , and some of i t comes to Puget Sound.
Tt has be-ai well said by witnesses here today that we
have been importing live stock here Yery l a r gely, to the
extent t h a t ?/e have had to go as far as Nebraska.
The hard wlaeat of Montana i s cdming west in increasing
volume for milling,

W have up on the Spokane River a now
e

developed water power of 200,000 horse power.




One of the

G

E. S . Durham
T

2585

l a gest m i l l s , the l a r g e s t mill T b e l i e v e in Spokane, i s
now g-inding exclusively on Tlontana wheat.
That movement of the wool crop —
The Secretary of t h e Treasury:

Where i s t h a t product

shipped, T mean the product of your flour mills?
!&*. Durham:

P a r t l y for home consumption, "but largely to

the Orient.
The Secretary of the Treasury:
Mr. Durham:

Yes.

l a r g e l y to the Orient?

You know, the Orient has become an

i n c r e a s i n g consumer of American wheat ano flour.
The Secretary of Agriculture:

You have heard the s t a t e -

ment of these gentlemen from Montana saying t h a t p r a c t i c a l l y
the unanimous sentiment of ttie bankers and business men
t h e r e i s t h a t they ought to be connected eastward?
?!r. Durham:

That i s t r u e , on t h e i r f i r s t choice.

Tt i s

t r u e t h a t t h e i r products, a s ?/ith the basic products of the
whole northwest, have a trend to the e a s t , e i t h e r d i r e c t
by r a i l or e l s e by sea around to the seaboard, or else to
England.

Tf t h a t were l o g i c a l l y carried out, T suppose we

should be connected with Chicago or " e York, because
Nw
undoubtedly the volume of movement of our raw products i s
to the e a s t , and we in turn get t h e i r commodities, t h e i r




G

E, ?. Durham

2586

manufactured prodycts, from the east.
The Secretary of the Treasury:

T do not think i t follows

that you would be connected with Chicago or ftew York,
because the b i l l expressly provides that there shall not be
less than eight d i s t r i c t s , and you could oot possibly divide
t h i s country into less than eight d i s t r i c t s , and that could
not be done by including you with Chicago.
Mr. Durham:

T a afraid you will have to do violence
m

to the natural trend of business somewhere.
The Secretary of the Treasury*.

W will haTC to do the
e

l e a s t violences under the Act.
Mr. Durham:

Yes, that i s true.

The Secretary of Agriculture:

They say i t would be

doing great violence if you sent Montana westward.
Mr. Durham:

Tt would not do as great violence as if you

we?-e to attach Tdaho and Washington and Oregon to California .
The Secretary of the Treasury:

That is not frhe point.

I t fes how much violence i t does to Montana.

That i s what

we are thinking of now.
Vr. Durham:

T have not been able to figure out, and have-

not found a backer who can figure out how i t would do




G

E. ?/. "Durham

2587

v i o l e r c e to the i n t e r e s t s or welfare of the people or
"business community.

T think there i s a banking i n t e r e s t

concerned there that probably would figure to a considerable extent.
The Secretary of Agriculture:

Suppose you were in

Montana instead of in Spokane, where would you want to go?
Mr. Durham:

T would want the most a c c e s s i b l e p o i n t , i t

seems to me, beyond a l l question.
The Secretary of t h e Treasury:

Suppose Montana were

here demanding t h a t Spokane should be annexed t o them, you
would rather f e e l , on the American Home Rule p r i n c i p l e ,
that you ought to be allowed a voice in that yourself, would
you not?
Mr. Durham:

Well, i f we had expressed a f i r s t choice for

some other poirjt and a second choice for s t i l l another
p o i n t , T would not f e e l that any very gr-mt violence had
been dcrre us i f we were given our second choice.

T had

hoped that you would ask of our /iorstana brethren here v/here
t h e i r choice would be in case the: were attached

to a

P a c i f i c northwest d i s t r i c t and they had no option then as
t o where t h e i r choice would be.
The Secretary of Agriculture:
given in the summary.




Their seco .d choices were

G

E. W. Durham
Mr. Durham:

That ms

2588

second choice a d f i r s t choice, but

i t was not put to them upon the basis of where they would
go i f they were compelled to —
The Secretary of the Treasury:

You mean as between

Spokane and —
¥r.

Durham: Portland, S e a t t l e and San Francisco.

The Secretary of Agriculture:

You heard the second choice

of the gentlemen representing t h i s community.

Their second

choice was for San pranciscOj as a rule?
Mr. Durham:

Yes.

The Secretary of Agriculture:

T/hat does that leave for

Spokane?
Mr, Durham:

What would Spokane 1 s second choice be?

The Secretary of Agriculture:
t h a t leave for Spokane?

T5»o, what territory does

Hontana expresses her f i r s t and

second choice for the Twin 2 i t i e s and Chicago, and t h i s
s e c t i o n expresses a s their second choice San Francisco,
Mr. Durham:

Very naturally, i f S e a t t l e should express a

preference for San Francisco, and Portland should go the
same WE&-/ there would be no d i s t r i c t l e f t , and the t a i l
would have to go with the hide.
The Secretary of the Treasury:




This i s a c a t t l e country,

G

E. % Durham

so that goes.
Mr. Durham:

2589

(Laughter)
This i s a c a t t l e country.

Eut i t seems to

me that t h i s matter of the reserve "bank i s quite apart, so
far a s i t s service to the people and the communities and
the i n t e r e s t s of the people are concerned, from the trend
of trade.

Tt w i l l have to " e somev/here on the Pacific
b

Coast, adjusted on that "basis, because undoubtedly our
movement i s towards the east and we buy very largely in the
east.
The Secretary of the Treasury:

The question, as T said

before, i s what w i l l do the least violence, and what w i l l
conserve the most convenience of these respective d i s t r i c t s .
That i s r e a l l y our problem, what w i l l do the l e a s t violence,
" r Durham:
M,

Unfortunately, you w i l l not leave that to

my determination.

I should say leave i t

to Spokane, and

there w i l l be no violence.
The Secretary of the Treasury:

W would be very happy to
e

leave i t to you, but we cannot escape i t .
Mr. Durham:

T should be very happy to assume i t .

The Secretary of Agriculture*.

To what extent i s Spokane

regarded as the financial centre of t h i s
Mr. Durham:




section?

Hr. Secretary, we have a peculiar situation

G

E. W Durham
.

2590

here in the P a c i f i c Northwest, and there i s no recognized
conceded f i n a n c i a l centre in the P a c i f i c Northwest, no
p l a c e that holds the r e l a t i o n that San Francisco, for
exangple, holds to California^ or Boston to Uew England, or
Chicago with the interior*

By reason of that f a c t , and the
is
further fact that 'hile none of us scss recognized as the
financial metropolis, Spokane is recognized as the financial
and commercial metropolis of the interior, "between the
Cascade Mountains and St. Paul, and " y reason of the fact
b
of i t s clear accessibility, i t s quick accessibility to an
overtohelming majority of the member banks, if a district
were constituted of these four Northwestern states, that
fact, and the further fact of our very close adjacency to
the basic agricultural and live stock and mining and a
large part of the lumber production should necessarily be
the controlling points of the decision.
The Secretary of the Treasury:

O that question, i t is
n

not a question of the physical accessibility wholly that
has to be considered here, but the question is accessibility
with reference to the great volume of transactions which
must be had between the member banks and the reserve bank
itself.




A-.id you can see that that i s a thing apart from

E. rY. Durham

G

2591

the mere railroad transportation or physical accessibility
at the place where the reserve "bank- i s to "be located.
Kr. Durham:

That i s very true, an d Kr. 3rewer w i l l speak

more p a r t i c u l a r l y with reference to the banking aspect, and
he w i l l follow me.
I was going to say we would have a seasonal proposition
h e r e , of a c t i v i t i e s "beginning with the wool crop and the
l i v e stock movement —
The Secretary of t h e Treasury:

You are speaking now of

?!ontana?
Mr. Durham:

Of the whole northwest, and that followed

immediately "by the movement of summer f r u i t s and that in
turn by the salmon run in the Columbia river a-->d Puget
Sound, and that would be followed by our hay harvest, which
would come along about the same time; and after that, the
general grain hardest.

And t h e grain harvest here i s

different from that in the eastern s t a t e s .

For some reason

our grain does iiot shatter after i t ripens, and i t can be
allowed to stand in the f i e l c for weeks at a time.

By

reason of climatic d i f f e r e n c e s , we w i l l s t a r t our grain
harvest in the Walla Walla Country in t h e l a t t e r part of
June, and often we w i l l not complete t h a t grain harvest




E. W. Durham

m

3593

until the latter part of September or well into October;
it is a long process. The procedure of marketing is also
extended, going into the winter and often over into the
spring.
The Secretary of Agriculture: We will concede that
you have a great diversity of interests, there is no debate
about that.
The Secretary of the Treasury: Where do you keep your
reserves now?
Mr. Durham:

Mr. Brewer will speak upon the technical

banking end of that, more particularly.
The Secretary of Agriculture:

There is no debate about

the diversity of your interests and about the enormous growth
of your community.
The Secretary of the Treasury:

Those facts have all

been very thoroughly developed by other gentlemen, Mr.
Durham.
Mr, Durham:

Yes.

I shall not go any further.

that has been sufficiently covered.

I think

It seems to me that

the addition of California and perhaps Nevada and Arizona
to this district would not add any strength to a Reserve
Bank.




It would be as though you cooked another portion

E. W. Durham

m

3593

for a very hungry man, and California has something of an
appetite.
of ours.

Their basing industries are substantially those*
They have fruits, and they have oils, which we

ii
have not.

They have no coal mining, which we have.

upon the whole, their resources are the same.

So,

When we

should be wanting reserves for the movement of our crops,
they would be wanting reserves and they would be wanting
them to a fuller extent than we should be wanting them.
That, coupled with the fact that there is no identity of
interests, there is no association of popular thought between
districts so remote as those, with the further fact that
California and the southwest, by' its overload of capital
and population, would dominate the system, as it necessarily
would —

.

;

The Secretary of the Treasury:

How could it, under the

system of electing the directors from each part of the
district.
Mr. Durham:

By the bare fact that they will have more of

the banks and more of the capital, and not only that, even
if by any prospect —

>

The Secretary of the Treasury:
cut any figure here on this vote.




The capital does not

»

E. W. Durham.

2594

Mr. Durham: Well, they have a greater number of banks.
The Secretary of the Treasury: Because the banks are
divided into three classes, under the Act,
Mr, Durham:

But they have a greater number.

The Secretary of the Treasury: Would they have, as
against Oregon and Washington, if California were thro^m
into that district?

I do not know what the toumber of banks

is as between the three states*
Mr. Durham:

I think so. I have not seen the figures

recently, but if you add Nevada and Arizona to California,
I know they out-top us in population and are very much
heavier in banking capital and I think in the number of
banks.
The Secretary of the Treasury: You would be bound to get
under this system a fairly representative Board of Directors
of the entire district.
Mr. Durham:

But it is not clear — while Mr. Spangler

is looking: after that data —

v

The Secretary of the Treasury: We have it here in the
Comptroller?© report, and it is very much the same.
Mr. Durham:

I should like to submit to you here the

comparative area map.




In these four Northwestern states

m

E. W. Durham

there are 496,000 square miles.

3595

If you blanket substan-

tially that area over the west, we find the following
states have 407,000 square miles —
The Secretary of the Treasury: Yes, we are familiar with
that.

That may be filed with the stenographer.

Now, have

you anything else to add.
(The map was accordingly filed.)
Mr. Durham:

Coming down more particularly to Spokane's

case, if I may present it in a very few minutes, I wish to
say that the conditions here topographically and productively are unique upon the Pacific Northwest, in this, that
while along the Atlantic seaboard and the Qulf seaboard and
the California seaboard the agricultural production crowds
down to the shore line, our coastal region is largely broken
and mountainous

—

The Secretary of the Treasury:

On this hearing I think

we have been pretty well posted on that, and I think if you
will be good enough to file any maps you have simply as
exhibits, so that the Committee can give them consideration at the proper time, it will not be necessary to go
over that ground again.
Mr. Durham:



The maps will require a moment's explanation,

^tmntm

•

E. W. Durham

2596

and it will simplify it.
The Secretary of the Treasury: We are quite familiar
with these physical characteristics anyway.
Mr. Durham:

But this goes, if you will pardon me, into

the region where the basic production of these four Northwestern states lies.
The Secretary of the Treasury:

I think we are pretty

well informed on that. I think the data we have had given
to us, in addition to what we have had before, because me
have been looking up this subject, as you can naturally
Imagine, and into the natural resources, will make it
unnecessary to cover that ground. We do not want to cut
you off if you have anything new to offer.
Mr» Durham:

I do not want to be persistent, but I assure

you this is new matter.
The Secretary of the Treasury: *e will see what you have
to offer.
Mr. Durham:

To show you the value of farm crops as shown

by the United States Census of 1910, $146,000,000 lies east
of the Cascade Mountains in these four Northwestern states,
and $44,000,000 west of the Cascade*.

;

The Secretary of the Treasury: Now, that data, you see,



»

E. W. Durham

2597

is all on tlie map, is it not?
Mr. Durham:

It ie on the map.

The Secretary of the Treasury:

Yes, and I say if you

will file these maps we will study them.
Mr. Durham:

But it will require a little explanation as

to the scheme of the map.
The Secretary of the Treasury:
clear upon the face of it.

I think that is pretty

Let it be filed as an exhibit,

(The map was accordingly filed.)
Mr. Durham:

I want to file here also a number of census

charts, as illustrating the point that the productive area,
so far as agricultural wealth is concerned, is along the
interior here.

v

,-..
••

The Secretary of the Treasury:

Yes, just file them as

exhibits.
(The charts were accordingly filed.)
Mr. Durham:

I do not want to trespass, but if I may

present one more map as to the railroad situation?
The Secretary of the Treasury: Yes.
Mr. Durham:

While we are waiting for that, I may say

here is a corrobative map of the Columbia River basin,
prepared by the Chamber of Commerce of Portland, which shows




35 9 8

E. W. Durham

m

incidentally, while not intended to, Spokanefs superiority
ae a railroad centre, and the great network of branch lines
which cover the agricultural region and the fruit region
aro^and Spokane.

You can see as well how we compare with

Portland and our neighbors in that respect.
The Secretary of the Treasury: Do you want to file that
ae an exhibit?
Mr. Durham: Yes.
The Secretary of the Treasury:

That may be filed also.

(The map was accordingly filed.)
Mr. Durham:
through.

Here is one additional map, and then I am

This is a map showing Spokane's railroad facili-

ties, with lines drawn here of the hours of travel, one
irregular circle showing six hours, another twelve, another
eighteen and another twenty-four. In the twelve hour region
would fall all the larger cities in the proposed district.
The Secretary of the Treasury:

The key, I see, is on that

map.
Mr. Durham:

.
Yes.

This gives the number of railroads

and transcontinental lines.

.

(The map was accordingly filed.)
Mr. Durham:




I should like to add something here in

»

E. W. Durham.

3599

connection with the fruit industry, as that has been touched
upon.

I want to say I have authentic data which I obtained

from the Secretary and one of the directors of the North
Pacific Fruit Distributors; that is a cooperative organization of fruit growers covering the four Northwestern
states.

Something like 134 local organizations are

federated into that association.
There are now planted in these four Northwestern states
550,000 acre8 in apples.

425,000 of that acreage lies east

of the Cascade Mountains.

70,000 acres of that, or 13-1/3

per cent, is now in bearing, and all of it will be in
bearing in the next four or five or six years.
There was just one other map I wanted to call your
attention to, so it will be understood a little later
(laughter.)

If you had not picked this up yourself, Mr.

Secretary, I would have overlooked it.

TheBe are maps

indicating the irrigation area of the four Northwestern
states, and there is just a little data that is not shown
there that I want to submit.

All of that irrigated area,

amounting to between four and five million acres, according
to the census reports, lies east of the Cascade Mountains,
It covere between 14,000 and 15,000 independent irrigation




m

E. W. Durham

undertakings.

2600

There will have been invested in those when

completed $152,000,000.

There had been invested a year

ago, according to the report of the Agricultural Department, $90,000,000, of which the government itself had
expended $30,000,000.
The Secretary of the Treasury:

Have you finished, Mr.

Durham?
Mr. Durham:

As to that Montana situation, as to one

question asked by Mr. Secretary Houston, as to the developing trend of that business, I may say that since the
decision of the Interstate Commerce Commission in the
Spokane rate case, and more recently by voluntary reductions by the railroads, Spokane jobbers have been given
territory which carries them to Billings, Montana, where
they meet the St. Paul jobbers, and there is a growing and
very large trade between Spokane and western Montana as far
as the Billings line.
I just simply want to say in conclusion that our
attitude is one of friendly cooperation with our sister
cities on the Coast.

We have identity of interest.

We,

above all else, feel the need of a district here that will
serve thest Northwestern states and their basic interests,




T. H. Brewer

3601

and in that spirit we have presented our claims here,
believing that they will have that fair consideration which
the shortness of the time here today will not permit us to
have.
The Secretary of the Treasury: We shall certainly give
it very thorough and serious consideration, Mr. Durham,
Mr, Brewer, we will hear you now.
STATEMENT OF THOS. H, BREWER.
The Secretary of Agriculture: Will you please state
your full name, residence and occupation.
Mr. Brewer:

Thomas H. Brewer, President of the Fidelity

National Bank, Spokane.
The Secretary of Agriculture:

You are familiar with the

problem confronting us. Will you tell us what is in your
mind.
Mr. Brewer:

.
I want to say a ^ord first, Mr. Secretary,

about the balancing of this district.

It has been stated

by the Coast people that there is not much borrowing in
this district.

That is true of the Ccast and it is true

largely of Montana, but it is not true of eastern Washington,
Idaho and eastern Oregon.




In that district the report of

T. H. Brewer

m

3602

August Sth by the Comptroller shows that the banks in the
district mentioned had re-discounte and bills payable of
$5,269,000, while west of the Cascades there was just a
little lees than $1,000,000 of re-disccunts.

The Spokane

banks had §400,000 of the government crop moving fund at
that time and eastern re-discounts of §550,000.
contend that this is a well-balanced district.

So that we
There will

be deposits on one side and borrowing on the other side,
ec that a bank situated here would be profitable.
The Secretary of Agriculture:

Where do you re-discount

now?
Mr. Brewer:

Largely in the east.

The Secretary of Agriculture:
Mr. Brewer:

Why not in the west?

The rates are less in the east.

The Secretary of Agriculture:

Would you re-diecount in

the west, do you think, under other conditions?
Mr. Brewer:

If the r a t e s were equal, we would very much

prefer to re-diecount in the west.
The Secretary of Agriculture:
Mr. Brewer:

Are they likely to be equal?

Under the Regional Bank Act they may be,

perhaps.
The Secretary of Agriculture:



Bo you think that w i l l

•

T. H. Brewer

3603

change the whole system.of interest rates?
Mr. Brewer:. We feel that it will reduce the interest
rates on re-discounts in the banks.
The Secretary of Agriculture:

And below what the economic

conditions mi^it justify?
Mr. Brewer:

No.

The Secretary of Agriculture:

Would they not be different

economically, anyway?
Mr. Brewer:

Ido not just catch the point.

The Secretary of Agriculture:

Over the different parts of

the country?
Mr. Erewer:

Yes, the rates of interest are governed by

the law of supply and demand, and in the west the rates have
always been higher than in the east.
The Secretary of Agriculture:

Do you think, then, you

would re-diecount in the west or in the east?
Mr. Brewer:

We would probably be compelled to re-discount

in the west if a Regional Bank were established here.
The Secretary of Agriculture:

Would that necessarily .

follow!
Mr. Brerer:

Not entirely.

Probably the bafekein the west

would still continue to rediscount somewhat in the eastern




T. H. Brewer

m

3604

banks.
The Secretary of Agriculture:

Now you were going to tell

us more definitely about Spokane's claims,
Mr. Brewer: We claim that to put Spokane in the San
Francisco district would have the same effect as putting
Minneapolis as a branch of Boston, for instance, or Seattle
with Denver.

You probably remember how long it took to

come from Denver to Seattle.

It would take us just the same

time to go from Spokane to San Francisco.

In times of panic,

when you wanted money hurriedly, if you had to go to San
Francisco, you would have to get along without it.
The Secretary of Agriculture:

Suppose you had a branch

In 8#*ttle or Spokane?
Mr. Brewer:

If the branch had the same powers as the

Regional Bank, well and good.
The Secretary of Agriculture:

So far as the law goes,

it has.
Mr. Brewer: We do not believe that in practical operation
a branch bank would have the authority or the money that
the Regional Bank will have, and that things will have to
be referred to headquarters.
The Secretary of Agriculture:




That is a matter of

3605

T. H. Brewer

m

regulation resting with the Federal Reserve Board, with a
view to the necessities and demands of the situation.
are not going to do an unreasonable thins.

They

We cannot assume

that.
The Secretary of the Treasury:

Here is Seattle asking for

the Reserve Bank and Spokane is asking for it.

Now each

could not have it in any case; one or the other has got to
have a branch, we will say.

Would you think that the

interests of this district would be better served by having
that headquarters in Spokane and a branch in Seattle, or
the reverse?
Mr, Brewer;

Very much the first way (laughter.)

The Secretary of the Treasury:

That is based upon a mere

question of the local desire or pride, is it not, to be
celled the headquarters for this bank.
Mr. Brewer:

Quite largely.

Spokane has —

The Secretary of the Treasury:

'' •
'
"

Now is net that just the

spirit in which we cannot consider this important economic
problem?
Mr. Brewer:

I might say that Spokane entered into this

matter because we felt that Montana was necessary to a
Northwest district, absolutely essential to make the required




m

T. H, Brewer

2606

capital and business, and we felt that Montana might come
to Spokane where it would hesitate to come to the Coast,—
seven hours, for instance, from Kalispel and from Missoula
to Spokane,
The Secretary of the Treasury:

Now you have heard what

the Montana people have had to say about that.

In view of

their testimony would you think it fair to force them into
a district to the west?
Mr. Brewer:

-\

I do not know whether you have ever taken

polle or not; but as to second choice, I can go into Montana
and in a week I can get a poll there which will show at
least half the banks of Montana favor Spokane as second
choice.
The Secretary of the Treasury: We are speaking of first
choice now; that is the important question, of course.
Mr. Brewer:

No doubt they prefer to go east, but we

contend that the Federal Reserve Bank is a reserve bank for
keeping reserves. We contend it is not necessary for the
Montana people to do even a majority of their business with
a reserve bank.

They can carry their accounts and send

their business east as they have always done, but keep
their reserves in the Reserve Bank, and in times of panic




*

.

T. H. Brewer

2607

of re-discount or crop moving, they have a bank very close
to them.
The Secretary of the Treasury:

For re-discount and

exchanges and clearances, because the bill goes further
than a mere re-discount operation; the question of bank
clearances has to be considered.
The Secretary of Agriculture:

What are the facts in

reference to Spokane, ae to interest on balances?
Mr. Brewer:

The interest paid on bank balances is two

percent, the same ae the other Northwestern banks.
The Secretary of Agriculture:

Is your practice the same

as to check collections?
Mr. Brewer:

Yes.

The Secretary of the Treasury:
Mr. Brewer:

,
Free check collections?

Where there is a justifying and compensating

balance, as it is called; otherwise not.
The Secretary of the Treasury:

That generally means

free, does it not?
Mr. Brewer:

In half the cases or perhaps a little more.

The Secretary of the Treasury:
reserves?
Mr. Brewer:




Where do you keep your

*
The Spokane banks keep their reserves very

•

T. H. Brewer

2608

largely in New York and Chicago,

^

The Secretary of the Treasury: What is the division
between the two?
Mr. Brewer:

New York has a little more balances of the

Spokane banks than all of the other balances, outside of
Chicago or St. Louie.
The Secretary of the Treasury: Why is that?
Mr. Brewer:

Well, it is probably artificial, as was

stated this morning by Mr. Backus.

It is because the law

compels us to keep our money in central reserve cities.
The Secretary of the Treasury:

It permits you to count

balar.ces in central reserve cities as part of your resources.
It does not compel it.

Do you keep it there for exchange

purposes largely, or merely to get the interest rate?
Mr. Brewer:

Both.

There is a demand at all times for

New York exchange, and they pay interest also on the
deposits.
The Secretary of Agriculture: What would be your second
choice, Mr. Brewer?
Mr, Brewer:

If there is no bank established in the North--

west, I presume, as a matter of Pacific States pride, we
would prefer going to San Francisco,



n
i

.

T. H. Brewer

3609

The Secretary of Agriculture: What cities in the Northwest other than Spokane should you care to express a
preference for any one of those?
Mr. Brewer:

Seattle and Portland are both an equal

distance from Spokane.

As a matter of state pride, I presume

we would prefer Seattle, just as a state sentiment.
Now I would like to state our balances in San Francisco
as compared to the other points.

The balances in San

Francisco of all the Spokane banks are $126,000. In New
York, 41,567,000.

Chicago is about half New York and St.

Paul-Minneapolis about three-fifths of Chicago, and so on
down the line.

Our remittances show about the same

tendency.
The Secretary of the Treasury:

Assuming these banks are

organized and you are attached to the San Francisco district,
your exchange, or San Francisco exchange, we will say, would
pass at par.

That would result in the natrual transfer of

those New York balances to San Francisco, would it not?
Mr. Brewer:

Somewhat.

The Secretary of the Treasury'

I am speaking of your

exchange balances. Would it not suit you just as well?
Mr. Brewer:




The balances carried in the Reserve Bank

»

T. E. Brewer

3610

would depend on whether or not it pays interest.
The Secretary of the Treasury:

Of course, the reserve

banks do not pay interest; but I am talking about the compensating advantage, probably, in getting exchange, and the
parring of exchange between these banks, making it unnecessary to carry balances in the cities which now have
the preference.
Mr. Brewer:

If the Reserve Bank does not pay interest,

it is my opinion that the reserves will be kept at the
minimum in the Reserve Bank, and the excess reserves will be
kept in banks which do pay interest, and when you want to
replenish your reserve in the Reserve Bank, you would send
a draft on one of your other correspondents, and vice-versa.
The Secretary of the Treasury: Well, there is something
in that, of course.
Mr. Brewer: Now I have prepared some figures showing the
amount of business that a bank in the Northwest would have,
if you would be interested in that.
The Secretary of the Treasury: Yes, proceed.
Mr. Brewer:

The deposits of national banks in the North-

west, the four states, are $236,000,000; state banks
•$233,000,000.




The reserve requirements of the national

m

T. H. Brewer

3611

banks would be approximately $33,000,000, and figuring that
one-half of the state banks would come in, and I think that
is a fair assumption, I think there will be far more than
half, but figuring one-half of them come in, the reserve
requirements wculd be $14,600,000, or a total legal reserve
in the banks of the Northwest $46,600,000.

One-half of

it kept in cash in the vaults and one-half in the Reserve
Bank, which I think is a fair statement, would leave the
deposits then of

—

The Secretary of the Treasury:

But your statement made

a moment ago would seem to contradict that, that if the
Reserve Banks did not pay interest you would keep with them
the minimum deposit required by the Act.
Mr. Brewer*

That is true, but for instance, in

The Secretary of the Treasury:

—

That would reduce the

resources of the Reserve Bank materially.
Mr. Brewer:

My statement Is that half would be kept in

cash in the vault and perhaps half in the Reserve Bank for
currency shipments and exchange purposes.

In talking with

other bankers I think that is a fair assumption.

That is

the assumption of the law at present, that in reserve cities
half the reserve must be in cash in the vault and half may




a

T. H. Brewer

2613

be with banks in central reserve cities, so I think that
practice will be largely followed.

That would make a

deposit, then, in the Federal Reserve Bank of the Northwest
of $23,000,000, of which the Reserve Bank would be required
to keep 35 per cent, or a little over §8,000,000, leaving
deposits or loanable funds of $15,000,000.

To that would

be added the capital of $4,000,000, or a little over
$19,000,000 of loanable funds in the Reserve Bank in the
four states.

To that would be added whatever government

deposits the Secretary of the Treasury made with the Reserve
Bank of the Northwest.

You would also add the borrowing

power from the other banks, and you would also add to it
the note issuing power, so that a bank in the Northwestern
states would have ample deposits to do all the business that
is required; in fact most of the time they would have money
to loan to the eastern reserve banks.
The Secretary of Agriculture:

Will you file that with

the reporter, Mr. Brewer?
Mr. Brewer:

Yes, sir.

Now I also prepared figures ae to

the available capital of a Northwestern banks as shown by
Mr. Latimer's figures

—

The Secretary of the Treasury:



You are covering t&e same

m

T. H. Brewer

2613

four states?
Mr. Brewer:

Yes.

Six per cent of the national banking

capital, $6,353,000, and again assuming that half the state
banks will join

—

The Secretary of the Treasury:

How many state banks in

this territory are eligible to membership, have you figured
that out?
Mr. Brewer:

Yes, sir.

The Secretary of the Treasury:

That is, eligible under

the Act?
Mr. Brewer:

There are 364 in the four states that are

eligible, and 363 that are not eligible.

But of that 363,

136 are banks of more than $30,000 capital, one-third
of them, and it would be very easy for them to make the
required $35,000.
The Secretary of the Treasury:

Of course, the question

arises here to what extent these banks have power under
their state charters to subscribe to this system.
Mr. Brewer:

As Governor Lister said

The Secretary of the Treasury:

—

He spoke for Washington,

but I am think iiig of Idaho, Oregon and Montana.
Mr. Brewer:




That will be remedied at the next session of

••^.*v

m

3614
T. H. Brewer

|

the Legislature in every state In the union, I think, I
an eure it will be in the Northwest.
The Secretary of the Treasury:

Of course, this Committee

has to act pretty quickly, and if we are to go on the
as sumption you are presenting to us we have to know that they
a

re reasonable.

As to the state banks, it seems to me it

ie a rather violent assumption to take it that half of them
would come in right away, especially if there are legal
impediments in the way of their subscribing to the system,
Mr. Brewer: What do you mean by right of way?
The Secretary of the Treasury:
these banks very shortly.
a few months, anyway.

We have got to organize

We hope to accomplish this within

It is not to be expected

that if

there are difficulties in the laws of these different states,
that those laws can be altered within the time that we will
render a decision upon this question.
Mr. Brewer:

By the time you are ready to organize the

banks, before the final payment ie due under the law, every
national bank and state bank of the four Northwestern states
Trill be eligible to join, in my opinion.
The Secretary of the Treasury:

But the law requires us

to organize these banks with a minimum of $4,000,000 capital



T. H. Brewer

2615

and we will know within 60 days vrhat the absolute capital
ie to be for distribution among these districts,
Mr. Brewer: Would you be willing to give us of the
lorthweat say 60 days to canvass the state banks and see
if we cannot raise enough?
The Secretary of the Treasury:

The question is whether

they have the legal right.
Mr, Brewer:

Suppose they nationalize.

going to do that now.

A great many are

I knou of three banks in cur par-

ticular district that are going to do that,
i
.

The Secretary of the Treasury:
objection to those applications.

Of course, there is no
They ought to send them in

as rapidly as they can, and they have the right now to make
the applications and present them to the Organization
| Committee; and as a matter of fact the Committee is sending
i

i to all the state banks in the country the form of resolution
i

' and the formal action necessary to be taken by them to
acquire membership in the Federal Rserve system; so they
will hare an opportunity to express their opinion within the
• tin* required.
Mr. Brewer:

That is very true, but a great many of them

take the stand that it ie not necessary to hurry, that the



m

2616
T, H. Brewer

national banks have to hurry and the state banks do not.
The Secretary of the Treasury:

Exactly, and that is the

reason the Committee cannot assume they will come in within
the time we have to consider this proposition.
The Secretary of Agriculture:

Have they considered the

further fact, that unless they do take steps to come in they
will have no voice in the selection of the first directors?
The Secretary of the Treasury:
Mr. Brewer:

And officers,

I do not think that has been considered very

much by the state banks, but I think it is an entirely safe
assumption that three-fours of the state banks which are
eligible will join this system within two years.
The Secretary of the Treasury:

You would not havs us

postpone action so long, would you?
Mr. Brewer:

I think that assumption can be made as safely

ae a man who is building a building will say he will get
tenants for it, or as the man who built the Hudson Tunnel
would say, people would desert the ferryboats and go to the
tunnel.

I think the assumption is just as safe in one case

as in the other,
The Secretary of the Treasury:

...•..-Well, in the one case

there was no law compelling action within a given time, and



a

3317

T, H. Brewer

I
here there is a law compelling us not to proceed upon
assumptions but upon a definite basis, so we are a little
bit handicapped•
Mr. Brewer:

•

!

Yes, but the law permits you to throw the

subscription open to the public, and as has been stated,

!

the public would grab at the chance to subscribe to the
Federal Bank, and I think it is up to the Secretaries,
because the capital can be easily subscribed in the Northwest.

!

The Secretary of the Treasury:

Well, the interpretation

of the Act may not be as you put it exactly.

However, you

may proceed with your statement.
Mr. Brewer:

I

I wanted to state in behalf of Spokane that,

as lias been stated, Spokane is the geographical centre of
the territory.

Within 13 hours of Spokane are all the

large banks of the district.

In times of panic, as for

instance we had in 1907, if a bank should discover that
there were clouds in the horizon, and they wanted funds in
the afternoon, they could wire the Federal Reserve Bank in
8pokane and the next morning, in three-quarters of the
district, they could have the money to do business.

It

seems to me that is a strong point in favor of the location




|
\
i
j

m

3618
T. H. Brewer

of the bank there.

East of the Cascade Mountains are

three-fifths of the banks of the territory, and two-fifths
are west of the Cascades,

Spokane is the farm mortgage

centre of the Northwest.

There are now held by Spokane

mortgage companies $27,000,000 of Mortgages, and the annual
business handled in Spokane is something over $7,000,000,
If a Regional Bank were established at Spokane, for instance,
the directors of that bank, as has been pointed out, would
be men who are familiar with the needs of the district.
They are familiar with the lumber; and there is lumber
industry in all of the four states.

They are familiar with

the grain, because there are grain interests in all the
four states.

They are familiar with horticulture, because

fruit is raised in all four states.
The Secretary of the Treasury:

Would not that be true

if you had the bank at Seattle?
Mr/ Brewer:

That part of it would apply perhaps as well,

except that the Seattle people know very much less about
the interior than the interior people know about the coast
(laughter)l
The Secretary of Agriculture:
drawn from the entire district.



But your directors would be

a

T. H. Brewer

Mr. Brewer:

That is true.

3619

I was talking th the cashier

of a Seattle bank yesterday who has been cashier of a bank
here for twenty odd years, and he said he had been in Spokane
(
1

P once in that time.

He knows nothing about the interior.

The Secretary of Agriculture:

And yet you want to take

it eastward, and they do not go there,
Mr. Brewer:

They should be acquainted with the state.

The Secretary of the Treasury:

He betrays an extraordinary

lack of appreciation of Spokane, doesn't he?
Mr. Brewsr:

Yes, indeed.

Spokane, as you of course know,

has groTrn, in common with the rest of the Northwest.

The

deposits ten years ago were #5,000,000 and now they are
|

$31,000,000.

The city has grown from 37,000 in 1900 to

104,000 in 1910.

The interior district has grown in this

same proportion.

And we feel that with Montana in the

Northwest district more banks could be ssrved quickly and
economically from Spokane than any other part of the
district; that it will cost a small bank a good deal of

I

money to go to the Federal Reserve Bank with its re-discount,
if it is located away off in one corner of the district,
while if it is located conveniently, where they can take a
night train and in the morning be at the Federal Reserve Bank



I
T. H. Brewer

2630

the expense both of time and of money is very little.
The Secretary of the Treasury:

Have you anything else

to suggest?
Mr. Brewer:

I have a few maps I would like to file,

showing the situation (laughter).
The Secretary of the Treasury:
Mr. Brewer:

Just file them.

I would like to say in defense of our maps,

that it was impossible to get the Secretaries to stop at
8pokane.

We do not know that they know a thing in the world

about Spokane except what we tell them, and so we show them
maps of the district and then they will see at a glance
quicker than they could by a whole half day of testimony.
The Secretary of Agriculture:
The Secretary of the Treasury:

I am very fond of maps.
We like maps, really,

I

prefer to have the, because they really illustrate points
and bring them out more forcibly, frequently, than anything
else.
(The maps were accordingly filed.)
Mr. Brewer:

I would like to make one further suggestion,

that you remember, in attaching the Northwest, particularly
Spokane, to San Francisco or to the east, that it is very
much easier to go from Minneapolis to Boston, it takes 11




m

T. H. Brewer

3631

hours less time to go from Minneapolis to Boston than to
go from Spokane to San Francisco, and further than that,
you have your choice of six or eight different railroads,
while here we go over one road which goes over mountains
which are frequently blocked in winter.
The Secretary of the Treasury:

Notwithstanding, you are

willing to take San Francisco as your third choice?
Mr, Brewer:

We feel that in that case we will not get

anything like the use of the Reserve Bank that we would if
it were located somewhere else.

And we felt that the

purpose of this Act was to put the banks where they were
olose of acceas.

It was frequently stated on the floors of

Congress that they would be located so that no bank would be
more than 34 hours from the Regional Bank, and in the ca3e
of San Francisco it would be 48 hours.
The Secretary of the Treasury:

We do not recall, at

least I do not recall, that statement, but however that may
be, it would not be binding on the Committee, of course.
Mr, Brewer:

There are a good many statements made in

Congress, of course.
The Secretary of the Treasury:
offer?



Have you anything else to

m

G. C. Corbaley

Mr. Brewer:

2623

No,

The Secretary of Agriculture:

I might say to you, Mr.

Brewer and Mr. Durham, that if there is anything else you
desire to submit, in view of what has been said here, we
will be delighted to have you file anything in the way of a
brief.

STATEMENT OF G. C. CORBALEY.
Mr, Corbaley:

There is just one point I wish to make,

and this is not ae to any section, but as to the claim for
a Northwestern bank.

As you know, the question of the

Northwestern bank is a pretty serious business to the
business interests of this country,

Oregon, Washington and

the northern part of Idaho, so far as we know, are very
determined that they want a Northwestern bank.

Mr. Brewer

brought up the matter of interesting state banks in this
system.

That has been talked in all the banking centres,

and I think that the state banks and the general dispostion
of the state banks is to go into a Regional Bank, and of
course, naturally, a Northwestern Bank, which is the angle
from which we have talked.
Now the point is this.




Apparently, that is inferentially

m

0. C. Corbaley.

2633

from the questions you have asked, you gentlemen are up
against a problem to begin with, that there is insufficient
capital in the Northwestern district to finance a bank,
and that is that Montana objects to going with the Northwest
the three states which want to go in with her; that is
I inferentially, and that as an assertion of your feeling,
the three states are to be put where they do not want to go.
That, we believe, by reason of our balances and resources,
is going to do violence to our finance*
about it.

We may be wrong

That is a matter which can only be worked out

with the development of the Act.

But our banking interests

feel as a rale that it is very much to *2 the business interest
of the Northwest that there be a Northwestern district, and
the state banks, 75 per cent of them, in the larger centres
are disposed to go into the system, either by nationalization
or by the state authority.

,

If your disposition is to establish a Northwestern
bank, providing there is $4,000,000 capital, or practically
so, if that could be indicated to the Northwestern states
I think there is no question whatever about the immediate
subscribing of a great many of these banks.

Whereas, while

th9 matter is up in the air, they are disposed to let it



8634
Q. C. Corbaley

drift.

The capital is here.

There is no use of going to

these men and putting up to them the situation, if a Northi western bank cannot be created.

But if it is practical

to create a Northwestern bank with $4,000,000 capital, that
capital can be secured from the state banks and by the
national banks.

There is no question in the minds of the

banking interests of the Northwest but what the district can
finance itself and the stock be taken.
The Secretary of the Treasury:

These state banks have

their opportunity now to say whether they will come in or
not, because the Committee has sent to them, as I said
before, and probably they are receiving them now, the formal
action they must take in order to get into the system.
Mr. Corbaley:

Their disposition is very different toward

a bank that they will believe in rather than toward a branch
bank giving service over one line of rails between Bkre and
San Francisco, where ko business is being done, and over a
branch line that runs through mountains, and that is stopped
by snow in the winter.
The Secretary of the Treasury:

All the national banks are

joining without knowing where they are to be put.
Mr. Corbaley:




And the state banks have a leeway and

m
G. C. Corbaley

3635

naturally they will take it.
The Secretary of the Treasury:

Yes, and I suppose, until

the laws of the different states have been settled affirmatively as to their right to subscribe, they will take
that attitude.
Mr. Corbaley:

The disposition is to act much more

rapidly than that, I think.
The Secretary of the Treasury:

Naturally, they cannot

subscribe until they get the legal right.
Mr. Corbaley: Well, that was the only point in connection
with it.

The state banks are disposed to go in, but if

they are tc be tied in with San Francisco, they will not
have the disposition to go in that they would if the bank
were located in the Northwest.

STATEMENT OF A. K. KELLER.
The Secretary of Agriculture:

You may state your full

name, Mr. Keller,,and your occupation.
Mr. Keller:

A. K. Keller, Weiser, Cashier of the First

National Bank,
The Secretary of Agriculture:
this matter?



What are your wishes in

What do you represent?

ft

3626
A. K. Keller

Mr. Keller:

I can only say that I am representing our

own institution, and I have not any credentials here from
any other.
The Secretary of Agriculture:

Is it a state or national

bank?

-. -

Mr. Keller:

The First National Bank.

The Secretary of Agriculture:
Mr. Keller:

How many banks have you?

Three banks in the town, two national and

one state.
The Secretary of Agriculture:

What is your view on this

subject?
Mr. Keller:

Well, we take this position, that the country

west of the Rocky Mountains is large enough for two Regional
Banks.

We concede that one if them must, of necessity, go

to San Francisco, and we would like to see the other one in
this Northwest territory.
The Secretary of Agriculture:

You are an advocate of a

Horthwest Regional Bank?
Mr. Keller:

Yes.

The Secretary of Agriculture:
see it located?




Where would you liie to
. v

m

2637
A. K. Keller

Mr. Keller:

We think if there are to be two, one on the

coast is sufficient.

We Mive in this great intermountain

district between the Rockies and the Cascades, a country
which has its own peculiar conditions, and we believe we
would be better served by a bank located within the intermountain district.
The Secretary of the Treasury:
Mr. Keller

Where, for instance?

Well, Spokane, for instance.

Now I might

say this, that southern Idaho originally was a sage brush
country that has been brought under cultivation by the
irrigation system.
and cattle country.

Originally it was a large stock, sheep
The sheep and the wool are shipped east,

The cattle and hogs go west and northwest.
growing into more of a fanning country.

We are now

We raise a great

deal of fruit and in the last year that has been financed at
Spokane to a great extent and shipped through a Spokane
1

agency.

Some of this, however, has gone through Portland.

We have little or no business connections with San
Francisco.

The wholesaling that is done in our section is

perhaps divided up into a great many different sections.
Spokane, Portland, Salt Lake City, Omaha and Chicago sell
in our territory.




t

3638
A. K. Keller

The Secretary of the Treasury:

What would be your

second choice?
Mr. Keller:

Well, almost any city in the Northwest.

The Secretary of the Treasury:

I understood that any

city in the Northwest would be your first choice.
Mr. Keller:

Spokane is our first choice.

The Secretary of the Treasury:

What would be $our second

Choice, outside of the Northwest, I mean; would it be Denver
or Salt Lake City or San Francisco?
Mr. Keller:
Denver.

Well, nwe have no business in common with

I am at a little of a loss to know.

Possibly, on

account of its being we9t of the Rocky Mountains we should
say San Francisco, although we have a great deal more
business and are better acquainted with Chicago or some
other point east than we would be with San Francisco.
The Secretary of Agriculture:

How would you get to San

Francisco?
Mr. Keller:

We would have to go either by way of Ogden

and then west, or to Portland and then south.

We are about

14 to 16 hours from Portland, and I am not posted as to the
time, but I think it is nearly 48 hours from our town to
San Francisco.



•

3639
A. K. Keller

!
j

The Secretary of the Treasury:

How long does it take to

go to 8pokane?
Mr. Keller:

We are about the same mileage from Weiser to

Spokane as from Weiser to Portland.

! i
1

]

The Secretary of the Treasury:

Bat you do not get the

I i
J

connections, do you?
Mr. Keller:
connections.

Not under present conditions, quite as good
We are a little closer, by

a few hours, to

Portland, on account of the present railroad conditions.

<

i

j

We are looking forward, however, to having a much shorter
distance to Spokane,
The Secretary of the Treasury:

j 4
Where do you keep your

reserves now?
Mr. Keller:

•

I

i I

New York, Chicago and Spokane, and we have

i

to carry a Portland account.
The Secretary of the Treasury:
Mr. Keller: Yes,

A Portland account?

The Secretary of the Treasury:

Where do you carry the

,

bulk of your reserves?
Mr. Keller: I should say Chicago.
The Secretary of the Treasury:
are there?



What percentage of them

1

m

3630
A. K. Keller

Mr. Keller:

Possibly 30 per cent.

The Secretary of the Treasury:
Mr. Keller:

Possibly —

How much in New York?

well, we will say 35 per cent

in Chicago and 25 per cent in New. York.
The Secretary of the Treasury:

That is 60 per cent.

Where is the rest?
Mr. Keller:

The rest would be divided between the western

accounts.
The Secretary of the Treasury:

30 per cent in Spokane

and 30 per cent in Portland?
Mr. Keller:

Possibly that would be a fair break.

The Secretary of the Treasury:
Mr. Keller:

Yes.

Possibly?

I have not figured that out, but I am

giving you an estimate that that would be a fair division.
The Secretary of Agriculture:

Do you know the attitude

of the other banks in your city?
Mr. Keller:

No, I could not speak as to that.

Of course,

the state bank is not considering it at this time, on account
of the State Banking Law, which does not permit them to
Invest more than five per cent of their capital in stock of
other corporations, and until the law is changed I do not
think that they are considering it*



m

A. K. Keller

The Secretary of Agriculture:

2631

Is there anybody here

that can speak for Idaho as a whole?
Mr. Keller:

Mr. Thomson of Lewi a ton is the president

of the State Bankers1 Association, and I think he has gotten
into communication with a number of the banks.

I think

southern Idaho is somewhat divided, however, as to their
location.

I could mention possibly a few other locations

which favor Spokane, but it is just from personal conversations with the local bankers, and I am not prepared to
speak for them.
The Secretary of Agriculture:

Perhaps if we could hear

from Mr. Thomson, he could throw some light on the question,
Mr. Keller:

Yes, I think he could give you thst infor-

mation.
The Secretary of Agriculture:

Mr. Thomson.

STATEMENT OF WM. THOMSON.
The Secretary of Agriculture:

You may state your full

name, residence and occupation.
Mr. Thomson:

William Thomson, President of the Lewiston

National Bank, and I am president of the Idaho Bankers1
Association.



Wm. Thomson

The Secretary of Agriculture:

3633

You are just on the north-

western line of Idaho?
Mr. Thomson:

Yes, en the line between Washington and

Idaho, on the Snake River,
The Secretary of the Treasury:

How many banks are there

in your city?
Mr. Thomson:

We have four banks in Lewiston.

The Secretary of the Treasury:
Mr. Thomson:

State or national?

Three national and one state.

The Secretary of the Treasury:

What is your vie^r of this

problem that we are discussing, and ycur wish?

Do you

represent, may I ask, any association or body?
Mr. Thomson:
ciation.

I am president of the Idaho Bankers' Asso-

As an association we did not take this matter up,

but personally I sent out telegrams to about 50 banks in
the state, both national and state, asking what their desire
was as to the formation of a Northwestern district, without
regard to where the reserve centre would be.

Practically

all the banks in Idaho wish to be in this proposed Northi

western district, providing sufficient capital could be had
so that we could have a district.

There were three of them

that stated that they desired to be tied on to additional



1

n

,

Wm. Thomson

2633

states, embracing seven states, with San Francisco as the
centre.
The Secretary of Agriculture:

Did you say you sent cut a

letter to these banks?
Mr. Thomson:

I sent a telegram.

The Secretary of Agriculture:

Could you file a copy of

that telegram?
Mr. Thomson:

I can, and also their replies.

I have them

with me.
The Secretary of Agriculture:
you would do that.

We would be very glad if

Have you it with you, so we could see

the telegram?
Mr. Thomson:

In the telegram I just asked the question

whether they were in favor of a Northwestern region
embracing the four Northwestern states, and I have the
i

replies.
The Secretary of the Treasury:

You did not give them the

opportunity to express themselves on any other question?
Mr. Thomson:

No, I did not ask them the question.

Here

are some of the replies.
The Secretary of the Treasury:
that you sent.




Let us see the telegram

Wm. Thomson

m

Mr, Thomson*
was:

3634

I have not got it with me.

This is all it

"Are you in favor of the Northwestern district em-

bracing the four Northwestern states?"

A few of them

expressed in the telegram their preference for a location.
For instance, I have the Caldwell Commercial Bank, and they
favor the seven states,
The Secretary of Agriculture:

With San Francisco as the

headquarters?
Mr. Thomson:

With San Francisco as the headquarters, and

if the four North states are to be separated, they favor
Portland.

Now in the eouthern part of the state the

trend of business is mostly toward Portland, and the bankars
in the southern part of the state, I know, from having
communicated with them, favor Portland.

In the northern

part of the state the banks are practically unanimously in
favor of Spokane.

In Lewieton 60 per cent of our business

is done with Spokane, 24 per cent is with Portland, 4 per
cent with Seattle, 2 per cent with San Francisco, and only
10 per cent with eastern points.
The Secretary of Agriculture:
Spokane?
l£r. Thomson:




Seven hours.

How far are you from

»

Wm, Thomson

The Secretary of Agriculture:

2635

Do you know what the view of

the bankers and business men in southern Idaho is with
reference to the eastern points?
Mr. Thomson:

The attitude of practically all of southern

Idaho is in favor of the Northwest, if a bank of sufficient
capital can be had, but they are divided as to the place.
Southern Idaho will mostly support Portland,

In the terri-

tory where I am, on account of ease of access, we prefer
Spokane, and the bulk of our business is with Spokane.
The Secretary of Agriculture:

Suppose it were found to

be impossible to locate one of these Reserve Banks in the
northwest, what would be the choice of Idaho?
'
i

Mr. Thomson:

San Francisco,

i!
j
l

The Secretary of Agriculture:
point?

Rather than an eastern

.

Mr. Thomson:

Rather than an eastern point, providing we

could have an accessible branch in the northwest.
The Secretary of Agriculture:

In case a Regional Bank

were not established in the Northwest, where would you want
a branch?

Your first choice would be Spokane?

Mr. Thomson:

My first choice vrould be Spokane, and my

second choice Portland.



And the banks in the region

tt

Wm. Thomson

3636

where I am, their second choice, we have about five counties
that do business through Lewiston, and we are sort of a
clearing house for them, and they would favor Portland,
because it is easier of access.
The Secretary of Agriculture: Where does Idaho dc the
great volume of its business?
Mr. Thomson:

The business in Idaho

—

we have

123,500,000 which comes in from the mines, and that is from
the Coeur d!Alenee.

The grain is a little over $31,000,000.

That is all practically shipped to the coast.
The Secretary of Agriculture:
Mr. Thomson:

To this coast?

Yes, and most of it goes to Portland.

The Secretary of the Treasury:

How about the products of

the mines?
Mr. Thomson:

Mr. Tinkle is from the mining country and

he will follow me. We have about three and a half million
dollars of potatoes that are shipped to various places, and
•l7,00Q,000 in live stock.

A good deal of the live stock

is shipped to Portland, some tc Seattle, some to Spokane,
and some of it to the east, to Omaha.
The Secretary of the Treasury:
say comes west?



What percentage should you

m

Wm. Thomson

Mr. Thomson:

3637

Of the live stock?

The Secretary of the Treasury:
Mr. Thomson:

r

Yes.

Well, in the district where I am, and on

account of the railroad facilities, practically all of it
goes Tre6t.

In southern Idaho a good deal of it goes to

Omaha.
The Secretary of the Treasury?: And Denver?
Mr. Thomson:

Some of it to Denver, yes.

We have

#17,000,000 coming from Live stock, and $11,000,000 from
lumber, and $2,500,000 from chickens.
The Secretary of Agriculture:
matter in addition?

Will you file with us any

Have you anything in addition to those

telegrair.s?
Mr. Thomson:

No.

The Secretary of Agriculture:

Will you kindly let us

have the telegrams that you received.
Mr. Thomson:

^*.
.-

Yes.

(The telegrams fcbove referred to were then filed by
Mr. Thomson.)




:.:'"

ni

Wm, Thomson

2638

(The following is a copy of telegram sent by Mr. Wm.
Thomson to the bankers of Idaho.)
"Do you favor formation of a Northwest Regional district
embracing four Northwestern States.
Wm. Thomson."
(To which the following are sone of the replies.)
"Favor Seven States West Rocky Mountains centered in
Frisco if four Northwest States to be separated favor
Portland center.

Caldwell Comfl Bank,"

"At Clearing House meeting held today Boise Banks passed
resolution favorin? Reserve Bank for Northwest States,
to be located at Portland and are sending representatives
to meet with Board the Thirtieth.

I. H'. Parsons."

"We are in favor of the establishment of a Northwest
Regional Reserve District embracing Four Northwestern
States.
"Yes.

Wallace National Bank."
Bank Cainas Prairie, Grangeville, Idaho."

"Yes, if possible to get it.

First National Bank,

Wallace, Idaho."
•We are in favor of the establishment of the Northwest
Regional Reserve District embracing four Northwest States,
Farmer State Bank, Perce, Idaho."



Wm. Thomson

3639

*¥e are in favor of the establishment of a Regional
Reserve District embracing the four Northwest States.
Idaho State Bank, lie, Idaho,"
"We are in favor of Northwest Regional Reserve district.
First National Bank, Cottonwood, Idaho,"
"Yes, have endorsed Spokane for location.

First

National Bank of Nampa, Idaho."
"Rave already endorsed the creation of such a district
with Spokane as seat of the Regional Bank; if this cannot
j
: be accomplished would recommend Idaho, Washington and Oregcn
joining San Francisco with a branch bank to serve three
Northern States,
;
;

First Trust & Savings Bank, Moscow, Idaho."

"Answer yes to your telegram yesterday.

First National

Bank, Fayette National Bank, Fruitland State Bank, Fayette,
Idaho,"
!
;

.
.

"Answering your telegram we are decidedly in favor of a
Northwest Regional Reserve District embracing four Northwestern States.

First National Bank of Moscow, Idaho."

"In answer to ycur telegram this Bank would say yes
! in large letters.
i

First National Bank, Weiser, Idaho,"

•We are in favor of a Northwest Regional Reserve
district.



Union State Bank, Bezperce, Idaho,"

Wm. Thomson

3640

"Are waiting further development before deciding
definitely.

If sufficient capital can be obtained to

make such banks one comparative strength usefulness and
dignity, we are.

If this cannot be accomplished we had

better Include California, Nevada, Utah;
States we" favor Portland for location.

if four Northwest
First National

Bank, Qrangeville, Idaho."

STATEMENT OF F. W. TINKEL.
The Secretary of Agriculture:
from you now.

Mr. Tinkel; we will hear

You may give your full name, residence and

occupation.
Mr. Tinkel:

F. W. Tinkel, President of the First National

Bank, Coeur d!Alene, Idaho.
The Secretary of Agriculture:

Do you represent any

association?
Mr. Tinkel:

I come with a resolution from the Coeur

d'Alene Clearing House Association,
The Secretary of Agriculture:

How many banks have you

there?
Mr. Tinkel:



We have four banks in Coeur d'Alene,

F. W. Tinkel

The Secretary of Agriculture:
Mr. Tinkel:

3641

State or national?

Two state and two national.

The Secretary of Agriculture:

Do all the banks belong

to the Clearing HouBe Association?
Mr. Tinkel:

Yes, sir. Would you care to look at the

resolution?
The Secretary of Agriculture:

Just read it to us, if you

will.
Mr. Tinkel:

(Reading):
RESOLUTION.

WHEREAS under a recent law enacted by the Congress of
the United States, provision was made for not more than
twelve regional banks to be distributed throughout the
various states, the purpose being to select such locations
as to accommodate the greatest number of people;
AND, WHEREAS, the City of Spokane, in the State of
Washington, is so located as to be easily accessible from
all points in the Pacific Northwest;
THEREFORE, Be it Resolved that the Coeur d!Alene
Clearing House Association unqualifiedly endorses the City
of Spokane as the logical location for the Regional
Bank for the Pacific Northwest;



m

F. W. Tinkel

3643

AND, BE IT FURTHER RESOLVED that said Clearing House
Association respectfully requests an unbiased investigation
and consideration of the authorities as to the claims and
merits of Spokane as the logical location for a Regional
Bank.
Dated at Coeur dfAlene, Idaho, this 27th day of January,
1914.
Coeur d'Alene Clearing House Association,
By Ross Black, President,
Ira H. Shally, Secretary."
The Secretary of Agriculture: How far are you from
Spokane?
Mr. Tinkel:

•

<,

33 miles.

The Secretary of Agriculture: What is the volume of
business at your city?
Mr. Tinkel:

In the banking business, you mean, with

Spokane?
The Secretary of Agriculture: The mining business.
Mr. Tinkel: Well, Mr. Thomson stated I was in a mining
country, but he is really mistaken, because our city and
county are not in a mining country, like the country known
ae the mining country, which is really located at Shoshone



m

F. W. Tinkel.

2643

county, although I have the expression from all the banks
of Shoshone County as to their preference for the location
of a Regional Bank.
The Secretery of Agriculture: Where is that business
financed?
Mr. Tinkel: Their statements made to me show that by
far their largest balances are in Spokane banks.
The Secretary of Agriculture: Tour first choice is for a
Northwestern district with Spokane as the centre?
Mr, Tinkel: All the banks in those two counties, 18 in
number, decidedly want a Northwestern bank embracing the
four states, with Spokane as the banking point.
The Secretary of Agriculture: What would be your second
choice?
Mr. Tinkel: The Second choice would be Seattle.
The Secretary of Agriculture: And your third?
Mr. Tinkel:

I presume that would be San Francisco,

The Secretary of Agriculture: You endorse what has been
said about the section in general, but endorse Spokane as
the location?
Mr, Tinkel: Yes, sir.
The Secretary of Agriculture:



Is there anything else

m

F. W. Tinkel

3644

you wish to present?
Mr. Tinkel:

I presume you would not probably care to

have these figures read, in regard to the amount cf bank
balances carried by these 18 banks with the cities under
consideration.

i
The Secretary of Agriculture:

Yes, y©u may do that.

u

I

Mr. Tinkel:

I will state these figures were furnished to

• me by the banks themselves.

I will just read the totals.

It shows average bank balances carried in banks in Spokane
to be $640,000.

Drafts drawn per month by these banks on

Spokane $3,148,335.

At Portland the average balances

carried by these 18 banks are $71,000.
The Secretary of Agriculture:

As against $640,000 in

Spokane?
Mr. Tinkel:
$113,335.

$640,000.

Drafts drawn per month on Portland

Average balances carried in Seattle $19,000.

The Secretary cf Agriculture:

Your connections are

principally with Spokane?
Mr. Tinkel:

Yes. Drafts drawn on Seattle $35,500.

Minneapolis or St. Paul $33,000 balances and drafts drawn
per month $35,000.

Average balances in San Francisco

$30,500 and drafts d r a m per month $39,500.




F. W. Tinkel.

m

The Secretary of Agriculture:

3645

Please file that, Mr.

!; Tinkel.
(The paper was accordingly filed.)
STATEMENT OF T. J. HUMBIRD.
The Secretary of Agriculture:

Mr. Humbird, please state

your full name, residence and occupation?
Mr. Humbird:

T. J. Humbird, President of Humbird

Lumber Company, Sand Point, Idaho.
The Secretary of Agriculture:
Mr. Humbird:

How far are you from Spokane?

69 miles.

The Secretary of Agriculture:

What business or industry

do you represent?
Mr. Humbird:

Lumber interests. We are manufacturers of

lumber.
The Secretary of Agriculture:

You are economically a part

of Spokane, are you not?
Mr. Humbird.

I would say so.

The Secretary of Agriculture:

Can you give us any

additional facts bearing on this problem, Mr. Humbirdf
Mr. Humbird:

Along what particular line, would you say?

The Secretary of Agriculture:



Well, what do you desire to

T. J. Humbird

2646

suggest to the Committee?
Mr. Humbird:

As representing the lumber industry of

Idaho, which covers the northern part of the state, the
southern part not being timbered, our preference would
naturally be for Spokane, largely because of its convenience
and then because our operations are financed very largely
by Spokane banks.
The Secretary of Agriculture: Where does your lumber go?
Mr. Humbird:

Our lumber practically all goes east, a

portion of it going into almost all of the eastern states.
I will say further that the character of our lumber being
pine largely, it is the same as that of Oregon and Washington, lying east of the Cascade fountains and Western
Montana, as we. call it, the Inland Empire.

The character

of the timber grown in the territory is similar in character,
being pine as against the fir of the coast west of the
Cascade8•
The Secretary of Agriculture:

Could you tell us about

what the volume of that business is in that part of Idaho?
Mr. Humbird:

Outside of Idaho?

The Secretary of Agriculture:
the northern part.



No, in Idaho, especially in

»

T. J. Humbird

Mr, Humbird:
in Idaho.

2647

I could not answer to the amount produced

I would say in what is called the Inland Empire,

where the same kind is produced, about a billion and a half
feet.
The Secretary of Agriculture:

In dollars, can you give

ue the equivalent?
Mr. Humbird:

Presumably it would amount to from $12 to

|15 per thousand feet.

That would be nearly two billion

dollars.
The Secretary of Agriculture:

That is pretty high, is it

not?
Mr. Humbird:

It is a billion and a half feet at $13

to $15 a thousand feet.
The Secretary of Agriculture:

The Board will not under-

take to work that out at the present time.
The Secretary of the Treasury:

About $12,000,000, is it

not?
The Secretary of Agriculture: Do you require much credit
to handle this?
Mr. Humbird:

All we can get. As a matter of fact, our

timber in this particular district, the majority of it, is
placed in the piles and remains in the piles an average, I



ffl

T. J. Humbird

3648

would eay, of about a year, necessitating, of course, our
borrowing money to carry it over for that period.
majority of our product is not kiln dried.

The

We carry very

much larger stocks than is necessary on the coast,

I presume

that the stocks the same concerns will carry will average
three or four times as much, making a very much longer period
for the turn-over than would be necessary on the Coast,
The Secretary of Agriculture:

And what do you depend on

for carrying this business, what centres?
Mr. Humbird:

That is for financing?

The Secretary of Agriculture:
Mr. Humbird:

Yes.

Spokane, very largely.

The Secretary of Agriculture:

Do you have to go outside

of this section?
Mr. Humbird:

Some of us who have eastern stockholders,

ask them to aid ue with their banks in the east, and more
particularly in the Middle West, I would say, rather than in
the east, Minnesota, Michigan and Wisconsin particularly.
The Secretary of Agriculture:

What is the period of your

greatest demand, does it extend over the year?
Mr. Humbird:

Yes.

Our operators, however, are confined

to about eight to nine months of the year.



During the

T. J. Humbird.

3643

winter season we are not manufacturing, although we are
shipping, and during that period when we are not manufacturing we are employing our men and capital in the woods in
getting in the next season's cut, so we employ about the
same number of men the year-round.
The Secretary of Agriculture: Do you do much business
west of the mountains?
Mr, Humbird:

Practically none.

The Secretary of Agriculture: What would be your second
choice of a centre?
Mr. Humbird:

| I

Speaking individually now?

The Secretary of Agriculture: Yes.
Mr. Humbird:

Portland and Seattle are equally distant,

so far as northern Idahc is concerned, in my particular
district.

I do not know as it would make any difference.

The Secretary of Agriculture: Would your second choice
be a northwestern city or a city to the east?
Mr. Humbird:

A Northwestern city.

I feel that they know

our conditions very much better than the eastern cities, and
are in closer touch with our needs.
The Secretary of Agriculture:
deeire to submit?



Is there anything else you

T. J. Humbird

Mr. Humbird:

3650

Nothing that I think of.

The Secretary of Agriculture: What would be ycur third
choice, if it came to that?
Mr. Humbird:

San Francisco.

The Secretary of Agriculture: We thank you very much.
The Secretary of the Treasury:

That completes the list

of witnesses who have been submitted to us, but before the
Committee adjourns, I desire to give anybody who wishes to
be heard an opportunity.
light on the subject.

Anybody who can shed any new

I see Mr. Titlow of Tacoma, is here.

We did not hear from him.

You were not here this morning, I

believe, Mr. Titlow.
V

.

STATEMENT OF A. R. TITLOW.

The Secretary of the Treasury J State your full name,
occupation and address, Mr. Titlow?
Mr. Titlow:

A. R. Titlcw; I am an Agriculturist first,

and second a hotel keeper,and third, I practice law when I am
not engaged in the other occupations.
The Secretary of Agriculture:
Mr. Titlow:

You are not aftoner?

No, sir, an agriculturist.

I presume,

Professor, that you understand the distinction.



ac

A. R. Titlow.

The Secretary of Agriculture:
Mr. Titlow:

365i

Yes.

I do not know whether I can add anything

particularly new or not.

There are one or two other things

which I think have been possibly overlooked.

One is the

manufacturing industry of the northwest, and particularly
the State of Washington.

Lumber was spoken of, and I think

that is about the only manufactured article which has been
mentioned.
Now the fact is that the State of Washington alone
manufactures between $350,000,000 and $300,000,000 worth

\
i

of goods every year, that is, I should say down to the
present time.

Of that, of course, the $90,000,000 that

Mr. Backus has spoken of is included in that amount.

Our

water shipments from Puget Sound alone, so far as we can

.

ascertain from the government statistics, which were published
the 30th of last June, amounted to {114,000,000 to
$130,000,000.
The Secretary of the Treasury:

;

Is not all that statistical

data before us?
The Secretary of Agriculture:
The Secretary of the Treasury:

We have that already here.
Everything that we have of

that kind here we do not care to have repeated, because it is




8C

A. R. Titlow.

j lost motion.

3653

Anything that is not included in this

ii

statistical data we have had all day, we would be glad to
hear.
Mr. Tltlow:

I was not here and I did not know about that.

The Secretary of the Treasury:

I do not think anything

has been omitted.
Mr, Titlow:

Just correct me on anything, and I will

not feel offended at all.
The Secretary pf the Treasury:
Mr. Titlow:

Yes.

The rail ^commerce has not been shown, rrlt

is impossible for us to tell, unless the Public Service
! Commission or ths Railroad Commissions of the different
states could give us that information.

Whether or not they

can, I do not know. But it is safe to say this, at least
three times of the water shipments are rail shipments, which
of course makes a very handsome sum.
Now in addition tc that, the business of the United
States has not been touched upon in this supposed or
! proposed district.

And in that would be included, of

course, the post office department, the Internal Revenue
collections, and also the customs thatxare collected from
the port of Puget Sound and also the port of Portland.



We

ee

A. R. Titlow

2653

have, of course, a number of sub-ports in Puget Sound, but
when we speak of the port of Puget Sound that includes
everything on Puget Sound.
ions are as follows:

The Internal Revenue collect-

This is the latest data we have at

I hand from the Government reports: Oregon $893,931,74;
Alaska and Washington, which constitutes this district;
$1,385,473.73; Idaho, Utah and Montana, $405,937.61,
Now then on the postal matters ire $ave not a complete
report and cannot get a complete report of that, but we can
give you some of the larger cities:

j
i

Billings, Montana,

$65,579.

Butte, Montana,

#161,768.

Great Falls, Montana,

t 85,375,

Helena, Montana,

• 94,273.

Miesoula, Montana,

I 55,443.

j
i

Portland, Oregon,

$1,183,544.

Salem, Oregon,

$ 73,479.

Bellingham, Washington,

$ 74,936.

Everett,

$ 78,738.

North Yakima,

$ 61,399.

Seattle, Wash.

$1,344,348.

Spokane, Wash.

$503,694.




ec

A. R. Titlow

Tacoma, Wash.

3654

$383,599.

Walla, HOla,

. $ 53,014.

The Secretary of the Treasury:

Just file those figures.

It is impossible to carry those in our heads. Just let
it become an exhibit.
(The paper was accordingly filed.)
Mr. Titlow:

Very well.

I want to say this, however, and

! do want to call attention to the magnitude of the federal
business in this Northwestern country, including the business
of the United States as well ?s other business outside of
!
if you
! the Federal business. Now then I think,/please, as
far as statistics are concerned, I heartily agree with Mr*
; Keleher, that there should be a full number of districts
i
;

established originally, for the reason, as suggested by
be
him, that it is going to/very hard indeed to uproot or
| unsettle them and very disadvantageous to thAse who have

i
established business and commercial relations after the
districts have once been established.
As to the Northwest, we believe there should be two
banks on the Coast, It is conceded by all of ue that one
of those should be- at San Francisco, serving not only
]

" California but the adjacent territory.




And as to the

ec

A. R. Titlow

3655

Northwest, we are an Empire in ourselves. The various
industries we have here and the rapid increase that we have
in business and in population seems to me demands that we
should have at ieast two districts on the Pacific Coast.
In that co meet ion it has been asserted that Montana would
be done an injustice.

That possibly may be true in a sense but

what is the injustice done to the balance of those four
Northwestern states as compared to the injustice done to

i

Montana?

It is conceded by Montana that as far as that state

is concerned, the trade now is trending westward and increasing at a rapid rate?
The Secretary of the Treasury:

I did not so understand

the testimony.

They said it was increasing very slowly.

Mr. Titlow:

Well} it has been on the increase, because

we used to get no trade at all from Montana, so it necessarily must be an increase, if there is any business at all.
The Secretary of the Treasury:

But they say it is in-

creasing slowly and not very rapidly.

You said rapidly.

The testimony is that it is increasing slowly.

That is the

only difference.
Mr. Titlow:

Very well, that may be true, and that is true

possibly in actual verbiage, but this is also true, that the




ec

A. R. Titlow

2656

Reserve Bank established here, it must be conceded, is for
the purpose of a money centre and to a certain axtent around
that money centre will necessarily gather trade, and that
will increase the trade.

|

The Secretary of the Treasury:

All this is purely argu-

mentative, Mr. Titlow, and if you have any additional facts
or figures now which would illuminate this subject, we would
be glad to hear them, but the suggestions you are making to
us now in the way of an argument are the things this Committee
has to consider when it takes up the whole question and
considers the facts amd figures, and I do not think it sheds
any light on the question.

Other gentlemen want to be

heard, so we have to cut off anything that does not relate
directly to the problen at hand.
Mr. Titlow:
new features.

Very well,

I think I have suggested the

One is the manufacttiring feature and the

other is the commerce of railroads, which has not been
touched upon, except inconnection with the lumber industry.
The Secretary of the ^'Treasury:

Anything of that sort we

are glad to hear.
Mr. Titlow:
lishment of a



I was getting to the question of the estabdistrict.

I thought that was what you wanted

•e

A. R. Titlow

2657

to hear about from all of us.
The Secretary of the Treasury:
ing out anything new.

Yes, but it is not bring-

That ground hag been very thoroughly

covered all day.
Mr. Titlow:

Very well. On the question of establishing

a Regional Bank, at Spokane, Seattle or Portland, I want to
say this:

Of course, the money itself, the banking business

and all the other business, or the bulk of the business I
think has been shown here this afternoon, comes from Puget
Sound,

Mow from Tacoma and all Sound ports it will be

tributary, of course, to Seattle.

If it were to come to a

second choice, and it has been suggested here that we might
possibly be put in a district &oihg across the Continent
to
east, I want/say to you gentlemen, when I came here 36 or
37 years ago, the entire business of this Northwest, which
was very small at that time, was done almost exclusively
up and down the Coast.

In fact, we were completely under

the control and protection, you might say, as well as con-




ec

A. R. Titlow

3658

trol of Oregon and California. That waa in the Territorial days, and afterwards in Statehood, and it lasted for
some considerable time. Of course, business since that
time h?s been changed and is going east. But after putting
us in a district which would take us east, I have this to
sayj: that our second choice would surely be, if the Northwestern Bank is to be established and not at Seattle, it
would be Portland. That would be upon the ground of distances and the question of accessibility.

Now the second

choice would be then, I think, San Francisco,
The Secretary of Agriculture:
Mr. Titlow:

The third choice, you mean.

Yes, First Seattle, and of course, second,

Portland, and then San Francisco.

The reason for that would

be this. We are in the district and if we should be put in
a Chicago district, to illustrate, the country that they
eerve is largely an agricultural country.

You take eastern

Washington and easterm Oregon and a large part of Montana,
in the Valleys particularly, and also in Idahp, it is also
I agricultural.

The time of the year that there would be a

demand to be drawn upon the reserves, the Dakfitas, Minnesota,
! Iowa, and all that section of the country would have a demand
also upon those reserves.




In Califb.rnia it would be

e

c

A. R. Titlow

different.
climate.

2659

We buy from California fruits, oils, and
Now we sell to California lumber, flour, wheat

and various other grains, feed and coal. The citrus fruit
we buy from California comes in the winter and spring of the
year at the time that we are not making our crop, so that
the demand upon the reserves at that time could be supplied
and that adjustment made and the money paid back in time, so
that when we came to move the cereals and the agricultural
| products, it would not interfere with the moving of the
citrus crop from California,
Now another fact has just been called to my attention,
which I do not think has been touched upon, and that is this.
Since the Assay Office was established in this city,
$338,000,000 have been disbursed from this Assay Office here
which of course adds to the government business.
The Secretary of thevTreasury:
Mr. Titlow:

Is that all you have to say.

If there is anything further you care to ask

me, I will try to answer it.
The Secretary of the Treasury:
all.
;

Thank youl that will be

Now we will hear from anybody who can shed any new

light on this problems
be heard?




Is there anyone here who desires to

a

C. H. Frye.

3660

Mr. Backus: We would like to put on one more witness,
Mr. Frye, who is a large buyer of cattle from Montana, and
who is very familiar with that business, and I think he will
only occupy a very few minutes.
STATEMENT OF CHARLES H. FRYE.
The Secretary of the Treasury:

Mr. Frye, what is your

business?
Mr. Frye:

In the meat and produce business.

The Secretary of the Treasury:

You mean raising live

stock?
Mr. Frye: No, sir, packing house.
The Secretary of the Treasury:

Packing house?

Mr. Frye: Yes, sir.
The Secretary of the Treasury:

At what place?

Mr. Frye: Seattle.
The Secretary of the Treasury:

You have some facts which

you want to present?
Mr. Frye: Yes, sir. We are getting 40 per cent of our
cattle in Montana, 15 per cent in Washington, 11 per cent
in California, 10 in Oregon, 5 in Idaho, 3 in Wyoming, and
one in South Dakota.




m

C. H. Frye

The Secretary of Agriculture:

2661

In numbers what would that

40 per cent from Montana be?
Mr. Frye: About 38,500,
The Secretary of Agriculture: And in value?
Mr. Frye:

They are worth about $95 apiece, or $90 apiece

probably about §3,000,000.
The Secretary of the Treasury: What percentage of the
total live stock business of cattle produced in Montana
does that represent?

What is the total cattle production?

Mr. Frye: About 35 per cent.
The Secretary of the Treasury:

About one-fourth of it?

Mr. Frye: Yes, sir.
The Secretary of the Treasury:

There are only about

88,000 cattle?
Mr. Frye:

There were about 100,000, — 84,000 or 79,000,

something like that, shipped east last year.
The Secretary of the Treasury:

89,000, and you got

33,000.
Mr. Frye:

Those that went east, and outside of what we

got, Tacoina and Portland probably got 17,000 or 18,000
besides us.
The Secretary of the Treasury:



Where do you finance most

m

C. H. Frye

3663

of that business?
Mr. Frye: Here in Seattle. We get about 35 per cent of
our money east.
The Secretary of the Treasury: What is the name of your
concern?
Mr. Frye: Frye & Company.
Mr. Backus: TOaat was your total business last year, Mr.
Frye?
Mr. Frye: $10,051,705.
The Secretary of the Treasury:

Is yours an independent

packing house?
Mr. Frye: Yes, sir.
The Secretary of the Treasury:

Have you had any diffi-

culty in financing your requirements here at any time?
Mr. Frye: Ho.
Mr. Backus:

There are the figures, |f you want them

(handing paper).
The Secretary of the Treasury:

Do you finance all of it

in Seattle?
Mr. Frye: All except about 35 per cent.
The Secretary of the Treasury:
Mr. Frye: Yes.



About $3,500,000.

m

C. H. Frye

2663

The Secretary of the Treasury: Where do you finance that?
Mr. Frye: Well, it is $250,000, We have been getting
that in the east.
The Secretary of the Treasury:

$250,000?

Mr. Frye: Yes,
Mr. Backus:

$10,000,000 is the total business for the

year.
The Secretary of the Treasury;

That is the turn over?

Mr. Frye: That is the turn-over.
The Secretary of the Treasury:

You turn over your million

dollars of capital, for instance, ten times a year?
Mr. Frye: Yes, sir.
The Secretary of the Treasury:

And you get {350,000 in

the east and $750,000 here?
Mr. Frye: About {700,000 here and about {500,000 in
Portland,
The Secretary of the Treasury:

Is there anything else you

desire to say?
Mr. Baclcus: There are just one or two points I should
like to add*, I am informed that the Spokane Clearing House
voted to select Seattle as second choice.
that has been brought out.



I do not think

m

3664

The Secretary of the Treasury:

I understood that to be

true,
Mr. Brewer:

I made the statement,

Mr. Backus: I call attention to this fact.

It has been

argued by the Montana gentlemen that violence would be done
to the natural course of trade if a bank were located in
Seattle and they were attached to this district.

It is

pretty evident and must be to you gentlemen that some
violence must be done to somebody's trade.

The total trade

of Montana is a very small part of that of this entire district.

The banking capital, the deposits, and the resources

and liabilities of all of the banks would be small as compared with those of Washington and Oregon, and far greater
violence would be done to the trade of Washington and Oregon
if they were compelled to send it south to San Francisco,
over a single track line of railroad, than would be done to
Montana.

That is* violence would be done to a far greater

number of people and injustice done to a larger number of
business concerns and banks by forcing us throughout
Washington and Oregon to transact our business to the south,
where we have very little in common, over a single track
road, operating slowly through, the mountain districts, than



a

2665

would be done to Montana, where there are four or five transcontinental lines, and where they admit that the business is
east and west and the connections excellent.
The Secretary of the Treasury:

How are you going to

overcome the fact that the district as you laid it out, will
not provide the minimum amount of capital required by the
Act?

The only alternative that has been suggested here is

that the remainder be raised by private subscriptions.
Mr. Backus:

If the state banks come in, as we believe they

will —
The Secretary of the Treasury:
There is nothing to indicate it.

But we cannot assume that.
The only thing this

Committee can act upon is the actual application of the state
banks to come into the system.

We cannot assume that they

may come in, because when we divide the country into districts, the object of the Act in limiting the action of the
banks to 60 days was to enable the Committee to know what
available capital there would be.
Mr. Backus:
have to meet.

That is the chief difficulty you gentlemen
But our desire is to impress upon you if

possible the great necessity of having a Northwest district
created.



Of course, you are the ones to carve it out. We

m

3666

cannot do it. But I do feel that very great injustice
would be done to all this territory up here if only one
bank on the coast is located, and that at San Francisco.
Because our communication with San Francisco is bad.

The

mails are very slow, and we have very little in common.
The Secretary of the Treasury:

You are not taking into

consideration the effectiveness of a branch in your city.
That is a thing, however, that we went over this morning.
Mr. Backus: Yes, we traversed that this morning very well.
The Secretary of the Treasury:

Is there anything further?

Mr, Backus: No,
The Secretary of the Treasury:
adjournment is taken

I desire to say before an

—

Mr. Brown: May I say a word?
The Secretary of the Treasury: Yes.
STATEMENT OF GREY C. BROWN.
The Secretary of the Treasury:

You may state your name

and residence and occupation.
Mr. Brown:

Grey C. Brown, President of the Columbia Valley

Bank, at lenatchee, Washington.

The North Central part of

the state has not been heard from.



Also I am a state banker,

m

G. C. Brown

3667

and I wanted to talk along that line.
The Secretary of the Treasury: What have you to suggest
on this subject?
Mr, Brown:
i
:

The State bankers have not realized that there

was any great hurry in the matter of deciding to come in,

; The law specifies that national banks are to signify their
intention within 60 days, but it does not seem to contemplate
that state banks are to signify their intention in that
length of time.
The Secretary of the Treasury:
Mr, Brown:

They are permitted to,

They are permitted to.

The Secretary of Agriculture:

You see, it has a bearing

in two ways on the matter of the banking strength of a
proposed district, and secondly, on the selection of the
directors.

Unless the state banks come in when these banks

are organized, they will have no voice in the selection of
the first directors.
The Secretary of the Treasury:

The national government

has no right to compel the state banks to come in within a
given time.

It has a right to fix the limits within which

a national bank may or may not accept the provisions of the
Act, and the purpose of the limitation was to compel the



m

G. C. Brown

2668

national banks to determine within a reasonable time whether
or not they would subscribe, in order that this Committee
might 3mow what was the minimum amount of capital that
would be available for distribution among the districts of
the country when they are outlined.
Mr. Brown: Well, I am satisfied that a large proportion
of the state banks, if they realized that time was necessary, would certainly signify their intention to come in.
The Secretary of the Treasury:

Well, you gentlemen have

30 days within which to make up your minds.

The banks

are being sent to you and all you have to do is to take the
action.
Mr. Brown: Another thing I wanted to bring out was that
our district is principally fruit.

From the Wenatchee

district we shipped approximately 5,000 cars of fruit this
past year.

And we have absolutely nothing in common with

I California; not only in Wenatchee, but I believe in eastern
Washington, we have very little business with California,
The Secretary of the Treasury:

Which direction does your

business go?
Mr. Brown:

Largely east.

The Secretary of Agriculture:



To what points?

m

G. C. Brown

3669

Mr. Brown: Well, all points, but probably more to Chicago
and New York than any other point; that is our commercial
i
business;

our banking business goes largely to Spokane and

j

Seattle,
The Secretary of Agriculture: What would be your first
choice for the location of a Reserve Bank?
Hr. Brown:

Spokane or Seattle';

The Secretary of Agriculture: Either?
Mr, Brown: Either.

\

The Secretary of Agriculture:
Mr, Brown:

No preference?

No preference.

The Secretary of Agriculture:

And for second choice the

other city?
Mr, Brown:

Yes, and then Portland.

The Secretary of the Treasury:
Mr. Brown:

Chicago.

And what other?

We have ten times the business with

Chicago that we have with San Francisco, beyond the shadow
af a doubt, and I believe all eastern Washington has ten
times the business with Chicago than it does with San
Francisco, and it will do a great deal more injustice to us
to tie us up with San Francisco than it will to Montana to
| tie them up with us, in my opinion.
|



'[
\

m

G. C. Brown

The Secretary of the Treasury:

3670

Have you anything else to

suggest?
Mr. Brown:

Nc, sir.

The Secretary of the Treasury:

That is all, thank you.

Does anyone else desire to be heard?
l
|
1

Before adjournment, I desire to say in behalf of the
Committee that it must not be assumed, I want to repeat,

, that the line of questioning employed by the Committee
:
| indicates any view of opinion that the Committee may have
on this subject, because it has no opinion.

We have to take

of course, a line of questioning that will develop the facts
that we are trying to get for the purpose of enabling us
ultimately to reach a decision on these important questions.
We very much appreciate the interest and the earnestness
and patience with which you gentlemen have all presented
your cases, and we want to congratulate you on the showing
of the great progress that this great section of the country
has. made, from the facts and interesting data which you
have submitted here, and we desire to assure you that the
case will be thoroughly considered and that the Committee




m

2671

will do its level best to reach a decision which will be
as just as we know how to make it, in the interest of the
whole country, including the Northwest as a very important
and a very wonderful part of our ereat nation.
The Committee will now stand adjourned.

Whereupon, at 5:45 o1clock P. M. the hearing was
adjourned.

4