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This narrative records important facts and happenings in connection
with the establishment of the Fourth District Reserve Bank at Cleveland;
the important events in the org811ization of the bank prior to its opening;
and matters which are considered of importance or of interest in the affairs of the institution.

The narrative has been compiled largely from

published sources, supplemented by suggestions and incidents mentioned by
the few remaining people in the organization who were "in the know" in the
early stages of the bank 1 s life.

It is inevitable that in a record of this

nature much that is of interest will be overlooked.

On the other hand the

reader may be assured that, while what is of interest or of historical value is largely a matter of opinion, no really important happening or occasion which is a matter of record or of recollection has been overlooked.
When the Reserve Banking Act was passed in December of 1913, the organization of the System, including the determination of the number of
banks to be established and the location of such banks, was left to the
Organization Committee, consisting of the Secretary of the Treasury (William
Gibbs McAdoo), the Secretary of Agriculture (David Franklin Houston), and
the Comptroller of the CUJ:Tency (John Skelton Williams).
Early in 1914, the Organization Committee held hearings in various
parts .of the country to permit cities to present their claims as candidates for the location of a Federal Reserve bank.

Each city was requested

to present its suggestions as to the number of districts that should be
created, the territory to be included in each, and the reasons for its own
selection as a Federal Reserve City.
Following announcement of the procedure to be observed, a committee
was organized in Oleveland under the leadership of the Cleveland Chamber


of Commerce, which represented also eight other organizations headed by the
Cleveland Clearinghouse Association.

This committee selected an executive

committee consisting of Colonel John J. Sullivan, then president of the
Cleveland Clearinghouse Association; the Honorable Newton D. Baker, then
Mayor of the City of Cleveland; Warren S. Hayden, then president of the
Cleveland Chamber of Commerce; Elbert H. Baker, then president of the Plain
Dealer Publishing Company; and Frederick H. Goff, then president of The
Cleveland Trust Company.



Baxter, then assistant secretary and in-

dustrial commissioner of the Cleveland Chamber of Commerce, was assigned as
secretary of the committee, which proceeded at once to map out the eleven
districts which it proposed.

District Number Five was to include all of

Ohio, twenty-five counties of western Pennsylvania, nine counties of western
New York (including the City of Buffa.lo), four counties in the panhandle of
West Virginia, and nine counties of southeastern Michigan (including the
City of Detroit), with the Federal Reserve bank to be located at Cleveland.
The views of the Cleveland Committee were presented to the Organization Committee at a meeting which was held in Cleveland on February 17, 1914.
Applications for the location of the Federal Reserve bank likewise were
filed by representative orga11izations in Cincinnati and in Pittsburgh.


report of the Reserve Bank Organization Committee, transmitting to the United
States Senate in response to a request from that body the briefs and axguments
filed by the thirty-seven cities which asked to be designated as Federal Reserve bank cities, includes the Cities of Wheeling, West Virginia, and Columbus,

Apparently the brief filed in behalf of Columbus was submitted by the

Ohio National Bank.

The Committee also refers to "statements in behalf of

Wheeling, West Virginia," without reference to who filed the statements, and
we can find no record of publication of such statements.

It is entirely pos-

sible that, as was the case with Columbus, the brief was filed by a bank, or
possibly the Cha.mber of Commerce.

In the tabulation of votes cast, indicating

first, second, and third choice for Reserve bank cities by States, Columbus
received thirty-six first choice, and Wheeling one second choice vote.


is no evidence that the claims of Columbus and of Wheeling were at any time
given serious consideration.
The brief filed by Cincinnati was prepared under the direction of


Hicks, professor of economics and commerce at the University of

Cincinnati, for the Joint Committee on the Regional Bank, which represented
the Cincinnati Clearinghouse, the Chamber of Commerce, and the Businessmen's

The material presented was very elaborate and complete.

The terri-

tory to be covered by the Cincinnati bank included the States of Ohio,
Indiana, West Virginia, Kentucky, and Tennessee.
The final brief filed by Pittsburgh, on August 12, was very short and
concise, containing not more than two thousand words.

The tone of the Pitts-

burgh brief was definitely impolitic, and the tenor of the entire docwnent
was to ridicule any claim that Cleveland might entertain as a possible site
for the new bank.

The original brief filed by Pittsburgh was not published

by the Organization Committee in its letter transmitting briefs and arguments to the United States Senate.
Cleveland's brief in rebuttal of the Pittsburgh brief, filed October 3,
was prepared by the members of the committee who signed the original brief,
assisted bys. H. Tolles, a Cleveland attorney.

It was stated that Colonel

J. J. Sullivan would go to Washington to attend the hearing when the Pittsburgh protest was given final consideration.

The hearing was set for

January 13, 1915.
Cincinnati was early eliminated from consideration and the contest for
the location of the Fourth District bank became very bitter between the organization sponsoring Pittsburgh and that which was championing the cause
of Cleveland.

The reasons which prompted the Organization Committee to lo-


cate the bank in Cleveland have never been announced.

It has been freely

charged that the determination was largely the result of the influence of
Honorable Newton D. Baker, then Mayor of Cleveland, prominent in national
Democratic circles, and later Secretary of War in President Wilson's cabinet.

Other arguments run that Pittsburgh was eliminated because of certain

banking difficulties through which the City of Pittsburgh had just passed,
involving the suspension of large and important banks.

Dr. H. Parker Willis

in his FEDERAL RESERVE SYSTEM states that the reasons for the selection of
the twelve cities determined by the Organization Committee were filed in the
form of a confidential memorandum, and so far as is knovn1 the contents of
this memorandum have never been made public.
The decision of the Organization Committee to locate the Fourth District bank in Cleveland was stubbornly and vigorously contested by the committee presenting Pittsburgh's claim, and the proposal was made that the
nineteen counties in western Pennsylvania apportioned to District No. 4 "secede"
from the Fourth District and be attached to the Philadelphia district.


upon an opinion of the Attorney General of the United States that the Reserve
Board had no authority in law to change the designation of a Reserve bank
city once the determination had been made by the Organization Committee, the
Board declined to take action on the Pittsburgh petition to name that city
instead of Cleveland as the location for the Fourth District bank.

The pro-

posal to transfer the nineteen-county area in western Pennsylvania to the
Philadelphia district apparently received scant consideration.

It is probable

that Philadelphia would have been no more acceptalil.e to Pittsburgh interests
than would have Cleveland.
One of the steps ta.ken by the Organization Committee in determining
the location of the Federal Reserve banks was to poll the 7,471 national
banks throughout the country which had formally assented to accept the

provisions of the Federal Reserve Act, as to their first, second, and third
choice preferences.

It is interesting to observe that of the three cities

in this territory whose claims were given serious consideration, Cleveland
received the smallest number of first choice vote~.

Even in the State of

Ohio it received a much smaller vote than did Cincinnati.

The tabulation

below shows first choice votes for the cities of Pittsburgh, Cincinnati,
and Cleveland, set up to show the preference of banlcs in the district, in
the State of Ohio, and in the country as a whole.




Ohio Vote









A substantial part of the out-of-district vote for Pittsburgh and Cincinnati came from West Virginia, which cast 41 votes for Pittsburgh and 26
votes for Cincinnati.

The Cincinnati vote lilcewise was influenced by a

substantial vote cast for that city by banks in Kentucky and in southern

Cleveland, apparently, did not receive a single vote from outside

the district, the difference between the district vote and the Ohio vote
being the three ballots cast by Pennsylvania banks for Cleveland as first

It is lilcewise of interest to note that Cleveland is the only city

in which a Federal Reserve bank was established that did not receive a majority of the ballots cast for the selection of such city by the voting banks
in its district.
It may not be entirely without significance that the Organization Committee, on the date that it announced the location of the twelve Reserve
banks, commented upon the claims of New Orleans, Atlanta, Dallas, Baltimore,
Omaha, Lincoln, Denver, Portland, Columbia

(s.c.), Washiugton, Cincinnati,

and Charlotte (N.C.), but made no mention whatever of Pittsburgh.


Location of Reserve Districts in the United States - Senate
Document 485 - 63rd Congress - Second Session - Page 349


The final decision of the Organization Committee to establish twelve
districts and twelve Reserve banks was announced in Washington under date
of April 2, 1914-

As originally constituted the Fourth Federal Reserve Dis-

trict included all of the State of Ohio, fifty-six counties in eastern Kentucky, nineteen counties in western Pennsylvania, and four counties in the
West Virginia panhandle.

Except for the addition of two counties in West

Virginia (Tyler and Wetzel, which were transferred to the Fourth District by
resolution of the Federal Reserve Boa.rd on May 4, 1915), the territory today
remains unchanged.


On May 18, 1914, two representatives each of the five banks which had
been designated by the Organization Committee to file an organization certificate for the Cleveland bank met in the City of Cleveland for that purpose.
These banks and tl:leir representatives were Lexington, Kentucky, represented by


Phoenix and Third National Bank,

A. McDowell and


L. Threlkeld; First

National Bank of Cincinnati, Ohio, represented by T. J. Davis and R. E.
McEvilley; The New First National Bank, Columbus, Ohio, represented by



Mayers and C.R. Shields; The Bank of Pittsburgh, N. A., Pittsburgh, Pennsylvania, represented by Harrison Nesbit and Alexander Dunbar; and The First
National Bame of Cleveland, Cleveland, Ohio, represented by T. H. Wilson and


E. Farnsworth.

M.r. ,J. R. Kraus of The First National Bank, Cleveland, Ohio,

was also present on that occasion.

The notarial certificate was executed by

Joseph A. Rayon, a Cleveland attorney.

The certificate of organization was

signed on the afternoon ef' that day at a. meetine scheduled for 2:00 o'clock.
The Federal Reserve Act provides that the certificate shall be transmitted to the Comptroller of the Currency, "who shall file, record and carefully preserve the same in his office," and that upon the filing of


This transfer resulted in the addition to District No. 4 of five national
banks -- The First of Middlebourne, First of New Martinsville, Farmers
and Producers, First, and Peoples of Sistersville.


certif'icate with the Comptroller as aforesaid, the Federal Reserve bank
shall become a body corporate.

Since it is manifestly impossible that an

organization certificate executed in Cleveland on the afternoon of May 18,

1914, could have been filed with the Comptroller of the Currency "in his
office" on that same date, it would seem that there is legitimate question
whether the date of the organization of this bank, as given in all published sources and as included in the seal of the bank, is correct.

It would

appear much more probable that the filing date was May 19, and that the bank
became a body corporate on that date.
Following the filing of the organization certificate, interest shifted
to the election of Class A and Class B directors.

The first election was

conducted by the Reserve Bank Organization CoriUllittee, acting for the chairmen of the various Federal Reserve banks.

In a circular letter da-1:,ed May 6,

1914, prescribing the mechanics of nominatioJ/and election, the Committee
stated that:
"The organization of the Federal Reserve bank
in those districts whose member banks act
promptly will not be held back or delayed to
keep pace with organization of banks in other
districts whose member banks are slow in taking
action and making returns to the Organization
Apparently the election was rather loosely conducted.

Although there

was nothing in the Orgru1ization Committee's circular fixing a do.te for the
closing of the polls other than to provide that ballots must be returned
within fifteen days from their receipt by the voting bank, FINANCE in its
issue of July 11, 1914, stated that national banks in the Fourth Federal
Reserve District on Tuesda;/received the formal call for election of directors of Federal Reserve Bank of Cleveland.
should have closed on July 22.

iJ Complete

Such being the case the polls

Two days after this date, however, the bazlks

lists of all candidates for Class A and Class B directors
nominated by banks in all three groups may be found in Appendix A
July 7, 1914




of the country were notified by the Committee that the polls for the election of Class A and Class B directors would be definitely and finally closed
on August l, and that no votes for Class A or Class B directors received
thereafter would be counted.
It is evident also that the annow1cement of the election of directors
was not made by the Organization Committee a.tone time.

FINANCE in its issue

of July 25 announced the election of Robert Wardrop of Pittsburgh, and
Thomas A. Combs of Lexington, as Class A and Class B directors respectively.
In the srune issue another dispatch indicated that "the next announcement
from Washington will contain the naJJ1es of directors chosen by Groups Two and

The complete list of Class A and Class B directors was announced on

August 10, a.nd there is given below a. list of the first Class A and Class B
directors of this bank, together with their principal business affiliations.
Robert Wardrop, president, Peoples National Bank, Pittsburgh, Pa.
William S. Rowe, president, First National Bank, Cincinnati, Ohio
Stacey B. Rankin, president, Bank of South Charleston, South
Charleston, Ohio, and secretary of Ohio Bankers
Thomas A. Combs, president, Combs Lumber Company, Lexington, Ky.
A. B. Patrick, oil producer, Salyersville, Ky.
C.H. Bagley, president, Ajax Iron Works, Corry, Pa.
It was common gossip that in the first election of directors the banks
in Cincinnati and Pittsburgh "ganged up" to defeat the two principal Clevela...TJd candidates for directorships in Class A and Class B.

These were

Thomas H. Wilson, vice president of The First National Bank of Cleveland,
and Harry Coulby, also of Cleveland.


11 deal 11

apparently contemplated that

in exchange for support by banks in the Cincinnati area of the candidacy of
Robert Wardrop of Pittsburgh, the banks in the Pittsburgh area would support
the election of William S. Rowe of Cincinnati.

To secure support of the

Kentucky banks it seems to have been agreed that in exchange for their votes

' •


for the Wardrop-Rowe slate tfie Pittsburgh and Cincinnati banks would support
Thomas Combs of Lexington, and A. B. Patrick of Salyersville.

That the ef-

fort was successful is evidenced by the fact that all four of the gentlemen
were elected.
Further than this, it seems that the Pittsburgh and Cincinnati bankers
outsmarted the Cleveland crowd in that both Mr. Wardrop and Mr. Rowe were
nominated by banks in all three groups whereas Mr. Wilson and Mr. Coulby were
nominated by banks in Group One only.

Since by the terms of the Organization

Committee's circular the electors were permitted to vote on the nominees of
their own group only, the possible vote for Mr. Wilson and Mr. Coulby was
limited to the banks in Group One.

As the number of banks in each voting

group was very nearly equal it is obvious that the Cleveland candidates were
at a hopeless disadvantage.
Following the publication of nominations for Class A and Class B directors by the three voting groups, Mr. Rowe, in a letter signed by al.l Cincinnati banks and sent to the voting banks, announced his intention to withdraw
as a candidate for Class A director of Group Ong· and to run as a candidate
representing Group Two, notwithstanding that Mr. Rowe was identified with a
bank which was classified in Group One.

Such practice was permitted by the

terms of the law in effect at that time.

In spite of Mr. Rowe's announced

intention, his nwne appeared on the official ballot as a candidate for Class
A director of Group One.

Mr. Rowe's action was regarded as open evidence

of a deal between Cincinnati and Pittsburgh to elect their two candidates
in separate groups.
There appears to be nothing unusual in the election of Stacey B. Rankin
of South Charleston, and of


H. Bagley of Corry, Pennsylvania.

at the time, was secretary of the Ohio Bankers Association.

Mr. Rankin,

A factor in his

election may also have been that he was nominated by banks in Group Two and
Group Three.

' .


That the System was not ent:ixely free from political pressure early in
the organization days appears evident from a Washington dispatch published
in FINANCE for July 25, to the effect that the "latest tip" at the Treasury
Building was that Cleveland would not get a single one of the three Class C
directors of the regional bank to be appointed by the Federal Reserve Board.
It was stated that Secretary McAdoo and Comptroller Williams were said to
feel that inasmuch as Cleveland was selected as the Reserve city, the plums
of the Fourth District bank's organization would fall to cities outside of
Washington gossip, as reported in the dispatch, was that the governo~
of the bank would come from Cincinnati, which had a candidate in the person
of Ben


Dale, a lawyer with much experience in banking law,

endorsed by the local Democratic organization.


had been

It was stated that Dale had

been in Washington seeking endorsements, and that both Cincinnati representatives in Congress were for him.
It was rumored in Washington that one of the other two Class C directors would come from Pittsburgh and the other from Columbus.

The only Colum-

bus candidate was Harry Wolfe, owner of the Ohio State Journal and the
Columbus Dispatch, a Republican politically, but whose newspapers had been
supporting State and national Democratic administrations.

He was endorsed

by Governor Cox and Senator Pomerene, and was said to be the only Ohio candi-

date who had the latter's endorsement. When the final appointments were
announced, however, one of the directors (D.C. Wills) was from Pittsburgh,
one (H.P. Wolfe) from Columbus, and one (L.H. Treadway) fr0Jt1 Cleveland.
The CHRONICLE in its issue of September 5, 1914, refers to reports that
had been current during the week of the existence of dissention in the Board


It is assumed that the term "governor" in the above dispatch
actually referred to the chairman of the board, since the
governor of the bank would be elected by the board of directors of the Cleveland regional ba.iik.




on the question of the advisability of putting the new Federal Reserve System into effect at this time, and that pressure was being brought to effect
a delay in the appointment of Class C directors.

Secretary McAdoo, while

not denying that the postponement of the inauguration of the System was
favored in some quarters, stated he would be able to announce the Class C
directors by October l, and that the System would then be quickly established.
The announcement of the appointment of Class C directors was made on October


The initial meeting of the Cleveland bank board, at which all members

were present, was held in the Federal Building, on Saturday morning, October
17, 1914, at eleven o'clock.


B. Rankin was elected temporary secretary.

The board, by lot, determined the terms of office of the directors of
each class, with the following result:
Robert Wardrop
w. s. Rowe
S. B. Rankin

Three-year term
Two-year term
One-year term

T. A. Combs
c. H. Bagley
A. B. Patrick

Three-year term
Two-year term
One-year term


D. c.
L. H. Treadw83'
H. P. Wolfe

Three-year term
Two-year term
One-year term

With the "pressure" on to open the banks at the earliest possible date
the immediate problems of the Board were concerned with the selection of
personnel, the securing of quarters, the purchase of the necessary equipment and supplies, provision for vault space, the selection of the official
staff, including the appointment of a governor, and other basic organization details.

A committee was appointed to select quarters; another was

authorized to employ counsel.

There was also appointed a committee on

"nominations for governor, 11 with instructions to report on nominations at
the next meeting of the board.
The Federal Reserve Board had extended an invitation to the governor
and all directors of the Reserve banks to attend a general meeting to be
held in Washington on October 20, to discuss such questions as opening date,
by-laws, tentative organization plans, quarters, staffs, what functions the
banks expected to undertake at the outset, whether the conversion of emergency currency into Federal Reserve notes could be successfully accomplished,
and uniform accounting.

Since the governor of the bank would not be selected

until the next meeting of the board of directors, the board at its October
17 meeting selected Chairman Wills, Mr. Rowe, and Mr. Patrick as a committee
representing the Cleveland bank to attend the Washington meeting.


special. mention of the meeting appears in the minutes of the Cleveland board,
but a comprehensive report of the meeting is contained in the first annual
report of the Federal Reserve Board, in the form of reports rendered by committees which had been assigned to study the various topics proposed for
On October 22, at the second meeting of the board, which was held in
the Statler Hotel and at which all the directors again were present, E~ R.
Fancher, president of the Union National Bank of Cleveland, was elected
governor of the bank.

The by-laws approved by the Conference of Directors

at Washington on October 20, with amendments relating to the composition of
the executive committee, were adopted.
At the meeting of the board on October JO, a proposal of the Williamson
Company to furnish space in the Williamson Building under an agreement -with
considerable elasticity, was accepted.

In the informal agreement provision

was made for vault space which was considered adequate to meet the modest


demands at that time.
Mr. Edwin


Baxter of Cleveland was elected secretary of the bank.

At this meeting the design of a proposed sesJ. for the bank was submitted and accepted.
The chairman reported that a four-months' supply of blanks and forms
needed for the operation of the system of uniform aooounting which had
been devised for the use of Reserve banks had been ordered.