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LOCATION OF REGIONAL RESERVE BANKS
" Mr. Chairman, with no animosity on earth toward the city of Baltimore, or the city of Washington, or any of the cities involved in this
dispute, I desire to put upon record some facts relating to tiiis useless
controversy.
It is not done to disparage Baltimore or Washington, nor
with any view of unduly magnifying the commercial importance of the
city of Richmond, hut solely with a view to j u s t i f y i n g the action of the
Federal reserve organization committee and to demonstrate to the
House that this talk of "partisan and personal m o t i v e s ' is the sheerest
nonsense."
SPEECH
O K
VIKGMISriA.
IN THE
H O U S E
OK
K E P
R E S E N T A T I V E S
A P R I L 8, 1911
WASHINGTON
42000
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LOCATION ot' m : ( i i o \ A r , Ki:,si:nvK R A N K S .
Mr. < J L A S S . Mr. Chairman, I did not happen to bo on the
floor ot the House on last Saturday when t w o Members took
occasion to challenge the motives of the Federal reserve organization committee in locating the regional reserve banks as
recently announced, nor did 1 happen to be on the floor of the
House yesterday when the gentleman f r o m Louisiana
[Mr
DuraiS] read into the BKCORD those remarkably vindictive and
vituperative resolutions adopted by a mass meeting in N e w
Orleans on the 4th of this month. I did come on the floor in
tune to hear the distinguished gentleman f r o m Illinois | Mr.
MANN J say something In this connection which, upon reflection,
i am sure ho will deeply regret. In the debates of Congress,
when w e consider (he complete immunity which Representatives
may cla in, a Member, above everything, should be careful of
his public utterances. A m i 1 think (lie gentleman f r o m Illinois
I.Mr. MANNJ, upon reflection, w i l l regret that lie stood in his
place here yesterday and personally aspersed a member of the
I'cderal Reserve Board, even (o (lie amazing extent of bringing
in question his personal integrity. H a d anyone in my presence
bus assailed I ho gentleman f r o m Illinois in any forum where
1 had the privilege of speech, 1 would have resented (lie assault
on linn as quickly and as indignantly as I now resent his asper(lon ot the Comptroller of the Currency. T h e attack upon that
olheial, without means of defense, w a s wanton and altogether
uuwol-thy of the gentleman f r o m Illinois, who on all occasions
hitherto has been perfectly f a i r and frank, as well as courageous in his utterances here, no matter what was the nature
ot (he question in controversy.
I think the gentleman should
expunge f r o m (he IJKCOBD his offensive personal reference to
(he Comptroller of (ho Currency.
A s to the wretched clatter about politics being involved in
the action of (lie Federal reserve organization committee, it
is positively so trilling that I flnd myself unable to speak
temperately of it. W h a t sort of polities could bo Involved in
(ho location of these regional reserve banks? Maryland is a
closely contested State at elections, and the city of Baltimore,
which usually controls the political situation there, is close also.
H o w could a Democratic organization committee have successlully played politics in the State of M a r y l a n d by depriving the
commercial center of (hat State of a Federal reserve bank?
Can it bo conceived that the members of the organization committee w e r e ioolish enough to suppose that by depriving Baltimore of a Federal reserve bank they would strengthen the
Democratic P a r l y in a close State like Maryland?
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And so with the city of Richmond, In a State with HO,000
Democratic majority. Could the organization committee have
been simple enough to imagine that it might help the Democratic Party in Virginia by giving Richmond a Federal reserve,
bank? T h e Democratic Party in Virginia did not need help.
W h e r e is the politics of the situation? The politics is right
here on the lloor of the Douse and nowhere else; and the character of the politics is illustrated by the talk of the gentleman
from the State of Washington [Mr. HUMIMIRKY], who started
out to make politics of (his banking and currency measure and
lias continued to make very small politics of it. [Applause on
the Democratic side.]
What possible political motive could have prompted the Federal reserve committee to deprive N e w Orleans of a Federal
reserve bank? Is it conceived that depriving a Democratic city
like N e w Orleans of a bank might help the Democratic Party in
the State of Louisiana? Did this Democratic Federal reserve
organization committee dream that it might convert the Republican city of Philadelphia by giving it a Federal reserve bank,
after having made Maryland and Louisiana safely Democratic
by depriving Baltimore and N e w Orleans of a bank each? Mr.
Chairman, it is unutterably silly to talk about there being any
politics in the location of these Federal reserve banks.
Regional reserve banks are established under the spirit and
text of the Federal reserve act, not to serve Baltimore, or Richmond, or N e w Orleans, or Atlanta, or any particular city, but;
to serve the entire country. And the regional reserve bank is
established largely with respect to the commerce and the customary channels of trade of the region in which it is located,
and not altogether with reference to the banking resources or
the population of the city in which it is situated.
I t might be imagined, from the clamor that has been raised
over the designation of Federal reserve cities, that the banking
facilities of some communities will bo seriously impaired and
that they will be deprived of business they have for years
enjoyed in the regular process of trade. Could any suggestion
be more senseless? Baltimore, for instance, will not lose one
dollar of the banking business it has to-day by reason of the
location of a regional reserve bank at Richmond. Nor will
N e w Orleans lose one dollar of its banking business by reason
of the location of a regional reserve bank in the city of Atlanta.
In Baltimore and in New Orleans a branch regional reserve
bank will be located, and those branches will fully maintain
the banking prestige of those cities. So that, after all, the
location of regional reserve banks affords little advantage except in merely a sentimental way or in the way of advertising.
When it comes to the practical work of banking, the advantage
of having one of these regional banks has been infinitely exaggerated. Congress could not, if it would, interfere with the
usual courses of banking or the activities of commerce, nor
could anything that the organization committee has done or
might do in the establishment of regional reserve banks divert
or seriously affect the ordinary course of business transactions.
A l l of this childish talk about some prejudiced person desiring
to deprive New York of Its preeminence as a commercial and
financial center is nonsense. New York is the commercial and
financial center of the United States, and it is going to continue
42090—13:270
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to ho. Nothing (hat Congress or (his organization committee
may do will alter that fact.
Mr. Chairman, with no animosity on earth toward (ho city of
Baltimore, or (ho city of Washington, or any of the cities involved in this dispute, I desire to put upon record some facts
relating to this useless controversy. I t is not done to disparage
Baltimore or Washington, nor with any view of unduly magniJying (he commercial importance of the city of Richmond, hut
solely with a view (o justifying the action of (ho Federal reserve
organization committee and (o demonstrate (o the House that
this talk of " p a r t i s a n and personal m o t i v e s " is the sheerest
nonsense.
Federal reserve hank district No. 5 is composed of (he Stales
of Maryland, Virginia, West Virgina (except four counties),
ami North and South Carolina and the District of Columbia,
these States have always been closely bound together commercially and linancially, and their business relations are larire
and intimate.
The reports made to (he Comptroller of (he Currency on
January 13, 1011, by all (lie national banks in each of ihese
States show, in every essential respect, that (lie business of the
national banks in Virginia, including Richmond, is f a r ahead
of (lie business of (ho national banks of Maryland, including
Baltimore, or of any other of the live States embraced in district No. 5.
The capital and surplus of (he Virginia national banks on
the date mentioned was $32,900,000, against $31,300,000 in
•Maryland, including Baltimore; $18,000,000 in West Virginia,
$13,300,000 in North Carolimi, $10,000,000 in South Carolina,
and $12,000,000 in the District of Columbia.
In their loans and discounts—$108,500,000—the Virginia national banks exceeded those of Maryland by about $1S,000,000,
or 20 per cent.
The total individual deposits, Including cerlllieates of deposit,
of tho national banks in Virginia, including Richmond, amounted
lo $92,300,000, against $81,700,000 in .Maryland, including Baltimore, (ho State in district No. 5 in which individual deposits
were next greatest; (lie individual deposits of (lie District of
Columbia, including Washington, being $29,000,000.
In the poll taken by (he organization committee 431 banks in
district No. 5 expressed their preferences for (he location of a
regional bank.
ltiehmond received more lirst-choico ballots
than any oilier city in the district, namely, 107, against 128 f o r
Baltimore, 35 f o r Pittsburgh, 2S f o r Columbia, S. C„ 27 f o r
Cincinnati, and 25 for Washington, I).
Of (lie remaining 21
voles 19 were for Charlotte, N. C., and 2 for New York. Leaving out the States of Maryland and Virginia, Richmond received
from (lie rest of the district Ihree times as many iirst-cholco
votes as wore oust for Baltimore.
In (lie growth of (lie capital and general business of (he
national banks Richmond outstripped both Washington and
Baltimore. The capital and surplus of tho national banks of
Richmond increased 219 per cent in (lie period from 1903 to
1913 against an increase f o r tho same period in Washington of
83 per cent and in Baltimoro of 4 per cent. The loans and discounts of the national banks in Richmond increased in the same
10-year period 207 per eon I, or from $11,300.(100 to $34,700,000,
while (ho loans and discounts in (he national banks of Wash4i!090-
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ington f o r llio same period increased 89 per cent, or from $11,300,000 to $2(5,800,000. Tlie loans and discounts in national
banks of Baltimore for tlio same period increased from $47,-22,000 to $03,70:5,000, or 35 per cent.
in individual deposits the national banks in Richmond increased in this 10-year period from $9,000,000 to $24,300,000, an
increase of 152 per cent. T h e increase in the national banks of
Washington f o r the same period was 40 per cent, or from $18,000,000 to $20,300,000, while the individual deposits in the
national banks of Baltimore increased in the same 10 years 38
per cent, or from $32,100,000 to $44,500,000.
Tiie banks in N e w Orleans have criticized the decision of tlio
organization committee and have given out relative figures as
to New Orleans, Richmond, and other cities which are incorrect and misleading. An analysis and study of tlio actual figures
will bo found instructive and can lend no support to the claims
which N e w Orleans is making.
From the sworn special reports recently submitted to the
Comptroller of the Currency it appears that the national banks
in Richmond were lending on loans and discounts in the 13
Southern States on January 13, 1911, more money than was
being loaned by the national banks in any other city in the
country except New York, and nearly twice as much as was
being loaned by the national banks in Chicago in the same section. The total loans and discounts in the 13 Southern States
of the national banks in Richmond amounted to $33,473,000.
T h e loans in the same territory being made by tlie Baltimore
national banks were $0,891,000, and by the national banks in
Washington $915,000; in N e w Orleans, $19,477,000. In other
words, the national banks in Richmond were lending in the 13
Southern Stales more than four times as much money as all
the national banks in Baltimore and Washington combined;
70 per cent more than the national hanlcs of New Orleans, ami
more money than the national banks in the central reserve
cities of Chicago and St. Louis combined.
The figures also show (hat in those portions of district No. 5
outside of the States of Virginia and Maryland the Richmond
national banks are lending twice as much money as all the national banks in Baltimore and Washington combined are lending
in the same district. They also show that although Richmond
is not a reserve city, the banks and trust companies in tlio 13
Southern States had on deposit in the national banks of Richmond on February 14, 1914, $9,870,000, or slightly more than
these same banks had on deposit in the city of Baltimore, and
four times as much as tliey carried in Washington, which two
cities have long enjoyed the benefits of being reserve cities.
That southern banks should carry larger balances in Richmond,
where they could not be counted in their reserves, rather than
in Baltimore or Washington, where they could lie counted, is
suggestive.
T h e statistics also show that the capital and surplus of all
reporting banks—National, State, and savings and trust companies—per capita in Richmond, as of Juno 4, 1013, was $131,
against $S5 in Baltimore, $88 in Washington, and $00 in New
Orleans, while the loans and discounts made by all banks and
trust companies in Richmond, on the same date, amounted to
$393 per capita, against $190 in Washington and $213 in Baltimore and $194 in New Orleans.
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The amount of money which banks and trust companies in
1 lie various parts of the country carried on deposit with Riclimond, a nonrescrve city, on February 1-1, 1014, amounted to
$ 10,970,000, or nearly twice as much as the balances carried by
outside banks with the national banks of Washington, which
on the same day amounted to $5,510,000, and one and a half
times as much as was carried on that day by the national banks
of N e w Orleans, a reserve city.
The statistics furnished the organization committee show
that on March 4, 1014, the capital and surplus of the national
banks in Richmond per capita amounted lo more than twice as'
much as (lie capital and surplus pel* capita of the national banks
in either Baltimore or Washington and three and a half times
as much as New Orleans, while the individual deposits of the
national banks in Richmond amounted to$201 per capita, against
$80 in Washington and .$70 in Baltimore and $50 in N e w Orleans. T h e loans and discounts in the national banks in Richmond on the same date were reported at $279 per capita, against
$77 in Washington and $.108 in Baltimore and $51 in N e w
Orleans.
On March 1, 1914, 11k1 capital and surplus of all national
banks in Richmond was $9,314,000; in New Orleans, $0,730,000;
in Washington, $11,305,000. Loans and discounts of national
banks wi Richmond, same day, $35,593,000; in Washington, $25,•105,000; in New Orleans, $17,285,000.
In other words, the figures show that the national banks of
Richmond wore lending, on March 4. 1914, on loans and discounts twice as much money as all the national banks in the
city of New Orleans and 40 per cent more than all the national
banks of Washington.
In capital and surplus of national banks per capita Richmond
exceeded New York, Chicago, St. Louis, Boston, and every other
applicant city having a population of as much as SO,000, except
the city of San Francisco and one other.
In the matter of individual deposits, the individual deposits
in the national banks of Richmond per capita were greater than
those of N e w York, Philadelphia, Cleveland, Chicago, and St.
Louis, and every other applicant city whose population amounted
to SO,000 or more, except San Francisco, Boston, and two others,
and wore the same as those of Dallas.
The loans and discounts of the national banks of Richmond
per capita exceeded those of every other applicant city having a
population of 80,000 or more, save only the city of Boston, and
exceeded by more than 50 per cent the loans and discounts per
capita of either Chicago or St. Louis, and .were live times as
great as N e w Orleans.
A s 1 have said, the Federal reserve act does not purpose to
establish regional reserve banks to please a f e w cities. They,
are to lie established to take care of the commercial requirements and to respond to the business needs of various sections
of the country, and a poll of the banks of regional division No.
5 by the Richmond Chamber of Commerce, more complete than
the poll of the organization committee, showed an overwhelming majority for Richmond as the reserve city of the district.
Out of a total of 437 banks in Virginia, but 4 voted f o r Baltimore as lirst choice and but 7 f o r Washington, while 415 voted
f o r Richmond.
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Onl of a total of 4SO banks in North Carolina, 412 voted f o r
Richmond.
Out of a total of 405 banks in South Carolina, but 1 voted
f o r Baltimore as first choice and none f o r Washington as first;
choice; but, eliminating Columbia, the State capital of South
Carolina, nearly every bank in the State that responded to the
poll voted f o r Richmond. Out of a total of 1,828 banks, 1,032
voted f o r Richmond, 21 for Washington, and 101 f o r Baltimore.
T h e gentleman from Maryland [Mr. LINTIIICUM] suggested
yesterday that some letters had been written in f a v o r of Baltimore. 1 have no doubt that is true. Baltimore is a splendid
city, and the South is proud of her commercial supremacy, but
the business men of the territory comprised in regional reserve
bank district No. 5 were overwhelmingly in f a v o r of Richmond
f o r the reserve bank. A s many as 2,280 business firms in four
of the States comprising this district filed letters with the Federal Reserve Board in f a v o r of Richmond. Delegations of
bankers and business men from all the States of the district
except Maryland came to Washington to indicate their preference f o r Richmond. T h e audience room set apart in the Treasury Building f o r the hearings could not begin to hold the bankers and business men who came to Washington in behalf of
Richmond. T h e total capital, surplus, and profits of the hanks
voting f o r Richmond aggregate $181,072,878 and the deposits of
the banks voting for Richmond total in exccss of $801,000,000.
My friend from Maryland also said yesterday, with a thrip of
his forefinger and thumb, that Baltimore banks loaned to Richmond most of the funds which the Richmond banks loan in the
Southern States. Upon just such myths as this cities which
failed to get a regional reserve bank are feeding their resentment.
On February 14, 1014, the national banks of Baltimore were
lending to banks, bankers, merchants, and individuals in the
State of Virginia the sum of $1,806,903, while the banks and
trust companies in Virginia had on deposit with the Baltimore
banks the sum of $8,072,002. In other words, with a balance
Struck, Baltimore on the date named was indebted to Virginia
banks and trust companies to the amount of $1,705,159 over
and above Iho loans made by Baltimore banks to Virginia.
Mr. Chairman, the passionate and even desperate tenor of
the resolutions adopted by Hie mass meeting held at New Orleans on April 4 could not bo more sharply disclosed than by
pointing to the malicious reference therein made to the city of
Richmond. I t was impertinent, as well as wantonly false, and
exposes ihe city of New Orleans to a retort that should be
humiliating to any community with a reasonable amount of
civic pride. These resolutions speak of Richmond, which was
not In competition with N e w Orleans, and with which that city
has nothing to do, as " a comparatively unimportant mart of
t r a d e " ; and yet, Mr. Chairman, I hold in my hand an official
compilation from the ollice of the Comptroller of the Currency
giving the total loans of national banks of certain cities of the
United States as of January 18, 1914; and I want to say to the
gentleman from Louisiana [Mr. Duraf;], who had the NewOrleans resolution inserted In the RECORD, that the total loans
of the national banks of his great metropolis on the date indicated were but $19,077,000 as contrasted with total loans of
$85,721,000 of the city of Richmond.
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Just In the degree that the mass nicotine at N o w Orleans
impertinently undertook to depreciate the commercial importance of Richmond, just in this proportion should tlisit community feel humiliated by an oflicial exhibit of this character.
Mr. E S T O P t N A L . W h y does the gentleman make comparisons with Richmond? N e w Orleans was not a competitor of
Richmond.
Mr. G L A S S . I am glad my courteous friend realizes that
fact. One of the Members of this House from Louisiana undertook to deride Richmond, and lie has elicited this comparison.
Mr. E S T O P I N A L . I t was a general protest against the manner in which those selections were made, and Richmond was
named as an instance.
Mr. G L A S S . Y e s ; as an "inconsequential mart of t r a d e "
that should not have a regional reserve bank. L e t us see further about that.
I also hold in my hand an ollicial statement from the Treasury Department showing bank and trust company credit balances with the national banks in certain cities as of February
14, 1914. The amount thus on deposit in the national banks of
Richmond, the inconsequential mart of trade, was $10.970,OGS,
and tiio amount on deposit with tlie national banks of her New
Orleans critics was but $7,229,470.
The same statement shows the amount loaned to all banks
and trust companies on bills payable and rediscounts, including indirect loans, as of January 13, 1914; and In this item the
inconsequential mart of trade shows a total of $1,629,419 to a
total of $1,134,102 at N e w Orleans.
The same statement shows the amount of bought paper, stockexchange loans, and so forth, made by national banks to noncustomers throughout the United States as of January 13, 1914;
and the total f o r the inconsequential mart of trade at Richmond
is $4,257,028, as against $1,234,109 f o r the banks represented bv
that hysterical mass meeting of April 4 in N e w Orleans.
And I may add that in these comparisons Washington fares
but little if any better than N e w Orleans in the contrast with
Richmond.
Quitting this comparison of cities and turning to the banking
resources of the States, I find, according to the comptroller's
figures f o r October 21, 1913, that the aggregate national-bank
resources of Virginia were $108,000,000 as contrasted with $80.000,000 f o r Louisiana, or eight millions more than twice as
much, while the deposits in all classes of banks in these two
States were $175,000,000 f o r Virginia against $147,000,000 for
Louisiana. Virginia pays 50 per cent more internal-revenue taxes
to the Federal Government than does the State of Louisiana, and
in the matter of corporate capital, upon which Virginia pays to
the Federal Government a tax, she leads the entire list of Southern States with $942,000,000, with Louisiana so f a r Jn the rear
that she does not deserve to be mentioned in the same column.
Mr. C O O P E R . Will the gentleman yield?
The C H A I R M A N .
Does the gentleman from Virginia yield
to the gentleman f r o m Wisconsin?
Mr. G L A S S . I do.
Mr. COOPER. I interrupt only to say that from the resolutions to which I listened yesterday I understand it to be the
chief complaint of New Orleans tiiat she has been passed by
for Dallas and Atlanta, one spec!tic charge, among other charges
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made in those resolutions, being that the combined hanking
capital of Dallas and Atlanta is less by more than $1,000,000
than the banking capital of New Orleans alone.
Mr. G L A S S . I am sure there are gentlemen here who are
perfectly competent to take care of Atlanta and Dallas; but
N e w Orleans went out of its way to deride Richmond, and [
just want to show what, little basis it had for interfering with
our affairs up here. [Laughter. !
Although Richmond is not a reserve city, and New Orleans,
Washington, and Baltimore are, Richmond had on deposit from
the 15 Southern States on February 4, 1911, $9,870,000, or
slightly more than the national banks had on deposit from the
Southern States in the city of Baltimore and four times as much
as Washington had on deposit from these Southern States
Mr. A S W E L L . W i l l the gentleman yield?
Mr. G L A S S . Yes.
Mr. A S W E L L . I f the gentleman's argument that the regional banks should be located in those cities that the money
seeks, why should not Pennsylvania ami New Jersey and all the
surrounding country go to New York?
Mr. G L A S S . Because N e w York is too big. I t started out to
have a central bank, and wanted everything east of the Allegheny Mountains.
Air. A S W E L L . Is it not a fact that (lie arbitrary location of
lite boundary lines of these districts practically located the
cities for I lie regional reserve banks?
Mr. G L A S S . The gentleman knows very well that the statute
authorizes the organization committee, in observing the spirit
of the law, lo divide tlie States and to not run the lines according to the State boundaries.
Mr. A S W E L L .
Is it not possible that if the boundary line
that made the Richmond district had been very much changed,
.Richmond would not have been voted for?
Mr. G L A S S . Oil, it is possible, Mr. Chairman, that the organization committee has made a mistake. I, for one, do not
think it has, but it is possible; they are human. We may make
mistakes. This Congress makes mistakes; and it is possible
that the organization committee made a mistake. But I say it
is unjust to asperse the patriotism and the purpose of these
gentlemen by undertaking to say that they are playing politics,
and by this wanton denunciation of them, like this mass meeting at New Orleans, based upon resentment and not upon re. corded facts.
Mr. A S W E L L . Does not the gentleman agree that it is altogether probable that by a proper location of boundary lines
they would have located a bank in N e w Orleans?
Mr. G L A S S . N o ; I think the boundary lines have been properly located. If 1 did not think so, I would not bo willing to
risk, haphazard, my judgment against these three gentlemen
who have gone over the country from one end to the other,
industriously and honestly seeking the facts and basing their
action on conditions that they found.
Mr. A S W E L L .
But the gentleman lias not answered my
question.
Mr. GLASS.
I think 1 have. T said that, in ray judgment,
the lines have been properly located.
Mr. A S W E L L .
If they had been located differently, the
banks would have been located differently.
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Air. G L A S S . Oh, yes; if cities had been thrown into other
districts. N o w , I am not aspersing N e w Orleans, except in
resentment to what New Orleans said about Richmond.
Mr. A S W E L L . T h e gentleman will admit that N e w Orleans
ought to have had a bank?
Mr. G L A S S . I do not admit any such thing.
Mr. P L A T T . W i l l the gentleman yield?
Mr. G L A S S . Yes.
Mr. P L A T T . Does the gentleman mean to imply that the
boundary lines were fixed and then the banks asked f o r their
preference afterwards? I do not think that is true.
Mr. G L A S S . I think tentatively that was the case; yes.
I
think that tentatively when the organization committee went:
over the country it ascertained the preference of the various
locations. I t was generally understood what cities wore applicants for banks, and the organization committee, I infer, kept
its record straight, and they knew when they got back to
Washington what banks in certain localities favored certain
cities for a location.
Rut I do want to say that so f a r as this regional district
No. 5 is concerned, the vote was taken by the States as they
are qomprised in that territory, and Richmond had an overwhelming majority not only of the banks but the business interests of all the States outside of Maryland located in the
regional district No. f>. I am not saying this in any spirit of
disparagement to Baltimore. I t is a great commercial city, and
the South and Virginia take great pride in Baltimore.
To
show what I thought about this matter and about the city of
Washington, when I was tentatively dividing the country up
into 32 reserve regions for banks, as I did in drafting the bill,
I located one of the banks in the city of Washington and I
located one in N e w Orleans, but that only illustrates how we
are apt to make mistakes.
Mr. P L A T T . Will the gentleman yield again?
Mr. G L A S S . Yes.
Mr. P L A T T . T h e gentleman does not mean to Imply that the
people west of New Orleans voted for that district after the
boundaries were fixed. The line runs just west of New Orleans,
and of course the people west could not have voted after the
line had been established.
Mr. G L A S S . M y colleague knows very well, because he is
familiar with the terms of the reserve act, that the organization
committee had to divide the country with reference to the minimum capital required for organizing a regional reserve bank,
and in order to come within the provisions of the law it might
have been necessary to divide certain States by an imaginary
lino, throwing one section into one regional reserve district and
the other section into another regional reserve district. That
was necessitated by the minimum requirement of capital, and
in some instances it was necessitated by the regular course of
business not being interrupted.
Mr. P L A T T . The gentleman has been giving some statistics
showing (lie loans made by Baltimore and Richmond and other
towns of the Southern States. Where does the gentleman get
those figures?
Mr. G L A S S . From the comptroller's office.
Mr. P L A T T . Banks are not required to report where they
make their loans.
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Mr. CLASS. Tliey do nut have to do it, but they do it at tlio
request of the comptroller, and the gentleman can go there and
got the figures.
Mr. SLOAN. Will the gentleman yield?
Mr. (JLASS. Yes.
Mr. SLOAN. 1 would like to ask, purely for information, as
to the tenth district, which is the one in which 1 reside, if after
the boundaries were lixed any poll of banks was taken by the
organization committee, or any opportunity given for the people
in that newly organized district to say where they wanted the
regional bank to be locatedV
Mr. (JLASS. Yes; I have the poll here for district No. 30.
Mr. SLOAN. The point is was that made after the district
lines were lixed?
Mr. GLASS. I have just said that l imagine that, in going
over the country and holding these hearings at various convenient points, the organization committee obtained the views
of the banks in each section as to where they wanted tlio
regional reserve bank located.
A bank was located at Kansas City, and Kansas City, outside of the State Of Missouri, received the votes of 027 banks,
while the city of Omaha, for which a plea was made here
yesterday, received outside of the State of Nebraska only 10
votes for the location of the bank. T h e city of Denver, outside of the State of Colorado, received but 2;': votes as against
.'527 voles received by Kansas City. The 1 inking resources of
Kansas City are infinitely superior to the banking resources of
any other city located In district No. 10.
Mr. Chairman, I did not, rise hero, however, to engage in a
controversy as to tlio location of these various banks. I did
not purpose assaulting Baltimore. I did want to say some tart
things about those people down in Louisiana who held a mass
meeting and, without any facts to sustain their position, undertook to ridicule the idea of putting a regional reserve bank at:
Richmond, and I did want to put into the RECORD, as 1 shall
do, (lit; facts in the case to show that, at most, the organization committee could have only made a mistake of judgment,
and I deny that they did that. The banks are all in favor of
locating the regional reserve bank in this particular district at
Richmond, because the trade of the district is with Richmond,
because the banking business of the district is at Richmond,
and il is not " r i d i c u l o u s " to say that the bank should have
been located at Richmond. Gentlemen are not justified here in
ascribing political motives to members of ibis organization committee and aspersing their personal integrity, as was done, I
think in a mistaken mood, by my friend from Illinois on yesterday.
Mr. FOSTER. Mr. Chairman, will the gentleman vield?
Mr. GLASS. Certainly.
Mr. FOSTER, is it the intention of the gentleman from Virginia to put in not only the vote on two of these cities that
have been selected, but on others?
Mr. GLASS.
I can do that if it is desired. I have tlio
record.
Mr. FOSTER. I think it will be a good thing to put it in.
Mr. GLASS. I will do it, if niy friend desires; yes.
Mr. I ' l l E L A N . Mr. Chairman, will the gentleman yield?
4U0!)l>
i:!_'70
'JO
Mr. G L A S S . Yes.
Mr. P I I E L A N . Some one asked a question about Baltimore
and Richmond, f just wanted to remind the gentleman, if lie
has not already called attention to the figures, that the loans
made by the national banks in the Southern Slates, with one
exception—In (lie Richmond district—by Richmond national
banks amounted to $33,173,000, while the loans made by Baltimore banks in the same Southern States amounted to only
$(>,801,000. In connection with that I would like to call attention lo the fact that Boston, away up in New England, loaned
to the Southern States almost $5,000,000, very nearly as much
as Baltimore, and that Philadelphia loaned to those Southern
States over $0,000,000, which is more than Baltimore loaned to
the same States.
Mr. G L A S S . Mr. Chairman, I will say to my friend f r o m
Massachusetts that 1 not only made that statement but I made
this further statement, which I want to repeat, as I think,
perhaps, my friend from Maryland [Mr. LMTIIXCUMJ was out at
that time. T h e gentleman from Maryland the other day stated
that Baltimore loaned Richmond all of the money that Richmond in turn loaned the Southern States, and I have shown from
actual figures that the national banks of Richmond and the
State of Virginia are creditors of the Baltimore banks.
Mr. L I N T T I I O U M . Y e s ; but will the gentleman yield?
Mr. G L A S S . Certainly.
Mr. L I N T I I I C U M .
T h e gentleman from Virginia knows, or
ought to know, that in computing the $33,000,000 which Richmond loaned to the South and the $0,000,000 which Baltimore
loaned to the South, while this organization committee included
Baltimore in the fifth regional district, it absolutely threw out
all (ho loans which Baltimore made to Baitimoreans and to people in the Slate of Maryland, and it took all of the Richmond
loans which Richmond made, and while putting Baltimore in
that district excluded all of the loans made by Baltimore north
of the Potomac, and if you include all of the loans of Baltimore
and Maryland in the fifth district, you will find that you have
$00,000,000 instead of $0,000,000.
Mr. G L A S S .
Mr. Chairman, as a matter of fact, if you
Include all of the loans that Baltimore made in (lie Southern
States, outside of Maryland, and the loans that Richmond made
in the Southern States, outside of Virginia, you will find that
Richmond f a r exceeds Baltimore in its loans, and the figures
demonstrate that fact.
Mr. Chairman, in further reference to these remarkable N e w
Orleans resolutions, I can conjecture who wrote those resolutions.
I venture to say they were written, and that entire
meeting was instigated, by the representative of the State of
Louisiana on the legislative committee of the American Bankers' Association. That gentleman spent a great deal of his time
here in Washington, trying to convince the Banking and Currency Committee of the House specifically, and Congress in
general, that there ought to be but one Federal reserve bank in
(his country, and he was willing to have that located 1,500
miles from New Orleans, in (he city of Now Y o r k ; and yet now,
when Congress has passed (lie Federal reserve act, and (he
organization committee of intelligent and patriotic citizens has
gone out and diligently made inquiry as to the location of
42099—13270
'JO
these banks, and fixed the number at 12, and has located one
of them to the northeast of New Orleans, within about 300
miles of that city, and one in Texas, to the southwest, this
gentleman and his compatriots down there are not satisfied
with the situation, and are accusing the organization committee
of being guided by personal and political considerations.
I want to say again, with respect to the Comptroller of the
Currency, that in considering the location of the regional
reserve bank in district No. 5, the business men and bankers of
the city of Richmond feared that the only weakness in the
entire situation f o r them was (he fact that the Comptroller of
the Currency was a native and former resident of the city of
Richmond.
Knowing him to bo a man of high sensibilities,
they apprehended that the vtvy fact that lie was born in Richmond and had formerly resided there would influence him
against Richmond and not in its behalf. 1 am authorized to
state, moreover, that the entire Organization committee voted
as a unit in favor of locating a hank at Richmond. It was
not duo to the intluence of John Skelton Williams, who happens
to be the Comptroller of Currency and a member of that organization ('011111111100.
Mr. B A R T O N .
Mr. Chairman, in inserting those letters to
which the gentleman referred he stated, for instance, the letters
outside Of the State of Nebraska. Inasmuch as Kansas City
would be close to the edge of the State of Missouri, and Omaha
is on the extreme eastern end of Nebraska, will the gentleman
in inserting the letters insert the entire vote?
Mr. G L A S S . That is what I said. I said, " E x c l u d i n g the
Stale of Missouri, Kansas City has .'527 votes, whereas, excluding Nebraska, Omaha had only 10 votes."
Mr. B A R T O N . Rut the gentleman does not get my question
yet. Kansas City is close to the edge of Missouri, and quite
naturally that section of Missouri would not mean much; but
it does command Kansas on the west and the southern part of
Nebraska.'
Mr. G L A S S . Kansas was unanimous for Kansas City.
Mr. B A R T O N .
Now, excluding Nebraska from Missouri
means something, because she is on the extreme east of
Omaha, and the entire business of the north and middle parts
of tlie State is done in the city of Omaha, extending to Montana and Wyoming.
Mr. G L A S S . I have no idea in the world of depreciating
Omaha. I ha ve no idea on earth ol depreciating Denver.
Mr. L O R L C K .
T h e gentleman can not depreciate Omaha.
I t is not in liim.
Mr. G L A S S .
I trust the gentleman will not interrupt me
until I llnlsh my sentence. I was saying to my courteous friend
I have no desire in the World to depreciate Omaha, certainly
no desire <m earth to depreciate Denver. I very mncli wanted
to see Denver get one of those banks f o r personal and other
considerations, but I do very earnestly believe that the organization committee has picked Kansas City in response to the
real business requirements of that territory. And I want to
say to my friend, furthermore, that a branch bank at Omaha
and a branch bank at Denver will be of just as much practical
use to the business interests of those communities as the
42000 — 1:5270
'JO
regional reserve banks will to the business requirements of
Kansas C i f y .
Mr. B A R T O N . The gentleman understands my inquiry was
not of criticism but of information
Mr. G L A S S . I shall insert
Mr. B A R T O N . And I ask the gentleman to insert the entire
vote of the State of Nebraska.
Mr. G L A S S . I shall do that.
Mr. S L O A N . W i l l the gentleman yield to me f o r a question
f o r information?
Mr. G L A S S . Yes.
Mr. S L O A N . Can the gentleman from Virginia tell us why
the tenth district is the only inland district among the 12 where
a regional reserve bank was placed practically in the margin
of the district, with 110 reference whatever to the location of
population or of the wealth or of the means of transportation
running through the district? I noticed this, and I presumed
there was some reason; and I thought the gentleman might be
able to give it. In all the other inland districts the regional
reserve banks are placed with some reference to tlie center of
population and the center of area, and also with some reference
to the general lines of transportation.
Mr. G L A S S . M y understanding is that, after having formed
district No. 10, the organization committee considered which
one of the three most important cities of that district should
have the regional reserve bank, and I assume they have located
it with reference to the trend of trade and the business of the
district and to the bank resources and to the facilities afforded
by Kansas C i t y ; but I will say to my friend that lie can not
identify 1110 as a factor in the location of these reserve banks.
I had nothing
Mr. S L O A N . I admit that.
Mr. GLASS. I had nothing in the world to do with it, and I
am not here to raise any row about Kansas City or Denver,
or any row with anybody. I simply undertake to Justify, as
f a r as regional reserve bank No. 5 is concerned, the organization board and to defend it against the assumption that there
was something " r i d i c u l o u s " in their action.
Mr. S L O A N . Another suggestion, if the gentleman will permit. I was trying to find out why this one exception was made
in this one district, which is the largest inland district in the
"United States as formed and second in size in the United States,
where the district is so formed that the regional bank was in
the margin of the district and the vast western part beyond
Omaha, which is tributary to Kansas and is a part of Kansas
City business territory, was entirely cut off from the Kansas
City district and given to St. Louis. W a s that, as a matter of
fact, to follow the course of business that one-half of the
Kansas City district was entirely cut off from the East, as it
leaves a vast one-sixth of the United States with a regional
reserve bank away 011 the far-off eastern margin with a thousand miles between some banks and the regional reserve bank?
Mr. G L A S S . Well, I make 110 sort of doubt, Mr.
but that the members of the organization committee
t i f y their action to my friend. 1 assume that the
there were peculiar; I can see that the organization
42099—13-70
Chairman,
could jusconditions
committee
'JO
w a s r e s t r i c t e d in H i e a r r a n g e m e n t m a d e b y t h e p r o v i s i o n s o f
t h e F e d e r a l r e s e r v e a c t r e l a t i n g to t h e m i n i m u m o f c a p i t a l req u i r e d f o r t h e o r g a n i z a t i o n of r e s e r v e banks.
The C H A I R M A N .
T h e time of (he gentleman has expired.
Mr. CLASS.
I d e s i r e , M r . C h a i r m a n , t o i n s e r t in t h e RECORD
a t t h i s p o i n t ( l i e poll o f b a n k s a s to p r e f e r e n c e s f o r r e s e r v e - b a n k
c i t i e s , a s t a k e n b y ( l i e o r g a n i z a t i o n c o m in It t e e , a n d t o w h i c h I
have heretofore made reference:
District
New
Maine. Hampshire.
New York
I'rovldence
Total
Xo. 1.
Vermont.
Massachusetts.
Kbodo
Island.
Connect!cut.
Total.
CO
2
o
23
19
137
17
11
4
1
7
€4
287
lot;
i
11
50
42
154
16
71
394
T o t a l number of v o t i n g banks, MUl.
District
Xl'W
Xo. 2.
YORK,
N o w Y o r k City
___
Jiuffalo
Albany
Koston
I.rooklyn
Syracuse
N e w Yoi'k or A l b a n y .
Totril
Tntal number of assonllng banks, (78.
T o t a l number of v o t i n g banks, IL'O.
District
120
Xo. .1.
Delaware.
7'hiladelphla
New York
Pittsburgh
Halttmore
Host on
llullalo
\\ ashlngton
Total
T o t a l number of assenting banks, SOD.
T o t a l number of voting banks, 708.
•lL'ObU— l.i27il
23
I'enusvlvjNew
n Li,
Jersey. eastern Total.
district.
r.5
122
1
1
24
188
417
42
23
11
1
1
1
503
164
23
12
2
490
70S
1
17
District
Xo. !,.
West
KenVirtucky,
ginia, eastern
northdisern dis- trict.
trict.
Cleveland
Cincinnati
Chicago
Colutnlnis
New York
Pittsburgh
Toledo
Philadelphia
Louisville
Cincinnati or Cleveland
Cleveland or Pittsburgh
Louisville or Cincinnati
34
1
7
31
1
Total
Ohio.
107
100
2
36
2
31
1
Pen nsylvania,
west- Total.
ern district.
3
3
250
0
2
2
CO
313
20S
Wesi
DisVirtrict of ginia,
Colum- southbia.
ern
district.
Virginia.
North
Carolina.
South
Carolina.
10
21
34
90
11
41
n
1
20
1
9
8
110
194
2
30
0
291
1
0
31
2
2
1
, 08 )
Total number of assenting banks. 721.
T o t a l number ot' voting banks, (>85.
District
Maryland.
Richmond
Baltimore
Pittsburgh
Columbia
Cincinnati
Washington
Charlotte
New York
Total
95
1
1
12
Xo. 5.
1
98
1
12
97
Total number of asscnllnfi banks, 475,
Total number of voting banks, '131.
42090 —13-70
2
11.8
28
2
18
1
1
04
42
Total.
107
128
35
28
27
25
19
2
431
'JO
A r o. G.
District
8
13
:i
y
I
Tennes- Missis- Louisison,
sippi,
ana,
oastsouth- south- Total.
ern dis- ern dis- eastern
trict.
trict. district.
Georgia.
Florida.
Alabama.
1!)
1
!0
3
IS
It
7
i
2
1
]
:i
i
1
)
Total
4
22
14
I
•i
i
121
19
14
i
103
7J
;
71
....
l'J
4
T o t a l number of assenting banks. -'!72.
T o t a l number of v o t i n g banks, 819.
District
Iowa.
Xo.
7.
IndiM(ch IWisIllinois, ana,
pan,
consin,
north- north- southsouthern dis- ern dii ern disern district.
trict.
trict.
trict.
105
10
Chicago
Cincinnati
Detroit
Des Moines
Omaha
Indianapolis
St. l.ouii
Sioux City
Minneapolis
Cedar Kapids
Milwaukee
Clinton
Chicago or St. Louis
T w i n Cities
Total.
308
T o t a l number of assenting banks, 08 4.
T o t a l number of v o t i n g banks. 801.
42000—13270
281
05
310
19
District
Xo. !,.
MissisMis- Illinois IndiKenTenana,
Arkan- souri, southtucky, nessee, sippi,
southnorthTotal.
sas.
eastern ern diswestern western
district trict. ern dis- district district ern district.
trict.
St. Louis
Louisville
Chicago
Kansas City
Memphis
Cincinnati. . .
Indianapolis . . .
Nashville
Dallas
Chicago or St.
51
2
27
103
2
15
20
30
I
G1
13
5
4
1
4
0
8
4
1
208
77
59
29
14
13
5
4
1
2
£t. Louis or
Kansas City.
Birmingham
total
43
2
1
51
71
135
Gt
C2
15
1
1
1
13
411
Total number of assenting banks, 434.
Total number of voting banks, 414.
District
Montana.
Minneapolis
Chicago
St. J'aul
Twin Cities
Milwaukee
Omaha
Spokane
Sioux City
l'"argo
Detroit
Total
18
1
10
20
Xo. 9.
WisMichconsin, igan,
North South Minne- north- northTotal.
Dakota. Dakota. sota.
ern
ern
district. district.
97
2
1!)
<>
188
8
52
It
8
63
C»
1
11
259
79
8
•1
1
53
51
25
G
4
125
T o t a l number of assenting banks. 087.
T o t a l number of voting banks, 015.
42090—13270
1
365
118
93
42
11
8
•1
2
1
I
30
C45
29
2
69
L>0
District
Colorado.
Kansas City,Mo
Denver
St. Louis
Lincoln
Omaha
Kansas C i t y ,
K a n t . , or
Kansas City,
Mo
Kansas C i t y ,
Kans
Chicago
Rait LakoCity..
"Wichita
fcioux City
Oklahoma City.
Twin Cities
Omalta or Lincoln
Total.
Kansas.
Mlisouri,
western
district.
Ko. 10.
New
Mexico,
western
district.
Oklahoma,
northern
district.
Wyoming.
Nebraska. Total.
12S
1
112
22
1S1
113
155
198
355
132
2S
22
Wl
223
T o t a l number of assenting banks, 835.
Total number of voting banks, "TOO.
District
Texas.
Dallas
Kansas City
Houston
Fort Worth
St. Louis
Now Orleans
Dallas or Houston
Dallas or Fort Wortti
Dallas, Fort Worth, or Houston.
Kan Francisco.
Denver
El Paso
Waco
Calvnston
New York
San Antonio
Oklahoma City
St. Louis or Kansas City
Total.
No.
It.
New
Okia- LoulsiArizona, Mexico homa, | ana,
south- south- south- | west- Total.
ern
ern
ern
cm
district. district. district.'district.
232
105
07
87
4li
212
12
97
84
13
21
7
4
3
3
3
0
2
2
1
1
1
1
433
T o t a l number of assenting banks, 720.
Total number of voting lianks, 018.
42090—13270
123
CIS
21
District
WashOregon. Idaho.
ington.
San Francisco.,
l'ortland
Seattle
Salt Lake
Spokane
I.os Angeles
Chicago
Now York
Omaha
Fresno
Minneapolis
Denver
Total
8
9
40
ia
50
8
10
10
1
12
9
Xo.
!,.
California.
Nevada.
Utah.
Arizona,
northern
district.
208
5
0
5
2
i:i
21
2
2
1
t
1
73
73
2
1
2
235
45
7
20
7
Total.
251
75
to
27
20
20
3
2
2
I
1
1
4 GO
lillill IHIIlllJt'l OL UHHIMIllllK ICII1KN,
T o t a l number of v o t i n g hanks, 100.
District
District
District
District
District
District
District
District
District:
District
District
District
No.
No.
No.
No.
No.
No',
No.
No.
No.
No.
No.
No.
Recapitulation.
1
2
3
4
5
(i
T
8
!)
10
11
12
_
__
:
"
"I
394
420
70S
085
4.*11
310
801
414
04 5
700
<5 IS
400
__
I
0, 724
T o t a l unrulier of assenting national banks In U n i t e d States, 7,475.
l o t a l number of votes cast in United States, 0,721.
Mr. G L A S S .
Mr. Chairman, I v o n l n r o to ask
unanimous
c o n s e n t to e x t e n d m y r e m a r k s in o r d e r t h a t I m a y i n s e r t in t h e
HKCORD, L'or H i e i n f o r m a t i o n o f t h e M e m b e r s , a n o f f i c i a l s t a t e m e n t f r o m tiie regional r e s e r v e b a n k o r g a n i z a t i o n c o m m i t t e e as
t o w h y it l o c a t e d b a n k s i n c e r t a i n c i t i e s .
The C H A I R M A N .
T h e gentleman from Virginia [Mr.
a s k s u n a n i m o u s c o n s e n t to e x t e n d h i s r e m a r k s in t h e
as indicated.
Is there objection?
T h e r e w a s no o b j e c t i o n .
T h e f o l l o w i n g is t h e s t a t e m e n t r e f e r r e d
STATEMENT
GIVEN -
OCT
Gr..\ssl
RKCOKD
to:
T O - D A Y BY T U B R E S E R V E
COMMITTEE.
HANK
ORGANIZATION
WASHINGTON, R>. C., April 10, 191).
Congress Imposed on the committee the duty of d i v i d i n g the c o u n t r y
into not less than 8 nor more than 12 districts, and the location of a
f e d e r a l reserve bank In each.
T h i r t y - s e v e n cities asked to he chosen.
The committed could select at most only 12. Necessarily 25 cities had
to lie disappointed.
F o l l o w i n g Its policy declared at the very outset, the c o m m i t t e e refused
to he influenced by the purely local and selfish claims of cities or
individuals, and discharged the duty imposed upon it by Congress a f t e r
42000
13270
'JO
exhaustive Investigation and study of the entire country, with unbiased
minds, and according to its best judgment.
With so many conflicting
claims somebody bad to judge. Congress constituted the committee a
court and gave Hie Federal Reserve Hoard the power of review.
Disappointed competitors should seek a remedy through the orderly
processes the law prescribes.
Considerable comment has been occasioned by the failure of the
committee to create districts suggested by New Orleans, with New
Orleans as the location for a reserve b a n k ; by Baltimore, with Baltimore as the location f o r a reserve bank ; by Omaha, with Omaha as the
location for a reserve b a n k ; and by Denver, with Denver as the location
for a reserve bank.
T h e committee realized that the division of the country Into districts
was far more important and complex than the designation of the reserve
cities, and that the latter duty was subsidiary and relatively simple,
waiving considerations of local pride or prestige.
In arranging the
districts the consideration of the character and growth of industry,
trade, and banking, no less than the traditions, habits, and common
understandings of the people was much more intimately involved.
It; became clear in the hearings that comparatively few people
realized, or seemed to realize, what I lie act was intended to accomplish, what the nature and functions of the reserve banks were to be,
and how little change would occur in the ordinary financial relations
of the communities, the business establishments, and the individual
banks.
Critics of the decision of the committee reveal misunderstanding
in these directions and either do not know, or appear not to know, that
the Federal reserve banks are bankers' banks and not ordinary commercial banks; that they are to hold the reserves and to clear the
checks of member banks, make rediscounts for them, and engage in
certain open market operations.
A s a matter of fact, the ordinary
everyday banking relations of the community of business men and of
banks will not bo greatly modified or altered.
T h e purpose of the
system is to remove artificialIly, promote normal relations, and create
better conditions under which everybody will transact business.
F v e r y city can continue to do business w i t h individuals, firms, or
corporations within its own limits or in its own region or in any
other part of the Union or the world in which it has heretofore done
business.
Reserves are to be held in a new w a y and in new places so far as
this act controls them, but banking and business generally will no
more be confined within districts than heretofore, and it is simply
misleading for any city or individual to represent that the future of
a city will be Injuriously affected by reason of its failure to secure a
Federal reserve bank.
10very city which has the foundations for
prosperity and progress w i l l continue to grow and expand, whether it
has such a reserve bank or not, and well-informed bankers especially
are aware of this.
T h e facts which (lie committee had to consider will throw light
on Its decision in reference to these cities.
NEW
Or. LEAN a
CLAIMS.
New Orleans selected a district extending from New Mexico to the
A t l a n t i c Ocean, including all of Texas, Louisiana, Mississippi, Alabama,
Florida, Georgia, and that part of Tennessee south of the Tennessee
River.
It was represented bv Texas that It would do great violence to her
trade to connect her with New Orleans.
It was claimed, and evidence
was submitted in support of the claim, that her trade was with her
own cities or with Kansas City and St. Louis. In a poll of the banks
of Texas made bv the Comptroller of the Currency 212 banks expressed
a first choice. 121 a second choice, and 30 a third choice for Dallas.
No bank in Texas expressed a first choice for New Orleans, only I a
second choice, and 11 a third choice. T h e whole State protested against
being related to New Orleans.
,
T h e hanks ct' Alabama generally desired to be connected either with
Birmingham or Atlanta, only three expressing a first choice for N e w
Orleans. T h e banks of Georgia desired to be connected with Atlanta,
none expressing a first or second choice for New Orleans, and only 12
a third choice. They represented that it would do violence to them to
be connected with a city to the west, and claimed that their relations
were mainly with Atlanta or cities to the northeast. Of 11 banks m
Florida, 1!) gave Atlanta as their first choice, 1!) as their second choice,
and 5 as their third choice.
Only 5 expressed a first preference for
42009—13270
L>3
N e w Orleans, ami fhose were in the western eorner, 4 a second choice,
and ,'S a third choice.
No hank in Tennessee expressed a first or second choice for New Orleans, and only 2 a third choice, while 7 expressed a first choice for Atlanta, 14 a second choice, and i:i a third
choice.
Generally speaking, the only hanks desired to he connected
with New Orleans, and expressed a first preference for her, were 25
of the 2<> banks reporting in Louisiana and I!) of the :t2 in Mississippi.
On a poll made f r o m the comptroller's otlice of all banks expressing
their preference as to the location for a Federal reserve city, 124 expressed a tirst preference for Atlanta, 2:i2 for Dallas, and only 52 for
New Orleans. T h e views of the bankers were supported by chambers
of commerce, other business organizations, and by many business men.
It will thus be seen that if the committee was to g i v e weight to the
views of business men and bankers In the section of the country
a f f e c t e d ; to consider the opposition to the States of Texas, Alabama,
Georgia, Florida, and Tennessee; and to be guided by economic considerations, it could not have designated N e w Orleans as the location
f o r a reserve bank to serve either the western or the eastern part of
the district the city asked for. T h e course of business is not from the
A t l a n t i c seaboard toward N e w Orleans, nor largely from the State of
Texas (o that city, and if Dallas and A t l a n t a had been related to N e w
Orleans a better-grounded complaint could and would have been lodged
by them against the committee's decision than that made by N e w
Orleans.
Some of (lie banking statistics which the committee had to consider
throw light on the problem.
II; should be borne in mind that the committee could consider primarily only the statistics with reference to
assenting banks. In this section of the countrv, as in most others, the
assenting banks were the national banks.
In March, 1914, the capital
stock and surplus, loans and discounts, and individual deposits of the
national banks in the three-cities named, as shown by the sworn reports
to the Comptroller of the Currency, were as f o l l o w s :
Capital and
surplus.
Loans and
discounts.
Individual
deposits.
$8,000,000
5,900,000
0,730,000
$20,038,000
18,022,000
17,285,000
$24,348,000
18,551,000
10,857,000
Atlanta
Dallas
New Orleans
I'.ven more significant are (he statistics of growth
1001, to March, 1914 :
CAPITAL
AND
Atlanta
Dallas
Now Orleans
LOANS AND
Atlanta
Dallas
New Orleans
SURPLUS.
September,
1901.
March,
1914,
$2,410,000
' 2,070,000
0,250,000
$8,000,003
5,900,000
0,730,000
Atlanta
Dallas
New Orleans
1
250
120
8
152
Ml
1
13
DEPOSITS.
SO, 931,000 $23,348,000
7,157,000
II', 551,000
19,425, (MO 10,857,00)
111270
Percentage
of increase.
DISCOUNTS.
810,329,000 1$20,038,000
I 7,053,000
18,022,000
! 20, OSS, 000 17,285,00J
INDIVIDUAL
42009
from September,
Decrease.
145
159
'11
'JO
T h e loans ami discounts in the national banks of N e w O r l e a n s at the
l i m e of the report, M a r c h 4. 1014, w e r e less than those of the n a t i o n a l
hanks of either A t l a n t a or Dallas.
W h i l e the c o m m i t t e e could not figure on the resources of other than
assenting banks which are in this section, the national banks, the foll o w i n g s t a t i s t i c s of all r e p o r t i n g banks, including national banks, S t a t e
banks, and trust companies, as of June 4, 1013, were regarded as significant and were g i v e n c o n s i d e r a t i o n :
A t l a n t a reported capital stock and surplus, $ I .">,313,000. or $98 per
c a p i t a : Dallas, $0,007,000, or $10S per c a p i t a ; and N o w Orleans,
820,532.000, or $00 per capita.
I n d i v i d u a l deposits, per capita, A t l a n t a ,
.'jits;:; Dallas,
; N e w Orleans, $20!).
T h e loans and discounts f o r all reporting hanks f o r the three cities
w e r e as f o l l o w s : A t l a n t a , $33,404,000, or $210 per c a p i t a ; Dallas,
$27,517,000, or $200 per c a p i t a ; N e w Orleans, $04,845,000, or $101
Iter capita.
T h e c o m m i t t e e f o u n d that the total loans and discounts made by
national banks in the cities named in the 13 Southern States on Janua r y 13, 1014, w e r e as f o l l o w s :
Atlanta
$20, 117, 000
Dallas
10,123,001)
N e w Orleans
10, 4 7 7 . 0 0 0
W h i l e the total loans made by the national banks of Dallas t h r o u g h o u t
the entire United S t a t e s on the (late mentioned exceeded the loans made
by the national banks of N e w Orleans.
Special reports made under oath to the C o m p t r o l l e r of the Currency
also show t h a t on F e b r u a r y 1L, 1014, the credit balances of the banks and
trust companies In the 13 Southern S t a t e s w i t h the national banks of
D a l l a s exceeded In amount the credit: balances of all banks and trust
companies In these same S t a t e s w i t h the national banks of N e w Orleans.
In v i e w of the comparisons and c r i t i c i s m s f r o m N e w Orleans In connection with the designation of Dallas, A t l a n t a , and Itlchmond, and t h e
omission of N e w Orleans and B a l t i m o r e , the f o l l o w i n g table is instructive :
Rational
hanlc statistics
for States of Texas,
Louisiana
anil Mississippi
as of Mar.
reports made to the Comptroller
of the
State of Texas (including Dallas)
State of Virginia
(including Richmond)
State of Maryland
(including lJalUmoro)
State of Georgia (including A t l a n t a ) . .
State of Louisiana
(including
New
Orleans)
Stato of Mississippi..
Virginia,
Maryland,
Geor</i<t,
19li, according
to
sworn
Currency.
Area,
squaro
miles.
Population, census 1010.
Capital and
surplus.
Individual
deposits.
205,"SO
3, 890,512
570, 7So, SSI
$107,003,338
$215,11 I , 3 2 j
•12,450
2,001,012
29,732,090
00,SS7,8o3
107,410,00?
Loans and
discounts.
12,210
1,205,310
28,207, 120
83,217,370
01,320,912
50,-175
2, GOO, 121
21,470,735
51,382,001
01,852,57!)
48, 720
1 , 0 5 0 , 3 S3
1,707, 111
12,128,800
5,108,102
32,000,521
17,015,321
31,801,351
13,009,200
•10,810
F r o m the above s t a t e m e n t it w i l l be seen that In each i t e m — c a p i t a l
and surplus, individual deposits, and loans and discounts
the national
banks of V i r g i n i a , including Richmond, l a r g e l y surpass the n a t i o n a l
banks of M a r y l a n d , including Italtiniore.
T h e capital" and surplus of the national banks of the S t a t e of V i r ginia are GO per cent g r e a t e r than the capital and surplus o r t h e
national banks of the States of Louisiana and Mississippi combined, including the c i t y of N e w Orleans, w h i l e the loans and discounts by the
national banks of V i r g i n i a are more than three times as great as t h e
loans and discounts in the national banks of Louisiana, Including N e w
Orleans.
,
„ „
W h i l e the capital and surplus of the national banks or G e o r g i a
l a r g e l y exceed the combined capital anil surplus of the national hanks
of tlie States of both Mississippi and Louisiana, the loans and discounts made by the national banks of G e o r g i a exceed by $13,000,000
42000—13270
25
tho loans and discounts of all tlio national banks of Louisiana and
Mississippi combined, Including llie city of Now Orleans.
T h e capital and surplus of (lie national banks of Texas amount to
four times as much as the capital and surplus of the national banks
of the States of Louisiana and Mississippi combined, and the individual deposits in tho national banks of Texas also amount to about
four times as much as tho Individual deposits of all national banks in
Louisiana and Mississippi, the only States from which New Orleans
received as much as half a dozen votes as first choice for the location
for a Federal reserve bank.
KANSAS
CITY
DISTRICT.
The region in the Middle and F a r West presented problems of difficulty.
Careful consideration was given to tho claims of Omaha, Lincoln, Denver, and Kansas City, which conflicted in this region. Denver
asked for a district which included Idaho, Montana, Utah, Wyoming,
Colorado. New Mexico, and the eastern two-thirds of Arizona and
Texas, Kansas, and Nebraska west of the one hundredth meridian, and
the Deadwood portion of South Dakota.
T h e district gave approximately the minimum capital provided by law. Of tlio territory included
in tills district Montana unanimously requested to bo connected w i t h
Minneapolis or Chicago, saying that she had little or 110 trade relations
with Denver.
Idaho desired to go to Portland or San Francisco;
Arizona preferred San Francisco, and the greater part of New Mexico
asked for Kansas City. Western Texas, Kansas, and Nebraska unanimously protested against going to Denver.
Kansas desired Kansas
City ; Nebraska preferred Omaha or L i n c o l n ; and Texas wanted either
a Texas city or Kansas City or St. Louis.
In the poll of banks Denver received 13G first-choice votes, of which
.112 were from Colorado and 12 from Wyoming.
W i t h Montana, Idaho,
Arizona, Texas, Kansas, and Nebraska in opposition, it was clearly impossible to make a district witli Denver as the location of a bank.
Part
of tho territory asked to be assigned to San Francisco and the other
part to Minneapolis or Kansas City.
Omaha asked f o r a district embracing western Iowa, all of Nebraska,
part of South Dakota, part of Kansas, Colorado, Utah, Wyoming, Idaho,
and Montana. All but eight of the banks in South Dakota insisted
upon being connected with Minneapolis; Iowa desired to go to C h i c a g o ;
Kansas practically unanimously voted for Kansas City ; Montana protested against any oilier connection than Minneapolis or Chicago.
The
preferences of (lie other States have already been Indicated.
Of tho 21S banks which expressed a first preference for Omaha. 181
were from Nebraska. T h e committee had to consider the State of Oklahoma and part of Missouri in connection with tills region, and in district No. 10, 407 banks expressed a first preference for Kansas C i t y ;
western Missouri, Oklahoma, and Kansas, and part of New Mexico especially asked f o r this connection. Thirty-seven banks in Colorado gave
Kansas City as second choice and 2(1 gave Omaha.
It seemed Impossible to serve the great section from Kansas City to
the mountains In any other w a y than by creating a district with
Kansas City as the headquarters, or to provide f o r the northwestern
section except by creating a district with Minneapolis as headquarters.
T h e only other thing that could have been done with Nebraska under the
conditions which presented Ihemseives was to relate her to Chicago, and
this seemed to he Inadvisable In the circumstances. T h o Kansas City
banks serve a very distinctive territory and will serve it more satisfactorily than St. Louis could have done. The relations of that territory on the whole are much more largely with Kansas City than witli
any other city in the Middle West with which it could have been connected.
It will, of course, be recognized by those who are Informed
(hat of (lie four cities Kansas City is the most dominant banking and
business center. T h e following statistics as of March, 1011, will throw
light on tho situation:
42009—13270
Individual
deposits.
Capital and
surplus.
Loans and
discounts.
$11,(^0,000
0,570,000
7,5-15,000
1,330,000
J60,205,000 $10,415,000
32, fits, (100 27,25K,(XX)
34,121,00!)
2S,022,000
4,439,000
(i,06t),000
'JO
T l i o statistics of g r o w t h d u r i n g the nine y e a r s f r o m September, 1904,
t o .March, 1014, arc significant :
CAPITAL AND
sunrr.es.
Lincoln
LOAN'S
AND
September,
1001.
March,
13,000,000
3,880,000
3,325,000
708,000
$11, or,0,000
(i,.170,000
7,645,000
1,330,000
100
(10
Jfifl; 20.">, 000
32,848,00)
to)
102
Percentage
of increase.
127
73
DISCOUNTS;
Kansas City
?:?"), 508,000
1(1,218,00)
Denver
Lincoln
11,140,000
3,820,-000
INDIVIDUAL
1911.
28,022,00.)
98
0, (X3G, 000
68
$30, 730,000 140,415,000
27,258,000
IT), 728,000
27, 798, (XX) 34,124,000
4, 139,000
3,283,000
73
22
35
Di:rosrrs.
Kansas City
Lincoln
31
T h o loans ami discounts of all r e p o r t i n g banks and trust: companies
in Kansas C i t y on June 4, 101U, amounted to $01 .OSO.OOO, exceeding
by about $7,000,000 (lie t o t a l loans and discounts of all hanks and
trust companies in the cities of Omaha, Denver, and L i n c o l n combined.
T h e loans and discounts of the national banks alone In Kansas C i t y
also exceeded (lie sum total of the loans and discounts of all national
banks in the cities of Omaha and D e n v e r combined.
T h e g r e a t preponderance in the m o v e m e n t of trade in district X o . 10
is to the east.
In order to place the F e d e r a l reserve bank f o r that
region in Denver it would have been necessary to disregard these f a e t s
and tin' opposition and earnest protests of banks, both N a t i o n a l ami
State, throughout tho d i s t r i c t .
Tin:
RICHMOND
DISTRICT.
T h o c o m m i t t e e named as cities f o r the location of Federal reserve
hanks N e w York, Chicago, Philadelphia, St. Louis, Boston, and Cleveland.
In population these are the six l a r g e s t cities In the I ' n l t e d
S t a t e s : their g e o g r a p h i c a l situation and all other considerations f u l l y
justified their selection.
San Francisco and M i n n e a p o l i s w e r e the first choice of the g r e a t
m a j o r i t y of the national banks in their respective sections, and their
financial, industrial, and commercial relations and other f a c t o r s entitled them to bo chosen.
T h e i r selection appears to have evoked no
criticism, but to have received general a p p r o v a l .
Conditions r e l a t i n g
to the Kansas C i t y , Dallas, and A t l a n t a districts have been d e a l t
with.
F o r the t e r r i t o r y f r o m eastern Georgia to the P e n n s y l v a n i a line the
committee, a f t e r f u l l y considering all the facts, decided to create u
district, w i t h the Federal reserve bank at Richmond.
South Carolina
and N o r t h Carolina had protested a g a i n s t being connected w i t h a
bank to tho South or West.
T h e y said that their course of trade
was northeast.
It seemed undesirable to place a bank in (lie e x t r e m e
northeastern corner or at B a l t i m o r e , n o t only because of its p r o x i m i t y
to P h i l a d e l p h i a but also because of the industrial and banking relations of the g r e a t e r part of the d i s t r i c t were more I n t i m a t e w i t h
Richmond than w i t h either W a s h i n g t o n or B a l t i m o r e .
T h e States of
M a r y l a n d , V i r g i n i a , West V i r g i n i a , N o r t h and South Carolina, and
the District of Columbia had to ho considered.
N o r t h Carolina. South
Carolina, and V i r g i n i a p r e f e r r e d to be connected w i t h
Richmond.
W e s t V i r g i n i a was d i v i d e d In its p r e f e r e n c e s ; M a r y l a n d and the District of Columbia, of course, desired B a l t i m o r e or Washington.
In
the poll of banks made d i r e c t l y by the C o m p t r o l l e r ' s oflice, Richmond received more first-choice ballots than any other city in the district, 107,
420!)!)
1:1270
against 12S f o r Baltimore, 35 f o r Pittsburgh. 28 for Columbia, S. C.,
37 f o r Cincinnati, ami 25 for Washington, D. C.
Of the remaining
21 votes, 1!) were f o r Charlotte. N. C., and 2 for New York.
Leaving
out the States of Maryland and Virginia, Richmond received from the
rest of flie district three times as many lirst-eholcc votes as were cast
for Baltimore.
District No. 5 is composed of the States of Maryland, Virginia. W e s t
Virginia (except four counties), North and South Carolina, and the
District of Columbia. These States have a l w a y s been closely bound tonether commercially and financially, and their business dealings are
large and Intimate. T h e reports made to the Comptroller of the Currency on March 4, 1014, by all the national banks in each of these
States show in every essential respect that the business of the national
banks in Virginia, including Richmond, is greater than the business of
the national banks of Maryland, including Baltimore, or any other of
the live States embraced in district No. 5, as appears in the f o l l o w i n g
table:
Virginia
Maryland
West Virginia
South Carolina
District of Columbia
Capital, surplus. and undivided
prolits.
Loans and
discounts.
Total individual deposits
$33,/) 14,631
31,390,057
I S , 209,310
13,527,080
10,332,439
12,085,411
5107,410,003
91,320,912
50,789,538
41,051,033
28,800,456
26,253,432
390,887,858
83,217,376
61,421,332
36,051,151
23,330,916
29,520,053
Advocates of N e w Orleans have criticized the decision of the organization committee and have given out comparative figures as to New
Orleans, Richmond, and other cities, which are incorrect and misleading.
An analysis and study of the actual figures will be found instructive and
can lend no support to the claims of New Orleans.
From the sworn special reports recently submitted to the Comptroller
of the Currency it appears that the national banks in Richmond were
lending in the l."> Southern States on January 13, 1014, more money than
was being loaned in those States by the national banks of any other
city in the country except New York. T h e total loans and discounts in
the 13 Southern States by the four cities referred to are as f o l l o w s :
Richmond
Baltimore
New Orleans
Washington
__
$33, 473, 000
0,801,000
19, 477, 000
915,000
T h e figures also show that in these portions of district No. 5, outside of the States of Vlrglnln^and Maryland, the Richmond national
banks are lending twice as much money as all the national banks in
Baltimore and Washington combined.
They also show that although
Richmond is not a reserve city, (lie banks anil trust companies in the
13 Southern States had on deposit in the national banks of Richmond
on February 14, 1911, $9,870,000, or slightly more than the banks ot'
this section had on deposit iu the city of Baltimore, and four times as
much as they carried in Washington, although these two cities have long
enjoyed the benefits of being reserve cities. T h a t southern banks should
carry larger balances in Richmond where they could not be counted In
their reserves, rather than in Baltimore, or Washington, where they
could he counted, is suggestive.
The figures show that the capital and surplus of all reporting b a n k s national, State, and savings—and trust companies, per capita, in Richmond, as of .lime 4. 1913, was $131 : in Baltimore, $85; in Washington,
$88; and in New Orleans, $150, while the loans and discounts made b.v
all banks ami trust companies in Richmond on the same date amounted
to $393 per capita, against $190 in Washington, $213 in Baltimore, and
$ 194 in New Orleans.
T h e amount of money which banks and trust companies in the
various parts of the country carried on deposit with Richmond—a nonreserve c i t y — o n February 11, 1914, amounted to $10,970,000, or nearly
twice as much as the balances carried by outside banks with the
national banks of Washington, which on the same day amounted to
$5,510,000, and one and a half times as much as they carried on the
same day with the national banks of New Orleans—a reserve city.
42099—13270
'JO
T h e statistics furnished tho o r g a n i s a t i o n c o m m i t t e e fdiows iliat on
M a r c h I, 11)1.4. the capital and surplus of the national banks of Richmond. per capita, amounted to more than twicc as much as tho capital
and surplus, per capita, of the n a t i o n a l hanks of c i t h e r B a l t i m o r e or
W a s h i n g t o n and three and a half times as much as N e w Orleans, w h i l e
the individual deposits of I lie national hanks of Richmond amounted to
$201 per capita, against
f o r W a s h i n g t o n and $70 f o r Haltlmoro and
$50 1'or N e w Orleans.
T h e loans and discounts in the national hanks
of Hi 'hmond on the same d a l e w e r e reported at $270 per capita, against
$77 for W a s h i n g t o n and $10S f o r B a l t i m o r e and $.">1 for N e w O W e a n «
Especially significant are the f o l l o w i n g statistics, showing the g r o w t h
in capital and surplus, loans and discounts, and individual deposits of
national banks in the throe cities n a m e d :
scnrr.rs.
CAI>ITAR. A N D
September,
1904.
Richmond
Washington
Baltimore..
N e w Orleans
S3,11.5,000
(1,215,000
18,21.2,900
ti, 250,000
LOAN'S
AND
15,018,000
48,755,000
20, OSS, 000
20,017,000
40,910,000
19, 425,000
\
1
$9,314,392
11,31)5,000
19,205,900
l>, 730,000
199
Kt
$35,593,000
2."., 105,000
(.0,312,000
17,285,000
175
IK)
23
1
13
$25,705,000
28,491.000
42,553,000
10,857,000
128
42
4
13
DKrosrrs.
Richmond
Washington
Baltimore
N e w Orleans
_
I'ereentago
of i n c r e a s e .
DISCOUNTS.
Richmond
Washington
Haiti m o r e
N e w Orleans
INDiVIUI'AI,
M a r c h , 1914.
Decrease.
Mr. C L A S S , Mr. Chairman, under leave to revise and extend
iiiv remarks I shall insert in (lie U K C O R D the brief prepared by
IIH> R i c h m o n d committee having in hand tho presentation of
Kichmond's ol.'t iin to a regional reserve b a n k :
IIN'mtONj) AS 'I II K LOCATION OF A l'KDKUAI. I'.r.kl'.UVK HANK.
[A
brief
by (icoi'Rc .1. Seay on bclmlf of the c o m m i t t e e representing Richmond. |
T h e t e r r i t o ...
r y mapped out by nature as the most p e r f e c t geographical division of this continent lies south of the Potomac R i v e r , cast of
the A p p a l a c h i a n Mountains, and extends to the ( i i i l f .
P,v reason of
superior f a c i l i t i e s of communication and the consequent trade relations
w h i c h have sprung up and become established, portions of contiguous
States arc now and long have been commercially allied w i t h this
territory.
It is t h e r e f o r e hclh<vc<1 that one of the most s h a r p l v defined and
p e r f e c t zones f o r the operation of a Federal reserve bank Is embraced
in the f o l l o w i n g named S t a t e s : Virginia, N o r t h Carolina, South Carolina. Oeorgia, Florida, tho southern half of West Virginia, part of
eastern Tennessee and part of eastern K e n t u c k y .
Since the o r g a n i z a t i o n c o m m i t t e e has at all of Its hearings sought
and invited the expression
opinion, w e now desire to express the
roti viol ion that the c o m m i t t e e can lender an inestimable service to
the country, the value of which will g r o w w i t h time, by defining the
Federal reserve bank zones in iiarnionv w i t h commercial zones determined by natural boundaries, so f a r as may be done in a g r e e m e n t
w i t h the act.
It lias been recognized as desirable, f o r purposes of economic comparison. to cut the country into units or divisions.
42000
1.3270
29
Given n natural division of territory, (lie conditions in It, financial
find commercial, must a l w a y s be more uniform than could otherwise
be the case.
The comptroller has adopted six divisions within S t a t e lines.
The Interstate Commerce Commission, f o r comparison of the operations of railways, has made 10 arbitrary divisions within State
lines.
l'oor's Manual, a very high railroad authority of very long experience, makes eight; divisions within Slate lines.
The United States Government has established nine judicial circuits, one of which comprises the States of Maryland, West Virginia.
Virginia. N o r t h Carolina, and South Carolina. Richmond was selected
as the location of the court of appeals f o r this circuit, and the chief
justice sits here.
There are no standard divisions.
Comparisons by States w i l l always be desirable and necessary, but
these divisions are too numerous f o r economic purposes.
T h e Federal reserve act marks an epoch in the commercial and
financial
history of the United States, and while zones once determined may bo readjusted the service which can now be rendered to
the country by the committee in fixing these zones, which need not be
coterminous with States, and therefore are contemplated to be according to the natural divisions and trade relations of the country. 4s
of the v e r y highest order.
In fixing I lie zone which we have mapped out we have been guided
by this principle, and in presenting an argument to prove that: Richmond can better serve this zone than any other city in it, and that by
reason of her commercial and financial preeminence she is entitled to
be the location of a Federal reserve bank, we have endeavored to
eliminate all Irrelevant matter and have confined ourselves to the consideration of (he following points, all of which are involved in the
operation .of the a c t :
1. The Importance of Richmond's geographical position, her facilities of communication, her convenience of location and accessibility
to members with whom w e now do business, and her advantage of
location in all banking transactions between the North and the South.
2. The present trend of business, the present course of commercial
transactions, the natural currents of exchange, the present banking
and trade connections, and banking customs of the people.
3. The natural advantages of Richmond's location with relation to
other Federal reserve banks necessary to be established on the A t l a n t i c
seaboard in a territory embracing one-half of the national banking
capital of the United States and 41 per cent of the population.
4. Comparative commercial importance in the territory covered,
measured bv capital, deposits, and other banking transactions.
5. Diversity of industries and agriculture—in their effect upon seasonal demand for credit and currency.
G. Necessity of having capital resources to handle the business of the
district.
'
, .
7. T h e wishes and views of those engaged in banking and commerce
In the district outlined as to the location of their regional bank.
In presenting our case w e shall be compelled to state facts and
figures which we know to be within the knowledge of the committee,
and with which bv now we fear they may be surfeited.
W e desire
t o bring these facts together and present them in such form and
manner as will serve for convenient reference and to make more clear
their relations to each other and their bearing upon our position.
Addressing ourselves to these facts in their o r d e r :
1. T H E U X S E K P A S H K D A D V A N T A G E O F ITLCLIMOND I N CIEORJITAPITICAI, P O S I T I O N .
Practically and effectively on the Atlantic seaboard, about midway of
the entire c o a s t ; reaping the greatest advantage of the f a v o r i n g c u r v e ;
opposite the gap in the Appalachian Mountains, giving the shortest,
easiest, and quickest communication between the coast and the great
centers of the Middle West ; within one hour and a half of the greatest of Atlantic harbors, plans being now under w a y to make it the
greatest naval base; in quick communication by rati and water with
all other parts of the coast, and easily accessible to the ocean commerce
of the world. Roar Admiral Stanford has just made the f o l l o w i n g report
on this harbor:
" T h e most frequent mobilizations of the fleet are in Ilamplon Roads,
and large ships ordinarily assigned to other yards must pass this point
proceeding to and from the Gulf to the West Indies. In view of this
central location, and the use of Hampton Roads as a base of operations,
there is greater possibility of unforeseen repairs being required f o r
vessels than at any other coast point."
42009—13270
'JO
Richmond's Ihroe north and south trunk lines—the Atlantic Const
Lino, tiic Seaboard A i r IJno, and the Soutiiorn R a i l w a y ; and wo may
lio pardoned tor reminding lite committee that the genius, brains, anil
energies of Richmond men were very prominent in the development of
the last two and are prominent, in the management of the first.
T w o of the most important east and-west, trunk lines—the Chesapeake & Ohio and the N o r f o l k & Western
connect Richmond with the
finest coal area in the world and the greatest natural producing area on
this continent, while Into Norfolk, within two hours and a half travel
from Richmond, run the Virginian Railway f r o m the West and the
N o r f o l k & .Southern from the South.
All of which is well known to you, but necessary to bo stated for the
logical bearing of our argument.
We wish to impress upon the committee the natural advantages of
I he territory surrounding I lampion Roads, because It is goncrallv
regarded as inevitable that the heaviest population of the State will
bo divided between Richmond and that territory.
Mr. <). 1'. Austin,
for 15 years Chief of the Bureau of Statistics of the Department of
Commerce, in a report on the zone which wo have mapped out. which
report fully confirms our own argument and position and accompanies
this brief, refers to " t h e possibilities of the groat harbor at Hampton
Roads becoming the natural gateway for the Mississippi Valley, with
its enormous production for foreign markets and consumption of foreign merchandise."
lie also slates that " t h e olllcers of the War
Department in charge of the 105 river and harbor works on the water
irontage from the upper Potomac to the western coast of Florida,
report the value of the water-borne freight traflle at these places in
l!>12 at Hie enormous sum of $ 1 ,(>80,000,000, about one-half of which
is at Hamilton Roads."
We believe that, this region must and will have an economic development; which will far surpass any equal area in the A t l a n t i c States,
all of which has a practical and most intimate bearing upon Richmond as the location of a Federal reserve bank for the South Ytlantle
States.
Reverting to Richmond's railroad facilities
fhoy place her within
18 hours of all the Important: cities within the district defined, with the
exception of part of the most southern territory, and reference is made
to the map and Iimo fable accompanying.
Shi- Is therefore in a position to ship with the greatest promptness
and under the quickest schedule currency, not only to the banks In
her zone, but to the numerous cotton, tobacco, and peanut buyers and
a telegram received in Richmond before the close of hanking hours
would enable currency shipments to reach practically all important
points on the next day, in most cases before the opening of bank and
few situations will appeal more strongly to practical country bankers
than tills.
Again, Richmond is within easier and quicker reach of all the eastern
centers of trade and finance than any other important southern city,
and is in the most exceptional position to act for the North in hanking
relations with the South, and for the South In dealing with the North.
No other city In the Atlantic Coast States occupies this advantageous
posit ion.
T h e numerous lines to the South and West are not only a guaranty
of promptness and efficiency, but an insurance against disaster.
Into Washington and llaitlmoro and on to points beyond there is only
one connecting line.
It is worth while to consider that a railway disaster, easily Imaginable, to this line would cut oil the South from any reserve centers
placed north of Richmond, and should this occur at a critical time might
cause financial confusion and even disaster to the South Atlantic States,
and since this idea emanates from a railroad man, it is entitled to the
greater consideration.
2. P R 8 8 K X T
TRKN'I) OF
miSIXESS.
II is a fact, certainly applicable to the Atlantic Const States, that
Hie trend of business, lite course of commercial transactions, and tiie
currents of exchange are northward, or, iu other words, from the outside toward the centers of finance and manufacture. T h i s is the natural course of exchanges.
We believe that the operation of I lie Federal reserve act will revolutionize the existing method of using exchange in making settlements.
No net or rule will, however, reverse the natural course of settlements where the money is due, there it must be paid.
Virginia, occupying Hie position of head of the Southern States,
places Richmond in direct line with this natural trend, on the principal avenues of travel and transportation.
•fl'OSMi
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'JO
T h e railway linos from ihc South conic into Virginia as into a funnel,
Richmond being at the apex
the one line of railway being the tube
leading to Washington and points North.
She is a natural converging
point.
T h e overwhelming volume of travel and transportation must go
through this point.
3. T H E N A T U R A L A D V A N T A G E S OP R I C H M O N D ' S L O C A T I O N ' W I T I I R E F E R E N C E
•FO O T H E R F E D E R A L R E S E R V E H A N K S ON T H E A T L A N T I C SEABOARD.
Tt is plainly contemplated in the net. and must so work out in its
normal operation, that these Federal banks will act not only as clearing
houses f o r members in their own zones, but between zones. T h e clearings between zones w e believe will develop into enormous proportions,
and the bank most advantageously located for clearing the transactions
of any large section of country will have a great service to perform.
T i m e and distance must necessarily be most important factors in
determining the location and selection of this bank for such a purpose.
T o best perform 11. the means of communication must bo superior.
The bank should not onlv be readily accessible to members in its own
district, but in the general line of trade and natural current of banking
translations of the entire section, so as to preserve the continuous
trend toward the center of manufacture and finance where the greatest
volume of settlements is made.
Tills essential principle is peculiarly applicable to the Atlantic Coast
States, and can there be worked out to greater economic advantage
tliart in anv other part of tin' country.
It is axiomatic that quickness of communication is better assured by
being on the lines of greatest frequency of travel, and all railroad
schedules have been arranged with regard to the northward trend and
with particular reference to the ilnancial and business centers in line
With that trend.
Therefore, to serve its own zone as a whole with the highest eliiclency and economy, and at the same time to equally serve other zones
in intimate relation with its own zone, a point midway along the line
of quickest and most frequent communication offers tlie ideal location,
and Providence lias placed Richmond in that position.
T h e Atlantic Const States afford a distinct and peculiar problem in
putting into effect the Federal reserve act.
It was recognized both before and during the framing of and debate
upon the act that I he problem in the Fast was to decentralize reserves,
while the object in other parts of the country is to concentrate them.
T h e States bordering on the A t l a n t i c const have about 41 per cent
of I lie population and 52 per cent of the national banking capital of
the country, as f o l l o w s :
I Figures In millions. |
New Fngland S t a t e s :
Maine
H
Vermont
7
New Hampshire
Massachusetts
•}<>
Connecticut
31
Rhode Island
U
Total
Fa stern States :
New York
Pennsylvania
New Jersey
Delaware
Maryland
Total
Southern S t a l e s :
Virginia
North Carolina
South Carolina
Georgia
Florida
Total
„ ,
344
<(*{
'
075
20
5
_ _ It81
Total, $024,000,000, or about 52 per cent of the national-banking
capital of the United States.
In giving our views upon this situation, we are doing, as we understand It, only that which the committee invites us to do, as before
42000—13270
312 '
Mnlori, and chiefly because ii lias an intimate r e l a t i o n w i t h our o w n
ease.
W e t h e r e f o r e assume t h a t the A t l a n t i c Coast States, where the
banking capital essential to the operation of the system is h e a v i l y
concentrated, arc entitled to and perhaps must have several reserve
banks, located a c c o r d i n g to the density of banking operations, so as
t o c a r r y out the purpose and s p i r i t of the act and not disrupt or disturb the natural course of business and financial settlements.
It is a c c o r d i n g l y n a t u r a l to assume, as we look upon it, that the
greatest cities in t h a t section w i l l receive the iirst consideration, and
these cities are, of course, in g e o g r a p h i c a l o r d e r : Uoston, N e w Y o r k ,
and Philadelphia.
A n d if the selection of these cities w i l l , as w e believe, best accomplish the division of hanking p o w e r aimed at, then a
Federal reserve bank can not, in justice to the rest of the c o u n t r y and
w i t h o u t d o i n g violence to the purpose of the act, be located in any other
near-bv c i t y .
A m o n g the 15 A t l a n t i c Coast S t a l e s named, V i r g i n i a ranks sixth.
T h e s e 0 S t a t e s rank in the order named
New York, Pennsylvania,
Massachusetts, N e w Jersey, Connecticut, V i r g i n i a .
Hut V i r g i n i a exceeds Connecticut in n a t i o n a l bank gross deposits by
$40,000,000.
„
V i r g i n i a t h e r e f o r e ranlcs fifth in n a t i o n a l banking importance among
the 15 States.
I'or I his reason, as well as for her geographical position. It f o l l o w s
t h a t it is natural to look to Virginia to furnish the next location f o r
a Federal reserve bank a l o n g the A t l a n t i c coast, and again w e affirm
that, a Federal reserve hank in Richmond will h a v e the most decided
a d v a n t a g e o v e r any point In lliese A t l a n t i c Coast States in c l e a r i n g
for member banks and reserve banks between the N o r t h and South,
and no o t h e r location can o f f e r such practical a d v a n t a g e s in economy
of t i m e which, a c c o r d i n g to the accepted adage, is synonymous w i t h
money.
One d a y ' s interest on the annual volume of exchanges between the
northern and southern banks would mean a handsome profit to
the (Jovernnient.
T h i s one a d v a n t a g e alone is of such o v e r w h e l m i n g
importance that it: justifies our statement that R i c h m o n d ' s natural
a d v a n t a g e of location can not he o v e r c o m e by any other consideration.
II is difficult to name a f e a t u r e of equal economic i m p o r t a n c e to the
g a i n of a banking day in perpetuity.
II cuts the y e a r in half, or doubles its length, according to w h e t h e r
it is o p e r a t i n g f o r or a g a i n s t any point or points.
Richmond would
h a v e llial a d v a n t a g e o v e r o i l i e r large cities north of her in e f f e c t i n g
these clearings between zones in the A t l a n t i c States.
i.
COMPARATIVE
COMMF-RCIATI
IMPORTANCE.
As to the c o m p a r a t i v e commercial Importance of Richmond, and
of V i r g i n i a , w i t h r e l a t i o n to this district, measured by capital, deposits,
and banking transactions
Of the 15 A t l a n t i c Coast Stales, V i r g i n i a , as we have stated, ranks
f i f t h in natural banking importance.
T h e r e a r e only three other S t a t e s on this side of the Mississippi
which exceed V i r g i n i a in national banking c a p i t a l ; that Is, Illinois,
Indiana, and Ohio.
A m o n g the 20 S t a l e s on this side of the Mississippi, V i r g i n i a , theref o r e , ranks eighth in Importance in the present national banking system, measured by that standard.
She stands financially, as well as g e o g r a p h i c a l l y , at the head of all
the Southern States east of the Mississippi R i v e r .
T h e a g g r e g a t e millonal-bank resources of these several States are as
f o l l o w s ( c o m p t r o l l e r ' s figures, Oct. 21, l O l . ' l ) ;
Virginia
West V i r g i n i a
North Carolina
South Carol inn
< ieorgla
Florida
Alabama
Mississippi
Louisiana
Tennessee
S I OS, 000, 000
02, 000, 000
7o, turn, ooo
41), 000; ooo
1 Ft, o o o , o o o
01,000,000
s o , ooo, o o o
27, 000, 000
SO, 000. not)
115, 000, 000
V i r g i n i a t h e r e f o r e leads by $5:1,000,000 the S t a t e next highest in
rank.
Virginia m a i n t a i n s the same supremacy in the entire banking
field.
42000
1:1270
33
Tlic deposits in all classes of banks in these Slates arc as f o l l o w s :
Virginia
$175,000,000
North Carolina
100, 000, 00O
South Carolina
75, 000, 000
Ceorcla
152, 000, 000
Florida
70, 000, 000
Alabama
00, 000, 000
Mississippi
70,000,000
Louisiana
147, 000, 000
Tennessee
150, 000, 000
Virginia leads by about $20,000,000 the State next highest in rank
among the Southern States east of the Mississippi R i v e r .
As to Richmond, the national-bank deposits of Richmond are twofifths of such deposits in the out ire State, while her national hanking
capital is three-fifths of that of the State.
Richmond Is not a reserve city under the national banking law, and
Virginia has no reserve city.
Her bank deposits have not been built up because of any inducements
Which other competing cities do not offer.
She is a natural reserve city.
The law governing Virginia State banks requires no specified amount
of liabilities to be kept either in vault or in other banks.
The business of Richmond has flowed to her f r o m other V i r g i n i a
points and from Southern and Western States as a result of natural
causes governed by the trend of business, the numerous and unexcelled
means of communication as well as by the attraction of capital.
T h e industrial and commercial relations and needs of this section
have developed these banking relations.
T h e customary trend of business, f r e e from all extraneous compelling
influences, has developed these relations, and the established custom of
keeping checking accounts has simply grown up as a natural result of
everyday business transactions.
i t is to be considered that the Federal reserve act will, with its new
principles of credit and reserve, clearing and par of exchange, alter in
a great measure the banking customs and practices which have grown
np under the old law, and may, and probably will, revolutionize some of
the practices of banking.
T h e trend and flow of exchanges will be altered to the extent that
they have become artificial, and to the extent that they have been influenced by the location of reserve centers, the requirements of keeping
reserve accounts, and the custom of sustaining balances in order to
command credit.
It is altogether probable that results in many cases w i l l be of an
astonishing nature.
, „
, .
, ,,
I t is one of the purposes of the act to promote free banking relations,
and under f r e e banking relations it is clearly a justifiable conclusion
that the service Richmond will have to perform w i l l be a greater one
because of being a natural trade, transportation, and banking center.
T h e law of physics Is the law of commerce—It will f o l l o w the lines of
least resistance. W e will develop this point further on.
T o further illustrate the natural ilow of business to Virginia and
Richmond —
T h e national banks of Richmond on Oct. 21, 1013, bad
deposits from other national banks of
$7,500,000
Deposits from other State banks, etc
10, 000, 000
Total
T1^5007000
Which compares with corresponding totals for—•
Ceorgia
Tl, 700, 00(1
North Carolina
8,200,000
South Carolina
<J. -00, 000
These deposits were exceeded by no other Southern State east of the
Mississippi River.
illustrating the rapid growth and concentration of banking capital,
the resources of Richmond banks were in—•
1800
$14,000,000
10 n
32, 000, 000
loiai::::::::::::::::::::::::
w o . ooo
I l e r clearings in—•
1000
1012::::::::::::::::::::::::::
42000
13270
3
-
$175,000,000
424, 000, 000
34
Richmond ranks in hank clearings among the first .tO cities in tlio
United .States, and compares with other southern cities as f o l l o w s :
Washington
$387, 000, 000
Richmond
42t, 000, 000
Atlanta
GO.''., 000, 000
In the case of Richmond tiiese clearings were for tho city alone, while
In the case of Atlanta they cover the State, with its 117 national and
GO!) Slate hanks, with a few exceptions, and, as we understand, also
points in adjoining States; and. furthermore, in addition to her local
clearings, Richmond handled $400,000,000 in checks and drafts on the
Southern States named, making her clearings on the same principle, as
we think, practically $800,000,000.
Richmond's hanking relations with States south of her show the great
intimacy of trade relations with these Slates, and the statement following sets forth in the most illuminating manner the custom and
trend of business under existing conditions and notwithstanding the
present system of bank reserves:
[From comptroller's report of 1012.]
Number of State and National batiks i n —
Virginia
,180
North Carolina
420
South Carolina
340
West Virginia
20T
Georgia
700
Florida
201
Number of accounts carried in Richmond by banks f r o m —
Virginia
R28
North Carolina
307
South Carolina
1S2
West Virginia
S2
Georgia
Florida
IS
Maximum deposits carried by other banks in Richmond
Virginia
$5. 407, G07
North Carolina
4, 405. 455
South Carolina
02G, 770
West Virginia
1, 711.1, 8.18
:
Georgia
410,115
Florida
142, 018
Maximum loans by Richmond to other banks in l'.U.'i Virginia
1.450,080
North Carolina
2,200,480
South Carolina
2, 42:!, 015
West Virginia
DO, 700
Georgia
000,001)
Florida
70,750
Maximum deposits in Richmond to credit of Individuals,
firms, and corporations in
North Carolina
3, 225. 3G0
South Carolina
. 1,410,007
Maximum loans made in Richmond in 1013 to Individuals,
firms, and corporations i n —
North Carolina
5,245.451
South Carolina 3, 120, 815
Maximum deposits of banks and individuals outside of Virginia iu Richmond banks—
North Carolina
7, GOO, 820
South Carolina
2,343, 770
Maximum loans by Richmond to banks and individuals in North Carolina
7, 445, 031
South Carolina
5, 553. 730
So that banks, corporations, and Individuals outside of Richmond
carried on deposit in Richmond banks $18,000,000.
it; will be observed that in Virginia the number of bank accounts
with Richmond greatly exceeds the number of banks In the State.
In North Carolina it nearly equals the number of banks, and In
South Carolina and West Virginia the number of accounts in proportion to the number of hanks is very large.
Richmond's loans to oilier Southern States and to individuals and
corporations in these States aggregated nearly $14,000,000, a sum not
f a r short of the aggregate borrowings and rediscounts on October 21,
1013, of national banks in any six Southern States, excluding Texas.
Richmond lends practically all of this capital iu the South outside
of Virginia. She does not use it herself.
She is a credit clearing house.
42000
13270 3
35
T o moot (tin demands for crop and other purposes Richmond, during
101.'!, shipped .$1-1,000,000 in currency into this section.
In tho volume of corporate capital, upon tho income of which V i r ginia pays to the Government a tax, she ranks easily lirst among all the
Southern S t a t e s :
Virginia
$042, 000, 000
Texas
87.'?, 000, 000
Georgia
485, 000, 000
T h e amount V i r g i n i a pays ( o the support of the Government in
internal revenue taxes is exceeded only by that of the State of N o r t h
Carolina among all the Southern S t a t e s :
Virginia
jfS, aoo, 000
North Carolina
ooo, 000
Alabama
Louisiana.
1
ii.'ts! 000
r». 000, o o o
These comparisons are n o t given simply to show the commercial
importance of the State of Virginia and of the city of Richmond, but
rath or to set f o r t h the volume of business transactions centered in
Richmond out of which g r o w banking transactions and customs of
trade and trend of commerce and exchanges and exchange of credits.
T h e jobbing and the m a n u f a c t u r i n g business of Richmond are f u r t h e r
practical illustrations that she is a trading and distributing center.
Her jobbing business is $SO,000,000 and the value of tier manufactures $100,000,000.
5. MVJ-.nsiTY op ixor.STNV AND AGRICULTURE.
A s to d i v e r s i t y of industry and agriculture in the district which
Richmond could serve better than any other location it can not perhaps
be better illustrated than by g i v i n g the annual value of products of
factories, farms, forests, and mines, w h i c h are the principal divisions of
labor.
T h e business of the Southern States as represented by industry in
these divisions is as f o l l o w s :
Factories
$1, ,°,01, 000, 000
Fanns:
1, 197, 000, (too
Forests
200. 000, 000
Mines
100,000,000
T o t a l values of all products as above
2, 9G0, 000, 000
Dr. S. C. Mitchell, in his admirable paper read to you a t the hearing
given Richmond, states t h a t :
" T h e diversity of interests in tills region are as striking as its
natural and economic u n i t y . "
I'erhaps in no other division of the United States w i l l you find so
g r e a t a v a r i e t y of Interests.
T h e developing character of the district Is of equal importance.
Y o u r committee shares with us the knowledge that it is w i t h i n little
more than t w o decades that this region began its real recovery f r o m
utter prostration and that now its r a t e of progress exceeds that of
any other portion of the country.
Mr. (). C. Austin, whom w e have previously quoted, estimates
the value of tin- merchandise handled in the district at. $5,000,000,000,
or more than the entire ingoing and outgoing foreign commerce of the
United States.
Richmond is to-day, and probably a l w a y s will be, the chicf tobacco
center of the United States.
Four governments, or their chief tobacco interests, maintain the
headquarters of their buyers or handle their business through Richmond.
F o r t y per cent of the tobacco crop raised in V i r g i n i a , N o r t h Carolina,
and South Carolina in 1!>1.'1 came directly to Richmond f o r rchandling
and manufacturing, and Richmond banks'supplied the tobacco trade of
Richmond in exchange to the various tobacco markets, and paid out: in
Richmond in 191:? the enormous sum of $53,000,000, or 88 per cent of
the total value of the crop in N o r t h Carolina, South Carolina, and
Virginia.
A considerable portion of this sum, however, w a s sent to Kentucky
and W e s t Virginia.
Of the total collections of internal revenue by the Government f r o m
tobacco in its various f o r m s f o r tho year 1012, 20 per cent w a s collected f r o m t e r r i t o r y w i t h i n a radius of eight hours f r o m Richmond.
42099
13270 '
3G
A s to d i v e r s i t y of crops of ( l i e d i s t r i c t In their cffcct upon the
demands f o r c r e d i t and currency, Richmond, being situated at the
nortluu-n l i m i t of the d i s t r i c t , occupies this Incontestable a d v a n t a g e as
a Federal reserve bank l o c a t i o n — t h e c l i m a t i c d i f f e r e n c e s of the Southern States, in their e f f e c t upon crop development, come in o r d e r l y
rotation up to V i r g i n i a . T h e demands upon the F e d e r a l reserve bank of
R i c h m o n d would be u n i f o r m and continuous.
_ ,
T h e peak of tin? load would doubtless be in the fall ; but that would
1>e the case e v e r y w h e r e else, and it is the purpose of the new law t o
p r o v i d e f o r it
F u r t h e r I l l u s t r a t i n g the d i v e r s i t y of crop and industrial conditions in
Ibis district, the r a i l r o a d s s e r v i n g It: are a t present a m o n g the most
prosperous in the c o u n t r y .
W e do not know h o w to account f o r it on
any other basis than the d i v e r s i t y of interests and the consequent
absence of any general depression.
A d d e d to her a d v a n t a g e s f o r assembling and m a n u f a c t u r i n g the products of industry, her f a c i l i t i e s f o r distribution h e r e t o f o r e described a r e
p o s i t i v e l y unsurpassed by any other southern c i t y .
W e w i l l g i v e you a v e r y recent concrete I n s t a n c e : One of the v e r y
l a r g e c o r p o r a t i o n s of this country, w i t h headquarters at St. Louis, has
•just selected R i c h m o n d as one of t w o depots on the A t l a n t i c seaboard
most a d v a n t a g e o u s l y located f o r the s t o r a g e and distribution of its
products. N e w Y o r k being the other point.
R i c h m o n d is a reserve center of products.
C. C A P I T A L BESOUBCE.H OF TIIF, DISTRICT.
A s to the confines and capital resources of the d i s t r i c t of w h i c h
R i c h m o n d is the l o g i c a l and most a d v a n t a g e o u s location f o r a Federal
reserve lmnk t
T h e rules laid d o w n by the o r g a n i z a t i o n c o m m i t t e e f o r their guidance
are so j u s t and w i s e that all men must acquiesce in arid a p p r o v e them.
Under the language of the l a w and the spirit, and purpose of I he act,
w e believe that the n a t u r a l t e r r i t o r y of a district - c o n s i d e r i n g geog r a p h i c a l convenience, natural boundaries, ease and quickness of communication and t r a n s p o r t a t i o n ; as g r e a t d i v e r s i t y of industry anil
a g r i c u l t u r e as may be found a n y w h e r e ; natural trend ot business and
e x c h a n g e s ; the banking customs and trade relations of a m a j o r i t y portion of the t e r r i t o r y ; the desires of a m a j o r i t y portion of the p e o n h — i s
embraced In the zone m a p p e d out to be served by « W d e r a l bank
located in Richmond, namely, V i r g i n i a , N o r t h Carolina South Carolina,
G e o r g i a , F l o r i d a , southern part of West V i r g i n i a , p a r t of eastern T e n nessee, p a r t of eastern K e n t u c k y .
T h e s e States h a v e adequate national bank resources to contribute
necessary capital a n d reserves f o r a r e g i o n a l bank
the
T l i e v also h a v e a s t r o n g system of S t a t e banks, which would add
l a r g e l y t o resources should these banks elect l o enter the system, which,
possibly, may not be counted upon in time f o r o r g a n i z a t i o n of the
l M ' N a t l o n a 1"I)anki 11 g
capital in the proposed district, a c c o r d i n g
c o m p t r o l l e r ' s figures, October 21, 1 0 1 3 :
Capital
State.!.
Virginia
North Carolina
South Carolina
Georgia
Florida
West Virginia, one-half.
East Tennessee
East Kentucky
Total.
and
surplus.
$20,300,000
ll,3IK),00t)
to
the
Capital
subscribed
to Federal
10,600,000
$1,758,000
078,000
510,000
1,371,000
030,000
8,300,000
8,300,000
1,300, (XX)
408,000
78,000
100,500,000
6,030,000
8,600,000
22,900,000
WH, 000
T h e total capital and surplus of the S l a t e banks in the S t a t e s named,
including one-half of W e s t V i r g i n i a , o m i t t i n g f o r the moment those nortlons of K e n t u c k y end Tennessee included in the zone, Is .>US,UOO,UUO.
42000—13270
37
Now as to the net deposits r e q u i r i n g reserves:
Virginia
North Carolina..
South Carolina
Georgia
Florida
West V i r g i n i a — s a y onc-lnilf
T o t a l net deposits
Net deposits.
.$100, 000, 000
30,000,000
2.'?, <>00, 000
no, 000, 000
a:!, 000, 000
2!), 000, 000
271, 000, 000
not taking Into account the portions of Tennessee and Kentucky, ineluded in the district, f o r lack of comptroller's llgures.
Classifying these as country banks, the amount of reservb required to
be kept in the Federal reserve bank, under full operation of the act,
would b e —
Say 5 per cent, or
$13,000,000
Government deposits divided in proportion to the capital
involved would probably be, say, 0 per cent, or
0,000,000
State banks might swell the amount, say
2,000,000
Full-paid capital
0, 000, 000
Total
probable resources
30, 000, 000
Omitting from consideration the note-Issuing powers of the bank, the
resources would serve as a basis f o r the expansion of credit in the usual
w a y to possibly .$75,000,000.
I t is considered by many that the credit business of these banks w i l l
far overshadow the note-issue business, and we share that view.
N o w , the banking power of these banks is not to be measured solely
by capital resources but by their ability to acquire gold and to build
up deposits and loans in the usual way upon their reserves as a base,
and also by their note-issue power upon this base.
It is estimated that the floating supply of gold or ifs representative in
tbis country not in banks is approximately $800,000,000, doing duty as
currency or hoarded.
It is certainly not performing its greatest economic function as currency.
In Federal reserve banks it would serve ns the basis for two and
one-half times its volume in a safe and sound currency, and it is clear
that here is a large source of gold supply.
II is prolmble that with stable banking conditions, as one beneficial
result of the act, gold will to a large extent cease to be hoarded and
gradually come from hiding.
T h e total amount of borrowings and rediscounts of all the Southern
States, excluding Texas, was, on October 21, 1013, about $10,000,000,
and of the States named .$25,000,000.
If: is clear that the resources of a Federal reserve bank In (lie district mapped out would bo entirely adequate to serve the district.
Furthermore, it is to be borne in mind that the reserve figured upon
Is tIio minimum reserve, and If the banks make any use whatever of
the Federal banks they will be compelled to keep more of their reserve
with them.
T h e area covered would be about 250,000 square miles and the population about .10,000,000.
7.
WISHES
A N D V I E W S OF T I I E ILANKS A N D I'EORI.E I N T H E
T H E I R L'RESENR 11ANKI NO C O N N E C T I O N S .
DISTRICT
AND
In Virginia out of a total of 137 banks 101 have voted for Richmond
as first choice.
In North Carolina out of a total of -ISO banks 373 have voted f o r
Richmond as first choice and 00 as second choice.
In South Carolina out of a total of 405 banks 82 have voted for
Richmond as tirst choice and 122 as second choice, Columbia being, of
course, first choice. Only 18 of the remaining banks in South Carolina
voted, and these were scattered.
T h e capital and deposits of the South Carolina banks voting first for
Richmond were greater than those voting first f o r their own city—•
Columbia.
So that, out of a total of 1,328 banks In three States, of the number
Voting, 803 gave Richmond as first choice and 101 gave Richmond as
second choice.
Fllminatlng Charlotte and Columbia. 1,052 banks out of a total of
1,328 in tile three States regard Richmond as the proper location of
their Federal reserve bank.
42000
13270 3
33
In West Virginia, in the southern lialf of the State, 40 hanks have
selected Richmond as first, choice and 2(1 as second.
Richmond has been designated as the preferred location by firms and
individuals outside of Richmond as f o l l o w s :
N o r t h Carolina
South Carolina
West Virginia
'870
141
154
We are therefore fully justified in the statement that there is a very
strong feeling In Virginia, North Carolina, and South Carolina that
they must be included together in any zone which may be formed, and
that whatever territory may he incorporated In their zone a Federal
reserve bank located In Richmond would serve their interests better
than if located in any other city.
T h e interests of these three States are too closely interwoven to be
separated.
If any further corroboration can possibly ho desired by the committee, we respectfully refer to the sentiments expressed by North Carolina, South Carolina, and also by West Virginia bankers at the hearing
given Richmond in Washington on January 15, and to the exhibit of
resolutions, petitions, letters, and telegrams accompanying this brief.
We respectfully submit that compliance with the letter and intent of
the law, which declares that the Federal reserve districts shall be
determined with due regard to the convenience and customary course
of business, would demand that these three States shall be kept together
in one district, so that their mutual trade and llnanclal relations may
not. bo disrupted or disturbed.
T h e district we have outlined is the most perfect geographical division of the country that can be carved out.
Nature has placed her
boundaries, sharply defining it.
W e believe it is an equally perfect
economic unit. it. is a political division equally sharply defined.
T h e inhabitants are more homogeneous than in any other division
or part of the United States. AH of these considerations have a practical bearing.
Our crops and the credits based upon them are distinctive, and the
management of the regional bank should bear the closest relation to.
and have the closest familiarity with, the needs and customs of the
district.
For this reason, as well as for all the foregoing reasons,
whatever territory may be added to this zone, the headquarters of any
bank organized to serve the zone, or any large part of it, should not be
located north of Richmond.
T h i s position and all of these conclusions are separately and independently confirmed by the learned and experienced authorities. Dr.
S. C. Mitchell and O. i'. Austin, former Chief of the Iltirenu of Statistics of the Department of Commerce, whose papers have been tiled
with you.
Finally, why Richmond can belter serve the zone mapped out than
any city' In it, or any city in territory north of Richmond which might
be'adde'd to the zone, and why Richmond may therefore be entitled to
the location of a Federal reserve bank.
In the entire zone mapped out Virginia is the dominating State
financially, and Richmond clearly the dominating city.
Since colonial
times Virginia has been the dominating State in the South.
Richmond has played a part f a r ahead of any other city in the zone
In its development, from a banking point of view, an industrial point
of view, and a railroad point of view.
Long ago Richmond found that in Ibis zone she had a preferential
freight rate territory, and that in this territory the cities north of her
could not compote on equal terms with Richmond.
T h i s preferential
territory extends through the zone described to southern Georgia and
Alabama nnd the eastern State line of Mississippi.
It does not embrace the State of Florida because of water competition. T h e territory Is more graphically portrayed on the map which
accompanies.
The trade relations of Richmond In this territory, out of which
spring banking relations and settlements, must continue to grow, and
more and more exclude cities north of Richmond.
T h e average first-class rate in the territory gives Richmond an
advantage over, wo will say. IUiitlmore, by way of Illustration, that
being the next large city of commercial Importance north of Richmond, gives Richmond an advantage of 11.2 cents per hundred pounds,
or approximately 1.1 per cent.
This relative proportion in f a v o r of Richmond applies to all class
and commodity rates, and in some Instances It is greater In f a v o r of
Richmond.
42009
1.1270
'JO
F o r full d e t a i l s w e r e f e r to Hie s t a t e m e n t of M r . \V. T . Reed, president of the R i c h m o n d Chamber of Commerce, w h i c h s t a t e m e n t accoml>a n ies.
Commercial supremacy in ( i d s t e r r i t o r y must so hand in hand w i t h
banking supremacy, p a r t i c u l a r l y under a n a t u r a l and f r e e system of
banking.
( . r a n t i n g the selection of this t e r r i t o r y , or any l a r g e p a r t of it, as
a zone, t h e a d v a n t a g e of R i c h m o n d in point of time and distance in
d e a l i n g w i t h tin; members of the zone is so g r e a t as to exclude any
c i t y north of her f r o m c o n s i d e r a t i o n ; and the equal a d v a n t a g e o f
R i c h m o n d as a c l e a r i n g p o i n t between zones, f o r the same reasons,
w o u l d likewise exclude any northern c i t y .
I t is firmly to be borne in mind, as w e understand, t h a t t h e purpose of the Federal reserve a c t is to a f f o r d a d d i t i o n a l banking f a c i l i ties to the people, and t h a t F e d e r a l r e s e r v e banks shall be so placed
as to best serve the people w i t h r e f e r e n c e t o the o p e r a t i o n of t h e
system as a whole.
Should Federal banks be placed in the three g r e a t
cities of the Fast w h i c h w e h a v e named, t h a t f a c t in i t s e l f , w e believe,
w o u l d j u s t l y exclude f r o m consideration l l i e l o c a t i o n of h e a d q u a r t e r s
of another bank in any c i t y n o r t h of R i c h m o n d .
T h e y are not intended to lie local, and f o r t h a t reason branches are
provided, and due consideration is not g e n e r a l l y g i v e n to the p o w e r
and f a c i l i t i e s of these branches.
II. goes w i t h o u t s a y i n g t h a t this zone mapped out w i l l be p r o v i d e d
w i t h these a d d i t i o n a l f a c i l i t i e s , superior to any w h i c h they h a v e heret o f o r e e n j o y e d , by the location of a bank in Richmond, " t h a t branch
banks will a n s w e r local needs, and t h a t the zone w i l l be m o r e independent of t h e financial considerations w h i c h h a v e bound i t t o l a r g e
money centers in llie Fast : and this, too, w a s intended and can best, be
brought about by the location of a bank w i t h i n the r e g i o n described as
a natural d i v i s i o n of country.
Is there any man w h o doubts t h a t if S t a t e lines w e r e o b l i t e r a t e d
and (he country a p p o r t i o n e d in these g e o g r a p h i c a l d i v i s i o n s R i c h m o n d
would by acclaim lie chosen t h e capital of this d i v i s i o n ?
A l t h o u g h resting our claims upon the financial s t r e n g t h and the
economics of the situation, w e h a v e also those considerations in our
f a v o r w h i c h are most p o w e r f u l in m o l d i n g t h e c h a r a c t e r and ideals
of a nation.
Richmond has a place in the a f f e c t i o n s of the South w h i c h 110 other
city possesses.
She has a place in the annals of the N a t i o n and the w o r l d w h i c h
is imperishable.
T h e debt of the N a t i o n lo V i r g i n i a Is inextinguishable.
II is difficult to see how tills Republic could h a v e been f o r m e d but
for Virginia.
R i c h m o n d lias that d i g n i t y of standing, that atmosphere of sentiment and history, that position in science and learning, w h i c h render
her w o r t h y of any honor or distinction t h a t can be bestowed upon her,
and the Intelligent judgment of the w h o l e country, h a v i n g a k n o w l e d g e
of these considerations, w o u l d a p p r o v e the location of a F e d e r a l reserve
bank in Richmond.
T h e names of V i r g i n i a n s will lie associated f o r all time in ( l i e
financial h i s t o r y of i b i s country w i t h the Federal reserve act.
A l l of these considerations preeminently distinguish R i c h m o n d as
the location of a F e d e r a l reserve bank.
T i n : SOUTH ATI.ANTIC COASTAL IT-UN
V DISTINCT GKOGRArniCAL AND
CLIMATIC K N I T — I T S l'llOIU'CTH, l'KCt' LIAR TO ITS OWN SOIL ANI> CLIMATM, HIIOI.'LU 111'. lT.NANCKL) IIV M1IN ACQI AINTl'I) W I T H LOCAL CONDITIONS.
I Ry O. 1'. A u s t i n , 1." y e a r s Chief of the U n i t e d S t a t e s Rurenu of Statistics ; s e c r e t a r y of the N a t i o n a l O c o g r a p h b ' S o c i e t y . ]
N a t u r e has set aside the south A t l a n t i c f r o n t a g e of this continent as
a d i s t i n c t and peculiar section and has g i v e n t o it a class of products
w h i c h are peculiar to itself, and w i t h the financing of w h i c h i f s o w n
people are more closely acquainted than those of any other section are
or can become.
T h e A t l a n t i c coastal plain, which in recent g e o l o g i c a l
ages emerged f r o m beneath the ocean, stretches f r o m N e w Y o r k southw a r d to the Oulf of M e x i c o and is shut off f r o m the W e s t by g r e a t
mountain ranges.
l'LCI'LIAUITlKS OK l'HOpCCINO 1'OWKU.
A t fhe northern end it is a n a r r o w and sandy plain, but g r a d u a l l y
w i d e n i n g t o w a r d the South.
At at out the point 'at which the i ' o t o m a e
crosses it it suddenly broadens to a w i d t h of a p p r o x i m a t e l y 200 miles,
42000
1:1270
•10
ami at (hat point enter t w o new and important factors in its producing
p o w e r — a f e r t i l e soil and a genial climate.
r.Xl'EUT T E S T I M O N Y
AH TO
SOILS.
1'rof. Jav A. Ronsteel, a distinguished soil expert of the Department
of Agriculture, in a general description of the soils of the I'nited
.states, which appeared in tho 1011 edition of the official publications
of the Department of Agriculture, T h e Agricultural Yearbook, and
in a similar discussion of the soils contributing to (lie trucking system
of the South Atlantic coast, presented in tlio 11)12 issue of that official
publication, s a y s :
" Tho N o r f o l k fine sandy loam extends from eastern Virginia southward along the Atlantic coast to Florida and thence westward.
Among
all the truck soils in use or available along the middle Atlantic coast,
the N o r f o l k line sandy loam easily occupies tlio premier place both with
regard to its total extent and its wide range of possible products.
It
lias been formed as a sedimentary deposit, laid down under the waters
of a more extended marine occupation, and later elevated to become a
portion of the present land area.
AN' IDF.AT. S O I L
FOR
MARKKT
GARDENING.
" P h y s i c a l l y it is almost ideally constituted f o r the intensive growing
of crops. It is of prime Importance f o r the production of vegetables and
small fruit. In the eastern counties of Virginia and North Carolina it
is also used f o r the production of corn, winter oats, peanuts, and bright
cigarette tobacco, and from the southern boundary of Virginia to T e x a s
it is highly prized as a cotton soil. Where local transportation facilities are adequate il is intensively farmed for the production of vegetables and small fruits f o r shipment to northern markets.
PRESENT
PRODUCTS
MAT
111! M A N Y
TIMES
MULTIPLIED.
" Soil surveys throughout this region have encountered a total area of
4,340,000 acre's of this soil, and it is possible that 20,000,000 acres will
lie found to exist. Not one-tenth of 1 per cent of this total area is now
occupied f o r truck farming, and it is probable that not 2,"> per cent is
now used f o r any agricultural purposes other than grazing."
EXPET1T T E S T I M O N Y A S TO C L I M A T E .
Tliese extracts from official descriptions of the peculiar soil factor in
the producing power of this section should be considered in conjunction
with that other Important factor, climatic conditions.
A GREAT OUT-OI'-DOmtS
GREENHOUSE.
T h a t the conditions of climate are as peculiar as those of soil and
equally effective in developing a production different from that of other
purls of the country is also Indicated by l'rof. Hohstcel in his 1012 discussion, in which ho describes this coastal frontage as " a great out <>fdoors greenhouse," and, in another place. " the great winter garden
which supplies the cities of the Northeastern States with fresh vegetables demanded f o r consumption during the later months of whiter
and those of early spring."
THE
GULF
STREAM
A FACTOR
IN
PRODUCING
POWER.
This peculiar condition of climate, and thus of producing power, he
attributes in part to the presence of tlio Otilf Stream, which, as is
well known, Hows close to the Atlantic coast as far north as Cape
I fat terns, but leaves (lie coast at that point, moving in a northeastwardly direction across the Atlantic.
A TROPICAL
AND KltJTROPICAr,
CLIMATE.
The peculiarities of climate (and. therefore, of the producing p o w e r )
of this section are also pointed out in the International encyclopedia,
edited by that great scholar and educator, the late Daniel Coit Oilman,
f o r 25 years the president of Johns Hopkins University, which s a y s :
" T h e United States has boon divided into eight ( c l i m a t i c ) sections;
two of these are tropical, Florida and T e x a s ; two are subtropical,
Including (lie coast: States from Texas to Virginia and the California
region; the other four seel ions are temperate or boreal."
I T S PRODUCTS ltEQI'IRE F I N A N C I N G FROM W I T H I N T H I S
AREA.
These statements from two distinguished authorities regarding the
peculiar characteristics of the South Atlantic frontage in the great
factors of production, soil and climate, are presented with (lie purpose
of sustaining (lie statement already made by us, that the chief products
of this section, which must prove the basis of its requirements f o r
credit and currency, are peculiar to this section, and would be much
better understood in their relation to credit and to currency require42000—13270
41
motits by tho officers of a bank located w i t h i n t h a t section than w o u l d
be possible elsewhere.
A N AURA OK P E C U L I A R
AND VARIED
PRODUCTION.
W h a t arc I lie products of this section which nature lias thus set
aside w i t h a peculiar soil and climate, and, t h e r e f o r e , a class of products to i t s e l f ? B e g i n n i n g at (he South, wo may name sea-Island cotton,
a p p r o x i m a t e l y $7,000,000; phosphates, about $10,000,000;
peanuts
$15,000,000; turpentine and rosin, ?:!ft,000,000 ; cottonseed oil and
cake, a p p r o x i m a t e l y $45,000,000; f r u i t s , $15,000,000; tobacco, $,".2.000,000; vegetables, exclusive of potatoes. $::<?,000,000 ; sweet potatoes,
S15,000,000; products of the mines, $100,000,000; animals, sold or
slaughtered on f a r m s , $92,000,000: all cereals, $107,000,000; cotton,
$255,(too,000 ; all f a r m crops, $»!>(),000,000; all m a n u f a c t u r e s , $087,000,000; these being in nearly all cases the figures of the census of
1000.
TIIE
WORLD'S
CHIEF
PRODUCER
OF
IMPORTANT
ARTICr.ES
OF
COMMERCE.
It will be seen that a large p r o p o r t i o n of the a r t i c l e s produced in
these six States are intensely local, the product of (he peculiar soil and
subtropical c l i m a t e referred to by the distinguished scholars a l r e a d y
quoted. T h e United S t a t e s is now one of the principal sponge producing and e x p o r t i n g countries of tho world, and p r a c t i c a l l y all of this
produce is peculiar to the coast of F l o r i d a .
W o are tho w o r l d ' s largest
producers of turpentine and rosin, and p r a c t i c a l l y all of our output
is produced in F l o r i d a and G e o r g i a .
Our sea-Island cotton Is f a m e d
the w o r l d over, and p r a c t i c a l l y all of it is produced along the e x t r e m e
South A t l a n t i c coast.
Of the $2.1,000,000 w o r t h of citrus f r u i t s produced in the U n i t e d States nearly one-third is g r o w n in F l o r i d a .
T h o U n i t e d States is the w o r l d ' s largest producer of rock phosphates,
and most of this is now mined in the S t a t e of F l o r i d a .
T h o value of
peanuts produced in the U n i t e d S t a t e s increased f r o m $7,250,000 in
180!) to $18,250,000 In 100!), and 78 per cent of these w e r e produced
in V i r g i n i a , N o r t h Carolina. Georgia, and F l o r i d a .
Of the approximately $ 120,000,000 w o r t h of cottonseed oil and meal produced in the
United S t a t e s in I!i0!), more than one-third w a s tho product of V i r g i n i a ,
N o r t h Carolina, South Carolina, and (Jeorgia.
Of the 1,000,000.000
pounds of tobacco g r o w n in the U n i t e d States in 1003, p r a c t i c a l l y
one third was the product of the six S t a t e s — V i r g i n i a , West V i r g i n i a ,
N o r t h and South Carolina, G e o r g i a , and F l o r i d a .
VALUE
OF
ITS
DISTINCTLY
LOCAL
PRODUCTS
$500,000,000 PER
ANNUM.
T h e value of these d i s t i n c t i v e l y tropical or subtropical
products
of tills section is, stated in round terms, $450,000,000 per a n n u m ;
sea-island cotton, $7,000,000; citrus f r u i t s , $0,000,000; sugar, $;i,000,OOO; d r y peas, $.'!,000,000; peanuts, $15,000,000; sweet potatoes, $15,0 0 0 , 0 0 0 : turpentine and rosin, $30,000,000: vegetables $30,000,000;
f r u i t s $15,000,000; small f r u i t s , $4,000,000; tobacco, $,".2,000,000:
cottonseed oil and meal, $45,000,000; cotton, $255,000,000; w h i l e if wo
add to tliese the phosphates and sponge* of F l o r i d a and other land
and w a t e r products peculiar to t h a t section, we g e t a grand total of
a p p r o x i m a t e l y $500,000,000 w o r t h of products d i s t i n c t l y tropical or
subtropical in c h a r a c t e r .
ITS
PRODUCTS
SHOULD
11E F I N A N C E D
FROM
WITHIN
ITS
OWN
AREA,
T h o f a c t t h a t the g r a n d total of tho production of this section is
made up of a l a r g e number of articles not closely related to each other,
hut h a v i n g f o r each a d i s t i n c t i v e c h a r a c t e r i s t i c as to production an I
use. Intensifies tho i m p o r t a n c e of selecting some convenient point w e l l
w i t h i n t h a t section as the locus of the reserve hjink f o r the d i s t r i c t .
W h i l e tho economic methods of the South as a whole have boon criticized upon tho ground t h a t it does not sufficiently d i v e r s i f y its products, such charge can n o t be sustained w i t h r e f e r e n c e to (lie area
which w e are bringing to y o u r a t t e n t i o n .
One of the speakers w h o
appeared before vour honorable body, a gentleman of high standing in
tho financial circles of tho Capital C i t y of the N a t i o n , remarked t h a t
one of the o b j e c t s of this law is to d e c e n t r a l i z e reserves as they now
e x i s t and distribute them among several reservoirs, each r e s e r v o i r
to be located w i t h regard to tho due convenience of a d i s t r i c t w h e r e i n
a g r e a t number of diversified industries are c a r r i e d on, to build up
e v e r y branch of industry and c o m m e r c o ; a suggestion which, w e submit. applies w i t h g r e a t f o r c e to tho South A t l a n t i c section as one
h a v i n g g r e a t d i v e r s i t y of production, and to R i c h m o n d as the natural
conter of tho finance and commerce g r o w i n g out of such production.
42000
13270 3
'JO
RICHMOND
AN* I D E A L
F I N A N C I A L . CENTER
OF T H E
DISTRICT.
_ TIint lliis groat mass of distinctively southern products can he more
Intelligently understood and financed from a distinctively southern city
can not he doubted. N o t only would Richmond be conveniently located
for the promot transmission of mails and expressago to the section in
which this great mass of products originates, but the acquaintance of her
people with the peculiar products in question—the phosphates, the naval
stores, the peanut crop, the tropical fruits, the tobacco, the cottonseed oil and meal, and tho sea Island and upland cotton, their seasons
of growth and preparation for market—all these would be better understood and the interests of their producers better served from Richmond
than Washington, which has 110 active business relation with the producing, manufacturing, or commercial interests, or from Baltimore,
which is still farther removed from the area of the chief production of
these peculiar and distinctively " l o c a l " products.
VOLUME
OF LOCAL B U S I N E S S
REQUIRES
A RESERVE
BANK.
The section lying south of the Potomac and east of the Appalachians
is amply sufllelcnt in area, population, and tho value of its products
f o r the service of a regional bank. T h e population of the six States
which we propose as that section—Virginia, West Virginia, North Carolina, South Carolina, Georgia, and F l o r i d a — i s in round numbers I I , (100,000 by tho census of .1010; the value of its f a r m property $2,500,000,000; its capital invested in manufactures, over $1,000,000,000; tho
products of its manufactures, nearly $1,000,000,000 in 100!), and now
much more than $1,000,000,000; the value of its farm crops, by the
census of 1000, $090,000,000; the products of its mines, $100,000,000;
the length of l i s railways, 29,000 miles; and ttie navigable mileage of
its rivers, over 5,000 miles, or one-fifth of the total of the United "States.
T h e officers of the W a r Department in charge of the 105 river and
harbor works on its water frontage from tin; upper I'otomae to the
western coast of Florida, report tho value of the water-borne f r e i g h t
'radio at those places in 3912 at the enormous sum of $1,080,000,000,
of which about onc-lialf is at Hampton Roads.
VALUE OF M E R C H A N D I S E
H A N D L E D , $5,000,000,000 rr.lt
ANNUM.
The census of 1910 placed the value of (lie manufactures of this area
at $987,000,000; the f a r m crops at: $088,000,000; the products of the
mines, $100,000,000; (lie farm animals slaughtered or sold, $92,000,000;
and, adding a reasonable estimate for flu; products of the forests and
fisheries, the total production of tho area in that year may be set
down at. nearly $2,000,000,000, indicating that the annual value of its
various products at tho present time Is more than $2,500,000,000. Most
of this $2,500,000,000 worth of annual products Is moved from the
place of production to other parts of the country, or to other sections of the world, and in their stead there is purchased about an equal
value of other merchandise, suggesting that the value of the merchandise handled in this district in a single year is approximately
$5,000,000,000, or more than the entire foreign commerce of the Fnltcil
Stales.
B U S I N E S S OF T H I S AREA
IS RAIMDLY
INCREASING.
T h a t this enormous total of $5,000,000,000 worth of merchandise
annually handled in this section is likely to grow very rapidly Is apparent from the figures of actual growth during recent periods.
The
total value of tho manufactures produced In these six States increased
12.'! per cent from 1899 to 1009, while the gain in alt other parts of the
country was but 80 per c?nt.
T h e value or all farm crops in these
States increased 120 per cent f o r the period from 1899 to 1909, while
that iu other parts of tho country increased but 8.'! per cent. T h e coal
production of this area increased 250 per cent in the 10-year period,
while that of the country as a whole only doubled. T h e capital invested
in manufacturing in these States increased .171 per cent from 1890 to
1909, while the gain in the whole manufacturing capital of tho country
was but 105 per cent. T h e wages and salaries paid in manufacturing
increased .12,'5 per cent, while that in other parts of the country increased but 80 per cent. T h e railroad mileage Increased 70 per cent
from 1890 to 1911. and in the other portions of the country increased
but 17 per cent. T h e internal revenue paid increased from $10,500,000
in 190.'! to $21,000,000 in 1912, a gain of 100 per cent, while the gain
in the other parts of the country was but 10 per cent in the same
period.
T h e estimated true value of all property, as shown by (tie
United States census, increased from $4,000,000,000 in 1900 to" over
$5,000,000,000 In 1904, an increase of 20 per cent, while the increase
in other parts of tho country was but 21 per cent. T h e total indebtedness less sinking f i n d of these six States was, according to the United
States census, $04,000,000 in 1800 and $100,000,000 in 11)02, an in42099- 13270
'JO
crease of less than 7 per cent, while the indebtedness of other States of
the Union showed an increase of 64 per cent in the same period. T h e
average per capita indebtedness of these six States fell from $12.82 f o r
each individual in 1890 to $11.02 in 1902, while that of the country as
a whole increased from $18.10 per capita in 1890 to $23.73 in 1902.
T h e expenditures on public roads in these six States now aggregate
about $15,000,000 per annum, a fact which in itself promises great
development of its agricultural power.
AR.R, Q E E A T
INDUSTRIES
REPRESENTED
IN
THIS
REGION.
T h e value of the three great products of this section—agriculture,
manufactures, and m i n i n g — a r e quite evenly distributed in proportion
to the products of the entire United States. T h e f a r m crops of the
section in question formed in 1909 about 12 per cent of those of the
entire United States, tlie manufactures about 5 per cent, and the
minerals approximately 5 per cent of those of the entire United States.
FOREIGN
COMMERCE
OF
THIS
AREA
HAL'IDLY
GROWING.
T h e value of the foreign commerce of the frontage from the mouth
of the Potomac to the western coast of Florida is now approximately
$15(),000,000, and shows a rapid growth when compared with other
sections of the country.
A t Norfolk and Newport News, especially,
lying as they do at that great natural harbor of the United S t a t e s —
Hampton Roads—tho exports of the fiscal year 1913 show a remarkable growth, having practically doubled In the past two years.
A
GATEWAY
FOR
THE
PRODUCTS
OF
THE
MISSISSIPPI
VALLEY.
The possibilities of this great harbor in becoming the natural galew a y for tiie Mississippi Valley, with its enormous production for foreign markets and consumption of foreign merchandise, arc worthy of
serious attention in considering the future possibilities and probabilities of the commerce and commercial requirements of this section.
With two great railway lines now transporting to this port the merchandise of tho upper Mississippi Valley, over remarkably easy grades
and free from the Interruption of a northern winter climate, it may be
expected that the remarkable growth of recent years will be continued.
A
SHIP
C A N AT,
POSSIBILITY.
Still another possibility of an enormous increase in the foreign commerce of Hampton Roads Is found in the suggest ion of a ship canal to
connect I he (Ireat Lakes with the Atlantic Ocean.
Our experience at
Panama has demonstrated the ability of our country and its engineers
in opening a passageway for ocean vessels through a country where the
natural obstacles are much greater than those which lie between the
A t l a n t i c and the (Ireat Lakes, and if the Government of the United
States should see lit to utilize for (his great enterprise the men and
machinery which have accomplished the work at Panama, the route
from llampton Koads, along the lines suggested by George Washington,
to tho Ohio River and thence to the ( i r e a t Lakes, would be worthy of
serious consideration, and If adopted make this the gateway f o r the
outflow of the products of that greatest producing section of the
world
the Mississippi Valley—and the route by which it would in turn
receive its requirements from foreign countries.
PANAMA
CANAL
WILL
INCREASE
TRADE
AND
CURRENCY
REQUIREMENTS.
The Panama Canal will, when opened to commerce, immediately
stimulate the coastal trade of this section. A t present a narrow strip
of country along the Atlantic frontage sends its merchandise for the
Pacific coast by water by w a y of the trans-Isthmian railways, which
demand f o r their service one-third of the entire coast to coast charges,
tho annual volume of that trans-Istlimlan traffic between the A t l a n t i c
and Pacific coasts being now more than $100,000,000 per annum.
With the possibility of passing the products of the.eastern and western
coasts across the Isthmus without the cost of rail movement, the
volume of this traffic between tlie A t l a n t i c and Pacific coasts will
greatly increase.
In addition to this, the export of our manufactures
and agricultural products to the western coasts of South America,
and, In fact, to all the countries f r o n t i n g on the Pacific, may be expected to rapldlv increase with the opening of the canal and thus
greatly enlarge the foreign commerce of this South Atlantic country
and the requirements of currency f o r that purpose.
SUMMARIZATION.
Now, to sum up the groat general facts as to the production, commerce, and commercial possibilities of the area In question.
T h e section of country lying south of the Potomac and east of the
Appalachians Is set aside by nature as a distinctive region by reason
42099—13270
'JO
of its peculiar soil and el i ma to and geographic surroundings, and has
therefore products peculiar to itself.
Its total products, which aggregated nearly $2,000,000,000 In value in
1010 and more than that al: I lie present time, are distributed with remarkable uniformity among the three great industries—agriculture,
mining, and manufactures—agricultural and mineral products forming
about one half and manufactures the other half of this grand total.
T h e agricultural products represent an unusually largff variety of
articles which have their peculiar seasons of maturity, and thus cooperating with the manufacturing and mining industries in maintaining
within the district a comparative uniformity and steadiness of demand
f o r currency.
Approximately one-third of those three great articles of commerce—
manufactures, farm crops, and minerals—are produced in the two
Northern States of the group, Virginia and West Virginia, and approximately two-thirds in the four States lying to the South, North
Carolina, South Carolina, Georgia, and F l o r i d a ; but as most of these
products of the Southern States move toward the North, Richmond,
which lies within 00 miles of the southern line of Virginia and on the
natural line of the northward trend of commerce and communication
becomes the natural center f o r the trade and liuance of both sections'
of (his natural region.
T h e productions of this area may bo expected to Increase with great
rapidity,
l'.oth manufacturing and agriculture showed in the period
of 1!)00—1910 a much larger percentage of growth than that of all
other parts of the country, and with the greatly increased use of
water power through the cooperation of electricity the contribution
of the rivers of this section to its manufacturing power will rapidly
increase its industrial and commercial activities.
T h e foreign commerce of this section may be expected to rapidly
increase. T h e value of tin; merchandise exported from the ports from
the mouth of the Potomac to (he western line of Florida is now
approximately $140,000,000 per annum, and those two cities at the
great natural harbor—Hampton Roads have actually doubled their
exports in the last two years, suggesting that the possibilities of this
section as tlie gateway f o r the surplus products of the Mississippi
Valley should be given careful consideration in connection with the
financing of its prospective business.
T h e value of the merchandise passing over the waters of the
navigable rivers and harbors from the Potomac to the western boundary
of Florida was $1,750,000.000 in 1912, the total value of its own
products in 1912 lully $2,500,000,000. and the value of the commerce handled by it approximately $5,000,0(10,000 per annum, and may
be expected to Increase with great rapidity in view of the rapid
growth which has characterized recent years.
Richmond is (lie natural railway center for the movement of this
commerce, and its mail and express requirements with reference thereto,
having three trunk lines from the South, two from the West, and two
from the North, and a close communication with Norfolk with its
western and southern lines,
MARYLAND
AS
A
fOSSinLH
FACTOII
IN
TIIE
RESERVE
ZONE.
While a portion of the State of Maryland lies geographically and
geologically within the South Atlantic coastal plain. Hie distinct area
proposed as the basis of a banking district, that State has not been
included in the proposed Federal reserve region because of the fact
that its products are, as a whole, not of the distinctively tropical or
subtropical type which distinguishes those of the section farther
south, where the presence of the Gulf Stream all'ects climatic conditions, and also because of the equally important fact that the trade
currents carry most of the commerce and therefore the finances of that
Sla((! toward (lie great commercial and llnanclal centers of the North,
(in the other hand, it has been thought proper to Include West Virginia
in the proposed regional bank area, even though it lies outside the
coastal plain region, because of (lie fact that the commerce and finances
of a large pari of (he State, especially the southern half, are distinctly
associated with those of the Atlantic coastal plain and with the State
of Virginia and the city of Richmond, a fact which is clearly shown
in the discussion of present banking relations of Richmond with surrounding territory.
It is proper to add. however, that a careful comparison of the figures
of Industry, product ion. and commerce of the two States—Maryland
and West Virginia
when considered article by article and item by
ilem, show that a substitution of Maryland for West Virginia in the
statement of products, manufactures, and business conducted would
42099
l.n>270
'JO
not m a t e r i a l l y change the total of the area as a whole or seriously
affect the percentage of g r o w t h or other evidence of prosperity of that
area.
T h e population of W e s t V i r g i n i a in 1010 was 1,221,000, and
that of M a r y l a n d was 1,295,000. T h e combined value of the products
of f a r m , f a c t o r y , and mine were, in West V i r g i n i a , $274,000,000. and
in M a r y l a n d $3015,000,000; and the value of all f a r m property in
West V i r g i n i a $314,000,000', and in M a r y l a n d $280,000,000.
S T A T E M E N T S H O W I N G FIUCIGIIT RATE?) FROM R I C H M O N D TO S O U T H E R N
WEHT V I R G I N I A , E A S T E R N K E N T U C K Y , E A S T E R N T E N N E S S E E , N O R T H AND
S O U T H C A R O L I N A , AND OEOROIA ; A L S O T O N N A G E FROM V I R G I N I A C I T I E S
I N T O N O R T I I AND S O U T H C A R O L I N A A N D GEORGIA.
I B y Richmond Chamber of Commerce, W i l l i a m T . Reed, P r e s i d e n t . ]
T h e railroads serving the above-mentioned t e r r i t o r y years ago recognized Richmond as the proper distributing point, and the above as the
natural t e r r i t o r y to Richmond, o w i n g to the f a c t that they w e r e enabled
to g i v e quick service, and f r o m one to f o u r days quicker delivery than
B a l t i m o r e or any c i t y north of us.
I n v i e w of this f a c t the rates into
this t e r r i t o r y w e r e fixed a t an average, a p p r o x i m a t e l y , of 13 per cent
lower than Baltimore.
T h e a v e r a g e first-class r a t e in the t e r r i t o r y
designated by the railroads as the natural t e r r i t o r y to Richmond is
75.2 cents per hundred pounds, w h i l e the a v e r a g e lirst-elass rate t o
the same t e r r i t o r y f r o m B a l t i m o r e is 8(5.4 cents per hundred pounds,
g i v i n g Richmond an a d v a n t a g e on the first-class r a t e of 11.2 cents per
hundred pounds, or approximately 13 per cent. T h i s r e l a t i v e proportion in f a v o r of Richmond applies to all class and commodity rates, and
in some Instances It is g r e a t e r in f a v o r of Richmond.
A t t a c h e d herewith, on page 41, is a map clearly defining the terrltory recognized by the transportation companies as Richmond's territory. and in which the above-mentioned f r e i g h t rates f a v o r a b l e to Richmond apply.
A t t a c h e d also, on page 40, are the actual rates in groups
of cities in this respective t e r r i t o r y , g i v i n g the respective rates to these
cities from Richmond and Baltimore.
T h e s e cities are chosen w i t h
respect to their prominence and also w i t h respect, to their proximity to
the borders of the t e r r i t o r y as designated by the map on page 41.
Some of the rates in the interior of this t e r r i t o r y w i l l even show
g r e a t e r a d v a n t a g e to Richmond.
T h e chamber begs to call attention f u r t h e r l o the tonnage o r i g i n a t i n g
at and f o r w a r d e d lo this southern t e r r i t o r y — N o r t h and South Carolina,
Georgia, and Florida- from the V i r g i n i a cities, Richmond, N o r f o l k .
Portsmouth, Suffolk. Petersburg, Lynchburg, Roanoke, Danville, and
South Boston.
T h e total tonnage f r o m these cities f o r the year 1913
reaches the enormous amount of 2.228,908 tons f r e i g h t , and of this
amount the tonnage f r o m Richmond into this t e r r i t o r y was 029,495
tons.
. ,
O w i n g to the limited time, and also to the f a c t (lint the tonnage into
eastern Tennessee, eastern K e n t u c k y , and southern West V i r g i n i a had
not been separated by (lie railroads f r o m the tonnage to this t e r r i t o r y
and points beyond our territory, we are unable to g i v e the actual tonnage to tliis portion of our t e r r i t o r y .
We have been unable to get the tonnage from B a l t i m o r e into Richmond's t e r r i t o r y — N o r t h and South Carolina, Georgia, and F l o r i d a —
but f r o m such information as we have received we feel assured that any
statement B a l t i m o r e makes that her tonnage exceeds or even approaches
the amount of tonnage of Richmond in the t e r r i t o r y mentioned is a
pretense, and, Inasmuch as B a l t i m o r e made Ibis claim before the honorable committee at Washington, it is Incumbent upon the B a l t i m o r e
people to state their exact tonnage, as we have done, and which w c
are prepared to v e r i f y .
OPINION OF EXPERTS.
OLIVER
,T. S A N D S ,
N E W Y O R K C I T Y , April
,
,
lo,
101).
/'resident
American
National
Bank, Richmond,
Va.:
Richmond, in my opinion, presented a strong and convincing case In
f a v o r of location for a reserve bank under (he new banking law.
She
showed adequate capital and essential tributary t e r r i t o r y f o r a reserve
district, rapid g r o w t h In resources in recent years, indicating f u r t h e r
g r o w t h in the f u t u r e ; a location much more convenient to nearly all
southern points than any cltv north of the P o t o m a c ; f a c i l i t i e s f o r communication by w a t e r and r a i l w a y within a f e w hours, and without risk
of interruption by a c c i d e n t ; a large volume of loans to southern b a n k s ;
general support by banks of tributary t e r r i t o r y ; and c o n f o r m i t y w i t h
requirements of the law that the districts should be " apportioned w i t h
42099—13270
'JO
due regard fo the convenient and customary course of business"
n
was my helief as stated lo (he organization committee, t i n t the entire
territory northeast of the Potomac should c o n s t i t u t e a d i s t r i c t with a
s rong hank at N e w York as the c e n t e r ; hut IMchmond ad convincing
m l s o n a i ) l c "i-portiontnent as one of the r e s e n t banks
of the South,'
ClIAS, A .
Mr.
Or.tvan
.7. S A N D S .
vlutiriHdn
Committee
WASHINGTON-,
on llcylonal
D. C „
April
CON'ANT.
13,
10,}.
kcscric
Hanks,
Washington,
I). C.:
My advocacy of Richmond as a location for a regional reserve hank
?dlUn> K
, U , C T ' f u l suidy Of economic cot.di.ions o f ' t l e area
•H .t en thet'eto, including population, climatic conditions, soil, producns, manufactures commerce, wealth, and currency rcqu m i i o n i s
W l , n " l i U l ° V.
,
.'! « w r f w t ' y «Pon mind and my conclusions
reached a f t e r the consideration of the claims of all the cities nsklnc
f o r that honor. I found Iti, hmond the natural geographical com mere U
and hnancial center of the great A t l a n t i c coastal t la n, a region pe
culiar to itself in soil, climate, production, and business V n d ions a ml
re<iu rements, and thus became convinced that that city was by f a r
,'t™ml!
»'
r ( T « l w n a l ' , n n k f l ' ° . m w l , i ( l1 l h c currency and busi11 ess 1 equiremonts of the area 111 question could be served.
While this
coiicius on was based upon a consideration of an area composed of Vlrr . i . r l i . nw, J , 1>' , ! , , Ih V ^, 01 ' Ul , Carolina, South Carolina, Florida, and
1 r : , ''i , f L
Maryland and the District of Columbia substituted for Florida and Georgia in the final determination of the area in
o degree reduced but rather increased, tlie economic, commercial, and
hnancial claims of Richmond for the reserve bank of that region as ho
geographical center of the district in its tinal form, itichmonl h s
especial advantages and the location of the reserve bank at that no t
will save a day's time in the mail collections of a large proportion of
he banks when compared with the facilities which any other city of
•nut iV.^l.w, 0 'H
r'i'M
consl.lor tho tinal determination of the area
and the selection of Itichmond for (lie reserve bank as a lo-'icnl -ind wis.,
conclusion, and believe it will be so reeognl/.e
when sub ec cd to tb
M
J u t u l
t0
U,e
test of business operations under tho new law.
42090—'13-70
•
o
P-
ALSTIN-
@FedFRASER