Speech

THE SAINT LOUIS BANKER 7 The First Two Years of the Federal Reserve Bank Delivered by William McChesney Martin, Chairman of the Board of the Federal Reserve Bank of St. Louis, Before the Memphis Chapter of the American Institute of Banking, in Memphis, Tennessee, on Tuesday Evening, November 14th, 1916. TODAY is the fourteenth of November, and on Tues­ that they are members of a great system whose purpose day of this week, November 16, 1916, the twelve is their protection. Now, at the end of two years, it seems Federal reserve banks will have been open for business to me that any bank, which owns stock in a Federal Re­ exactly two years. We are, therefore, in a position to see serve Bank, can go to its customers able to offer them the what the system has accomplished in this short time, and assurance that never again will they have trouble that on some things at least to speak from the view-point of was once experienced in getting money to meet payrolls. practical experience rather than from the viewpoint of A member bank can also assure its customer that, if he theory. has the proper credit standing and is conducting his busi­ Two years is an extremely short time to give any bank, ness in the proper wray, he is now under no danger of having let alone a great banking system, an opportunity to demon­ his loan called during a time like 1907, when such a call, in strate itself. Should we examine the first two years of the many cases, meant the shutting down of the business; but operation of any of the great world banks, such as the Bank that, instead, the bank, through the instrumentality of of France, the Bank of England, or the Imperial Bank'of the Federal Reserve System, is in position to extend such Germany, we would be unable to find that any one of these accommodation as is legitimate for sound business and the institutions made such progress in so short a time. In good of the entire community. fact, if I have read correctly, the impression would be The four great defects in our old system of banking, gained that in the first twro years they stood still. If there agreed upon by banker, business man and economist, were: are any of you present here tonight who were with your (1) lack of co-operation between the banks; (2) diversion banks when they first opened their doors, you can doubt­ and immobility of bank reserves); (3) and unscientific, in­ less testify that even an individual bank was not able to elastic bond secured currency, and (4) and an actual show much in the way of results at the end of the first hoarding of money by the Government. two years, and if you had been criticised on your bank In the early history of our country, it was learned showing for such a time, you would have considered, and through bitter experience that banking is a paradox. It rightly so, that it was unjust. is not only a most selfish business, but at the same time, We, however, are living in an age when things move if it washes to exist, must be altruistic. Ii i- •.‘■■gvuii/.ed im rapidly, and tonight I think I can state to you without the purpose of maTviiig dividends for its stockholders, but fear of contradiction that the Federal Reserve System a'nd at the same time, it must think of, and help wherever the Fedetal Reserve Banics have accomplished more in the .possible, its r.cighbrrs in the same business. The reason 4 first two years of their existence than any other of the is that it is based on confidence. Whenever any bank in world’s great banking systems can boast of from the his­ a community, fails, every other bank in that community, tory of their two first years. Even from an earning viewr- wrhether it deserves it or not, is under more or less sus­ point, and this, while not unimportant, in my judgment picion. A run on any bank is more or less a dangerous is perhaps the last viewpoint from wrhich the Federal thing for all banks. New York learned this lesson during Reserve Banks should be judged, they are, to use a com­ a panic in the early history of our country, and it resulted mon phrase, “making good.” All of the twelve banks in the formation of a clearing house, the chief purpose of are earning something on their paid-in capital. In Sep­ which was not so much the clearing of checks as the pooling tember of this year, six of the banks earned not in excess of reserves so that help could be extended to the smallest of six per cent on their paid-in capital, while the other six deserving bank. This principle of combination of reserves earned less than six per cent but in excess of four per cent. has justified itself throughout all of our country, and all Perhaps we can get a better idea of what the Federal of our large cities have clearing house associations. How­ Reserve Act has accomplished by very briefly stating the ever, though the banks in the cities could combine their things it was intended to accomplish. Its purpose was to reserves, there was no medium by which banks located correct certain defects in our financial system which had outside of cities could effectively pool their reserves. They long been recognized, but which it took the panic of 1907 were dependent on their correspondents in the centers, and to so impress on the minds of business men and bankers of the United States that they considered them of enough THEGUERTIN CO seriousness to realize that they must be corrected if this country’s future was to be assured. To do this, the Federal IANUFACTURER5 OF Reserve Act was passed, its chief object being to furnish BRASS SIGNS banks with a medium through which they could benefit OFFICE the public to a greater extent than ever before by giving aomssDEPT. £ 1751 GRACE ST.,CHICAGO it increased facilities, greater stability in the interest rate, SEND FOR ILLUSTRATED CATALOG and PRICE LIST and the creation of the confidence that comes from knowing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis THE SAINT LOOTS BANKER 8 YOUR INTERESTS FIRST HPHE thought uppermost in the minds of those in charge of the National Bank of Commerce is, first of all, to serve the best interests of our patrons and correspondents. This involves the maintenance of an experienced corps of officers and employes who are both capable and willing to extend them every service in keeping with sound banking methods. Following 57 years of continuous banking experience, we bespeak your continued and larger patronage. Capital and Surplus, $12,000,000.00 THE NATIONAL BANK OF COMMERCE IN ST. LOUIS JOHN G. LONSDALE, President TOM RANDOLPH, J. A. LEWIS. Vice-Prest. and Cashier W. B. COWEN, Vice-President Chairman of the Board W. L. McDONALD, Vice-Prest. though the correspondents in time of trouble did the very conditions. We are really too close to events to be able best they could for their friends in the country districts, to see clearly how much the present volume of business of as you gentlemen know, there were times when you could this country is due to the Federal Reserve System, but not be furnished the money you needed and even times we do know that it has helped a great deal, and perhaps when you were charged for your own money when it was when we are further away from these stirring times and sent to you. The principle of combination was all right, history is written, we will be astonished to find out ap- but there was no effective means of carrying it out. The proximately how much. Federal Reserve Bank furnishes this means. The country ln the period of readjustment that must follow the is divided into twelve districts; each district has a Federal war> it is to the Federal Reserve System that this country Reserve Bank. All National banks in a district, and such must look for the protection of its gold supply. The gold of the State banks as desire, are joined together through that we have will naturally be desired by the nations from the medium of stock ownership in the Federal Reserve which it came, because it is the basis of credit. Under our Bank. In it the member banks also deposit a certain Q\d system, we would have had to stand helpless and see portion of their reserves, and in fact, since the recent the gold go out. However, with the Federal Reserve System amendment to the Federal Reserve Act, they can keep all in effect, there is every reason to believe that we will be of their reserve in the Federal Reserve Bank of their given the effective protection. The system, under this district, if they so desire, even that part which heretofore strain, is yet to be tried, but those in charge are anticipating the law compelled them to keep in their own vaults. Thus, the situation and are waiting the outcome with confidence, 'as it were, the Federal Reserve Bank becomes a gold w e read of the “trade war” that is to be made upon this reservoir, able through its rediscounting operations to send country. We are becoming familiar with such phrases a stream of money to any bank that enjoys its privileges as “the scramble for gold.” There are those who predict which has a legitimate need for it. It is because the public a dark outlook ahead. Personally, however, I cannot be has realized this fact, and because the merchant has felt pessimist enough to find these “Jeremiahs” good company, that he is not under the cloud of the possibility of having Europe undoubtedly will want our gold, but how is she his loans called in the happening of any. unusual event, going to get it? Many of her men are dead, many more that, in great measure at least, it has been possible for have been rendered inefficient through wounds. Such business in this country, in the face of the greatest European machinery as she had has been turned into munition plants, war in history and in an atmosphere charged with the possi- and it takes time to change the sword into a plow-share. bility of the impossible, to reach the unprecedented high Gold will leave us, of course, but not as the result of a sud- tide that it now enjoys. It is perfectly true that there den raid. Europe cannot as heretofore established arti- has been brought in from Europe some six hundred or ficial interest rates, which we are helpless to check, seven hundred millions of dollars of gold, which, to some Now the Federal Reserve Banks will be able to meet degree, acting as a basis of credit, has resulted in lower such a move by a raise in rates. The movement will be interest rates, and it is also true that some sections of our slow, due to the natural and normal economic conditions, country have enjoyed good crops and high prices, but I and through the Federal Reserve Banks we have an instru- submit to you that it is entirely possible, with even these ment by which it can be safeguarded. conditions, if the people did not have the confidence in It is a pity that those State institutions which are our financial system, that they have gained through the hesitating about coming into the System cannot get this establishment of the Federal Reserve Banks, business world vision of the situation. Now that our country is would have gone forward with a much more halting step brought so close together through the medium of the rail- than it has. In fact, I was told by one of the largest whole- road, telegraph and telephone, no longer can any bank, salers in this country that he did not believe merchants however small, insist that it is not interested in the affairs would think of ordering the supplies they are, unless they of the world. An uncontrolled withdrawal of gold out of felt that there was a Federal Reserve System to stabilize the United States will affect every bank in it, whether the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis THE SAINT LOUIS BANKER 9 St. Louis Union Trust Co. St. Louis Union Bank Capital and Surplus - - $10,000,000.00 Capital and Surplus - - $5,000,000.00 N. A. McMILLAN.......................Chairman of the Board JOHN F. SHEPI.EY...............................................President N. A. McMILLAN...................................................President ROBERT S. BROOKINGS.......................Vice-President ROBERT S. BROOKINGS......................Vice-President HENRY C. HAARSTICK.........................Vice-President HENRY C. HAARSTICK........................Vice-President ISAAC H. ORR...............................................Vice-President JOHN F. SHEPLEY.....................................Vice-President J. LIONBERGER DAVIS.........................Vice-President W. T. RAVENSCROFT..............................Vice-President F. X. RYAN.........................................................Trust Officer C. E. FRENCH...............................................Vice-President GEO. G. CHASE...........................Assistant Trust Officer F. V. DUBROUILLET..............................................Cashier F. V. DUBROUILLET..........................................Treasurer J. S. WALKER..........................................Assistant Cashier J. S. WALKER......................................Assistant Treasurer BYRON W. MOSER..............................Assistant Cashier BYRON W. MOSER..............................................Secretary L. E. WILLIAMS.....................................Assistant Cashier ALEX. HAMILTON...........................Assistant Secretary GEO. M. WILLING............... ...............Assistant Cashier ARTHUR H. BURG...........................Assistant Secretary W. J. D. McCARTER........ ..............Assistant Cashier T. F. TURNER..................Manager Safe Deposit Dept. A. H. L. KUIIN.............Manager Savings Department A Trust Company free from any deposit St. Louis, Mo. A Bank seeking useful and mutually pro­ or demand liability. fitable relationship with its patrons. bank is able to recognize it or not. It will know the result, depositor and I might as well close my doors, and you know even though it may not be conscious of the cause. The that world conditions are such that at any time I may be Federal Reserve System can be made a success without called upon to cash an unusual number of checks.” The the State institutions, but it is unquestionably true that result, under the old system, was that Mr. Brown did not every State institution that joins the System adds strength, get his loan; he could not spend the money for the leather, not only to itself, but to the System. It is bound to benefit, and the dealer in the leather lost a profit. Mr. Brown whenever a strain comes, by having access, as a matter of could not make the shoes and make a profit. Perhaps right, to the gold reservoir in the Federal Reserve Bank; he had to put his help on half time or discharge some of and the Federal Reserve Bank is stronger and more able them, and as a community suffers when its units suffer, to help all banks by reason of the reserve which the State so the refusal of that loan to Mr. Brown discouraged the bank will keep with it. In a majority of cities, State whole community. On the other hand, the bank which banks and trust companies have found it to their advant­ perhaps could have loaned the money to Mr. Brown at 6rf age to be members of the local clearing house associations. could not make that much, and as a rulo, sent the money Such membership was a material aid to them in the dif­ it might have loaned to Mr. Brown to a central reserve ferent panics. At the outbreak of the war, when it was city, where it did not receive more than 2r< on daily bal­ necessary to establish the so-called “gold pool” to protect ances. It did this because if felt that money so deposited American industry, many State institutions realized the it could get on demand, but even this was not certain in situation and contributed to that pool. In such cases, unusual emergencies like in 1907, and the first weeks of State institutions have found it greatly to their benefit, August, 1915, when the great war commenced. and in some instances they found it even necessary to Now that the Federal Reserve banks are open for their life, to combine their reserves and pool their gold. business, if Mr. Brown wants S10.000 for a legitimate Having had to do this heretofore, why is it not plain to commercial transaction for ninety days, the banker can them that it is not only for their benefit, but for the benefit let him have it, for no longer is that S10,000 of necessity of the country as a w hole for them to pool their gold through tied up for ninety days. If Mr. Brown’s loan is based on the medium of the Federal Reserve Bank, when in so doing, a legitimate liquid commercial transaction, the banker through the medium of rediscount, they are certain of knows that, by endorsing Mr. Brown’s note and sending protection for themselves and their customers during any it to the Federal Reserve Bank of his district, with a state­ emergency? ment of Mr. Brown’s financial affairs, he can get cash for There was a time, under the old system, when a mer­ the note, less the discount, in any form that he desires it. chant might come into a bank and apply for say, a S10,000 The amount will be put to his credit on the books of the loan. The cashier of the bank would say: “Mr. Brown, Federal Reserve Bank, or he will be sent any kind of money you are a most excellent credit risk; we have the money, in the denominations that he desires. This means that and will be glad to lend it to you at 6%, provided you will business men can be taken care of for their legitimate make your note on demand.” Mr. Brown’s answer would needs by their local banks, and in this way, the whole be: “Such a loan will do me no good, for \ expect to buy community helped. leather with the money borrowed from you, turn it into Sometimes I fear that many of our member banks do shoes, sell the shoes, make enough on them to pay off the not thoroughly appreciate the facilities which the Federal loan, and have sufficient profit to increase my deposit with Reserve Bank of their district can offer them. It has ben you, but it will take me at least ninety days to do this.” astonishing to all of us that our member banks have not The banker would reply: “I am sorry, but when checks are made more requests of us for small bills. I know that presented at the counter of this bank, we must pay them many of our banks have needed this kind of money during in money. We cannot pay a $1000 check with an un­ the crop moving season. The Federal Reserve Bank of divided one-tenth interest in a $10,000 loan, even though St. Louis wishes to do evertyhing in its power to be of the loan is as good as your loan would be. If I cannot assistance to its member banks, and always tries to answer pay the check in cash, I have broken my contract with the requests for different kinds of money promptly. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis THE SAINT LOUIS BANKER 10 Our Real Estate Department— An efficient agency for the purchase, sale, renting and general manage­ ment of St. Louis city and county real estate. Loans negotiated on city and suburban property, leases effected, appraisals made, taxes paid, insurance placed and repairs supervised. MISSISSIPPI VALLEY TRUST CO. Capital, Stir plus and Profits over $8,000,000 ST. LOUIS There has always perhaps existed a prejudice against made yet by those who prefer to criticise rather than learn a bank borrowing money, and in my judgment, such a from experience how easy it is to deal with the Federal prejudice has not been well founded, provided the borrowing Reserve Bank. When a bank offers a note for rediscount was for legitimate needs. Banks were timid about show­ at the Federal Reserve Bank of St. Louis, we feel that it is ing the item “Bills Payable” in their statements, for they a perfectly reasonable request to ask that the bank let were afraid of criticism. Under the National Bank Act, us know what it knew when it granted the loan. We banks could not have Bills Payable in excess of the amount prefer this information in the way of a signed statement of of their capital stock, !but this provision of the National the borrower, but if the bank cannot furnish this, on small Bank Act has been so amended by the Federal Reserve loans we are prefectly willing to accept the bank’s state­ Act that there is now no fixed limit covering the amount a ment of what the borrower owns and what he owes. We member bank may rediscount with its Federal Reserve take it that no bank grants a loan without some parti­ Bank. This seems that the amount any member bank cular knowledge about the borrower, and all we want is this may rediscount is left to the discretion of the Board of particular knowledge. After two years’ experience in the Directors of the Federal Reserve Bank, with the result asking for statements, I think I can say that unques­ that legitimate needs of any bank may be cared for. This, tionably the requirement has been of very great benefit of course, does not mean that a bank may borrow all it not only to the bank, but also to the borrower, and I desires without hindrance, but it does mean that the Board know that many banks find it extremely easy to do busi­ of Directors of the Federal Reserve Bank can give all the ness with the Federal Reserve Bank of St. Louis. This help that it thinks the bank needs. statement requirement is resulting in many a small mer­ The item, “Bills Rediscounted with the Federal chant and farmer keeping a set of books—something that Reserve Bank,” on a bank’s statement, I have every reason he never did before—and through keeping a set of books, to believe, is viewed by the general public in an entirely he has been able to stop many a small leak. It may be different light from the old item “Bills Payable.” This is that if this winter you see a farmer, who ordinarily left his strikingly illustrated by a conversation I had several months implement open to the weather, take the trouble to put ago with a gentleman who stopped me on the street to them into the barn, this action can be directly traced to show me the sttements of two banks in which he was the fact that he was asked to make a statement, and after nterested. One of them showed Bills Payable and the seeing his condition expressed in figures, instead of guessing other one showed Bills Rediscounted with the Federal at it, he has become more careful. Reserve Bank, and he volunteered the information that Through the regulations issued by the Federal Re­ while he did not like “Bills Payable,” he rather liked that serve Board, commercial paper is becoming standarized. item “Bills Rediscounted with the Federal Reserve Bank.” Credit terms are beginning to have definite meaning. I asked him why, and his reply was: “Why, any bank that The Federal Reserve Banks themselves are working to­ shows Bills Rediscounted with the Federal Reserve Bank, gether and expect to formulate a set of statements that can indicates to me two things -.First, that it has paper measuring be used by all of them, and it looks like that within a short up to a certain standard; and second, that it was in fair time, we may have in this country statements as uniform condition or the Federal Reserve Bank would not have as it is possible to get them. rediscounted the paper for it.” This gives you an idea of It is obvious that when borrowers stop guessing at how this gentleman looked at the matter, and is indicative their financial condition, and banks quit guessing at the of the way that many others are viewing it. borrower’s condition, frequently misled by the optimistic The Federal Reserve System has done one thing ideas of the borrower himself, that loans themselves will which, it seems to me, is of the very greatest benefit to become safer. I think you will agree with me that the entire business world. It is asking that statements “charge offs” affect the bank’s earnings to a much greater of borrowers be furnished with their notes—a requirement degree than an obtaining of high interest rates. It, there­ which sometimes results in a charge against the Federal fore, stands to reason that the banker can afford to charge Reserve Bank of “red-tape.” During the early days of a less interest rate than heretofore, and at the same time the bank, this was a common charge, and is a charge often make more money, because he will collect his loans when Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis THE SAINT LOUIS BANKER 11 Southwest National Bank of Commerce, Kansas City, Mo. CAPITAL $3,000,000.00 SURPLUS AND PROFITS $1,000,000.00 OFFICERS AT THE CLOSE OF BUSINESS NOV. 17, 1916 RESOURCES F. P. NEAL. J. W. PERRY, Loans and Discounts.......................................................$28,794,026.15 Chairman Board of Directors. President. Overdrafts.......................................................................... 11,534.18 Real Estate (Bank Premises)....................................... 400.000 00 John M. Moore, Vice-Prest. James T. Bradley, Cashier. U. S. Bonds (Par).............................................................. 2,103.000.00 W. L. Buechle, Vite-Prest. E. P. Davis, Asst. Cashier. Bonds and Securities....................................................... 2,059,492.89 Stock in Federal Reserve Bank.................................... 108,000.00 Chas. H. Moore. Viee-Prtsl. Chas. M. Vining, Asst. Cashier. Cash and Sight Exchange.............................................. 25,745,753.34 J. F. Meade, Asst. Cashier. W. H. Glas&in, Asst. Cashier. Total Resources..............................................$59,221,806.56 LIABILITIES Capital................................................................................. $3,000,000.00 Surplus and Undivided Profits.................................... 1,488,924.69 Reserved for Taxes, Interest and Other Expenses. . 101.000.00 Unexcelled Facilities with the Most Modern Equipment Circulation Account........................................................ 2.000,000.00 Assures Accurate and Satisfactory Service. A Large Deposits.............................................................................. 52,631,881.87 Capital and Surplus with a Strong Organization Assures Safety. Total Liabilities..............................................$59,221,806.56 due, instead, as heretofore, of charging a high interest rate, Two years of operation of the Federal Reserve System because he was guessing at the credit standing of the proves that it is sound, and not only sound, but thoroughly borrower, and frequently finding his guess wrong and having practical. It has already brought about a feeling of to charge off the greater part, at least, of both principal confidence, and standardization of commercial paper, a and interest. One way through which the stabilizing of definition of credit terms, the establishment of the Ameri­ the discount rates will be attained is through the min­ can dollar in international trade, a Federal Reserve Note imizing of the risk by statements, and even with a lower currency, fitted to varying needs, and a check clearing interest rate, in the end the banks will make more net system of great benefit to the country as a whole, even profits. though certain individual banks may have to forgoe the Heretofore, we have never had an elastic currency— profit of charging exchanges. It is a thing worth noting i. e., a currency which could be issued so that you could that much of the criticism that is heard from banks, in use it to pay your hands in the cotton field when it was regard to Federal Reserve Banks, comes from those who needed for that purpose, and when the need had dis­ voice preconceived ideas and have had absolutely no ex­ appeared would come in and go out of existence. After perience with the Federal Reserve Banks themselves. It two years experience with the issue of Federal Reserve has not been an uncommon thing to have a bank make notes, I think I can safely say that they can give us the the statement that it could not do business with the Federal kind of relief we have long needed. I cannot do better Reserve Bank on account of “red-tape” and, at any rate, than quote Governor Harding of the Federal Reserve it did not have any paper that it could rediscount with the Board, who, in a recent speech, said: Federal Reserve Bank, and then, when it mentioned the “Experience thus far, limited though it has been, has notes that it had, find out that most of them were eligible shown that the machinery for the issue of the notes pro­ for rediscount. It has also, I am glad to say, been our vided for by the Federal Reserve Banks can work promptly experience that when a bank ceases dealing with pre­ and effectively, and there is no reason to doubt that when­ judices and once learns the facts, it finds it extremely ever it may be called upon to render extended service in easy, and think pleasant, to deal with us. Frankly, un­ times of stress or difficulty, it will be able immediately to less you take the trouble to find how the Federal Reserve meet the requirements of those calling for assistance Bank can be of service to you, you will never know how through the medium of note issues.” to use it and, in fact, may have to suffer inconvenience There was a time when a man in Memphis, who wished that it was not necessary for you to undergo. Sometimes to buy coffee in Brazil, had to arrange to have a London, very discouraging things occur. It was just the other day French or German bank accept a draft drawn on it. We that one of our member bankers came into our office and could not do an international business without paying said that if he could do such and such a thing, it would be tribute to foreign banks. All that is past now. Under a great convenience to him and save him considerable the Federal Reserve Act, National banks may now make money. For answer, I handed him a circular which I am both foreign and domestic acceptances, and there are now sure was mailed to him some two months previous. He in the foreign trade approximately 8175,000,000 of drafts read it and said: “Well, I declare; I didn’t know this.” accepted by American banks and bankers. A market Here is a case where he could have been doing something is created for this type of paper, since it can be purchased of distinct advantage to himself at least two months by the Federal Reserve Banks. Up to October 1st the sooner than he did, and it may be that in the meantime he amount of acceptances bought by Federal Reserve Banks had been criticising the Federal Reserve Bank when he was approximately $300,000,000. It is through this should have been criticising himself. May I ask that all means that the American dollar is attaining its place in of you please read our circulars carefully, and if there is the sun. It now has displaced the pound, the franc, and anything about them that you do not understand, please the mark, in the international trade of the world, and it is write in immediately, for the officers of the Federal Reserve believed that it will be able to maintain its position even Bank of St. Louis are practical bankers and want to be of when the war is over. real assistance to all member banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 12 THE SAINT LOUIS BANKER St. Louis Claims For Federal Farm Loan Bank REMARKS OF MR. WALKER HILL, BEFORE unimproved Arkansas lands. If the Federal Farm Loan FARM LOAN BANK BOARD. Act has been intended especially to meet the needs of this Missouri-Arkansas district it could not have been drafted Our Committee has prepared a brief which is accom­ better. The district is one of small farms. In Missouri panied by illustative diagrams. We wish to leave with the there are 140,000 farms under 50 acres. In Arkansas there Board copies of this brief, which is not long, and to ask 110,000 farms under 50 acres. The Federal Farm Loan that you will give it consideration. act offers these small farmers the capital to acquire dairy The brief demonstrates these facts: stock, to plant orchards, to establish themselves in poultry We have in this State of Missouri 20,000,000 acres raising, in short to make the most of their conditions of of land not under improvement. That is nearly one-half soil and climate. of our entire area. The Federal Farm Loan Act extends its advantages We have in Missouri 10,000,000 acres, nearly one- to “any person about to become the owner of farm land.” fourth of our area, which is not in farms. We have 85,000 tenant farmers in Missouri and 108,000 In the adjoining state of Arkansas the acreage of im­ tenant farmers in Arkansas. They are tenants, not from proved land is 8,000,000 acres, not one-fourth of the entire choice, but from the lack of capital to buy land. area. St. Louis loans a great deal of money on farm mort­ I mention these two States because the conditions gages. We have one trust company with a record S30,- show that they may be properly embraced in one district, 000,000.00 loaned on farm mortgages and not a dollar lost. with St. Louis as the location of the Federal Farm Loan But these loans are made on the larger farms and in large Bank. amounts. They are loaned to the amount of 25 per cent The Federal Farm Loan Act provides for twelve dis­ of the value of the property. We cannot meet the needs tricts and says, “said districts shall be apportioned with due of the small farmer. We have a great field for the operation regard to the farm loan needs of the country.” of the Federal Farm Loan Act. Epitomizing our brief The brief which we present to you gives, in more detail I invite your attention to these points:— than I will quote, the figures showing that Missouri has 1. Distinctive needs of the Missouri-Arkansas District. one-fifteenth of all of the mortgaged farms in the United 2. The extent of the unimproved land. States. Missouri and Arksnsas together have one-tenth 3. The decrease in the number of farms. of all the mortgaged farms in the United States. These 4. The proportion of mortgaged farms to the whole figures are given by the census bureau of the Government. country. They seem to our committee to demonstrate clearly the 5. Peculiar conditions of the Ozark region. claims of these two States to constitute a district. The 6. The high rate of interest paid by the small farmer. amount of the farm mortgages in the two States follows 7. St. Louis as a farm loaning center. closely the same proportion as the number in respect to the 8. St. Louis as a bond buying center. amount for the entire country. 9. The great number of tenant farmers in the district. The number of farms in Missouri is decreasing. We 10. Intimate relations of St. Louis to this small-farm had in 1910, a decrease of 7,642 in the number of our farms territory. as compared with 1900. We had an increase in farm 11. The relations of the Federal Farm Loan Bank and the mortgages. I will not quote the percentage of increase. Federal Reserve Bank. You will find it set forth fully in the brief, together with 12. What Missouri is doing at this time to help herself. other statistics showing the great needs of this territory 13. St. Louis’ present efforts toward agricultural develop­ which lies at the very door of St. Louis. ment. Now, why are these conditions? We are in the very 14. The unanimous request of the St. Louis Clearing center of the farm production of the entire country. Yet House. we have many counties in which less than 40 per cent of 15. Special adaptation of the Federal Act to St. Louis the acreage is embraced in farms. We have 33 countries territory. in which the present average value of the land is under $25 an acre. Significance of Live Stock Marketing at St. Louis by Missouri agriculturally is two kinds of a State: North Wirt Wright, President National Stockyards National of the Missouii River, about one-third of our area, is fine Bank. land adapted to grain growing. It is one vast lot for live Mr. Secretary and Members of the Committee:— stock in winter. South of the river and extending down With your permission I would like to discuss very through Arkansas is a teiritory of narrow rich valleys, briefly two facts connected with the live stock business, grassy slopes and plateaus, w'atered by innumerable springs which seem pertinent to the establishment of a farm loan and favored in respect to climate. It is territory which bank at St. Louis. nature intended for dairying, fruit growing and poultry First, live stock shipping and financing are ties or raising. It includes most of the 20,000,000 acres of un­ links of association between the farmer and St. Louis. improved Missouri and most of the 25,000,000 acres of The importance of a live stock market depends upon Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis THE SAINT LOUIS BANKER 13 contiguity and transportation facilities. You are, of course, aware that live stock shipping, more than that of any other farm product, respond quite absolutely to good AT YOUR COMMAND freight service; fast, convenient stock trains, early arrival at the market and low freight rates. To out-of-town banks we offer prompt and dependable service both in the making of collections and in the dis­ Therefore St. Louis comes honestly by its position as charge of other commissions with which they may choose the fourth largest market—the largest horse and mule to entrust us. market—because its railroads give good service in its If you have an opportunity to come to New York, call and see us and let us demonstrate our facilities for serv­ immediate tributary territory. Beginning at the north ing you. If you cannot come, write. with the Burlington along the river and then following around in order, the Wabash, Alton, Rock Island, Missouri Pacific, Frisco, Iron Mountain and Cotton Belt; spread out like a fan over Missouri and Arkansas. Our Committee has filed with you charts showing the number and value of live stock marketed here as result of this situation. The bulk of Missouri and Arkansas live stock is shipped to this market. Thus exists a peculi­ arly intimate relationship between St. Louis and its tri­ butary agricultural territory and its importance to you lies in the fact that the shipper largely comes to town with his stock. He does not do so when he markets grain or cotton LIBERTY NATIONAL BANK or fruit or produce unless he is within driving distance. In the Equitable Building 120 Broadway, New York But he frequently accompanies his stock to market. He learns the City, does a little shopping, visits its attractions and assures a proprietary interest therein. It becomes “his town” and he will support any good enterprise located doubtedly the Federal Land Banks, will make many a loan there, if he can. for this purpose. Moreover is so happens that financing of live stock Now North Missouri is a beef finishing country, but drifts naturally to the marketing point. Home banks do South of the Missouri River and all of Arkansss present as much of this as they are able, but at present prices, the a wonderful opportunity for live stock breeding and dairy­ amounts involved are frequently so large, and other con­ ing. Natural conditions are of the best, climate equable, ditions force farmers—every good farmer is this section grazing excellent, bottom lands produce sufficient winter is a live stock man—to obtain assistance through his com­ feed and water is fine. The Universities of both States mission man or the bank at the Stodkyards. Probably have been doing a world of educational work and the op­ in excess of $15,000,000.00 of this class of paper is handled portunities for producing cattle, hogs, and sheep and for annually at the Yards. And in this way again the tie dairying are unquestionably promising. But financing betw'een St. Louis and the Missouri and Arkansas stock is needed. If the Land Banks will assist in this matter, and man is emphasized and strengthened and the habit of I believe they will, there is sufficient need in this industry looking to St. Louis as the financial enter of the district alone to argue strongly the location of a Bank at St. Louis. is established. Just these two points, first the location of a well In the second place, Missouri and Arkansas seriously established National live stock market here is one of the need assistance in financing live stock breeding and dairy­ important links between Missouri and Arkansas farmers ing and I apprehend a farm loan bank here will, as one of and St. Louis. Second, there is in this territory urgent its activities, carry a good many loans, the proceeds of need of financing long-time breeding and dairying loans, which will go into these industries. In my judgment, there which the location of a bank at St. Louis will greatly has been urgent need for some sort of institution to handle assist. long time live stock loans if we propose to increase our sup­ ply to keep pace with the demand and encourage dairying. ''Why the Federal Farm Loan Bank will serve the district In the nature of the case a loan on breeding or dairy stock more effectively if located in the same city with the Federal will not automatically liquidate itself sooner than two and Reserve Bank."— Tom IF. Bennett. a half to three years. Interior banks do as much as they This subject, in its very nature, requires reasons, and can after they have first financed crop making, but they while they are numerous, I will endeavor to enumerate only correctly expect liquidation at least once a year. a few of the most potent ones. Mr. Hill’s bank or Mr. Watt’s bank cannot consider Federal Reserve Bank. this class of paper. The institutions at the Stock Yards carry some of it, but as they are holding largely demand In the consideration of the establishment of the Federal deposits, there is a limit to their capacity. In fact, as Reserve Bank in St. Louis, undoubtedly one of the con­ capital loans, they should be secured by something less trolling reasons for the selection of this city was the ease susceptible than live stock itself to the many contingencies with which it can be reached by railroad, telegraph, tele­ which may arise in a considerable period of time. Un­ phone and mail, from all sections of the country, and more Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 14 THE SAINT LOUIS BANKER must have a Farm Loan Registrar who must keep in his custody the first mortgages securing bond issues. Such Registrar, for the sake of convenience to all and to facilitate Drafts, Collections, the withdrawal of mortgage securities from time to time as they mature, or for the purpose of substitution which Cable Payments the Federal Land Bank may find necessary to make, will doubtless have his office on the premises or in the close Deposit Accounts vicinity of the Federal Land Bank. The Registrar should Investment Securities have at his disposal the very best vault accommodations Custody of Securities for the custody and safekeeping of the securities in his pos­ Letters of Credit session and for which he is held responsible. St. Louis can Commercial Credits offer as commodious and as finely equipped safe deposit Travelers’ Checks facilities as any city in the United States. Foreign Coin and Notes Therefore, where a city like St. Louis, the center of an Bank Money Orders agricultural district, is available, it would seem that the Federal Land Bank should have its principal office there. Imports and Exports Forwarded Agents of Federal Land Banks. Members of N. Y. Stock Exchange Under Section 15 of the Federal Farm Loan Act, where Federal Land Banks are authorized to make loans through Knautti NactioH &Knl)ne agents, it is provided:— “No agents other than a duly incorporated Equitable Building NEW YORK CITY bank, trust company, mortgage company or sav­ ings institution, chartered by the State in which it has its principal office, shall be employed under the provisions of this Section.” particularly this Federal Reserve District. This ease of It is possible that there may be the necessity for the access is especially necessary for the purpose of the prompt appointment of many such agents. Now, of course, no handling of rediscounts and the clearing and collection of Federal Land Bank would employ any agent about which checks and other banking items. it did not have the fullest information, and such being the In the consideration of this subject, it is unnecessary case, it would be a distinct advantage for the Federal Land to take up the time of this Honorable Body in discussing Bank to be established in the same city as the Federal transportation, telegraph, telephone or mail facilities. Reserve Bank. The Federal Reserve Bank necessarily We have them and through them our farming community has complete information in regard to all of its member is brought into very close touch with this city. But, it banks, and since it is collecting checks on non-member seems to me that in so far as the facilities mentioned were banks, it comes in daily contact with them and has full factors in locating the Federal Reserve Bank in St. Louis, information in regard to them. I am advised that al­ they are equally as desirable in determining the location though the check clearing system has only been in operation of the Federal Land Bank. under its present plan, since July 15, 1916, the Federal Many large transportation centers are not located in Reserve Bank of St. Louis now has 45% of all banks in agricultural districts, but in this respect St. Louis is parti­ its district on its par collection list. It is reasonable to cularly fortunate, and is therefore an ideal location for the suppose that in time it will have all of the banks on its establishment of a Federal Land Bank. collection list and through the collection system will have Appraiser. intimate knowledge of even those banks and trust com­ Under the Federal Farm Loan Act, before the Federal panies whose capital being less than $25,000, makes them Land Bank can grant any mortgage loan, it must be re­ ineligible to membership in the Federal Reserve System. ported upon by its appraiser. It seems to me that it would It seems to me that it would be a great convenience to the be a very great convenience to the prospective borrower, Federal Land Bank and be conducive to safety of all con­ as well as to the appraiser himself, if the appraiser had his cerned, if the Federal Land Bank could discuss the ap­ headquarters in a city which furnished a great number of pointment of agents with the Federal Reserve Bank. It trains to the locality where the property to be mortgaged stands to reason that it can do this much better if both the is located. It perhaps would not be necessary for the ap­ Federal Land Bank and the Federal Reserve Bank are praiser to have his office in the quarters of the Federal located in the same city. Land Bank, but it certainly would make for efficiency if Federal Reserve Banks May Buy Farm Loan Bonds. he could have his office there and could personally meet In Section 27 of the Federal Farm Loan Act, it is with the Board. He must make a written report, it is provided that any member bank of the Federal Reserve true, but quite frequently an oral explanation of a written System may buy and sell farm loan bonds issued under the report, while not always essential is often desirable. authority of this Act. Naturally, members of the Federal Farm Loan Registrar. Reserve System find occasion to visit the Federal Reserve Then again, each Federal Land Bank, under the Act, Bank of their district from time to time. They like to do Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis THE SAINT LOUIS BANKER 15 it, and it is proper that they should do it. It would be an B M t OF COMMERCE incentive to them to become familiar with both institutions if, on one visit to the city, they could come in personal con­ tact with the Federal Land Bank and the Federal Reserve Bank, and there is nothing like personal contact to give a thorough understanding of them. In fact, the farmers LITTLE ROCK, ARKANSAS of any given community are very likely to consult with their local bankers as to the establishment of National Farm Loan Associations, and the ways in which they can use the We Make a Specialty of Bank Accounts facilities offered by the Federal Farm Loan Act to better their condition. The closer the member banks can come in contact with the Federal Land Bank, the better equip­ S S OFFICERS ARE ARKANSAS ped they will be to give the desired information to their E " MEN WHO KNOW ARKANSAS £ farmer customers. They might not make a special trip £ CONDITIONS. ALL OF THEM HAVE „ to the Federal Land Bank, but if on the same visit they tt BEEN CONTINUOUSLY CONNECTED ^ V could visit the Federal Reserve Bank with which they are WITH THE BANK OF COMMERCE in daily contact, and at the same time visit the Federal K FOR FROM TEN TO TWENTY-FOUR | I YEARS. THEY PLEDGE THEIR COM- Land Bank, they would very probably sooon get an in­ T C BINED EFFORTS TO GIVE YOU A timate acquaintance with the latter institution, and would Y SATISFYING BANKING CONNECTION £ be in position to give the proper advice to those inquiring. Then there would undoubtedly be reciprocating advantages to the Federal Reserve Bank if the Federal Land Bank is Send us your Little Rock Collections located in the same city. It is possible that many of the state institutions which may be appointed agents of the Federal Land Bank may, through the development of a personal acquaintance with the Federal Reserve Bank, ulti­ Louis, and it might also be advantageous for it to secure mately become members of the Federal Reserve Bank, quarters in the same building with the Federal Reserve thus improving and furthering the development of the Bank. Reserve System. In the provision of the Act which permits the Federal PARIS BANKER VISITS ST. LOUIS. Reserve Banks to buy and sell farm loan bonds subject to certain limitations, it would certainly be a great conveni­ 1'estus J. Wade, president of the Mercantile Trust ence if in such transactions the Federal Reserve Bank and Company, played the part of host on November 21st to the Federal Land Bank were located in the same city. Capt. Robert Masson, vice-president of the Lyonnais Bank of Paris, France, at a dinner given at the St. Louis Branch Banks. Club. Many local bankers and business men were in­ The Act further provides, subject to the approval of vited to the banquet and had the pleasure of meeting the the Federal Farm Loan Board, for the establishment of distinguished foreign capitalist who, according to news­ Branch Banks. In the apportionment of the United States paper gossip, was here in the interest of a new foreign loan into Federal Land Bank districts, there are undoubtedly to the French Government. many smaller cities in the district, which will include St. Rumors of another loan being raised by the allied Louis where it may be desirable to establish branches, but powers has been current lately and it is believed he may in my opinion it would be unwise to select any other than be here on some such assignment. the Federal Reserve Bank city of St. Louis for the principal office of the Federal Land Bank. REPORT OF DROVERS NAT’L, EAST ST. LOUIS Finally. Splendid gains are shown by the Drovers National Bank Omitting many other good reasons which could be of East St. Louis by reference to its report of November advanced for the establishment of the Federal Land Bank 17th, showing total resources of $1,367,963.73. The for this district in St. Louis, I wish to say in conclusion that leading items comprising same are: bills receivable, $670,- St. Louis is ranked as a wealthy city and its citizens are 550; l\ S. and other bonds, S219,941; stock in Federal accustomed to buying high-class investments such as state Reserve Bank, $6,600; furniture and fixtures, SI 1,800; real and municipal bonds and mortgage securities. They now estate owned, S6,252; 5^c fund, $10,000 and cash items have great confindence in the Federal Reserve System and of S442,620.05. the Federal Reserve Bank of St. Louis. It is my opinion, Liabilities are; capital and surplus, $212,000; undivided therefore, that with the location of a Federal Land Bank in profits, S7,288; circulation, $194,800; reserved for taxes, St. Louis, which is to issue and sell farm loan bonds, the $1,000 and deposits of $952,875.68, a net gain on September confidence of investors in those bonds can be more readily 12th of $117,535.00 obtained than if located elsewhere. I am strongly of the belief that the Federal Land Bank should be located in St. Subscribe for THE SAINT LOUIS BANKER Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 16 THE SAINT LOUIS BANKER THE SAINT LOUIS BANKER to this country. That danger, the board believes, will arise only in case the inflowing gold should remain uncon­ SUCCEEDING THE COMMERCE MONTHLY trolled and be permitted to become the vasis of undesir­ PUBLISHED BY able loan expansions and of inflation. There are means, THE COMMERCE PUBLISHING COMPANY, Inc. however, of controlling accessions of gold by proper and SAINT LOUIS. MO. I. V. A. WAIT.............................................................................Editor an4 Publishtr voluntary co-operation of the banks or, if need be, by legislative enactment. An important step in this direction The St. Louis Banker numbers among its subscribers nearly every progressive banking institution in the country, particularly in the Central would be the anticipation of the final transfer of reserves West, South and Southwest. contemplated by the federal reserve act, to become ef­ SUBSCRIPTION PRICE - $2.00 PER YEAR fective November 16, 1917. This date can be advanced to February or March, 1917. Entered as second-class matter, July 13. 1905, at the Post Office at St. Louis, Mo., under the Act of Congress of March 3, 1879. “Member banks would then be placed on the per­ manent basis of their reserve requirements and fictitious TWELFTH YEAR DECEMBER, 1916 NUMBER TWELVE reserves would then disappear and the banks have a clearer conception of actual reserve and financial conditions. It FEDERAL BANK WARNINGS. will then appear that, while a large increase in the country’s gold holdings has taken place, the expansion of loans and A MERICAN bankers have just been warned by the deposits has been such that there will not remain any Federal Reserve Board to avoid locking up their excess of reserves, apart from the important reserve loan­ funds by purchasing treasury bills of foreign governments ing power of the federal reserve banks. involving long-term obligations. In these circumstances the board feels that member While specifically disclaiming “any intention of re­ banks should pursue a policy of keeping themselves liquid; flecting upon the financial stability of any nation,” the of not loaning down to the legal limit, but of maintaining board advises all investors to proceed with caution, and an excess of reserves—not with reserve agents, where formally announced to member banks of the federal reserve their balances are loaned out and constitute no actual re­ system that, with the liquid funds which should be avail­ serve, but in their own vaults or preferably with their able to American merchants, manufacturers and farmers federal reserve banks. The board believes that at this in danger of being absorbed for other purposes, it “does not time banks should proceed with much caution in locking regard it in the interest of the country at this time that up their funds in long-term obligations or in investments, they invest in foreign treasury bills of this character.” which are short term in form or name, but which, either H. P. Davison of J. P. Morgan Company was in by contract or through force of circumstances, may in the Washington recently and conferred with President Wilson aggregate have to be renewed until normal conditions re­ and some of the members of the reserve board. It was turn. said iater that he sought to have banks of the reserve Ultimate Danger Possible. system authorized to buy British treasury bills as if they were bills of exchange to cover commercial transactions. The board does not undertake to forecast probabilities Danger from further importation of large amounts of or to specify circumstances which may become important gold, the board says, in its statement, will arise only in factors in determining future conditions. Its concern case the gold is permitted to become the basis of undesir­ and responsibility lies primarily with the banking situation. able loan expansions and of inflations. If, however, our banking institutions have to intervene Emphasis is laid upon the necessity for caution in because foreign securities are offered faster than they can putting money into investments which are short term in be absorbed by investors—that is their depositors—an name, but which “either by contract or through force of element would be introduced into the situation, which, circumstances may in the aggregate have to be renewed if not kept under control, would tend toward instability until normal conditions return.” and ultimate injury to the economic development of this The board’s warning, in the form of a statement to be country. published later in the December Federal Reserve Bulletin, The natural absorbing power of the investment follows: market supplies an important regulator of the volume of “In view of the contradictory reports which have ap­ our sales to foreign countries in excess of the goods that peared in the press regarding its attitude toward the pur­ they send us. The form which the most recent borrowing chasing by banks in this country of treasury bills of foreign is taking, apart from reference to its intrinsic merits, governments, the board deems it a duty to define its makes it appear particularly attractive as a banking in­ position clearly. In making this statement the board vestment. The board, as a matter of fact, understands desires to disclaim any intention of discussing the finances that it is expected to place it primarily with banks. In or of reflecting upon the financial stability of any nation, fact, it would appear so attractive that, unless a broader but wishes it understood it seeks to deal only with general and natural point of view be adopted, individual banks principles which affect all alike. might easily be tempted to invest in it to such an extent “The board does not share the view expressed of that the banking resources of this country employed in late that further importations of large amounts of gold this manner might run into many hundreds of millions must of necessity prove a source of danger or disturbance of dollars. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis THE SAINT LOUIS BANKER 17 Liquid Funds Necessary. Board, which recently met at Dallas to conisder the claims While the loans may be short in form and severally, of Texas for one of the proposed 12 regional institutions. may be collected at maturity, the object of the borrower The homestead law of Texas defines a homestead as must be to attempt to renew them collectively, with the 200 acres, and a farmer owning less than this quantity of result that the aggregate amount placed here will remain land is not permitted to mortgage it for any purpose other until such time as it may be advantageously converted than to make permanent improvements, even excluding into a long-term obligation. It would therefore seem as the purchase of implements and livestock. It was shown a consequence that liquid funds of our banks, which should at the hearings that Texas is the only State having such be available for short credit facilities to our merchants, a homestead law. manufacturers and farmers, would be exposed to the danger Gov. Ferguson has expressed the opinion that the of being absorbed for other purposes to a disproportionate homestead law will not affect the chances of Texas in her degree, especially in view' of the fact that many of our candidacy for one of the farm loan banks, but Lieutenant- banks and trust companies are already carrying substan­ Governor W. P. Hobby, who appeared before the board tial amounts of foreign obligations and of acceptances at Houston, pledged his support for a measure amending which they are under agreement to renew'. the law at the next Legislature, to the end that Texas The board deems it, therefore, its duty to assure the farmers may have the full privileges and advantages member banks that it does not regard it in the interest of caused by the farm loan act. the country at this time that they invest in foreign trea­ Secretary McAdoo, in the course of the hearings, re­ sury bills of this character. peatedly stated that the board would not undertake to ad­ Investor Should Use Caution. vise the citizens of Texas as to homestead legislation, nor The boad does not consider that it is called upon to to criticise existing laws, and that it w'as up to the people advise private investors, but as the United States is fast of the State to get the utmost possible benefit from the becoming the banker of foreign countries in all parts of the farm loan act by whatever means they regarded best. world, it takes occasion to suggest that the investor should Farmers in nearly all of the Texas hearings were given receive full authoritative data—particularly in the case of preference over other speakers. Stories of high interest unsecured loans—in order that he may judge the future rates, of foreclosed mortgages and of savings lost w'ere intelligently in the light of present conditions and in con­ told by these witnesses. It was brought out that the in­ junction with the economic developments of the past. terest in Texas farm loans is higher than in any other The United States has not attained a position of wealth State, most of the farmers paying 9 and 10 per cent. and of international financial pow'er, which, in the natural course of events, it could not have reached for a generation. ------------------------------------------------------- We must be careful not to impair this position of strength and independence. While it is true that a slowing down in the process of credit extension may mean some cur­ Federal Reserve Act tailment of our abnormally stimulated export trade to Revisions certain countries, we need not fear that our business will fall off precipitately should we become more conservative Guaranty Important recent revisions of in the matter of investing in loans, because there ae still S*rv*ce the Federal Reserve Act include XXVH those permitting member banks: hundreds of millions of our own and foreign secutiries held abroad which our investors would be glad to take over, —to deal in domestic acceptances and, moreover, trade can be stimulated in other directions. —to carry in Federal Reserve Bank reserves Duty of American Bankers. formerly required to be held in their own vaults In the opinion of the board, it is the duty of our —to accept drafts from foreign bankers as banks to remain liquid, that they may be able to continue a basis for “dollar exchange” to respond to our home requirements, the nature and —to invest up to 10% of capital and surplus scope of which none can forsee, and that our present eco­ in an institution chiefly engaged in inter­ nomic and financial strength may be maintained when, at national or foreign banking (This applies the end of the wrar, we shall wish to do our full share in exclusively to national banks with capital and surplus of $1,000,000). the work of international reconstruction and development, w’hich will then lie ahead of us, and when a clearer under­ These new provisions and others are fully explained in our “Revised Digest of the standing of economic conditions as they will then exist Federal Reserve Act,” sent on request to any­ will enable this country more safely and intelligently to one interested. do its proper part in the financial rehabilitation of the world. Guaranty Trust Company STATE LAWS BAR FARM LOAN BANKS. of New York The very peculiar homestead law of Texas may prove Capital and Surplus - - $40,000,000 a barrier to the farmers obtaining from the Federal farm loan law the benefits which, it was enacted to make avail­ able. This fact was dwelt upon by many of the farmers and others who appeared before the Federal Farm Loan Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 18 THE SAINT LOUIS BANKER Shears and Paste-Pot The information contained under this head is gleaned from 3,000 Newspapers in the Several States reported and in event any of it is in error, we will gladly correct same in the succeeding issues of the St. Louis Banker, upon being so advised by our readers. MISSOURI. Louisiana—At a meeting of the board of directors of the Bank of Cape Girardeau—B. F. Marshall, wealthy land owner, merchant Louisiana, Geo. E. Lynott was elected cashier to fill the vacancy caused and banker, died at his home in this city after two years’ illness of by the death of Judge R. H. Goodman. lung trouble. The funeral was held at Sikeston. St. Louis—Advices from Cincinnati, Ohio, stated that the Third St. Louis—Arrangements have been completed by the Industrial National Bank of St. Louis had won its suit for 855,000 against men Loan Co., (Poor Man’s Bank) to enlarge its quarters, making its third who were actively identified with the defunct Second National Bank expansion since it was founded less than four years ago. of that city. The litigation grew out of a loan made on notes given Maryville—George L. Wilfley, president of the Farmers Trust by the chairman of the board and president of the Cincinnati bank. Company, accompanied by Morgan Mayfield, superintendent of St. Louis—National Bank examiners of Federal Reserve District construction of the new banking building, went to Chicago to select No. 8, held their annual conference in the office of Chief Examiner, the furniture for the various offices and departments. The firm of J. M. Logan, in the Federal Reserve Bank Building, November 2nd. Wright & Wright of Kansas City were the architects of the new Bogard—H. T. Trotter has been elected assistant of the Carroll building. Exchange Bank at Carrollton to take the place of H. C. Brown re­ St. Louis—State National Bank has declared an extra dividend signed. of 2 per cent, besides the regular 4 per cent semi-annual dividend. Bunceton—The second National Bank ever chartered in Cooper The Franklin Bank has also declared an extra dividend of 3 per cent. County was organized at Boonville under very favorable circum­ St. Louis—The St. Louis Union Bank announces the opening of stances, under the name of the Boonville National Bank. It will its Business Building Bureau. supercede the Central National Bank, and have a capital stock of Kansas City—Members of the fifty trust companies and farm $75,000 with a paid-up surplus of $25,000. mortgage companies of Kansas met this week in the directors’ room of Birch Tree—The Shannon County Farm Loan Association was the Commerce Trust Company. They organized a division of the organized in Birch Tree for the purpose of obtaining farm loans under Farm Mortgage Bankers’ Association of America. the Federal Land Bank Bill. Metz—On account of a change of plans W. W. Jackson will not Birch Tree—C. M. Seaman of Monteer and A. J. Hawkins have accept the position of cashier of the Bank of Stotesbury on January contracted for C. L. V. Randall’s holdings in the Shannon County 1st. R. E. McAllister, who has held the position a number of years, Bank. will remain as cashier. Mr. Jackson will continue to hold the position Marshall—Blackburn is to have a new bank, capitalized at as assistant cashier of the Metz Bank. $25,000. SkelHna—The Commercial Bank made a presto change and California—Henry Herfurth has been made president of a bank opened for business in the H. H. Jewett building two doors north of just organized at East Helena, Montana. Mr. Herfurth has been the old stand. The change is tor a few weeks pending improvements connected with the California State Bank ever since it was organized. now under way in the Commercial Bank building. Laredo—The Farmers and Merchants’ Bank has a new assistant Carrolton—The Banking House of Wilcoxson & Co , celehrated cashier, in the pci son of Mr. Roy L. Storms of Laicdo, Mo., who will its 50th anniversary November 17, when the officers were the recip­ begin work in that position. ients of scores of telegrams and letters of congratulation from banks California—The newly organized bank at Enon opened up for in all parts of the state. Both the Third National of St. Louis and business November 6th. They will have temporary' headquarters the First National of Kansas City, correspondents, contributed in the restaurant building of E. H. Jeffries, until permanent quarters beautiful floral gifts. can be erected. jBloomfield,—S. C. Biffle, who resigned as assistant cashier of the ILLINOIS. Bank of Dexter left for Fredericktown. He will go to the Bell City Beecher—Strong interests in Beecher and vicinity are organizing Bank as cashier on January 1st. a new bank in that village to be known as the Farmers State Bank of St. Louis—The directors of the Mortgage Trust Company and Beecher, to take over the business of the First National Bank. the Mortgage Guarantee Company declared a regular semi-annual Waukegan—That the D. M. Erskine Bank of Highland, a private dividend of $2.50 per share on the capital stock of the company, institution, may become a state bank is now a possibility according payable November 28th, to stockholders of record November 21st, to report from that city. 1916. Berwyn—The stock of the Twelfth Street State Bank that has Carthage—The First National Bank of Williamston did not open just about completed its handsome new building at 12th and Harvey November 15 and announcement was made that an examination of the has been fully subscribed and the books closed. books was in progress. Quincy—The Bartlett-Wallace State Bank of Loraine has been Naylor—C. C. McCallon is the cashier of a new bank recently organized and a permit secured to operate the institution. The capital established here. stock of the Bank is $50,000. Morley—Morley’s new bank building has been completed and the Belleville—A very large crowd attended the funeral of Samuel C. Scott County Bank moved its business to its new quarters. Smiley, the O’Fallon banker, who was buried in the Shiloh Cemetery Queen City—At the meeting of the stockholders of the Bank of after srvices were held at the home in O’Fallon. Green City, J. H. Novinger tendered his resignation as president of that institution, a position he has held since its organization in 1903. Griggsville—Ross Shinn has been elected a director of the Griggs- Dr. D. M. Riggins was elected as president to succeed Mr. Novinger. ville Bank, this city, to fill the vacancy caused by the death of Doctor Jefferson City—Jesse W. Henry, cashier of the Farmers and Harvey. Mechanics bank, who was accidentally shot by a companion while Lincoln—The work on the German American National Bank new imitating the turkey call, at the Painted Rock Country Club, is im­ addition, is expected to be rapidly pushed within the next few weeks proving rapidly. with the hope of getting the building under cover before the severe Louisiana—J. S. Alexander has been elected cashier of the Farmers weather commences. The contract for the concrete work has been let and Merchants Bank at Frankford to fill the vacancy caused by the to H. K. Rhoads. death of W. H. Kniseley. Lincoln—A transfer of bank stock by the State Bank of Latham Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

William McChesney Martin, Sr. (1916, November 13). Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/speech_19161114_sr.

@misc{wtfs_speech_19161114_sr.,
  author = {William McChesney Martin, Sr.},
  title = {Speech},
  year = {1916},
  month = {Nov},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/speech_19161114_sr.},
  note = {Retrieved via When the Fed Speaks corpus}
}