A MEMORIAL 
 
 TO THE CONGRESS OF 
 THE UNITED STATES 
 
 ON 
 
 THE FEDERAL RESERVE BANK BILL 
 AS OUTLINED TO SEPT. 1, 1913 
 
 FROM 
 
 THE COUNTRY NATIONAL BANKS 
 
 OF WISCONSIN 
 

 
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At a representative meeting of the country National Banks of 
 Wisconsin, assembled in .Milwaukee, Wis., on September 3rd, 193 3, 
 a general discussion of the “Federal Reserve Bank Bill” now under 
 consideration by Congress, took place; also a brief address by 
 Andrew Jay Frame, President of the Waukesha (Wis.) National 
 Bank, was delivered. 
 
 .Mr. Frame’s short address, together with a copy of the resolu- 
 
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 tions, were unanimously approved, ordered printed and a copy sent 
 to each member of Congress, which is herewith respectfully submitted. 
 
 GEORGE I). BARTLETT, Secretary. 
 
 (Also Secretary Wisconsin Bankers’ Association.) 
 
 Mr. Frame’s address is as follows: 
 
 BANKING REFORM 
 
 The latest requirements as to reserves of the Federal Reserve 
 Banks seem, to be as follows: Compulsory as to national banks, but, 
 of course, voluntary as to state banks: 
 
 1st—10% of each bank’s capital must he paid in for capital of 
 the twelve Federal Reserve Banks. An additional 10% is subject 
 to the call of the Board of Control. Total, 20% of capitals. 
 
 AS TO NATIONAL BANKS 
 
 2nd—New York, Chicago and St. Louis, Central Reserve City 
 Banks now holding 25% of DEPOSITS in casli on hand, must hold 
 not less than 9% cash, 4V 2 % in Federal Reserve Banks and 4)4% 
 optional against liabilities. A reduction of 7% from 25%. 
 
 3rd—Other reserve city banks now holding not less than 12)4% 
 cash, and 12)4% due from reserve banks, total 25%. must hold at 
 least 9% cash, 5% in Federal Reserve Banks and 4% due from 
 other reserve banks for three years, then either in cash or with a 
 Federal Reserve Bank. Total, 18%. A reduction of 7%. 
 
4th—Country banks now holding 6% cash and 9% duo from re¬ 
 serve banks, total 15%, must hold 5 f X cash, ;<% in 1* ederal Resei ve 
 Banks and 2% due from other reserve banks for three years, then 
 either cash or in a Federal Reserve Bank. A reduction ot 3%. 
 
 Note the unjust discrimination against the country national 
 banks. The three “Central Reserve Cities” can spare without a dol¬ 
 lar’s loss 5% or even 15% of their cash reserves. The other re¬ 
 serve city hanks are allowed to reduce reserves 7%. As cash can 
 he reduced 3%%, it costs them 1*4% to contribute 5% to the 
 Federal Reserve Banks—the balance of 4% at end of three years 
 shall he cash or in Federal Reserve Bank. This is burdensome. (We 
 will not discuss the gravity of such great reserve city reductions.) 
 As to the country banks, their cash reserves required now being 6% 
 because their business is more commercial than other banks— 
 cannot be safely reduced more than 1%, therefore tx> coerce the 
 country banks into contributing 10 to 20% of capitals; then in addi¬ 
 tion 5% of deposits for deposit in the Federal Reserve Bank, with¬ 
 out income on it; then in three years to deposit 2% more, makes 
 it so expensive and unjust that country hanks cannot afford to pay 
 the price. 
 
 A It ho at the late Chicago conference, called by the Currency 
 Committee of the American Bankers’ Association, I presented a 
 resolution which was referred to the Committee on Resolutions, re¬ 
 commending 1% on deposits of country banks as a fair contribution 
 to tne Federal Reserve Bank, nevertheless, the' Committee, dominated 
 as usual by the big city bankers, ignored the country banks, so now 
 it seems reasonable that the country banks combine to appeal to 
 Congress for justice. 
 
 To compel country banks to contribute to capital; also 5% of 
 deposits soon; also a further 2% in three years to be deposited in 
 l hie Federal Reserve Banks, all without, recall at any time, would 
 compel these banks to practically close their business with their 
 present city correspondents, and confine the bulk of their business 
 to Federal Reserve Banks. Is this democratic? Now, if we are 
 not treated fairly at one bank, we choose another. It would seem 
 such compulsion can fairly he questioned as a constitutional pre¬ 
 rogative. Is it. not subversive of American freedom? 
 
 Should such a rule be applied, will it not seriously affect, the 
 merchants, the manufacturers and business men generally in the 
 
shifting of that most delicate machinery, existing credit? To illus¬ 
 trate: All Wisconsin Hanks membership would require— 
 
 Approximately. 
 
 10% of capitals of $38,000,000 is.$ 3,800.000 
 
 10% additional is subject to call 
 
 7% of country bank deposits and 9% of Milwaukee reserve 
 
 bank deposits aggregating $350,000,000, say. 20,000,000 
 
 Total requirements.$29,800,000 
 
 Cash on hand now approximates.. 21,000,000 
 
 This cash cannot fairly be reduced, as it is but (!% of total de¬ 
 posits, including the reserve city of Milwaukee. All conservative 
 
 banks keep from 1% to 2% above legal requirements in cash to 
 cover daily fluctuations. If so, this vast sum of $29,800,000 must 
 bo transferred either from present correspondents or withdrawn from 
 t tie loans to bank customers. 
 
 Disregarding tlie millions of dollars annual loss to the banks 
 which probably would be recovered in increased interest, rates 
 on general loans—the great disturbance of the delicate machinery 
 of credit, as heretofore noted, should make us pause. Will the 
 merchants and manufactu rers of the city of Milwaukee approve of 
 the loss of millions of country bank deposits, now used in their busi¬ 
 ness, which would be transferred to a Federal Reserve Hank* in 
 Chicago? Will the people of Wisconsin approve of a plan, which 
 would, if all banks joined, take at least $25,000,000, without interest, 
 out of Wisconsin for use of such a Federal Reserve Hank? The 
 only way to get it back would be by parting with our choice se¬ 
 curities. losing the interest thereon. That is “rediscounting.” 
 
 What is true of Wisconsin would seem approximately true of 
 every other state in the United States. Ijet us look before: we leap. 
 Conceding the broadest, good intent, it would seem that present 
 plans should be materially modified, if country banks are to join. 
 Reason alone must reign if a workable plan is adopted. 
 
 If national banks alone should be compelled to join, present 
 
 plans call for (All United States National Hanks) 
 
 Cash or equivalent—Approximated. 
 
 10% of total capitals of $1,050,000,000 is.$105,000,000 
 
 10% additional subject to call 
 
 4%% of Central Reserve Bank “liabilities”, of say $2,- 
 
 000,000,000 is.: . >90,000 000 
 
9% of other Reserve [tank •'liabilities”, $2,000,000,000 is 180,000,000 
 
 7% of country bank “liabilities”, $4,000,000,000, is. 280,000,000 
 
 Total..$655,000,000 
 
 rash now held by all national banks approximates.....$950,000,000 
 Therefore to meet these demands, as cash cannot be spared only par¬ 
 tially, large amounts of interest bearing securities must be parted with. 
 As these calls from country national banks aggregate $340,000,000, 
 and their cash on hand cannot safely be reduced more than 
 $40,000,000, the shifting of $ 300 , 000,000 alone is liable to precipitate 
 trouble. 
 
 If State Banks and Trust Companies, holding smaller reserves 
 by reason of their business being more rural than commercial, 
 were to join, the revolution of credits would be disastrous to the 
 country. It is a great fallacy to claim that radical shifting of re¬ 
 serves increases loaning capitals, or that banks generally desire 
 rediscounts. The past reports of the Comptroller of Currency prove 
 conclusively that rediscounts of all banks average about 1% of 
 total loans. Country banks hold very little paper discountable at 
 a Central Reserve Bank. Old. well-settled sections rarely need re¬ 
 discounts. Both old and new sections have ample facilities for it 
 now, if entitled to it, except only in times of distress. To cover 
 this alone is the true mission o& a reserve bank. The principle of 
 the bill is right. Its scope is too broad. Moderate mobilization 
 of cash-, with powers to issue temporary currency under pressure, 
 like unto the 5% taxed currency of the Imperial Bank of Germany, 
 will give us all the flexibility we need, without monopolization, in¬ 
 flation or over-expansion of credit, all of which must be avoided if 
 we would avoid trouble. 
 
 As to reserves. We are a rapidly developing country and larger 
 reserves are required than in the thoroughly developed sections of 
 Europe; therefore, our case is not parallel. 
 
 Whatever plan may result, as the city reserve banks of the 
 country compose in numbers but 5% of all national banks, we plead 
 that Congress will not permit the 5% to wag the 95% of the dog. 
 Let us preserve our great democratic, independent banking system 
 intact, by calling for reasonable reserves from the banks generally, 
 to the end that a relief reservoir may be at hand when trouble 
 threatens. 
 
 As it is not compulsory for banks in Europe to subscribe capi¬ 
 tal or deposit funds in central banks, is it tempered with justice 
 to arbitrarily impose it here? We plead alone for justice. 
 
 ANDREW JAY FRAME. 
 
RESOLUTIONS AS PASSED BY THE COUNTRY NATIONAL 
 BANKS OF WISCONSIN 
 
 Whereas, A conference under the auspices of the Currency Com¬ 
 mittee of the American Bankers’ Association was recently held in 
 Chicago, which conference failed to adopt suggestions made by coun¬ 
 try bankers to reduce Federal Reserve Bank deposits required of 
 country banks from !5% to 1% of their deposits; at the same time 
 this conference recommended material reductions as to Reserve City 
 Bank’s reserve requirements, which recommendation has since been 
 incorporated in the hill. Further, such a reduction of reserves by 
 the Central Reserve City Banks is no burden to them as against a 
 severe burden as placed upon the country banks, which the latter 
 cannot afford to bear because their cash reserves are proportionately 
 smaller; 
 
 And Whereas, The Bill as drawn has many admirable features, 
 vet we as country bankers believe several amendments are very 
 essential; 
 
 THEREFORE, RESOLVED, 
 
 That we urge upon Congress the following essential principal 
 changes, viz.: 
 
 a. So amend the Bill that country banks not in Reserve Cities 
 be compelled to contribute not exceeding 2% instead of 5% plus 
 2% at end of three years, of deposit liabilities for the reserve of 
 Federal Reserve Banks. 
 
 b. As Section 27 of the Bill (creating savings departments) 
 provides for a segregation not only of securities covering the sav¬ 
 ings deposits but a segregation of capital to an amount equal to 20% 
 of capital and surplus; but capital cannot be less than $25,000, and, re- 
 quiring investment of such demand deposits in long term securities, 
 which we believe wrong in principle and not offering such security as 
 is now offered savings depositors we urge this Section l>e eliminated 
 from the Bill. 
 
 c. That term of real estate loans be increased from one year 
 to five years. 
 
 d. That dividends allowed Reserve Bank stockholders he in¬ 
 creased from 5% to 6%. 
 
 , e. That the 40% of excess earnings alloted to banks be divided 
 among them on the basis of capital stock in Reserve Banks instead 
 of on average deposits therein. 
 
 f. That banks be allowed the same interest on deposits as is al¬ 
 lowed upon government deposits. 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 scugman