reason: Under the bill which created the port authority of New York City, they have drawn a line from Tarrytown, on the Hudson to Port Chester, on the sound, and within this line, and to the south and adjacent to New York City, are these four cities. Therefore, I should think, under the bill introduced last year, the Comptroller of the Currency could very readily say that this is contiguous territory. Of course the cities of Yonkers, Mount Vernon, and New Rochelle are practically on the border line of New York City.

The commuter district may be larger than what is covered by contiguous territory." The Sage Foundation of New York has gone into a very exhaustive study of what they call the commuter district of New York and they go as far north as Newburg.

I should like to say I represent, as chairman, group 6 of the New York State Bankers' Association. This group takes in all counties just to the north of New York City, Westchester, Putnam, and Dutchess-that is, Poughkeepsie on the east side and Rockland, Orange, Ulster, Greene, and the two mountain districts of Sullivan and Delaware.

In our State, in order for a public service corporation to get certain things which they desire from the public service commission, they must show public necessity. I have been in the banking business now upwards of 20 years and I have never seen the time in the history of our banking when a proper demand was not properly taken care of. In fact, in Yonkers, our banking facilities are such as meet, in my estimation, all the public needs and necessities and I know of no instance where local propositions have not been properly handled by the local institutions.

I heard this morning the statement with reference to bank examinations. Of course our State examinations are very thorough. We had one the other day which took nine men about five days to make an examination of our bank; in other words, we had upwards of forty-odd days of bank examination.

I should like to leave with you, if I may, the list of banks which number upwards of 138, with total deposits of over $329,000,000, which represent the banks in group 6 of the New York State Bankers Association.

(The statement referred to is as follows:)

NEW YORK STATE BANKERS ASSOCIATION MEMBERS OF GROUP VI

[Counties of Dutchess, Orange, Putnam, Rockland, Sullivan, Ulster, and Westchester, and the banks in Delaware and Greene Counties indicated below]

I feel that if public necessity demanded it, then any addition in the line of adding contiguous territory would be within the proper action of Congress, but as I feel now, the Westchester County banks, and the banks of group 6, are supplying all the needs of the communities and settlements in which they are located and I can see no necessity of adding that clause.

The CHAIRMAN. We thank you, Mr. Edie.

STATEMENT OF W. F. BLEAKLEY, REPRESENTING THE NATIONAL BANKS OF THE COUNTY OF WESTCHESTER AND THE YONKERS NATIONAL BANK OF YONKERS, N. Y.

The CHAIRMAN. Do you present yourself to the same propositions? Mr. BLEAKLEY. Yes, sir; and representing the national banks of the county of Westchester, which number 26, and more particularly the Yonkers National Bank of Yonkers, N. Y.

I notice that there does not appear to be any representation on behalf of the New York City banks seeking any amendment to the act and that is probably due to the fact that our State banking law does not permit of the creation of branch banks outside of the municipal limits.

It seems to me, without desiring to be facetious, that the best remedy, in view of the State banks interested, is for the City of Cleveland to extend the limits to take in these banks that have appeared here from the city of Cleveland.

Mr. MARLATT. May I interrupt to say that you will get the largest fee you ever earned, or ever earned in your life, if you will come out and solve that problem for not only the banks, but the city of Cleveland. A VOICE. And I will add Cincinnati.

Mr. BLEAKLEY. The fact of the matter remains that the governor of our State has already advocated the consolidation of counties and in the not distant future we may expect New York State to enact an act in which a number of counties will be consolidated and if that be true, this very amendment that the Cleveland bankers seek to have inserted in this act will permit of the extension of the New York City banks, with the problems which we have to meet and which have been answered by Mr. Edie and also by Mr. Vinson, to all these counties.

Our difficulties lie in this: We have, in the county of Westchester, three cities immediately adjacent to the county of New York, and already one bank, with 63 branches, is knocking at our doors. But a few blocks away is one branch bank.

We are able to afford banking facilities to any amount demanded to the inhabitants of our territory and we feel, with the adoption of these amendments, that the New York banks will be permitted to come into the territory and with their ample facilities and ability to decrease the discount rate and increase the interest rates, that the banks which have been institutions there for more than 100 years and where the stockholders are, to a great extent, depositors, will be imperiled.

We merely want to say that if it is the policy of this bill to prevent state-wide branch banks, this insertion is going to do just to the contrary to a great extent, because it will permit the extension of those branches into a large territory not even in contemplation, if the proposed amendment is adopted.

Senator EDGE. The Chairman suggested that the next witness would be ex-Senator Flint, of California.

Mr. FLINT. With the consent of the committee, I would rather not make any observations at this time, if at all. As the record now stands, it is entirely satisfactory to me for you to take into consideration what was said last session and the action taken by the committee. You reported a bill, I understand, unanimously according to my desire.

Up to this time, everything I have said would bear out that the committee acted correctly and while we have not that wonderful harmony manifested by the Cleveland representatives, we have a cordial feeling with the banks of California, and I would like to have them heard if possible.

Senator EDGE. They will be heard if the committee finds it physically possible to hear them.

Mr. FLINT. The only thing I would like to ask is to have Mr. Drum called last, and other than that I have nothing else to say.

Senator EDGE. Mr. Drum is on the list to be called next.

Mr. FLINT. I ask that he be called last.

Mr. FITZGERALD. I was going to suggest, if the bill is satisfactory, those who are opposed to it point out objections rather than have the bill before the committee sustained further. Mr. Drum and Mr. Flint have skillfully sought to place themselves last although they have objections to the bill as proposed.

Senator EDGE. It does not make any great deal of difference to the committee in just what order the witnesses appear. We hope we have intelligence enough to follow 'the witnesses' testimony no matter in what order they appear.

STATEMENT OF J. A.

MACDONNELL,

PRESIDENT FIRST NATIONAL BANK AND PRESIDENT OF THE FIRST TRUST AND SAVINGS BANK, PASADENA, CALIF.

Mr. MACDONNELL. Mr. Chairman and gentlemen of the committee, we were prepared to have this bill opposed by men of considerable prominence, and the list of economists quoted as having taken part in the investigation would have proved, if the questions of the chairman had not elicited the facts, that considerable money had been spent in this investigation. I would say that it has seemed to me→ and it has seemed to several of us-that the usual difficulty of having an expert testify has cropped up here much as it does in medical expert testimony.

I think it was apparent to any one in the room that the omissions from which certain inferences could be drawn were very important. Those inferences which were favorable to the supporters of the McFadden bill had to be called for in three or four instances by members of the Senate committee.

We had anticipated that the arguments to be presented by Senator Flint and Mr. Drum would show a rather great familiarity with the contents of the articles of research which have been in preparation for the last month. The constant contact that was admitted by Professor Willis with the group of bankers who financed this research is evidence of the fact of that joint preparation to oppose the McFadden bill, a preparation that seems to me particularly adroit in

that it does not attack the main objects specifically, but does attack rather sporadically various sections which the group that financed this research do not materially object to.

The object they had in hand was to see that section 9 was properly taken care of. With that object in view they employed one whose predilections were thoroughly well known to them. Mr. Elliott, who has been named as the representative of this group that made the arrangements, is vice president of the Security Trust & Savings Bank of Los Angeles. Those of us who come from California can figure perfectly well who the other gentlemen were who contributed to the pot.

I would add this, that in regard to the question asked by Senator Glass as to whether or not any findings were imposed upon Professor Willis, that you might just as well ask the colored gentleman to write a bill penalizing chicken stealing and then say you do not know what the results were going to be.

A great deal of emphasis has been laid upon failures of banks throughout certain parts of the United States and the inference has been drawn that these are in some way the fault of the Federal reserve bank. Questions asked by members of this committee brought out the fact that most of these failures were of banks not connected with the Federal reserve system at all and it seems to me a peculiar idea of responsibility to blame the Federal reserve bank for what failures have taken place outside of the system, failures in great part of State banks, and when questions have been asked by members of the committee as to why more State banks do not join the Federal reserve system, possibly a great many instances could be given where they are not banks which could very well come into the system because of the proper requirements of the system.

Senator GLASS. Would that be a very comprehensive answer when there are 11,000 eligible State banks and only 1,500 members?

Mr. MACDONNELL. I do not maintain that that is a comprehensive answer. One of the gentlemen who will follow me, will, I think, in a rather definite way, answer a great many of the references that Professor Willis made to the failures of banks in the northwestern part of the United States.

Senator GLASS. I am not emphasizing that point. I want to draw out your idea, if I might, of why so many State banks do not become members of the Federal reserve system.

Mr. MACDONNELL. A great many State banks are almost purely savings banks and have really no great reason to join the system. Apart from leaving out of consideration that group of banks not eligible for membership, a great many of them have nothing really

Senator GLASS. There are 11,000 eligible State banks and 1,500 members of the system. Why do not the 9,500 eligible banks become members?

Mr. MACDONNELL. I do not know that I am competent to answer that question and I do not believe that has much to do with the McFadden bill.

Senator GLASS. Well, I think it has quite as much to do with it as the inference you sought to draw a while ago that the reason the State banks do not become members is that they were not worth while.