RIVAL'S KNOCKS SEEM TO INSURE ST. PAUL A
Mill City Witnesses, in Belittling Neighbor,
Incur Disfavor at Chicago Hearing
McADOO AND HOUSTON APPRECIATE FAIRNESS
MINNEAPOLIS SURE ... TO GET RESERVE BANK
Business Men's Delegation Completes Argument
Before Federal Bank Organization Committee
LIVESTOCK MARKET PLEA IS MADE FOR ST. PAUL
St. Paul Pioneer Press
January 21, 1914
January 20, 1914
Despite occasional brief periods of cooperation, relations between
the cities of St. Paul and Minneapolis have historically been as
chilly as a Minnesota winter. When competition heats up, the resulting
thaw generally leads to a flood of vitriol rather than an overflow
of the milk of kindness. After the passage of the Federal Reserve
Act in 1913, for example, the two cities engaged in one of their
keenest fights over whichif eithershould have the honor
of hosting one of the proposed regional Federal Reserve banks.
"The Minneapolis St. Paul contest transcends in importance anything
in the history of the competition of the two cities in the last
twenty-five years," the Minneapolis Journal claimed,
"and is so recognized."
With prestige and jobs at stake, the state capital and its sister
city rushed to assemble delegations to present their relative cases
at hearings to be held in Chicago in mid-January 1914. At those
meetings and others held throughout the United States, Secretary
of the Treasury William G. McAdoo and Secretary of Agriculture David
F. Houston would listen to proposals about the location of regional
banks, the number of such banks and the size of the territories
they would serve.
From the outset, Minneapolis had better prospects than St. Paul.
New Year's 1914 found the Mill City with 71.2 percent of bank clearings
in the Twin Cities, leaving 28.8 percent for St. Paul. Newspapers
were quick to point out the significance of the numbers: "Important
beyond all past comparison are the figures at this time," the Journal trumpeted on Jan. 10, 1914, "for the federal committee of organization
of the new reserve association that is to operate under the new
currency law will be in Chicago early this month and business men
and bankers will attend and present statements as to the financial
prominence of Minneapolis and its relation to the northwest as a
Additionally, in a poll of 645 cities in the proposed district,
365 votes were cast for Minneapolis, 118 for Chicago, 93 for St.
Paul, 42 for either of the Twin Cities and the remainder of the
votes spread over other communities in the area.
Nevertheless, the outcome was not a foregone conclusion. Some
representatives from Chicago, which was practically guaranteed a
bank, were pushing for the City of Big Shoulders to carry the entire
Northwest all the way to the Pacific. Others were less greedy. George
Reynolds, president of Continental and Commercial National Bank
of Chicago, told the committee he favored banks in "Boston, New
York, Chicago, San Francisco, Minneapolis, St. Louis...." He stopped
suddenly and said, "Minneapolis or St. Paul," then continued his
When Reynolds had finished, Secretary McAdoo asked, "Which of
the Twin Cities?"
"I will leave that for them to settle," Reynolds tactfully suggested.
Business leaders and bankers in Minneapolis had made plans to
ensure that the matter was decided in their city's favor. The Minneapolis
Civic and Commerce Association put together a lengthy printed volume
of the city's resourcescommercial, financial and industrialto
present to the committee. An economist at the University of Wisconsin
was hired to gather and compile the information after the president
of the University of Minnesota forbid any faculty member there to
get into the fight between the two cities. Minneapolis also sent
the largest delegation of any city in the country to the Chicago
St. Paul's delegates took a look at their 14-page brief and their
smaller number of boosters and decided they needed reinforcements.
Joseph Beck, secretary of the St. Paul Association of Commerce,
got on the phone and called Jesse Gregg of Nicols, Dean and Gregg
and asked that he and some friends get on the next train to Chicago
so they could bolster St. Paul's position. In addition, John Flanagan
of the Stockyards National Bank and William Magivny, president of
the South St. Paul Union Stock Yards, planned to make a strong push
for St. Paul because of its livestock industry. But reporters from
the local dailies were more interested in those men from St. Paul
who did not lend their weight to the capital's bid.
Frank B. Kellogg, the "trust buster" who had taken on Standard
Oil and would eventually win a Nobel Peace Prize, was to open the
battle for St. Paul. When Kellogg did not appear in Chicago, other
arrangements had to be made. Empire Builder James J. Hill, the man
whose railroad had tamed the Pacific Northwest and turned Seattle
into a metropolis, would not be there to represent his newfound
interest in banking, but when his son Louis also skipped the meeting,
rumors flew. Pierce Butlera member of the University of Minnesota
Board of Regents, an eventual U.S. Supreme Court justice and one
of Hill's lawyerswas present but not part of St. Paul's official
The absence of these highly esteemed members of the St. Paul community
caused considerable speculation. The elder Hill's dramatic jump
from the Democratic to the Republican party and the Republican leanings
of Kellogg and Butler may have played some role in their decision
to avoid attending the hearings in any official capacity, especially
since Flanagan argued that the bank should be in St. Paul because
it was "a good democratic city." The banker's statement backfired
when McAdoo said the comment was "out of place." Houston added that
politics was not "the thing to bring up at this meeting."
St. Paul did have one ace in the hole, however. St. Paul banker
John R. Mitchell, part of the city's delegation, was "a warm personal
friend" of John Skelton Williams, who had just been confirmed as
Comptroller of the Currency by the Senate and thus would become
an ex-officio member of the Federal Reserve board. Williams could
not be in Chicago, but he would be part of the three-person panel
that would make the final decision concerning the disposition of
the reserve banks.
Minneapolis tried to counter any political advantage St. Paul
might have by attacking the city's economic vitality. McAdoo and
Houston quickly cautioned Minneapolis witnesses to confine any comments
to their own city. Taking a calculated risk, the Mill City's representatives
indicated that if Minneapolis could not have the regional bank,
then it should be located in Chicago, not St. Paul. Sensing they
could gain some kind of moral advantage, St. Paul's envoys quickly
told the two board members present that they would be happy to see
the bank in Minneapolis if it were not in St. Paul. Banks in the
Dakotas asked the Minneapolis delegation to change its stance and
accept St. Paul as an alternate. Otherwise, bankers from those two
states would press for Fargo as their reserve center. Representatives
from Montana also expressed their desire to see the Twin Cities
cooperate in getting a bank outside Chicago.
The day after the hearings were completed, the St. Paul Pioneer
Press boasted that "Rival's Knocks Seems to Insure St. Paul
a Bank," forgetting perhaps that the city's commissioners had also
been reprimanded by the two secretaries. The Minneapolis Journal also claimed victory: "Minneapolis Sure ... to Get Reserve Bank."
Months before the final decision was made, some cities were charging
the selection process would be marred by undue political influence.
Thus it came as no surprise that when the final determinations were
announced in early April, many of the 37 cities hoping to be selected
were not happy. "Omaha is hopping mad," the Journal reported, and "New Orleans is almost ready to secede from the union."
The decision to place a bank in Richmond caused particular rancor,
especially since Williams hailed from that city: "Baltimore is one
of the biggest trading places in the United States," one wag commented,
"But if Baltimore should happen to be short of cash it would have
to take its discountable paper to Richmond, which would entail much
loss of time besides involving the labor of seeking out the location
of Richmond and a study of the stage routes to the place."
When the final boundaries were drawn, the Ninth Federal Reserve
District did not include the Pacific Northwest as Minneapolis delegates
had proposed, but it did take in the northern two-thirds of Wisconsin
and Upper Michigan. Bankers from 34 Wisconsin counties were not
happy about the decision and petitioned for their removal from the
Ninth District. Eventually banks in 25 Wisconsin counties were transferred
to Chicago in October 1916.
Perhaps not surprisingly, St. Paul financiers expressed delight that
a Reserve bank was located in the Northwest. For their part, Minneapolis
delegates thanked St. Paul for helping to secure a bank for this section
of the country and promised it would be a Twin Cities rather than a Minneapolis
institution. Possibly as some sort of attempt at reconciliation, the first
meeting to discuss the shape of the bank's board of directors was held
in St. Paul.