The Committee announced that it was impressed with the growth and development of Washington, Oregon and Idaho, but that on the basis of six per cent of the capital and surplus of the banks which had applied for membership, that section could not provide the $4,000,000 minimum capital stock required by the law. The Committee stated that, "with the continued growth of that region, it is reasonable to expect that in a few years the capital and surplus of its member banks will be sufficient to justify the creation of an additional Federal reserve district, at which time application may be made to the Congress for a grant of the necessary authority." The Committee explained that it was not a part of their duty to locate branches of the Federal reserve banks, but that all the material it had collected would be placed at the disposal of the Federal reserve banks and the Federal Reserve Board when organized and ready to consider the establishment of branch banks.

The following table, issued by the Organization Committee, shows the area, population, number of national banks and state banks and trust companies which on April 1, 1914, had applied for membership in the new system, with the amount of their capital and the aggregate of their capital subscription to the Federal reserve banks:

District

No

Reserve City

Area sq. miles

Population

No. Banks

Capital and Surplus

6 per cent. Subscription

1

Boston.........

66,465

6,557,841

446

$165,529,010

$9,931,740

2

New York......

49,170

9,113,279

478

343,693,437

20,621,606

3

Philadelphia ........

39,865

8,110,217

800

216,340,213

12,980,412

4

Cleveland.......

183,995

7,961,022

724

192,147,258

11,528,835

5

Richmond......

173,818

8,519,313

475

105,064,483

6,303,868

6

Atlanta.........

233,860

6,695,341

372

77,356,913

4,641,415

7

Chicago........

176,940

12,630,383

984

211,068,338

12,664,100

8

St. Louis........

146,474

6,726,611

434

80,717,981

4,843,079

9

Minneapolis.....

437,930

5,724,893

687

78,381,081

4,702,864

10

Kansas City.....

509,649

6,306,850

835

93,065,912

5,583,955

11

Dallas ....................

404,826

5,310,561

726

92,003,123

5,520,187

12

San Francisco.......

693,658

5,389,303

514

130,423,422

7,825,405

Total........

3,016,650

89,045,616

7,475

$1,785,791,171

$107,147,470

Including State Banks and Trust Companies that Have Applied for Membership Up to April 1, 1914.

District No.

Reserve City

No. Banks

Capital and Surplus

6 per Cent. Subscription

1

Boston .......................................

446

$165,529,010

$9,931,740

2

New York .................................

479

344,793,437

20,687,616

3

Philadelphia ...........................

801

216,550,213

12,993,013

4

Cleveland .............................

726

193,697,258

11,621,835

5

Richmond ..............................

484

109,054,683

6,543,281

6

Atlanta ...................................

382

78,379,663

4,702,780

7

Chicago ................................

999

219,198,760

13,151,925

8

St. Louis .................................

445

103,655,397

6,219,323

9

Minneapolis ...........................

687

78,381,081

4,702,864

10

Kansas city ............................

838

93,248,612

5,594,916

11

Dallas .....................................

732

93,901,523

5,634,091

12

San Francisco ............................

529

135,258,732

8,115,524

Totals...............

7,548

$1,831,648,369

$109,898,902

The announcement of the selection of Federal reserve districts and Federal reserve cities naturally caused loud protests from cities that expected to be named as headquarters for Federal reserve banks. Resolutions of protest against the decisions of the Organization Committee were adopted by the commercial bodies of various cities, including New Orleans, Baltimore, Pittsburgh, Denver, Omaha and others. The Senate by resolution called upon the Organization Committee to file copies of all briefs and written arguments made by each city applying to the Committee for the location of a Federal reserve bank, together with the poll of the banks and the reasons relied upon by the Committee in fixing the boundaries of the reserve districts and locating the reserve cities. On April 10, 1914, the Organization Committee issued a statement in defense of its action, explaining that it had "refused to be influenced by the purely local and selfish claims of cities or individuals, and discharged the duty imposed upon it by Congress, after exhaustive investigation and study of the entire country, with unbiased minds and according to its best judgment. Congress constituted the Committee a court and gave the Federal Reserve Board the power of review. Disappointed competitors should seek a remedy through the orderly processes the law prescribes." The statement of the Committee explained in detail why New Orleans, Baltimore, Omaha and Denver, which had expected to be chosen as headquarters of Federal reserve districts, had not been selected. These and other cities continued to voice their dissatisfaction, and later, when the Federal Reserve Board was chosen, it announced that it would hear the claims of these and other protesting cities.

Upon the expiration of the sixty-day period for acceptance of the Federal Reserve Act - February 23 - 7,465 national banks had accepted, 18 had rejected, and 10 had not been heard from. Meantime the Organization Committee sought the opinion of the Attorney General of each state as to whether its laws would bar state banks from joining the new system. The Committee also obtained, for the subsequent use of the Reserve Board, the views of clearing house associations and bankers as to what should constitute commercial paper within the meaning of the Federal Reserve Act. Clearing house associations were asked also to make suggestions as to the clearing house functions to be undertaken by Federal reserve banks and their branches.

On April 8, 1914, the Secretary of the Organization Committee notified all prospective member banks to forward their subscriptions to the Federal reserve banks of their respective districts within thirty days, and duplicate forms of application for stock, approved by the Committee, were transmitted to the banks by the Comptroller of the Currency. A large number of banks interpreted this notice to subscribe as a call for the payment of the first installment of their subscriptions and sent checks and currency to the Committee. It promptly returned these cash payments, and in a press notice, given out April 13, announced that it was not the purpose to call for the payment of the subscriptions until the details of the organization were more nearly completed and the reserve banks were ready to be put in operation. On April 30, the Organization Committee sent out a second notice, urging prospective member banks to forward their applications for stock subscriptions to the Federal reserve banks not later than May 8, thirty days after notice. On that date the minimum capital prescribed by the Act had been subscribed in every district with a large margin, making it unnecessary to offer stock to the public or to the Government. Five banks in each district were than designated by the Committee to execute the certificate of organization for each Federal reserve bank, thus completing the incorporation of the twelve reserve banks.

The next step in the process of organizing the new system was the election by the member banks of each Federal reserve district of three directors of Class A and three of Class B, under the provisions of Section 4 of the Act. Early in June the Organization Committee notified all member banks to elect, by their board of directors, a district reserve elector and to nominate a candidate for Class A director and a candidate for Class B director for the Federal reserve bank of their respective districts. On July 4-6 preferential ballots were mailed to the district reserve electors of all banks which had certified to the Committee the names of their electors, and the Committee announced that the polls would be closed August 1, after which no votes received for Class A and Class B directors would be counted.