The Role of the Banker in a Small City

F ALL the organizations that comprise the complicated process known as community life, few outrank the crucial importance of the bank. The bank is an exceedingly important and powerful institution in any community, and it serves many functions, especially since the advent of a complicated economy and a complicated urban pattern of life. The economy of any community is actually a tightly integrated whole, at the core of which is usually found the community banking system. The bank itself is definitely a power structure. It controls practically all of the liquid capital available in the community. Its participation is usually necessary in any large community project, public or private, especially when large amounts of funds are needed. Very often its support or nonsupport of a project is a matter of life and death for that project. The banks also set the credit policies for most of the community.' Furthermore, the bank plays an important and influential role in relation to the individuals who make up the community. Aside from its important function of supplying capital through its lending powers to individual customers, both large and small, it is a center for the dissemination of financial advice. The bank is also the community bookkeeper, and this includes all purely banking services, such as acting as a depository for funds, serving as a clearing house for checks, and providing for the community a link in the great banking system which covers the United States. It is also a center for the circulation of money in any community through its credit and its money creation functions.2 Because of the importance of the banking operations in any community, the prestige position of the banker is usually very high.3 Because of this prestige, and because of the power that the banker is able to exercise in community affairs, this paper will be devoted to an analysis of the role of the banker in community affairs, with special emphasis on the officer group of the bank who make bank policy, and in a sense contribute to the formulation of community policy. This paper will study a small bank in a town of some thirty thousand persons, with which the present writer has had intimate contact. First there will be a brief description of the community which the bank serves. Next a view of this particular bank's function in the community will be presented. Then the community roles of the officer group will be discussed. The conclusion of this paper will be devoted to an analysis of the observations presented in this paper from the point of view of the following four hypotheses: 1. The position of the bank officer is unique in that he has access to power which is beyond that normally associated with his position as an individual. His power is derived from the fact that he has control over large amounts of money which are not his own. 2. The banker attempts to exercise power as covertly as possible, especially if he operates within a relatively small community. 3. The power of the banker in the long run depends upon the confidence of the community in his integrity and judgment. This requires him to play a special type of role in community life.4 I Floyd Hunter discusses the use of power by banks through their control of community credit thus: "Closely allied with the manipulation of expenditures are the controls exercised over credit in any community. From the largest industrial borrower to the smallest individual needing funds, credit controls are exercised. The men who control credit relationships are for the most part bankers, and in Regional City the banking interests have a large part in the informal policy-making machinery of the community. An elaborate network of credit bureaus and banking facilities keeps close watch over this important phase of American 'dollar down' activity operative in the lower social scale in the city. . .. Some get credit and some do not, and therein lies a tale of power." Commnunity Power Structure (Chapel Hill: University of North Carolina Press, 1953), pp. 204-205. 2Paul A. Samuelson, Economnics (New York: AlcGraw-Hill Book Company, Inc., 1955), pp. 260-262. 3In the N. 0. R. C. survey of occupations, bankers were listed tenth on an occupational prestige scale. This scale included most of the occupations and professions. Richard Centers found that bankers were usually placed in the upper class by the public. Joseph A. Kahl, TPe American Class Structure (New York: Rinehart and Company, Inc., 1957), pp. 64-82. 4Arthur Naftalin and his associates discuss this