San Antonio daily light. [volume] (San Antonio, Tex.) 1886-1907, 1897-09-21
BRANCH BANKS.
SOME OF THEIR ADVANTAGES AS
COMPARED WITH LOCAL BANKS.

They Equnlize supply and Demand of
Money In Different Parts of a Country.
Also Interest Rates, Distribute Risks and
Bind Interests of Different Localities
Together-Prevent Local Disaster Such as
Occurs When Local Banks Fail.
Instead of individual and local banks,
such as exist in this country, Scotland
and Canada have great central banks
with branch banks in small cities and
villages. Discussing the advantages of
these banks before the recent bankers
convention at Detroit, Mr.. William Q.
Cornwell said:
eff the people who now have no
banking facilities, and consequently
hoard what little money they have, had
in their vicinity branch of reliable
bank, they would prefer to place their
savings in this branch rather than take
the risk of losing it by keeping it them
selves. The very small proportion OF
coin which the Scotch banks carry en-
ables them to afford to pay interest on
deposits, as their notes cost them moth
ing, and what they loan is their notes.
The payment of a small rate of interest
ON deposits encourages people with
small sums of money to deposit them,
while, if no interest was paid, the mon
ey would probably be boarded.
Gin towns and counties where money
is not used much the branches collect
in the spare funds, and almost without
expense it is transferred through the
head offices to other branches where
money is in active demand. This mon
ey from all parts is placed in one res
ervoir and distributed, doing the most
good at the lowest cost. Rates to bor-
rowers are equalized by this distribu-
ton, and in the far off sparsely settled
regions rates are practically no higher
than at the large centers. We know
how different this is in the United
States-money at and 2 per cent per
annum in New York, 10 and ~ per
cent west and south and unobtainable
at any price at many points.
Zone of the great economies in the es-
tablishment of branch banks is the less
ening of the capital invested in the
business. The average percentage OF
capital to deposits in Scotland is 12. 3
per cent, while in this country it is "a. 3
per cent Whatever reduces expenses o.
bank management means reduced rates
to the borrower-benefit to the public.
If there were only one bank in the coun-
try, this might not be so, but competi-
ton between banks forces them to the
lowest rates that decent returns on their
capital will allow. Consequently if cost
to the bank is reduced cost to the pub
lie is also reduced. A tax ON banks is a
tax ON the people. Legislators, supposed
to represent the people, should remem-
Der this when it occurs to them that it
would be good thing to increase the
burdens of the banks.
"Money is not always in demand at
all places at the same time, but is need
ed in different parts of the country at
different times, and for this reason, I'M
der the branch system, the head bank
is enabled to meet demands upon it
with comparatively small amount Of
money, which would be entirely in
sufficient if being handled by numerous
independent banks. For the head banks
risks are distributed, and if one part Of
the country has disaster this is offset by
the banking profits in another part, not
affected. Each locality would be as
sured that no local disaster would affect
the banks. Now, when local banks be-
gin to break, the locality submits and
suffers until long afterward, when
timid capital again establishes itself.
In panics there would be combina-
ton OF interests which would make i'm
possih!a such 81 experience as ours in
1898, when the solvent banks of the
west were moved down by hundreds
because of Lack of support from each
Other and from the centers. The very
existence u INC large, strong banks
which would grow out of the system
would tend &c dissipate storms
"Perhaps tine argument in favor of
branch banks may be summed up when
We say the system reaches the highest
perfection in three important particu-
lars = stability, economy, usefulness;
stability, the greatest financial strength,
holding mp all our institutions in active
periods and in storm and attracting tc
this country the capital of the world
economy both of capital and manage
ment, meaning the lowest cost to the
business world and consequently thu
highest development of our resources
| usefulness, developing, and with mos
perfect machinery. the resources o.
every part of the country and bringing
| into greatest activity the capacities Of