Iowa County democrat. [volume] (Mineral Point, Wis.) 1877-1938, 1897-09-16
BRANCH BANKS.
SOME or THEIR ADVANTAGES AZ
COMPARED WITH LOCAL BANKS.


Money In Different Parts Of Country.
Also Interest Rates, Distribute Risks and
Bind Interests OF Different Localities
Together-Prevent Local Disaster Such ~
Occurs when Local Banks Fall.
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 tho recent bankers
convention Mt Detroit, Mr.. William q.
Cornwell said:
'If 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 1t by keeping 1t them
selves. Tho very small proportion OF
coin which tho Scotch banks carry en-
ables them to afford to pay interest on
deposits, as their notes cost thom moth
ing, and what they loan Is their notes.
The payment OF small ratio Of interest
on deposits encourages people with
small sums of money to deposit them,
while, IL no interest was paid, tho mon
ey would probably BIO boarded.
"In towns and counties where money
Ia not used much tho branches collect
in the spare funds, and almost without
expense IL il transferred through the
head Offices to other branches where
money Is in active demand. This mon
ey from Ill parts Ia placed in ono res
ervor and distributed, doing tho most
good at tho lowest cost. Rates to Dor
rowers arc equalized by this distribu-
ton, and in tho far off sparsely settled
regions rates arc practically no higher
than ut tho large centers. We know
how different this Is in tho United
Htates--money at and 2 per cont per
annum in New York, 10 and IL per
cent west and south and unobtninable
at any price mt many points.
zone of tho groat economies In tho cs-
tablishment of branch banks IL tho less
ening of tho capital invested in tho
business. The average percentage OF
capital to deposits IN Scotland IL 1919
per cent, while In this country 1T Is 31.2
per cent Whatever reduces expenses Of
bank management means reduced rates
to tho borrower-boncfit to tho public
IT there were only ono bank in tho coun-
try, this might not bo 80, but eompeti-
ton between banks forces them to tho
lowest ratios that decent returns on their
capital will allow. Consequently II cost
to tho bank Is reduced cost to tho pub
lilo in also reduced. a Tux on banks IL
tax on tho people. Legislators, supposed
to represent the people. should remom-
Der this when 10 occurs to them that 1t
would bo good thing to increase tho
burdens of tho banks.
money IL not always In demand Mt
all places mt tho Same timo, but IN need
cd In different parts of tho country Mt
different times, and for this reason, UNI
dor tho branch system. tho head bank
IL enabled to meet demands upon IL
with comparatively small amount of
money, which would bo entirely in
sufficient II being handled by numerous
risks IRE distributed, and If ono part Of
tho country has disaster this IL offset by
tho banking profits In another part, not
affected Each locality would be as-
surod that no local disaster would affect
the banks. Now. whom local banks bo-
gin to break, tho locality submits and
suffers until long aftorwnrd, when
timid capital again establishes itself,
"ln panics thero would be- u combina-
tion of interests which would mako inn
possible such I'M experience rs ours i'll
1903, when tho solvent banks Of the
west wero moved down by hundreds
because Of lack Of support from each
existence Of tho large, strong banks
which would grow out of tho system
would tend to dissipate storms.
Perhaps tho argument in favor of
branch banks may BIO summed up when
wo say tho system reaches tho highest
perfection in three important pnrticu.
lars stability, economy. usefulness;
stability, tho greatest financial strength,
holding up all our institutions in active
periods and in storm and attracting to
this country tho capital of the world;
economy both of capital and manage
ment, meaning tho lowest cost to tho
business world and consequently tho
highest development of our resources;
usefulness, developing, and with most
perfect machinery, tho resources of
every part Of tho country and bringing
into greatest activity tho capacities of
brain and muscle Of NIL our people. :"
Those Wheat Conspirators.