The enterprise. [volume] (Wellington, Ohio) 188?-1899, 1898-01-05
BRANCH BANKS.
Some OF THEIR ADVANTAGES As
coMPAFED WITH LOCAL BANKS.

COMPAFED WITH lOOAI oANNo'
They Euualise sapply and Demand Of
Money In Dtnsrent Parts Of Country.
Also Interest Rates. Distribute Risks and
bind Interests Of Different Localities
Towether--Prevent Local Disaster Such as
Occurs When Local Banks Fail.
Instead of individual and local banks,
such az 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:
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 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 small rate of interest
on deposits encourages people with
small sums Of money to deposit them,
wh'l~. if no interest was paid, the mon
ey W uld probably be boarded.
"In 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 mos
good at the lowest cost. Rates to Dor
rowers are equalized by this distribu
tion, and in the far off sparsely settled
regions rates are practically no highe
than at the large centers. We know
how different this is in the United
States-money at and 2 per cent pc
annum in New York, 10 and IL pc
cent west and south and unobtainabl
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 tn
business. The average percentage c
capital to deposits in Scotland is H.
per cent, while in this country it is "a.
per cent. Whatever reduces expenses
bank management means reduced rate
to the orrower-benefit to the public
If there were only one bank in the coui
Z; try, this might not be SO, but compel
3 tion between banks forces them to IL
e lowest rates that decent returns OH the
capital will allow. Consequently If co
J.. to the bank is reduced cost to the pu
lie is also reduced. A tax Oh banks is
tax on the people. Legislators, suppos'
to represent the people, should remer
e ber this when it occurs to them that
e would be good thing to increase t
c burdens of the banks.
a "Money is not always in demand
is all places at the same time, but is nee
a ed in different parts of the country
different times, and for this reason, I
u der the branch system, the head ba
10 is enabled to meet demands upon
le with comparatively small amount
or money, which would be entirely
sufficient if being. handled by numerC
TO independent banks For the head bal
O risks are distributed, and if one part
= the country has disaster this is offset
- the banking profits in another part,
su affected Each locality would be
re sured that no local disaster would aft
es the banks. Now, when local banks
er gin to break, the locality submits {
I'd suffers until long afterward, wi
Iv timid capital again establishes itself
- "In panics there would be comb
% tion of interests which would make
ne possible such an experience as ours
IT. 1898, when the solvent banks Of
west were moved down by hundr
es because of lack of support from g
ne other and from the centers The v
so existence of the large, strong ba
al which would grow out of the syst
" would tend to dissipate storms
Perhaps the argument in favo
branch banks may be summed up W
we say the system reaches the higl
w perfection in three important part
ns lars - stability, economy, usstuln
le- stability, the greatest financial strenI
~ holding up all our institutions i'll ac
'rs periods and in storm and attracting
$50 this country the capital Of the wo
irs economy both of capital and man
me ment, meaning the lowest cost to
lus business world and consequently
10, highest development of our resoui
Oh usefulness, developing, and with
ell perfect machinery, the resources
mo every part of the country aud brinI
'no into greatest activity the capaciti'
mo brain and muscle of all our people.
nat
the Those Wheat ConspiratOrs.
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