Omaha daily bee., 1902-06-16
PROPOSED BANK COMBINATION.
Serious Objections to n scheme Likely
to Breed Panic.
%Philadelphia Ledger.

Philadelphia Ledger.
Something akin to a bank trust Is about
to be organized, but there is, fortunately,
no danger that 1t will gain a monopoly Of
the business. The present company, with
a capital Of IS, 900. 900 and surplus of $45,-
900, 900, is not to engage directly in the
banking business, but is simply to buy a
controlling interest in banks throughout the
country and direct their affairs in combina-
tion. 1t is to own a national bank In New
York and the officers Of the corporation
are to be the officers Of the banks. In the
chief financial centers of the country and
In each of the state capitals a controlling
interest in one national bank will be pur-
chased and the affairs of all the %institu-
tions will be directed from New York.
There can be no run upon the parent cor
poration, for It Will not be doing a banking
business, but there might be a run upon
one or more OF the banks in the combina-
ton and the several banks would be so In
timately connected that disaster to one
would probably bring ruin upon all. There
would also be great temptation to a con-
centration of capital in New York for spec
ulative use, with It's attendant dangers. The
prospectus states, of course, only the ia
vorable view of the combination, such as
facility in making exchanges and the trans
fer Of funds from one part of the country
to another to meet the varying demands Of
the seasons, but 1t is extremely doubtful
whether these advantages outweigh the
risks involved.
The healthiest banks are local concerns
whose stockholders and officers are known
to each other and whose business is pro-
NOTED and closely watched by all. The
officers OF the new corporation recognize
the necessity Of having local stockholders
interested in the branch banks, and for
that reason do not propose to hold any
thing more than a bare majority OF the
stock in such banks, leaving the remainder
to be taken by local business men so as to
interest them in the bank. Large as the
proposed corporation appears to be, 1t is
Insignificant compared with the vast bank
ing interests OF the country and there is
little danger hat it would grow into a
monopoly or in any way gain control Of the
banking business, but 1t might do a great
deal Of mischief to other financial inter-
ests in an indirect way. It's failure, for ex-
ample, after It had established its chain of
banks throughout the country or the break
ing Of a link in the chain would probably
create a panic that would affect disas-
trously all other financial institutions. The
tendency Of the times is toward combina-
lions with great capital and there is in one
sense no more reason why such a combina-
tion should not own banks than there Ia
why another should not own sugar mills or
another steel works. But in addition to the
objections brought to bear against all great
combinations Of capital tending to the Gre
alton Of a monopoly there is special objec-
ton to a combination dealing with money
and exchanges. The slightest accident to
such a combination, after it should be we'll
established, might bring temporary dis
aster to the entire nation.