The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1902-05-05
FORGAN' SBANKPLAN
He Favors Wide Application Of the
Branch System.
MORE FUNDS AVAILABLE FOR USE
Cities Regard the Plan
With Favor.

President James B. Forgan of the First:
National bank of Chicago, aroused much
interest among western sbankers on the
subject Of branch banking by his speech
before the Milwaukee Bankers club Sat
urday evening. He advocated amending
the national banking laws so as to permit
the; formation of branch bank systems.
He gave forcible illustration of the
profits which would accrue in COMPARE
son Of the figures of several western
banks with those of the bank of Mon
treal and its fortyeight branches. He
showed that the First National banks OF
Chicago, Milwaukee, Minneapolis, st.
Paul, Omaha and Kansas City, together
with sixty banks in Illinois that are cor
respondents OF the Chicago bank, under
the present system are able to invest put
62.9 per cent of their total resources IN
loans and securities, while the bank OF
Montreal, with it's forty eight branches, is
able to employ sS:1 per cent: He contend,
ed that by combining the First National
of Chicago with it's sixty correspondents
in Illinois, nominally $370OO,00o more in
loanable funds could be employed. The
menace of artificially increased bank de-
posits would be decreased. This comblna-
ton would result in reduction OF $3,90i,-
134.4S in BALANCES between banks and con-
vert $6,859, 1922 of eastern exchange into
loanable funds.
How is it," he asked, "tihat we find
the Bank of Montreal running forty-elght
branches with cash reserves OF about lO
per cent Of its, deposits and balances due
by other banks of say per cent, avallaple
cash resources Of only Is per cent, against
Al per cent shown by our proposed COM
bination?"
1T Is simply because they can do their
entire domestic exchange and COLLECTION
business within themselves, and have no
occasion to deposit any of their FUNDS
with other domestic banks. The balance
which each of our banks now carries with
| correspondents for exchange pur
poses are entirely eliminated when they
become branches of banks with offices IN
| the financial centers.
of the banks 1 have referred to were
one institution, and in addition to tnel1
| six Offices in the northwest, estapllsheo
| branch in New York, the item balances
due from other banks would disappear
from it's statement except as to balances
due from banks in foreign countries. Inls
would enable it to loan at current rates
from $40, 900 900 to $25, 100000 of funds no"
carried as balances due from BANKS.
what Local Bankers Think.
Minneapolis banks generally take kindly
to the branch bank idea, although tnes
| saw that public sentiment is not yet ripe
for such legislation: ~ ~,
| G. T. Jaffray, cashier Of the First Ma
tional hank. is heartily in favor OF COL
| so)jdation. such as Mr.. Forgan suggests
! He says: ca, .
I received my bank training IN CANADA a
did Mr.. Forgan who, by the way, was cash
| Ter of the Northwestern National bank OF thl
city from 1887 to 1891. What he says is az
solutely true, and if it could be arranged
would result in the advantages he mentions.
The great obstacle to the establishment
such a system would be the local pre1udlc
against having the banks of minneapolis %
Paul or any city, managed IN Cnlcaso
New York The institution would not oe
local bank any longer, and the people "oul
think that the managers of the central Dan
would manage the Minneapolis branch 1or ID
benefit of New York, and disregard Mlnne
apolis interests. ..--.- -.
do not believe this to be valid ob)ectol
I believe that local needs which 1t is well IL
a. local bank to consider, should as matte
of business policy, be considered by centr'
bank. and would be SO considered
E. W. Decker, cashier OF the Nortn
western National says the branch ban
, system would make for economy in opera
ton as we'll as being powerful factor
: preventing panics. He does not belleV
the American people generally regard "a
branch bank system with favor at I'M
, :, time Mr.. Decker, who, with J. L. wy
man, w. H. Dunwoody, T. B. Janney,
l S. Bell, George w. Porter and W. A. Raj
sey, w ent to Milwaukee partly to hear M
Forgans address, says that the Ch1cag
bankers ideas made a good Impression
Milwaukee. -"