The Salt Lake tribune. [volume] (Salt Lake City, Utah) 1890-current, 1911-08-05
TEE BANK COMBINATIONS.

holding companies, which the National
banks have been organizing, and that
arc, in effect, Central National Banks.
On Tuesday morning last The Tribune
had an editorial account of the origin
OF these holding concerns, pointing out
that they amount practically to the
same thing as the Aldrich Central Re
serve Association.
The origin of this merging Of Ma"
tional banks in central associations by
means of security companies, or holding
companies, was with the National City
Bank of New York. which incorporated
n holding company to take over its
stock, and also the stock which it
might hold in other National Banks,
The effect of this strategy was, to give
the City National Bank of New York
the control Of considerable number
of National Banks, which the holding
company would operate in the City Ma
tional Bank s interest, forming com.
bination. or association, of banks, all
practically under one management,
IT is manifest that this sort Of thing
amounts to the same sort of maneuver
that President James J. Hill originated
for the holding of the stock Of the
Great Northern and the Northern
Pacific Railways, both of which
were under his control He
merged the stock Of the two
in the Northern Securities Com
pnny, which. on being attacked in the
courts, was declared illegal, and was
dissolved, 1t is difficult to see any diff
ference in principle between that
Northern Pacific merger, as it was
called, and this merger of National
Banks. There was, in fact, no call or
demand for the Northern Pacific mer-
ger; it was matter conceived by the
controllers Of both the railroads, in or
der to make their labors easy, and TO
Join the fortunes of both roads in the
common interest.
1t appears to be different, however,
with the present move for the holding
or security companies that would prac-
tically merge classes or groups of Ma
tional Banks under one organization.
1t is not surprising to learn, as the dis
patches inform us, that Attorney Gen
eral Wickersham, after an examination
of this form of National Bank pooling,
is likely to declare against it as ille-
gal, and proceed to break it up. That
would be the natural thing that the At
torney General would recommend to
Secretary MacVeagh, and through him
to the Comptroller of the Currency.
And yet, since this securities merger,
or olding company proposition, seems
to be natural outgrowtb of the bank
and currency situation. why would IL
not be well for the Government to take
the hint, and investigate the impelling
tendencies towards consultations like
this, and allow the consultations to be
made, at the convenience and agree
ment of the banking interests, but UNI
der the control of positive law, which
would direct, limit. restrict, guide, eX.
pand, or develop. as the case might be,
in all the transactions pertaining there
to?
The Aldrich currency plan, which
contemplates a National Reserve Asso-
citation, would not be materially diff
ferent from these proposed security OF
holding companies. 1t is not to be
supposed that there would be enough
of those companies to burden the bank
ing interests, or the business communi
ties involved. The Vreeland law con
templates the organization of National
Banking Associations in the United
States by the National Banks; but its
provisions are 80 awkward, so unbusi,
nesslike, so much of a tangle to good
financial operations, that there was no
spontaneous movement taken under
that law by the banks, For long time
there was only one association formed,
that in Washington. directly under the
patronage of the Treasury Department;
then, under stiff appeal from the
Treasury Department to the banks in
New York, Philadelphia, and Baltimore,
to organize such associations, in order
that the heavy expenditures of the
Treasury Department in providing
$500 100000 of emergency currency
should not go for nothing, a few asso-
Citations were organized. But there was
no life to them, no vigor; they amount.
ed to nothing, practically. in the bank
ing world.
This movement which the banks
themselves have originated, however,
has evidently a vital force behind it,
and we suggest that it might be well
for the government to find out Just
what that force is, what the impelling
inducement actually is that leads to
the formation of these security and
holding companies; and having ascer-
tanned the facts, we are inclined to
think that the Government would
achieve the best results by working
along the practical lines thus pioneered
by the banks themselves, rather than
to fix up cut-and-drled, lifeless
scheme such as Mr.. Aldrich proposes.