The Washington times., 1914-08-25

To the Editor Of THE TINES:
The power which the Federal reserve
| act gives to national banks to establish
branches in South and Central
America receives a double significance
In being available at time when wtde-
spread war practically places the Eu-
| ropean business OF Latin America at
our disposal-at time. too. when South
Americas rapidly growing business
| makes 1t imperative that she should
have pecuniary assistance from the out
side. both in the form of banking capital
| and of loans. At this most psycholos-
| ical Of moments it might be well to
glance briefly at the principles and his
| tory OF branch banking which is now
to be used for the first time as an i'm
plement for the opening up of those new
| markets for our benefit.
The entire banking of Europe-of the
| whole world. indeed. exclusive OF this
country-is transacted by banks with
| branches.
In Great Britain. where commercial
banking has been reduced to a science.
banks with branches absorbed every
other kind Of bank during the past CEN
| tury. and none other now exist. That
| country would. In fact. just as soon
| think OF having new railroad corpora
| ton for every station on the line as to
| have a new bank for every town or d.
! vision of the town. And here il may be
! mentioned that at one time. as will be
! recalled. the railroad running from New
! York to Buffalo was owned by a score
of different corporations. each one con-
| trolling certain section of the road.
! Can anyone pretend that the service
under such conditions was as satisfac-
tory to the public or to the stock
| holders as under the new plan OF un-
| divided ownership?
One very large bank in Great Britain
the London City and Midland Bank
| has upward of one Thousand branches
in England. and deposits exceeding
| $500 600 600. In the city of London. where
| all the large English banks have their
| main offices, no Incorporated bank with
| branches has failed in half a century.
| The funds of such banks are more
teamwork" is infinitely better both
for the bank and the depositor.
The splendid record made by branch
banking at home induced the English
| to carry this system far afield. and this
| they did to the extent Of covering South
America. Asia. Africa. and the islands
of the sea with their branches, with a
result which was enormously profitable
| to the banks themselves. to the countries
of their adoption, and to their own In
/ the commercial business they brought
to II.
The real secret of the popularity and
success of banks with branches lies D
In their economy in capital. which en-
| ables a like amount of business to be
done or two-thirds of the capital re-
| quired In this country: In their economy
| also in equipment and management: CD
| in the mobility of their funds-that is.
ease in transferring them from point TO
! point as needed: (3) In the custom of
| lending out to local borrowers. as far
| as can be done with absolute safety the
| funds deposited in the same neighbor-
hood; 90 in supplementing these. when
insufficient, from the other-funds of the
| bank,
The branches share equally In the
| capital and surplus of the bank, and
| each one has the strength and resources
| of the entire bank behind 1t. There Is
| no personal interest in the bank OF
| branches to influence its business: all
transactions are handled on a strictly
unbiased business basis.
! II the theory of the survival of the
| fittest" is correct, 1t is undoubtedly due
! to that principle that the branch sys-
! tenn has superseded the individual in
stitutions In Europe and elsewhere:
J. SELWIN TAFT.
| President Washington and Southern
Bank.