The Washington times., 1915-04-02

The Federal Reserve Board is COM
pleting its preparations to issue, In the
next few days, n statement of the reg
ulations and conditions under which
state banks and trust companies may
become members of the Federal He
serve system.
II would be far from the facts to say
that the Reserve Board Is going to open
a campaign In the effort to bring In
the State banks. Rather, 1t is con-
ccrned to.make perfectly clear that 1t
is not campaigning at all. 1t is. how
ever, deterp1ined to extend to national
banks as liberal a grant OF powers and
authority as may be necessary to in
sure that they shall not be placed at
an actual disadvantage In competition
with State institutions.
When the reserve law was pending in
Congress there were many threats that
IL 1t passed national banks would re-
organize under state laws, surrender
their charters. and become State insti-
tutions. 1t Is noteworthy. therefore.
that not q single national bank has
done this for the purpose of escaping
from the conditions Of the reserve act.
There have been a few reorganizations
OF national into State banks. but these
are always happening: and in no case
has such a change been made because
of objection to the reserve act
On the other hand, a statement given
out only today shows that national
! banks are decidedly gaining on the
| State Institutions. In the first fifteen
| months OF the reserve acts operation
| the Comptroller's office has chartered
conversions Of State banks or trust
| companies.
For National Charters.
| During the corresponding period. ff
! teen months, Immediately preceding tht
taking effect Of the reserve act, char
| ters were issued to 200 national banks
and only forty-two Of these were con
versions Of State into national institu
| tions. 1t would appear. therefore, tina
| the tendency Is decidedly for the Statt
! institution to take national bank char
ters. rather than for the national bank
| to surrender Federal and reorganiz'
| under State charters.
Much interest Is displayed In finan
| cial circles in the response that Stat
banks and trust companies will maxi
| when the proposed regulations, for thei
conversion, are made public. There u
pretty sharp competition between tn
State and national forms of organiza
ton in some States. The States hav
| been liberal with their institutions
granting them in some cases very wild
powers. National banks have had
more restricted field Of investment thai
the State institutions: could not act a
trustees, executors, administrators, reg
istrars, and the like; and we're subjec
to the national supervision, examina
ton. and publication OF statements
which are more rigid than in most o
Ethe States. The national banks, d
short have been expected to confin
themselves to the functions Of CONNER
cial institutions. dealing In short-tin
commercial paper.
Restriction of Field.
But State institutions have for. man
years been invading this field: in othe
words, they have been entering upo
the special field Of the national bank.
while the national institutions could nc
retaliate by invading the special pre-
serves of the State establishments. Thi
{ restriction Of the national banks fiel
has resulted In such a development G
State banking that. although State In
stitutions have not. and national ir
stitutions have. the power Of issu,
, there are nevertheless about twice q
, many State as national institutions
the country. The average capital {
national institutions is however, large
than that Of the State banks.
Not In any wise as a retaliator