The Birmingham age-herald., 1915-09-07
.DEWSES PLAN ID !. PERMIT BRANCHES |. 0F NATIONAL BANKS Gage Fond of Giving Friends
 His Views of Banking
 Conditions vY FORMER EFFORTS GET AROUND LAW State Chartered Banks Joining Re- serve System Have Advantage of Being Permitted to Have
 Branches
By HOLLAND

NeW 1Ork, Septemper o-tSpecldl) After Lyman J. Gage retired from the cabinet of President Roosevelt to accept the presidency of one of the older trust institutions of New York, it was his custom when he had leisure moments to chat with his financial friends and to give them his views respecting banking and physical conditions. In one of his conver- sations MT. Gage said he had always re- gretted that the national banking law made it impossible for national banks to establish branches. The result has been
 that in some of the larger cities what were in fact, but not In name, bra nch institutions were. he said acquired. This was done through the purchase of the control of banks by men of capita,
 who also controlled large banking insti- tutions. That led othe complaint that interlocking direcorates had been estab- lished on a large scale. In order to put an end to this complaint, the men of cap ital to some extent placed representatives upon the direcorate boards. There was,
 however, no way, MT. Gage said, by which the government could prevent individuals who were in control of large banks from, as individuals, buying the control of other banks, thereby establishing perfect com munity of interest.
 These comments of the former Secretary of the Treasury were recalled by some who heard him speak when the announce
 ment was made that the president of one of the national banks of New York .ity had discovered a way by which he could, with the approval of the comptroller of the currency, secure some 10 or 12 branch banks. If this president, MT. Kaufman discovers by his experience that his plan Is successful then it can be said of him that he was the first national bank presi-
 dent to work out method by which, without violating the law, national bank can secure branch institutions.
 In the larger cities, 1t has always seen felt that it would be to the advantage of national banks if they were permitted to establish branches within the bounda ries of cities in which they are located. State banks have this privilege. Recently 1t was announced that one of the largest of the trust institutions of New England is to become a member of the federal reserve system, of course without giving up it's state charter This institution maintains a number of branches. It is, therefore, | from one point of view to possess cer- | tain advantages which the national bank cannot secure. Only one national bank l in the United States. so far as is known, has availed itself of the opportunity of- | fered by the federal reserve bank law to establish banks In other countries
 l The method worked out by President | Kaufman reflects not only the modern | spirit of combination and absorption of ! Vuh xn raor nf thA 1o or0a l,o nlx .f
 New York are examples, but also the ap- parently sEillfully worked-out plan where- l by branches could be secured without yio- | lating the law. His bank had already
 been enlarged by absorption. A state
 chartered bank which had recently been
 enlarged also by absorption and which I controlled some 10 or 12 branches in New
 York city is to be brought over to Presi- dent Kaufman's institution. It will sur
 render its state charter and will take out | a national charter. It will, if the an- nouncement proves to have been accurate
 also bring over it's branches, but the uues- tion which has arisen and which has beer
 considerably discussed in banking circles | is, Are these branches still to be con. tinued under the control of the state banking department of New York? If they are, then the government at Wash ington will have no authority over .hem If they are not. then it will be proclaimed that any national bank can secure branches by taking over a state institu tion which has already established | branches.
 The report has been made public thai
 one bank in the United States has already
 established branches. The parent bank
 is in San Francisco. It maintains two
 branches in Oregon. This statement call:
 to mind some other things which MT. Gag
 said when chatting with some friends il
 this city some years ago. He intimatet
 that in California those who were in con
 trol of national banks went their owr way when it was considered more advan