The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-11-26
SAYS RESERVE ACT
FAVORS CITY BANK
Commerce Department Expert
Sees Monopoly in Foreign
Branches.
CHANGE IN LAW URGED

WARRINGTON, Nov. 25.-Declaring
that practically. though not WIN the
Intentional result. the Federal reserve
act confers "a monopoly on the Nationai
City Bank of New York as far AS bank
ing facilities for American trade In
South America Ii concerned. william II.
Tough. a financial expert OF the Depart
ment of Commerce, has submitted "A re-
port in which he advocates changes In
the act which will enable more wide
spread participation by interior banks
Of the country in this trade.
The same statement and the same sug-
g%estions, he adds, might be made with
respect to all foreign trade financing.
Calling attention TO the fact h a
only the National city Bank OF New
York and the Commercial National
Bank OF Washington. D.. C.-and the
latter only to a very limited extent
have awaited themselves OF the provision
Of the act under which a banking as
ISOLATION possessing a capital or surplus
Of $1,000. 900 may apply for permission
to establish branches in foreign coun-
tries to develop trade, the report goes
on To say
III 1t were possible for banks in other
producing or shipping centres to estab-
lish their own branches or agencies in
New York the case would be different.
or II they were permitted in some man
ner to combine their strength and facili-
ties for financing foreign trade. again
the case would be different, but we have
no branch bank system. and the recent
law provides only for separate acAon
by each bank.
Even under these conditions there
may in time be an exceptional INSTANCE
here n there OF some bank outside
ot New York being able to establish one
or two isolated branches for the sake OF
local business at these branches. II
seems certain, however. that serious ef-
fort to lance South American trade
cannot be probably undertaken except
by New York city banks.
AS one prominent banker expressed
". for an Interior bank. working alone
90 establish Its own foreign branches
would not be banking but adventure "
After citing the fact that several Of
the banks IN other cities in order &c
accommodate the demands OF the!.
clientele OF manufacturers in'end.i z to
develop their foreign business had
opened accounts in New York bank
and awaited themselves Of she facilities
which these banks offer. the repor'
states that some OF these interior banks
would be willing to work together 10
provide equally good facilities but can
not under the present law"
we are driven, then Mr.. Tough
adds. ito the somewhat startling con
clusion that the practical effect
though by no means the i~ntention-ot
the Federal reserve act, as IL now
stands. Is TO confer a monopoly OF South
American trade financially on New York
city n probably the statement coIld
be extended 10 include all foreign trade
financing
The investigator states that the pre-
dominating opinion among banker3 APP
pears to favor an amendment to the
present law which would grant ma
tional charters to international banks
organized exclusively for activities
abroad and supplementary activities in
this country the shares OF which might
be held b. national banks.