The Fargo forum and daily republican. [volume] (Fargo, N.D.) 1894-1957, 1917-10-23
STATE BANKS ARE
JOINING SYSTEM
Movement Toward Mobili-
zation Is Pronounced
Says Chairman Rich
(By John n. Rich, Chairman and
Federal Reserve Aqent.)

| (By John n. Rich, Chairman and
Federal Reserve Agent.)
Even before the Presidents state
ment of last Tuesday, in which he
called upon all state banks and trust
| companies of the United States to
consider membership in the Federal
| Reserve system from the viewpoint
that it is "manifestly imperative that
| there should be a complete mobiliza-
tion Of the banking reserves of the
United States, many of the leading
state institutions in the Ninth fed
eral reserve district had already
taken steps along the lines indicated
by the chief executive Of the United
States.
The movement towards federal
reserve membership is very pro-
nounced. The last amendment to the
federal reserve act provided that
each state institution upon taking
membership shall retain its full
charter and statutory rights. Under
this clause, a recent very important
ruling by John w. Davis, acting at
torney general, declared that state
banks which join the federal reserve
system do not operate under the laws
of the United States, but under the
state laws which gave them their
existence. Under this ruling. state
banks are even exempted from the
operation of the Clayton act dealing
with interlocking directors. How i'm
pOrtant this ruling was regarded by
New York trust companies is reveal
ed by the fact that six leading
institutions have Joined the federal
reserve system in the last two weeks.
Twelve state institutions in the south
and west, having a combined capital
and surplus of 1925, 000, 900, also be-
came members last month. Every
where over the United States the
same movement that has been detect
ed in the northwestern states has
been showing itself, and the drift is
unquestionably toward the consolida-
ton Of the banking forces of the
United States, under the federal re-
serve system, but with the important
proViso that the state banks which
are thus lending their help and
strength to the solidifying Of the
country's financial machinery are. at
the same time, retaining the same
freedom and the same rights which
they enjoyed under the law and
under their charters prior to TAX
ing membership.
Welcomed by National Banks.
There is some discrimination
against national banks due to this
fact. No complaint has been raised
by any national bank, and the ma
tional institutions are welcoming the
state institutions ints membership on
something more than equal terms.
National banks do not have the same
advantages that are conferred in
some states by state bank charters.
Their charter rights are equal and
uniform throughout the country. This
is not true Of state bank charters, and
in many states, state institutions en-
joy privileges which are not enjoyed
by national bank competitors.
Recognizing the impossibility Of
harmonizing the state bank laws OF
4S states, and bringing state banks
to something near the equal basis as
to their powers and privileges that
exists as to national banks, congress
very wisely decided that this differ
ence as to powers and privileges,
since it cannot be readily remedied,
must be admitted, and that at the
same time it should not constitute a
bar against the membership Of state
institutions. They were therefore
permitted to come into the federal
reserve system, retaining these
rights, even though the privileges
and powers so retained give them, in
some respects, an advantage over ma
tional banks.