New-York tribune., 1918-06-29
Parliament to
Curb British
Bank Mergers
Legislation PENDING For a Statu-
tory Body to Pass on
Amalgamations

Parliament which will set up Statu-
tory body representing the British
Treasury and the Board Of Trade, with
powers to approve or dlsapprove pro-
posed banking amalgamations. This
action will be taken at the suggestion
Of committee appointed by the Brit
ish Treasury which recently made an
exhaustive investigation Of the situa-
tion to determine to what extent, If at
all, amalgamations between banks may
affect prejudicially the interests of the
Industrial and mercantile community.
The recommendations Of the special
committee are the result, writes the
American commercial attache at Lon
don,. Of plans announced early in the
year for important amalgamations of
the largest English joint stock banks.
Tho great concentration Of banking re-
sources involved in these amalgama-
tions is illustrated by grouping to-
and the deposits of the banks partici-
pating in three of them, as follows:
(A) National Provincial, Union Of
London and Smiths, 1901 ,388,570; OBJ
London County g. Westminster and
PARIS, $1,109, $4,000; (C) London City
g. Midland and London Joint Stock,
81, 1,422,758,815.
Money Trust" Feared
Owing to the keen. competition, OF
leading banks, it has been rumored in
financial quarters that these amalgama-
tions might be followed by others. OPP
position to the amalgamations is said
to have been especially strong on the
part Of discount houses, which desire
as broad a market as possible for COM
mercial bills. There was also ques-
ton in the mind Of the general com
mercial community as to the possible
tendency Of amalgamations to lessen
competition, and the bogey Of money
trust" was thought Of
that the three amalgamations particu-
larly considered resulted in certain
amount of overlapping, and that to only
a partial extent was broader field se-
"Amalgamations usually result in
writing down of capital and smaller
ratio of capital to deposits. In the
three amalgamations referred to there
has been a certain reduction in capital,
especially reserve liability Of snare
holders, and the committee says that
substantial benefits to shareholders
are secured at the expense OF some e. OF
the security of the depositors. The
committee warns against permitting
unusual aggregations Of deposits with
out fully adequate capital and reserves.
No particular criticism is made, however,
of the writing down Of capital in recent
amalgamations, which is in certain
sense said to be only nominal.
"Strong representations were made
to the committee by the money market
and the Stock Exchange against too
great a reduction in the number OF
member banks in tlfe Clearing House,
already small, because this might affect
its smooth working. and the predomi.
nance Of few leading members might
create apprehension. The position of
the Bank of England might also be
seriously undermined were an over
whelming combination Of financial
strength secured by joint-stock banks
through amalgamations.
Dangers Are Remote
"The committee says that undoubt-
edly some of the dangers feared are
problematical and remote. Possible
dangers, nevertheless, have induced it
to recommend government supervision
in spite of the fact that in a general
way it would prefer to avoid the neces-
sity for any government interference
with the administration Of banking.
Custom rather than law has been in
the past the main safeguard Of Eng
lish banking, and government super
vision is worth considering as new
phase, Of the recommendation of the
committee should be accepted by the
government.
"Although the committee has recon-
mended government supervision Of
amalgamations - and also, it may be
remarked, of interlocking directorates
this step is taken only to avoid pos
sible abuses. The main purpose behind
these amalgamations has been to mobil-
ize financial strength for after-the-war
competition and to retain for London
the financial prominence it has pre-
viously enjoyed. Where greater facili
ties or greater banking strength may
be secured no check is to be expected.
The committees report should be con-
sidered only as suggesting control in
the public interest of q. movement to
bigger things in finance, which is stead
lily under way in England and which in
general appears to have the sympa-
thetic approval of the government and
the commercial community. Since 1891
the number Of English private banks
has fallen from thirty-seven to six,
and the number of joint banks from
106 to thirty-four.