Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1922-10-21
BANK STOCKS
Babson Sees Branch Banks.

OHly with organization OF DPAnCn
banks. Hence. there is n drive at
Laws amended SO that a city bank
can own a system OF branch ,banks-in
the surrounding cities and towns,
Whether or not this is in line with
Democracy, Is a very debatable ques-
ton; but the drive Is on and my guess
is that such branch banks are as lin
evitable as the chain store.
ALL. the banking systems Of Eur
/ are developed on the branch
bank idea. The big banks Of Eng
land, France and Germany have their
branches in hundreds Of cities and
towns. One OF the finest branch sys-
TENS in the world exists in Canada,
Just over the United States line. In
Montreal-there are several big. banks,
and each. Of these have from one
hundred to three hundred branches
in different Canadian cities and towns.
AS already stated, I doubt seriously
whether the branch bank system is
as good for the country as the pres
ent system. On the other hand, We
know that the present tendency OF
eliminating the small farmer and sub
shutting the renter in place of the
country. The development OF chain
store systems which IRE slowly crowd
ing out the individual retailer ia not
good foi the country.
lone Christmas Mr.. Henry Ford
sent me an autographed photograph
on which he wrote these words:
Eliminate absentee ownership and In
dustrial problems will solve them-
selves.' He is correct in that absen-
tee ownership lis q present difficulty
with our. Industrial organizations. Al
tho chain. otnrn Ornuyo q Frinoil0r 1jf.
aculty will develop which we do not
now have with gur Individual retail
system, and as system Of branch
banks grows, there will be hat same
difficulty with our banking system,
! Yet l believe these changes are in
evitable. Branch banks will be es-
tablished throughout the country, and
!congress will enact such legislation as
Is needed to make this possible"
Mr.. Babson was then asked what
the effect Of this would be on bank
stocks and he replied that It should
be a benefit to bank stocks, There
are enough banks in the country dis
tricts at the present time. Hence, the
city banks will be wise enough not te
start new mes to serve as their
branches. Instead the city bankt
will buy control Of the better country
banks. This will develop a new and
active market for country bank
stocks. Small banks in growing com
munities will be in special demand
Their stocks will surely sell higher
At the present time most bank stock:
! selel on book values without any con.
sideration Of the value of good will.
. AS soon as oity banks bid against 6nl
another for the, country banks. The
good will feature will at once5be o.
value With banks of small capita
stock, this will at once become a val
liable asset. Banks which have q
small capital stock and banks which
have q virtual monopoly Of the bank
ing interests. in q Community, will bl
In special demand. A communst,
i which has -four banks Will have thesl
] four banks purchased by four big cit,
z banks so that each of the. four biz
city banks will have a branch in tn,
smaller city. When, however, thor,
is only one bank in the,community tn,
four big city banks will compete ant
bid against one another for the stool
'of this one bank. The stock Of man!
of these small banks, which tpda!
can be bought around par, may late;
be purchased by some city bank q
5000 to $3.50 q share. All the countr!
banks need to do to bring about thes
conditions ~ to buy good securities
.Aayoid risks, and to keep themselve
In . strong position, The city bank
will be willing to pay q good pfic'
for good will and will not especial,
care about immediate earning cApa
city; but they will want to be sur
that the assets III topnd and tina
the bank has not 1aany lame uucks..'