The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1922-09-20
TOPEKA STATE JOURNAL
Information Bureau
FREDERIC }. HASKIN. Director.
washington, d. @.
BRANCHES FOR NATIONAL BANKS

BRANCHES FOR NATIONAL Ranks
Washington, D. c.. Sept. 1s-The
fight for the establishment of branches
of national banks has been renewed
| in congress by the introduction by
Representative -AxcFadden, chairman
of the house committee on banking
and currency, of a bill permitting
| ter of popular interest for two rea-
sons. First, it represents curious
contest between local institutional
pride and the protection of local
profits. and second. it represents a
struggle by small bankers against big
/ bankers
The principal argument in favor of
| branches for national banks is eff
cheney and service. The principal
argt .nent against such branches is
preservation of local enterprise and
immunity from the possibility of a
money trust.
What the, national banks ask is the
legal right to establish branches in
/ any places. Thus. the National City
bank of New York might wish to es-
tablish a branch in every city in the
towns. Under existing law it cannot
do SO, but if it could, it would get
the deposits and the business of many
more customers than now it can COM
mand- Therefore its profits would in
crease. Many other large national
banks-great financial institutions
known from one end of the country
to the other-might desire to expand
in the same way In all proba bility
they would, if permitted by law to
do so.
They claim that for the law to per-
NIT them to establish such branches,
so that the milk man in Omaha could
deal with a great banking institution
as readily as John Rockefeller or any
other New Yorker can, would be a
move in the direction of efficiency.
Under existing law, a national bank
may lend only a limited proportion of
its funds to one borrower. A man may
have big business in a small town.
His borrowing requirements are large.
His local bank may not be big enough
to accommodate him. Therefore he
must do business with a bigger bank
in distant city.
Increased Loan Facilities.
With local branch of the big bank
in his small town. he could borrow
just as much as tho he lived and did
business in New York, because the
business of the branch would be on
the same basis as business with the
home office. The loan would be linn
tied, not to the capital of the branch
but only to the capital of the whole
vast system of parent and branch
banks.
1t is a fact that in many parts of
the United States big businesses send
their deposits by messenger long dis
tances to other cities to find banks
big enough for them to deal with A
bank desires to lend only to those
who deposit with it; therefore, the
big business in the small city, does
not deposit at home but in the place
where there is a bank big enough to
handle its loans.
The national banks say that there
would be a great saving in a branch
tank system because of a diminished
overhead expense. There are 10000
banks of all sizes in the United States,
each with a president, subordinate
offieers and boards of directors This
means that each of the $4,000 banks
has an overhead which must be paid
for by the public. as all profits of any
business must, in the final analysis,
spring from the public. Now, if there
were but 1000 big banks. there would
be but 1000 sets of presidents, officers
and directors and much of the over
head would be saved.
There would be perhaps $4,000
branches SO the country would be
banking houses, but these branches
merely would have managers and
tellers with no expensive overhead
On the other side of the question,
the small banks say that it is contrary
to every tenet of Americanism to per-
nit any great group to crush out
the question of economic wastage of
duplicated overhead expenses They
insist that if the national banks are
permitted to establish branches the
small, independent banks will be
crushed out of business, Just as it has
frequently been alleged small bust
nesses in other lines have been
crushed out of existence by great
trusts.
Fear Banking Trust
The small banks say that the big
banks would come to towns whers
! local. thriving banks were situated
and open branches. The superior in
| fluence, of the branch of the great
parent bank would ultimately drive
tthe little, local banks out of business.
! This process would result in the great
banks gradually getting control of
| the whole banking business of the
country, creating a money trust which
would control credit. situation
would be created whereby a small
group of bankers could decide whether
! or not credit should be extended to
business in any part of the country.
The business destinies of millions
would be in the hands of the few pow
erful financial giants at the head of
the great %anks.
This, to be sure. is the sort of pic
| ture> which is extremely repugnant to
the American mind and il is this pic
/ ture which has prevented the estab-
| lishment of branch banks.
The controversy is an old one. II
| has occurred in years past. Now that
MFR. McFadden's bill brings it up again.
| it is to be expected that the whole
ground will be fought over again and
| il is not at all unlikely that the issue
will be the same as it has been in the
past; the little banks will beat the big
banks and the branches will not be au>
| thorized.
There is one existing method by
which, under the law. a national bank
! may acquire branches. State char
tered banks may have branches within
the states in which they are located.
A national bank may buy outright a
| trust company or state chartered
bank which has branches. 1t may