The Ontario Argus. (Ontario, Or.) 1???-1947, 1922-10-26
BANK STOCKS
BabsOn Sees Branch Banks


sion regarding branch banks at the
annual convention of the American
Bankers association which was held
last week in New York. Owing to
the controversy which this discussion
has developed, Roger w. Babson was
today interviewed regarding the
probable outcome.
"Of course the discussion is the
natural outgrowth of the Federal
Reserve Bank. Before the days of
the Federal Reserve SYSTEM" says
Mr.. Babson, "a branch bank organiz-
alton practically existed, altho it
was an unconscious and invisible or
ganization For instance, the small
bank in Indiana took orders from
it's correspondent bank in Indian
apolis; and the Indianapolis bank
took its orders from a still bigger
bank in New York. The heads Of
the New York banks would hold
conference at the home of the late
J. Pierpont Morgan or at the home
OF MIR. Baker of the First National
Bank, and decide upon a policy. This
policy they would pass along to the
large banks of Boston Chicago,
Philadelphia, indianapolis, st. Louis,
New Orlenas, and other large
cities would in turn pass the
safe policy on the the small
banks in their districts. There were
no contracts or stock control exist
ing between the banks, but there was
an invisible control which was very
powerful. With the Organization OF
the Federal Reserve Banks, the clear
ance checks at par, and the legisla-
ton against interlocking director
ates, this control was given tre-
memdous jolt. No longer is 1t much
of an object for a country bank to
keep a deposit with the large city
bank. Thus there has been a grad
ual drifting away on the part of the
country banks from the city banks.
The large cities have become more
independent of New York; and the
country banks are more independent
of the large cities. AS long as the
money rates were high, this did not
worry the city banks, but during the
past year, when money rates have
been declining, the large city banks
have distinctly felt the loss of their
former power. Hence, they are
looking around for some plan to get
their country following back again.
There is no hope of breaking up
the Federal Reserve system which is
functioning very satisfactorily. The
men connected with the Federal Re-
serve Banks are active and ambit-
tious. They are building permanent
and substantial banking houses and
are accumulating great resources.
They are issuing reports and other
publications which appeal greatly to
the country banks. The larger city
banks are distinctly worried about
this and are looking for some other
means of recouping their prestige.
They first turned their attention to
Foreign trade organizations. For
eign Trade" was the key note at the
American Bankers Convention two
years ago. The foreign trade busi-
ness, however, has not panned out
as we'll as the banks had hoped 1t
would, and our recent tariff has Civ
en- almost a death blow to what lit
tie foreign trade we had. Thus, the
banks hopes in this regard are not
very sanguine at the moment. An
otrer attempt has shown itself in
the organization of separate Invest
ments' companies and separate 'Ac-
ceptance' companies. These have
been organized by many of the larger
banks and most of them are operat-
Ing successfully. Banks are find
ing these Investment companies
more profitable at the moment than
their foreign trade adventures.
The banks are gradually coming
to the opinion. however, that they
can recover their influence with the
country districts only with the or
ganization of branch banks. Hence,
there is a drive at present to have
the National Bank Laws amended
so that city bank can own a sys-
TEN of branch banks In the surround
ing cities and towns. Whether or
not this In line with Democracy, is a
very debatable question; but the
drive is on and my guess is that such
branch banks are as inevitable as
the chain store.
"All the banking systems of Eur
ope are developed on the branch
bank" idea. The big banks of Eng
land. France and Germany have their
hmm ,haa In huudrada nf citiaS and