Idaho County free press. [volume] (Grangeville, Idaho Territory) 1886-current, 1922-10-26
BABSON SAYS
Branch Banks Coming

| garding branch banks at the annua
convention Of the American Bankers
association, in New York. Owing Il
the controversy which this discussing
has developed, Roger w. Babson wal
interviewed regarding the probable
| outcome.
"Of course the discussion is the
natural outgrowth of the federal re
federal reserve SYSTEM" says Mr.
| Babson, ga branch bank organization
practically existed, although it was an
unconscious and invisible organization
For instance, the small bank in Indiana
took orders from its correspondent
bank in Indianapolis; and the In.
dianapolis bank took its orders from a
still bigger bank in New York. The
heads OF a few of the New York banks
would hold n conference at the home of
the late J. Pierpont Morgan or at the
home of Mr.. Baker, of the First Ma
tional bank, and decide upon a policy.
This policy they would pass along to
the large banks of Boston, Chicago,
Philadelphia, Indianapolis, st. Louis,
New Orleans, and other large cities.
The banks in these large cities would
in turn pass the same policy on to
the small banks in their districts.
There were no contracts or stock con-
troll existing between the banks, but
there was an invisible control which
was very powerful. With the organi-
cation of the federal reserve banks, the
clearance of checks at par, and the
legislation against interlocking direc-
torates, this control was given ire
mendous jolt. No longer is it much of
an object for country bank to keep
a deposit with the large city bank.
DRIFT FROM CITY BANKS
"Thus there has been a gradual
drifting away on the part of the coun-
try banks from the city banks. The
large cities have become more indie
pendent of New York; and the country
banks have become more Independent
of the large cities. AS long as the
money rates were high, this did not
worry the city banks, but during the
last year, when money rates have been
declining, the large city banks have
distinctly felt the loss of their for
mer 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 ambitious
They are building permanent and sub
stantial banking houses and are ac-
cumulating 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 for
recouping their prestige. They first
turned their attention TO foreign trade
organizations. foreign trade' was the
keynote at the American Bankers con-
vention two years ago. The foreign
trade business, however, has not
PANIED out as well as the banks had
hoped it would, and our recent tariff
has given almost a death blow to what
little new foreign trade we had. Thus,
the banks hopes in this regard are not
very sanguine at the moment. Another
attempt has shown itself in the or
ganization of separate Investments
companies and separate acceptance
companies. These have been organized
by many of the larger banks and most
of them are operating SUCCESSFULLY
companies more profitable at the mo-
ment than their foreign trade adven-
ture.
NEED FOR BRANCH BANKS
"The banks are gradually coming to
the opinion, however, that they IAN
recover their influence with the coun-
try districts only with organization of
branch banks. Hence, there is drive
at present to have the national bank
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
inevitable as the chain store.
"All the banking systems of Europe
are developed on the fbranch bank
France and Germany have their
towns. One Of the finest branch sys-
ties in the world exists in Canada. In
there are several big banks,
and each OF tDese nave from lUO 70
300 branches in different Canadian
cities and towns. 7 doubt seriously
whether the branch bank system is as
good for the country as the present
system. On the other hand, we know
that the present tendency of eliminat-
ing the small farmer and substituting
the renter in place Of the owner is
not for the good of the country. The
development of chain store systems
which are slowly crowding out the