The Rock Island Argus and daily union. (Rock Island, Ill.) 1920-1923, 1922-09-18


branches Of national banks has
been renewed In congress BY the
introduction by Representative Nc
Fadden, chairman Of the house
committee ON banking and curren-
cy, e bill permitting such bank
ing expansion. 1t IL . matter OF
popular interest for two reasons.
First, it represents curious con-
test between local institutional
pride and the protection OF local
profits, and second, 1t represents q
struggle by small bankers against
big bankers.
The principal argument in favor
of branches for national banks is
efficiency and service. The princi-
pal argument against such branch
es is preservation of local. enter
prise and immunity from the pos
sibility Of money trust. .
What the national banks ask Is
the legal right to establish branch
es in any places. Thus. the Ma
tional City Bank Of New York
might wish to establish q branch
in every city in the United States
and in many small 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
increase. Many other large ma
tional banks-great financial insti-
I! tutions known from one end of the
country to the other-might desire
to expand in the same way. In all
probability they would, il permit
ted by law to do SO.
| They claim that for the law to
permit them to establish such
branches, so that the milk man in
Omaha could, deal with q great
banking institution as readily as
John D. Rockefeller or any other
New Yorker can, would be move
in the direction Of efficiency. I'm
der existing law. national bank
may lend only limited proportion
of it's funds to one borrower. A
man may have a big business in a
small town. His borrowing re-
quirements, are large. His local
bank may not be big enough to ,ac-.
commodate him. Therefore, he
must do business with a bigger
bank in a distant city.
Increased Loan Facilities.
With local branch of the big
bank in his small town, he could
borrow just as much as though he
lived and did business in New York,
because the business of the branch
would be ON the same basis as bus
mess with. the home Office. The
loan would be limited not to the
capital of the branch but only to
the capital of the whole vast sys-
tenn Of parent and branch banks.
1t is fact that in MANY parts
Of the United States big businesses
send their deposits by messenger
long distances 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 a
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 great saving in branch
bank system because of a dimin-
ished overhead expense. There are
10000 banks of all sizes in the
United States, each with a presi-
dent. subordinate officers and
boards of directors. This means
that each of the 10000 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
i. Now, if there were but 1000 big
banks, there would be but 1000
!, sets of presidents, officers and di-
rectors and much Of the overhead
would be saved.
There would be perhaps $4,000
branches, SO the country would be
served with the same number Of
. banking houses, but these branch
es merely would have managers
, and tellers with no expensive over.
head.
/ On the other side of the question
!. the small banks say that it is con
trary to every tenet of American
ism to permit any great group t.
crush out small competitors, Who'll